<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
PageMart Wireless, 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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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 calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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> 2
PageMart Logo
6688 NORTH CENTRAL EXPRESSWAY, SUITE 800
DALLAS, TEXAS 75206
April 18, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at 9:00 a.m., Central Daylight Time, on May 20, 1997, at The Doubletree
Hotel, 8250 N. Central Expressway, Dallas, TX 75206. The formal Notice of Annual
Meeting of Stockholders and Proxy Statement are attached. I hope that you will
be able to attend and participate in the meeting, at which time I will have the
opportunity to review the business and operations of PageMart Wireless, Inc.
The matters to be acted upon by our stockholders are set forth in the
Notice of Annual Meeting of Stockholders. It is important that your shares be
represented and voted at the meeting. Accordingly, after reading the attached
Proxy Statement, would you kindly sign, date and return the enclosed proxy card.
Your vote is important regardless of the number of shares you own.
Sincerely yours,
/s/ JOHN D. BELETIC
John D. Beletic
Chairman of the Board
<PAGE> 3
PageMart Logo
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
April 18, 1997
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of PageMart
Wireless, Inc., a Delaware corporation (the "Company"), will be held at The
Doubletree Hotel, 8250 N. Central Expressway, Dallas, TX 75206 on May 20, 1997,
at 9:00 a.m., Central Daylight Time, for the following purposes:
1. To elect a Board of Directors consisting of eight members.
2. To consider and vote upon a proposal to approve amendment of the
Company's Stock Option Plan.
3. To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company to serve as such at the pleasure of the Board of
Directors.
Only stockholders of record, as shown by the transfer books of the Company,
at the close of business on April 11, 1997 are entitled to notice of and to vote
at the Annual Meeting.
A list of stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholders for any proper purpose during
normal business hours at the offices of the Company for a period of at least ten
(10) days preceding the Annual Meeting.
The Board of Directors recommends that you vote FOR the approval of (i) the
amendment of the Company's Stock Option Plan and (ii) the appointment of the
independent auditors.
By Order of the Board of Directors
/s/ JOHN D. BELETIC
John D. Beletic
Chairman of the Board
PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE
PROVIDED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO
IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
<PAGE> 4
[PAGEMART LOGO]
PROXY STATEMENT
DATED APRIL 18, 1997
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
The accompanying proxy is solicited by the Board of Directors (the "Board")
of PageMart Wireless, Inc. (the "Company") to be voted at the Annual Meeting of
Stockholders to be held May 20, 1997 (the "Annual Meeting"), and any
adjournments thereof. When such proxy is properly executed and returned, the
shares it represents will be voted at the meeting as directed. If no
specification is indicated, the shares will be voted in accordance with the
recommendation of the Company's Board with respect to each matter submitted to
the Company's stockholders for approval. Abstentions will not be voted, but will
be counted for determining the presence of a quorum. Broker non-votes will not
be counted for any purpose. Any stockholder giving a proxy has the power to
revoke it prior to its exercise by notice of revocation to the Company in
writing, by voting in person at the Annual Meeting or by execution of a
subsequent proxy; provided, however, that such action must be taken in
sufficient time to permit the necessary examination and tabulation of the
subsequent proxy or revocation before the vote is taken.
The shares entitled to vote at the meeting consist of shares of Class A
Convertible Common Stock of the Company (the "Common Stock"), with each share
entitling the holder of record to one vote. At the close of business on April
11, 1997, the record date for the Annual Meeting, there were outstanding
33,950,752 shares of Common Stock. This Proxy Statement and the accompanying
form of proxy are first being sent to stockholders on or about April 18, 1997.
PROPOSAL ONE: ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS
Eight members of the Board will be elected at the Annual Meeting. Directors
elected at the Annual Meeting will serve until the next Annual Meeting or until
their successors are elected and qualified. The eight nominees receiving the
greatest number of votes cast by the holders of the Common Stock entitled to
vote at the meeting will be elected directors of the Company (assuming a quorum
is present). All proxies will be voted in accordance with instructions contained
thereon. If no specific instructions are given, the persons named as proxies in
the accompanying form of proxy will vote for the eight nominees named by the
Board of the Company and listed below. In the event that, by reason of death or
other unexpected occurrence, any one or more of such nominees shall not be
available for election, the persons named as proxies in the form of proxy have
advised that they will vote for such substitute nominees as the Board of the
Company may propose. The Company has no reason to believe that any nominee of
the Board will be unable to serve if elected. A vote FOR the nominees includes
discretionary authority to vote for a substitute nominee if any of the nominees
becomes unable or unwilling to serve.
<PAGE> 5
The persons named below have been nominated by the Board of the Company for
election to the Board of Directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John D. Beletic........................ 45 Chairman, President and Chief Executive Officer
Roger D. Linquist(2)................... 58 Director
Frank V. Sica(1)....................... 45 Director
Guy L. de Chazal(1).................... 49 Director
Arthur Patterson(1).................... 53 Director
Alejandro Perez Elizondo(2)............ 48 Director
Leigh J. Abramson(2)................... 28 Director
Pamela D.A. Reeve...................... 48 Director
</TABLE>
- ---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
Mr. Andrew Cooper, a Director of the Company since October 1990, resigned from
the Board of Directors on February 28, 1997. Following Mr. Cooper's resignation,
the size of the Board of Directors was decreased to eight (subject to increase
in accordance with the Company's by-laws). Pursuant to the Stockholders
Agreement (as defined herein), the Morgan Stanley Shareholders (as defined
herein) have the ability to appoint a successor for Mr. Cooper.
John D. Beletic, Chairman, President and Chief Executive Officer. Mr.
Beletic was named Chairman of the Company's Board of Directors in August 1994.
Mr. Beletic has been Chief Executive Officer of the Company since February 1994.
Mr. Beletic joined the Company as President and Director in March 1992 after
spending a year in venture capital. Prior to that, Mr. Beletic served for five
years as President and Chief Executive Officer of The Tigon Corporation
("Tigon"), a leading voice mail service provider. Tigon was acquired by
Ameritech Development Corporation, a wholly-owned subsidiary of American
Information Technologies Corporation in 1988. Before joining Tigon, Mr. Beletic
was Senior Vice President of Operations and Chief Financial Officer for five
years with VMX, Inc., a manufacturer of voice mail systems. Mr. Beletic earned
his bachelor's degree in finance from Cincinnati's Xavier University and his
master's degree in business administration from the Harvard Business School. Mr.
Beletic currently serves as a director of Digital Sound Corporation and
Teloquent Communications Corporation. Within the paging industry, Mr. Beletic
currently serves as a director of PCIA, the industry trade association and
President of the Paging Leadership Association.
Roger D. Linquist, Director. Mr. Linquist has been a Director of the
Company since co-founding it in 1989. He served as Chairman of the Company's
Board of Directors from 1989 until April 1994. Prior to launching the Company,
Mr. Linquist served for three years as President and Chief Executive Officer of
PacTel Personal Communications ("PacTel"), the cellular and paging division of
Pacific Telesis Group, the Regional Bell Operating Company that provides service
to California and Nevada. Mr. Linquist served as Chief Executive Officer of
Communications Industries before joining PacTel.
Frank V. Sica, Director. Mr. Sica has been a Director of the Company since
December 1991. He is currently a Managing Director of Morgan Stanley & Co.
Incorporated ("MS & Co."), and has been with MS & Co. since 1981, originally in
the Mergers and Acquisitions Department and, since 1988, with the Merchant
Banking Division. He serves as a director of numerous companies including ARM
Financial Group, Inc., Consolidated Hydro, Inc., Fort Howard Corporation, Kohl's
Corporation, and Sullivan Communications Inc. He is a director of the general
partner of The Morgan Stanley Leveraged Equity Fund II, L.P. ("MSLEF II") and of
the respective managing general partners of the general partner of Morgan
Stanley Venture Capital Fund, L.P. ("MSVCF"), Morgan Stanley Venture Capital
Fund II, L.P. ("MSVCF II") and Morgan Stanley Capital Partners III, L.P. ("MSCP
III"). Mr. Sica was designated by MSLEF II pursuant to the Stockholders
Agreement. See "Certain Relationships and Related Transactions -- Election of
Directors."
2
<PAGE> 6
Guy L. de Chazal, Director. Mr. de Chazal has been a Director of the
Company since June 1989. Mr. de Chazal is President and a Director of the
managing general partner of the general partner of MSVCF and MSVCF II and is a
Managing Director of MS & Co. Mr. de Chazal is also a director of several
private companies. From 1986 to 1990, Mr. de Chazal was a Vice President, and
from 1991 to 1994 a Principal of MS & Co. Mr. de Chazal was designated by MSVCF
pursuant to the Stockholders Agreement. See "Certain Relationships and Related
Transactions -- Election of Directors."
Arthur Patterson, Director. Mr. Patterson has been a Director of the
Company since June 1989 and a Managing Partner of Accel Partners, a venture
capital company since 1984. Mr. Patterson is also a director of VIASOFT, Axent
and the G.T. Global Group of Investment Companies as well as several private
software and telecommunications companies. Mr. Patterson was designated by Accel
Partners pursuant to the Stockholders Agreement. See "Certain Relationships and
Related Transactions -- Election of Directors."
Alejandro Perez Elizondo, Director. Mr. Perez has been a Director of the
Company since August 1994. Since 1987, Mr. Perez has been associated with
Pulsar, a diversified Mexican company with interests in the tobacco, insurance,
agriculture, telecommunications, finance and other industries, and is currently
Vice President of Diversification of Pulsar Internacional, S.A. de C.V. Mr.
Perez is also a director of Ionica L3 Ltd. (a public telephone services company
located in U.K.), NovaWeb Technologies, Inc. (a California modem manufacturing
company), Flat Connections Inc. (a California internet company), Fomento
Empresarial Regiomontano, S.A. de C.V. (a Mexico-based telecommunications
company), and Kb/Tel Telecommunications S.A. de C.V. (a Mexico-based holding
company with investments in communications engineering companies). Mr. Perez was
designated by Pulsar pursuant to the Stockholders Agreement. See "Certain
Relationships and Related Transactions -- Election of Directors."
Leigh J. Abramson, Director. Mr. Abramson has been a Director of the
Company since August 1994. He is currently an Associate of MS & Co. and an
officer of the general partner of MSLEF II and of the general partner of the
general partner of MSCP III. Mr. Abramson has been with MS & Co. since 1990,
first in the Corporate Finance Division and, since 1992, in the Merchant Banking
Division. Mr. Abramson is also a director of Silgan Holdings, Silgan
Corporation, and Jefferson Smurfit Corporation. Mr. Abramson was designated by
MSCP III pursuant to the Stockholders Agreement. See "Certain Relationships and
Related Transactions -- Election of Directors."
Pamela D. A. Reeve, Director. Ms. Reeve was elected Director of the Company
in April 1996. Ms. Reeve is currently President, Chief Executive Officer and
Director of Lightbridge, Inc. ("Lightbridge") and has been with Lightbridge
since 1989. Lightbridge develops and manages software used by wireless
telecommunications companies across the United States to support sales and
marketing applications. Prior to joining Lightbridge, Ms. Reeve spent eleven
years at The Boston Consulting Group, with senior operating responsibility for
the firm's Boston office. Prior to joining The Boston Consulting Group, Ms.
Reeve worked with the National Endowment for the Humanities managing educational
projects and with real estate development and manufacturing firms, primarily in
operations and marketing.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company's Board of Directors held 5 meetings in fiscal year 1996. All
of the directors attended 75% or more of the total number of meetings of the
Board and of committees of the Board on which they served.
The Audit Committee of the Board recommends the firm to be employed as the
Company's independent public accountants and reviews the scope of the audit and
audit fees. In addition, the Audit Committee consults with the independent
auditors with regard to the plan of audit, the resulting audit report and the
accompanying management letter, and confers with the independent auditors with
regard to the adequacy of internal accounting controls, as appropriate, out of
the presence of management. The members of the Audit committee are Messrs.
Linquist, Abramson and Perez. The Audit Committee held 2 meetings in fiscal year
1996.
3
<PAGE> 7
The Compensation Committee of the Board is charged with reviewing executive
compensation and administering the Company's Stock Option Plan (as defined
herein). Its members are Messrs. Sica, de Chazal and Patterson. Members of the
Compensation Committee held 5 meetings in fiscal year 1996.
The Board of the Company does not have a nominating committee.
EXECUTIVE OFFICERS
Set forth below are the names, ages, positions and certain other
information concerning the executive officers of the Company as of March 31,
1997.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John D. Beletic........................ 45 Chairman, President and Chief Executive Officer
G. Clay Myers.......................... 37 V.P., Finance, Chief Financial Officer and Treasurer
N. Ross Buckenham...................... 39 V.P. and General Manager, PCS
Richard S. Nelson...................... 49 V.P., International
Kenneth L. Hilton...................... 44 Executive V.P., National Sales Office Business Unit
Douglas S. Glen........................ 39 V.P., Strategic Alliances Business Unit
Douglas H. Kramp....................... 35 V.P., National Retail Business Unit
Sandra D. Neal......................... 49 Executive V.P., Administration
Frances W. Hopkins..................... 56 V.P., Customer Advocacy
Paul L. Turner......................... 38 V.P., Customer Service
Jack D. Hanson......................... 53 V.P., Network Operations
Todd A. Bergwall....................... 34 Corporate Counsel and Secretary
Thomas C. Keys......................... 38 V.P., Market Development
</TABLE>
John D. Beletic, President and Chief Executive Officer. Mr. Beletic is also
Chairman of the Board. See "-- Nominees and Directors."
G. Clay Myers, Vice President, Finance, Chief Financial Officer and
Treasurer. Mr. Myers joined the Company in April 1993 as Vice President of
Finance and Chief Financial Officer. Prior to joining the Company, Mr. Myers was
Senior Operations Manager for Dell Computer Corporation from 1991 to 1993. Prior
to joining Dell Computer Corporation, Mr. Myers was with Ernst & Young from 1982
to 1991. Mr. Myers is a certified public accountant.
N. Ross Buckenham, Vice President and General Manager, PCS. Mr. Buckenham
joined the Company on January 15, 1996 initially as Vice President, PCS
Strategy, and was promoted to Vice President and General Manager, PCS Strategy
in September 1996. Prior to joining the Company, Mr. Buckenham was President of
Touchtone Solutions, Inc., a telecommunications and interactive voice response
software and services company from 1992 to 1996. From 1984 to 1991, Mr.
Buckenham was with Aquanautics Corporation, initially as Vice President of
Development then as its President. From 1981 to 1984, Mr. Buckenham was with
Bain & Co. as a senior consultant to companies in the voice processing,
technology, finance and health care industries. Mr. Buckenham holds an MBA
degree from Harvard Graduate School of Business Administration and a BS degree
in Chemical Engineering from Canterbury University, New Zealand.
Richard S. Nelson, Vice President, International. Mr. Nelson was named Vice
President, International on March 1, 1996. Formerly, Mr. Nelson was Vice
President, Marketing of the Company since June 1992. Mr. Nelson also serves as
President of PageMart International. Before joining the Company, Mr. Nelson was
Vice President of Marketing for American Eagle, at American Airlines, where he
held various staff positions from 1972 to May 1992.
Kenneth L. Hilton, Executive Vice President, National Sales Office. Mr.
Hilton joined the Company in October 1994. Previously, Mr. Hilton spent five
years as Vice President, Sales and Marketing for Visual Information
Technologies, a manufacturer and distributor of high-end graphics cards for the
UNIX marketplace. Before joining Visual Information Technologies, Mr. Hilton
spent fourteen years with IBM in
4
<PAGE> 8
various sales and marketing positions, the last being Branch Manager. Mr. Hilton
also serves as a Director of PageMart Canada.
Douglas S. Glen, Vice President, Strategic Alliances Business Unit. Mr.
Glen has been a Vice President since July 1989. Formerly, Mr. Glen was Regional
Manager and Director of Finance and Administration for Multicom, Inc., a
subsidiary of PacTel for three years. Additionally, Mr. Glen was Manager of
financial control with PepsiCola Bottling Group and a consultant with Arthur
Andersen & Co. Mr. Glen serves as a Director of PCIA, the industry trade
association and Chairman of the Paging and Narrowband PCS Alliance.
Douglas H. Kramp, Vice President, National Retail Business Unit. Mr. Kramp
joined the Company as a Vice President in August 1993. Before joining PageMart,
Mr. Kramp was President and co-founder of Artificial Linguistics Inc. ("ALI"), a
text management software company from 1988 to 1993. Before co-founding ALI, Mr.
Kramp was responsible for starting up and managing high technology companies for
the Hart Group from 1984 to 1988.
Sandra D. Neal, Executive Vice President, Administration. Ms. Neal has been
a Vice President since joining the Company in July 1992. Prior to joining the
Company, Ms. Neal was Vice President of Customer Service for Tigon from 1989 to
1992. Previously, Ms. Neal held the positions of Vice President of Finance and
Controller at Tigon from 1986 to 1989. Before joining Tigon, Ms. Neal was a
practicing certified public accountant from 1979 to 1986.
Frances W. Hopkins, Co-founder, Vice President, Customer Advocacy. Ms.
Hopkins co-founded the Company in 1989 and was Vice President of Operations
until she left the Company in September 1990 to pursue other business interests.
Upon returning in July 1991, she was named Vice President, Operations. In 1995,
Ms. Hopkins became Vice President, Customer Advocacy. Before co-founding the
Company, Ms. Hopkins was President of Multicom, Inc., a subsidiary of PacTel for
six years; President of Gencell, the cellular subsidiary of Communications
Industries; and founded TelPage, a regional paging company.
Paul L. Turner, Vice President, Customer Service. Mr. Turner has been Vice
President, Customer Service of the Company since March 1994. Before joining the
Company, Mr. Turner was with MCI from 1984 to 1994 in positions of increasing
responsibility. From 1988 to 1994 he held various management positions, the most
recent being Senior Manager, MCI Consumer Markets.
Jack D. Hanson, Vice President, Network Operations. Mr. Hanson joined the
Company in October 1993. Prior to joining the Company in October 1993, Mr.
Hanson was Director of Engineering for Spectradyne, Inc. from June 1992 to
October 1993. Previously, he held senior engineering positions with VMX from
December 1984 to June 1992, the most recent being Vice President of National
Account Support.
Todd A. Bergwall, Corporate Counsel. Mr. Bergwall has been Corporate
Counsel since joining the Company in June 1994. Mr. Bergwall has also been
Secretary of the Company since April of 1995. From August 1989 until joining the
Company, Mr. Bergwall was engaged in private practice with the Dallas, Texas law
firm Winstead Sechrest & Minick P.C. specializing in corporate and securities
law.
Thomas C. Keys, Vice President, Market Development. Mr. Keys was named Vice
President in September 1994. Previously, Mr. Keys was Sales Director and General
Manager from April 1994 to August 1994 and Vice President, Sales, Market
Business Unit from August 1994 to February 1997. Previously, Mr. Keys was the
Area Manager for the Company's largest West Coast market for over one year.
Before joining the Company, Mr. Keys held the position of Vice President of
Sales at S.I.P., Inc., a welding equipment manufacturer, from December 1991 to
December 1992. Prior to that, Mr. Keys held several key management positions at
Metromedia Corporation from August 1990 to December 1991. Additionally, Mr. Keys
was Regional Sales Manager at Savin, Inc. from April 1988 to August 1990.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 31, 1997 (i) by each person known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
by each director of the Company, (iii) by each of its four most highly
compensated officers, other than the Chief Executive Officer (collectively, "the
Named Executive Officers"),
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<PAGE> 9
and (iv) by all executive officers and directors of the Company as a group.
Except as otherwise indicated, each named person has voting and investment power
over the listed shares, and such voting and investment power is exercised solely
by the named person or shared with a spouse.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
CLASS A CLASS A
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
------------------------------------ ------------ ------------
<S> <C> <C>
The Morgan Stanley Leveraged Equity Fund II, L.P.(1)........ 8,476,518 25.0%
1221 Avenue of the Americas
New York, NY 10020
Morgan Stanley Capital Partners III, L.P.(1)................ 5,072,672 15.0%
1221 Avenue of the Americas
New York, NY 10020
Morgan Stanley Venture Capital Fund, L.P.(2)................ 2,154,071 6.4%
1221 Avenue of the Americas
New York, NY 10020
Other Morgan Stanley-sponsored limited partnerships(3)...... 842,719 2.5%
Mellon Bank, N.A., as Trustee for First Plaza Group
Trust(4).................................................. 3,214,286 9.5%
One Mellon Plaza
Pittsburgh, PA 15258
Accel Telecom L.P.(5)....................................... 1,542,300 4.6%
One Embarcadero Center, Ste. 3820
San Francisco, CA 94111
Accel III L.P.(5)........................................... 1,416,200 4.2%
One Embarcadero Center, Ste. 3820
San Francisco, CA 94111
Accel Investors' 89 L.P.(5)................................. 91,500 *
One Embarcadero Center, Ste. 3820
San Francisco, CA 94111
Pulsar...................................................... 2,142,857 6.3%
Av. Roble, No. 300. Mezzanine
Edificio Torre Alta
Garza Garcia, N.L
Mexico C.P. 66265
Directors and Named Executive Officers:
John D. Beletic(6)........................................ 557,738 1.6%
Roger D. Linquist(7)...................................... 1,525,000 4.5%
Kenneth L. Hilton(8)...................................... 95,112 *
Douglas S. Glen(9)........................................ 93,750 *
Sandra D. Neal(10)........................................ 100,792 *
Douglas S. Kramp(11)...................................... 82,680 *
Frank V. Sica(1)(2)(3).................................... 16,545,980 48.7%
Guy L. de Chazal(2)(3).................................... 2,734,682 8.1%
Arthur Patterson(5)(12)................................... 3,050,000 9.0%
Alejandro Perez Elizondo.................................. -- *
Leigh J. Abramson(1)(3)................................... 13,811,298 40.7%
Pamela D.A. Reeve(14)..................................... 8,333 *
All directors and executive officers as a group(13)......... 22,581,798 64.8%
</TABLE>
6
<PAGE> 10
- ---------------
* Denotes less than 1%.
(1) Each of these entities is an investment partnership for which Frank V.
Sica, a Director of the Company, is a director of the entity controlling
such partnership. Each of these entities (other than MSVCF) is also an
investment partnership for which Leigh J. Abramson is an officer of the
entity controlling such partnership. Frank V. Sica and Leigh S. Abramson
each disclaim beneficial ownership of such shares. The general partner of
MSLEF II and the managing general partners of the respective general
partners of MSCP III and each of the investment partnerships referred to in
footnotes (2) and (3) below are each wholly-owned subsidiaries of Morgan
Stanley Group, Inc. ("MS Group").
(2) This entity is an investment partnership for which Frank V. Sica and Guy L.
de Chazal, Directors of the Company, are directors of the entity
controlling such partnership and, in the case of Mr. de Chazal, a general
partner of the general partner of such partnership. Frank V. Sica and Guy
L. de Chazal each disclaim beneficial ownership of such shares.
(3) Includes 372,662 shares owned by MSVCF II, 172,569 shares owned by Morgan
Stanley Capital Investors, L.P. ("MSCI"), 107,123 shares owned by Morgan
Stanley Venture Investors, L.P. ("MSVI"), 100,826 shares owned by Morgan
Stanley Venture Capital Fund II, C.V. ("MSVC II") and 89,539 shares owned
by MSCP III 892 Investors, L.P. ("MSCP 892"). Each of MSCI and MSCP 892 is
an investment partnership for which the relationships described in footnote
(1) above are applicable and Frank V. Sica and Leigh J. Abramson each
disclaim beneficial ownership of shares held by such entities. Each of
MSVCF II, MSVI and MSVC II is an investment partnership for which the
relationships described in footnote (2) above are applicable and Frank V.
Sica and Guy L. de Chazal each disclaim beneficial ownership of shares held
by such entities.
(4) Mellon Bank, N.A. ("Mellon"), acts as the trustee for First Plaza Group
Trust ("First Plaza"), a trust under and for the benefit of certain
employee benefit plans of General Motors Corporation ("GM") and its
subsidiaries. These shares may be deemed to be owned beneficially by
General Motors Investment Management Corporation ("GMIMCo"), a wholly-owned
subsidiary of GM. GMIMCo's principal business is providing investment
advice and investment management services with respect to the assets of
certain employee benefit plans of GM and its subsidiaries and with respect
to the assets of certain direct and indirect subsidiaries of GM and
associated entities. GMIMCo's business address is 767 Fifth Avenue, New
York, New York. GMIMCo is serving as First Plaza's investment manager with
respect to these shares and in that capacity it has the sole power to
direct the trustee as to the voting and disposition of these shares.
Because of Mellon's limited role, beneficial ownership of the shares by
Mellon is disclaimed.
(5) Each of these entities is an investment partnership for which Arthur
Patterson, a director of the Company, is a general partner.
(6) Includes 328,000 shares of Common Stock issued pursuant to the Stock Option
Plan and the Company's Stock Issuance Plan (as defined herein). Includes
218,335 stock options which are exercisable within the 60-day period
commencing April 1, 1997 pursuant to the Stock Option Plan.
(7) Includes 125,000 shares of Common Stock issued pursuant to the Stock Option
Plan and Stock Issuance Plan.
(8) Includes 62,299 stock options which are exercisable within the 60-day
period commencing April 1, 1997 pursuant to the Stock Option Plan.
(9) Includes 47,750 stock options which are exercisable within the 60-day
period commencing April 1, 1997 pursuant to the Stock Option Plan.
(10) Includes 77,498 stock options which are exercisable within the 60-day
period commencing April 1, 1997 pursuant to the Stock Option Plan.
(11) Includes 48,266 stock options which are exercisable within the 60-day
period commencing April 1, 1997 pursuant to the Stock Option Plan.
(12) Includes shares of Common Stock held by the entities described in Note 5 in
which Arthur Patterson, a Director of the Company, may be deemed to have
beneficial ownership. Mr. Patterson disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest therein.
(13) Includes 880,961 stock options which are exercisable within the 60-day
period commencing April 1, 1997.
(14) Includes 8,333 stock options which are exercisable within the 60-day period
commencing April 1, 1997 pursuant to the 1996 Nonqualified Stock Option
Plan for Non-Employee Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Related Party Transactions
The Company was organized in 1989 by Roger D. Linquist, MSVCF, Accel
Telecom L.P., Accel Partners L.P. and Frances W. Hopkins. Through the
acquisition of preferred stock in 1991 and 1993, and the subsequent conversion
of such preferred stock into voting Common Stock (together with any shares of
non-voting common stock, "Capital Stock"), MSLEF II became the owner of a
majority of the voting power in the Company. The general partner of MSLEF II and
the managing general partner of the general partner of MSVCF are both
wholly-owned subsidiaries of MS Group. Three of the eight Directors of the
Company are employees of MS & Co. MS & Co. acted as placement agent for the
offering of the 12 1/4% Senior Discount Notes due 2003 issued by PageMart, Inc.
and the offering of the 15% Senior Discount Notes due 2005 issued
7
<PAGE> 11
by the Company and received compensation from the Company in the amount of $2.6
million and $3.8 million, respectively, for acting in such capacity. In
addition, MS & Co. acted as an underwriter of the Company's initial public
offering and received $2.0 million in compensation in the form of an
underwriter's discount.
In two transactions consummated in March and May of 1993, the Company
issued a total of 5,277,611 shares of the Company's Series C Preferred Stock,
having an aggregate purchase price of $17,205,011, of which 5,214,724 shares
were issued to MSLEF II. During the fiscal quarter ended September 30, 1994, the
Company issued an aggregate of 11,242,857 shares of Capital Stock ("the 1994
Stock Offerings") at a purchase price of $7.00 per share. The aggregate net
proceeds (after expenses) of the 1994 Stock Offerings were approximately $76.9
million. Of the shares issued in the 1994 Stock Offerings, 5,000,000 shares of
Capital Stock were issued to MSCP III, MSCI, MSVCF II, MSVC II, and MSVI,
2,857,143 shares were issued to First Plaza and 1,242,857 shares to certain
other institutional investors. The remaining 2,142,857 shares of Capital Stock
issued in the 1994 Stock Offerings were acquired by an affiliate of Pulsar
pursuant to a private placement.
On May 11, 1995, the Company completed the issuance of 3,598,429 shares of
Common Stock ("the 1995 Private Stock Offering") at a purchase price of $7.00
per share. The net proceeds (after expenses) of the 1995 Private Stock Offering
were approximately $24.5 million. Of the shares issued in the 1995 Private Stock
Offering, 2,277,286 were purchased by the MS Merchant Banking Funds (as defined
herein), other than MSLEF II, and 357,143 shares were purchased by First Plaza.
The remaining 964,000 shares of Common Stock were purchased by other
institutional investors and the following officers of the Company: John D.
Beletic (3,000 shares), Danial W. Hay (1,000 shares), G. Clay Myers (5,000
shares), Todd A. Bergwall (1,000 shares), Lawrence H. Wecsler (1,000 shares),
Paul L. Turner (1,000 shares), Kenneth L. Hilton (18,000 shares) and Douglas H.
Kramp (15,000 shares).
In October 1995, MSLEF II, MSCP III, MSCI, MSVCF, MSVCF II, MSVC II, MSCP
892, and MSVI (collectively, the "Morgan Stanley Shareholders") exchanged a
portion of Common Stock of the Company for Class B Common Stock in a
share-for-share exchange without payment of any additional consideration.
As of December 31, 1996, John D. Beletic, President of the Company, was
indebted to the Company in the amount of $243,800 under three promissory notes.
The first promissory note (the "First Note") was issued in January 1994 for
$97,800 in connection with a stock option exercise by Mr. Beletic and bears
interest at the rate of 3.55% per annum. Interest on the outstanding balance is
due and payable annually beginning on January 28, 1995. The outstanding
principal balance on the First Note is due and payable on January 28, 1999. The
second promissory note (the "Second Note") was issued in November 1994 and bears
interest at the rate of 7% per annum. Under the terms of the Second Note, Mr.
Beletic may receive loans in various amounts, the total of which may not exceed
$200,000. At December 31, 1996, $125,000 was outstanding under the Second Note.
The third promissory note (the "Third Note") was issued in May 1995 for $21,000
in connection with the purchase of Common Stock by Mr. Beletic and bears
interest at the rate of 6.9% per annum. Interest on the outstanding principal is
due and payable annually beginning on May 11, 1996. The outstanding principal
balance on the Third Note is due and payable on May 11, 1999. The First Note,
the Second Note and the Third Note are all secured by the Common Stock owned by
Mr. Beletic.
Election of Directors
Pursuant to the Stockholders Agreement among certain Stockholders dated as
of September 19, 1995, as amended (the "Stockholders Agreement"), the Morgan
Stanley Shareholders have the right to designate and have elected one-half of
the members of the Board for so long as the total number of shares of Capital
Stock of the Company owned by the Morgan Stanley Shareholders constitutes at
least 50% of the outstanding Capital Stock of the Company. If such ownership
falls below 50%, the number of directors that the Morgan Stanley Shareholders
will have the right to designate and have elected will be reduced to the number
of directors which constitutes a percentage representation on the Board equal to
the Morgan Stanley Shareholders' aggregate percentage ownership of the
outstanding Capital Stock of the Company. The rights of each of
8
<PAGE> 12
MSLEF II, MSCP III, MSVCF and MSVCF II to designate and have elected one member
of the Board of Directors terminates once the total number of shares of Capital
Stock of the Company owned by such investor falls below 7.5%. However, each such
stockholder will continue to have such rights if its ownership of Capital Stock
exceeds 2% and such stockholder has determined that the continued possession of
such rights is necessary or desirable in order for such stockholder to qualify
as a "venture capital operating company" within the meaning of Department of
Labor Regulation Section 2510.3-101. MSVCF has made such a determination and
continues, therefore, to have the right to designate and have elected one
director.
Accel Telecom L.P., Accel III, L.P. and Accel Investors 89, L.P.
(collectively, "Accel") also has the right to designate one director for
election to the Board of Directors so long as Accel owns at least 7.5% of the
outstanding Capital Stock of the Company. So long as Pulsar owns at least 5% of
the outstanding Capital Stock of the Company (or until the expiration of the
Pulsar Exclusivity Period, as defined in the Stockholders Agreement), it will
have the right to designate one member of the Board of Directors.
So long as J.P. Morgan Capital Corporation owns no less than 4% of the
Capital Stock of the Company, the Company will permit a representative of such
holder to attend as an observer all meetings of the Board and all committees
thereof. Such representative is entitled to receive all written materials and
other information given to directors in connection with such meetings.
So long as the Morgan Stanley Shareholders hold securities representing at
least 10% of the outstanding Capital Stock, the Company is required to maintain
compensation and audit committees of its Board, each consisting of up to four
directors. Accel and those members of the Board who are not designated by the
Morgan Stanley Shareholders are each entitled to designate one director on each
such committee and the Morgan Stanley Shareholders are entitled to designate up
to two directors on each such committee.
Registration Rights
The Stockholders Agreement provides that the parties thereto (collectively,
the "Holders"), collectively have the right to "demand" an unlimited number of
registrations. Pursuant to these "demand" rights, Holders of Capital Stock (the
"Registrable Securities") may request in writing that the Company file a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the registration of a number of shares equal to at
least three million shares of Capital Stock or a lesser number if such number
represents a majority of the Registrable Securities then outstanding. The
Company is obligated within ten days of the receipt thereof to give written
notice of such request to all Holders and to use its best efforts to effect as
soon as practicable the registration under the Securities Act of all Registrable
Securities that the Holders request to be registered within 20 days of such
notice by the Company. Unless the Holders of a majority of the Registrable
Securities to be registered shall consent in writing, no other party (including
the Company) will be permitted to offer securities under such demand
registration. Pulsar may also request that the Company file a registration under
the Securities Act covering the registration of all of the Registrable
Securities Pulsar owns. Pulsar may make no more than two such requests. The
Company is not obligated to effect more than one demand registration in any
six-month period.
In the event the managing underwriter advises the Holders that the size of
the offering is such that the success of the offering would be materially and
adversely affected by inclusion of all Registrable Securities requested to be
included, then the number of shares of Registrable Securities to be included in
the underwriting will be reduced on a pro rata basis, provided that the Company
will first reduce entirely all securities other than Registrable Securities to
be included in such underwriting.
The Stockholders Agreement also provides that, if the Company proposes to
register any of its stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash, the
Company shall, at such time, promptly (but in no event less than 30 days before
the filing date) give each Holder written notice of such registration, and such
notice shall offer the Holders the opportunity to register such number of shares
of Registrable Securities as such Holder may request. Subject to certain
restrictions, upon the written request of each Holder given within 20 days after
delivery of such notice by the Company, the Company shall cause to be registered
under the Securities Act all of the Registrable Securities that each such Holder
has requested to be registered.
9
<PAGE> 13
If the underwriters determine that the total amount of securities requested
to be included in any such offering would materially and adversely affect the
success of such offering, the Company will be required to include in the
offering, in addition to any shares to be registered by the Company, only that
number of such Registrable Securities that the underwriters determine in their
sole discretion would not affect the success of such offering.
Preemptive Rights
Pursuant to the Stockholders Agreement, the Company has agreed that Holders
of at least 1,000,000 shares of Capital Stock will have preemptive rights with
respect to any new offering of Capital Stock by the Company, with certain
exceptions.
Restrictions on Transfer
Under the Stockholders Agreement, if MSLEF II, MSCI, MSCP 892 and MSCP III
(collectively, the "MS Merchant Banking Funds") propose to transfer (other than
in a sale to the public) shares which, taken together with any prior transfers
by the MS Merchant Banking Funds, represent more than 10% of the shares owned by
them on the date of the Stockholders Agreement, the Holders have a right to
require the transferee to purchase their shares on a pro rata basis. The Holders
who own at least 67% of the voting Common Stock (the "Compelling Holders") also
have the right to require all Holders to sell their shares to any third party
that buys all of the shares owned by the Compelling Holders.
The Stockholders Agreement further provides for certain restrictions on the
amount of Capital Stock which may be transferred by the parties to the
Stockholders Agreement for a period of one year following any public offering of
the Company's Capital Stock, based on, with certain exceptions, the percentage
of shares of Capital Stock sold in any such offering by certain institutional
investors party to the Stockholders Agreement. These restrictions on transfer,
and the right of the Compelling Holders described above, will terminate, subject
to certain extensions, approximately one year following the consummation of an
initial public offering. The Stockholders Agreement also provides for certain
restrictions on the transfer of shares of Capital Stock by holders thereof
subject to Regulation Y of the Board of Governors of the Federal Reserve System.
Restrictions on Amendment of Certificate of Incorporation
The Company will not amend the Company's Amended and Restated Certificate
of Incorporation or By-laws to eliminate the right of stockholders of the
Company to take action upon written consent of the holders of a majority of the
outstanding shares of Common Stock without a meeting, without prior notice and
without a vote as provided in the Company's Bylaws, so long as the MS Merchant
Banking Funds hold at least 7.5% of the Company's Capital Stock.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Based solely on a review of Forms 3, 4 and 5 furnished to the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")
in respect of its most recent fiscal year, the Company believes that Mr. Edward
M. Leonard, a party to the Stockholders Agreement who owns 7,000 shares of the
Company's stock, did not file a required Form 3 and that MS & Co. inadvertently
filed a Form 4 late in respect of one transaction in fiscal 1996.
10
<PAGE> 14
EXECUTIVE COMPENSATION
The following table sets forth compensation information for the Chief
Executive Officer of the Company and the Named Executive Officers, for services
rendered in the fiscal years ending December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION(1) SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(2) COMPENSATION(3)
--------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John D. Beletic.................. 1996 $250,000 $ 56,814 100,000 $12,414
Chairman, President and 1995 200,000 150,000 100,000 10,755
Chief Executive Officer 1994 200,000 187,500 100,000 11,220
Kenneth L. Hilton................ 1996 150,000 26,520 10,000 11,116
Executive Vice President, 1995 150,000 46,500 40,000 7,998
National Sales Office Business
Unit 1994 27,885 12,250 125,000 711
Douglas S. Glen.................. 1996 118,000 33,337 25,000 7,933
Vice President, 1995 110,846 29,150 10,000 7,713
Strategic Alliance Business Unit 1994 105,000 34,808 35,000 8,145
Sandra D. Neal................... 1996 130,000 19,845 15,000 6,662
Executive Vice President, 1995 115,000 39,675 50,000 7,569
Administration 1994 104,269 33,538 25,000 8,121
Douglas H. Kramp................. 1996 120,000 26,076 25,000 9,419
Vice President, 1995 95,000 38,500 50,000 7,606
National Retail Business Unit 1994 90,000 25,313 20,000 8,007
</TABLE>
- ---------------
(1) The amount of cash compensation does not include the value of personal
benefits or securities, property or other non-cash compensation paid or
distributed other than pursuant to a plan, which, with respect to any Named
Executive Officer, was less than the lesser of $50,000 and 10% of the cash
compensation received by such Officer.
(2) Denominated in shares of Common Stock.
(3) All other Compensation for 1996 is made up of the following:
<TABLE>
<CAPTION>
MR. BELETIC MR. HILTON MR. GLEN MS. NEAL MR. KRAMP
----------- ---------- -------- -------- ---------
1996
- -------------------------------------------
<S> <C> <C> <C> <C> <C>
Below prime rate loan...................... 3,600 4,100 -- -- 1,500
Life and accident insurance................ 627 353 353 353 353
Long-term disability insurance............. 1,435 852 828 890 814
Health insurance........................... 6,752 5,811 6,752 5,419 6,752
------ ------ ----- ----- -----
Total other compensation......... 12,414 11,116 7,933 6,662 9,419
====== ====== ===== ===== =====
</TABLE>
11
<PAGE> 15
STOCK OPTIONS
The following table sets forth grants of stock options, during fiscal year
1996, to the Chief Executive Officer and each Named Executive Officer.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENTAGE POTENTIAL REALIZATION VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------------
GRANTED(1) FISCAL 1996 SHARE DATE 5% 10%
---------- ------------ --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
John D. Beletic........... 100,000 8.88% $6.625 11/15/2006 $416,639 $1,055,852
Kenneth L. Hilton......... 10,000 0.89% 6.625 11/15/2006 41,663 105,584
Douglas S. Glen........... 25,000 2.22% 6.625 11/15/2006 104,159 263,963
Sandra D. Neal............ 15,000 1.33% 6.625 11/15/2006 62,495 158,377
Douglas H. Kramp.......... 25,000 2.22% 6.625 11/15/2006 104,159 263,963
</TABLE>
- ---------------
(1) Denominated in shares of Common Stock. Each option is immediately
exercisable; however, the underlying option shares are unvested and remain
subject to repurchase by the Company at the option price paid per share. The
optionee acquires a vested interest in, and the Company's repurchase right
accordingly lapses with respect to, (i) 20% of the option shares one year
after the date of grant and (ii) the balance of the option shares in equal
successive monthly installments over each of the next forty-eight (48)
months of service thereafter.
(2) The assigned rates of growth were selected by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict or
forecast future stock prices.
The following table sets forth stock options exercised during fiscal year
1996 and the fiscal year-end value of unexercised options for the Chief
Executive Officer and each Named Executive Officer.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1996(1) AT DECEMBER 31, 1996(2)
ACQUIRED VALUE ------------------------------ ------------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(3) EXERCISABLE UNEXERCISABLE(3)
----------- -------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John D. Beletic........... -- $ -- 185,001 284,999 $392,587 $179,461
Kenneth L. Hilton......... -- -- 48,548 112,167 -- --
Douglas S. Glen........... -- -- 42,582 56,418 123,469 17,034
Sandra D. Neal............ -- -- 64,998 80,002 189,077 61,296
Douglas S. Kramp.......... -- -- 39,930 82,003 66,186 40,692
</TABLE>
- ---------------
(1) Denominated in shares of Common Stock.
(2) The fair market value at December 31, 1996 was $6.625 per share.
(3) Each of these options is immediately exercisable; however, the underlying
option shares are unvested and remain subject to repurchase by the Company
as noted in Note 1 to the "Option Grants in Last Fiscal Year" table.
12
<PAGE> 16
DIRECTORS' COMPENSATION
Directors of the Company currently receive no compensation for their
services in such capacity. However, all outside directors participate in the
Company's 1996 Nonqualified Stock Option Plan for Non-Employee Directors,
pursuant to which each such director is granted an option covering 25,000 shares
of Common Stock upon being elected to the Board, with an exercise price equal to
the fair market value of such stock on the date of grant. On the third
anniversary of the grant, each eligible director still serving on the Board will
be granted another option covering 25,000 shares at the fair market value on the
date of such grant. Each option vests in equal quarterly installments over a
three year period and has a maximum term of 10 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company consists of Frank V. Sica, Guy L.
de Chazal, and Arthur Patterson. No executive officer of the Company serves as a
member of the Compensation Committee of the Company, or on the compensation
committee of another corporation, an executive officer of which serves as a
Director of the Company or on the Company's Compensation Committee, and no
executive officer of the Company serves as a director of another corporation, an
executive officer of which serves as a member of the Company's Compensation
Committee.
13
<PAGE> 17
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee
The Compensation Committee of the Board, which consists of three
non-employee directors, is responsible for overseeing all stock option plans,
setting the compensation for the Chief Executive Officer ("CEO"), reviewing and
approving the Company's compensation policies and providing guidelines to the
CEO for determining the annual compensation of other officers.
Compensation Philosophy
The goals of the Compensation Committee with respect to executive
compensation are to: (1) establish a competitive compensation program to
attract, retain and motivate employees in those positions that most directly
affect the Company's overall performance and (2) encourage coordinated and
sustained effort toward enhancing the Company's performance and maximizing the
Company's value to its shareholders. This focus is maintained through a program
of competitive base salaries, a bonus program based on successfully achieving
predetermined financial performance goals and a heavy emphasis on executive
equity ownership.
Base Salaries
The Compensation Committee reviews and approves salaries for the CEO and
the other executive officers on an annual basis. The Compensation Committee also
provides guidelines for the CEO to set the base salary of other officers. In
making recommendations to the CEO, the Compensation Committee may consider
information derived from reports of public companies in the paging industry and
telecommunications industry and/or national surveys of compensation data.
Ultimately, however, the salaries are based on a subjective analysis of each
officer's performance during the prior year, as well as an evaluation of the
individual executive's expected future performance. In ratifying salary
decisions, the Compensation Committee exercises its discretion and judgment with
no specific formula being applied to determine salary levels.
Annual Incentive Bonus
Each executive officer has an opportunity to earn an annual bonus based
upon Company performance. Annual incentive bonus opportunities for executive
officers are based on the Compensation Committee's belief that a significant
portion of the annual compensation of each executive officer should be
contingent upon Company performance. To carry out this philosophy, the Company
implemented the 1996 Management Annual Variable Compensation Plan (the
"Incentive Plan"). The Incentive Plan is a pay-for-performance plan intended to
motivate and award executive officers (as well as other officers and managers)
by directly linking cash bonuses to specific aggressive Company performance
targets. Prior to a calendar year, the Compensation Committee sets the incentive
bonus target at a stated percentage of an executive officer's base salary. The
bonus amounts earned are determined as of the end of each calendar year. The
percentage bonus is calculated by determining the level of the Company's
accomplishment of certain performance criteria established in order to align
participants' perspectives with that of shareholders and enhance shareholder
value.
The Compensation Committee has the discretion to modify the bonus amounts
paid to all participants in the Incentive Plan regardless of the performance
level achieved if certain extraordinary unforeseen events occur during the year.
The Compensation Committee has exercised its discretion to modify the bonus
amounts only once in prior years and did not exercise its discretion to modify
the bonus amounts under the Incentive Plan in 1996.
Certain of the executive officers of the Company (other than the CEO), as
well as certain managers and directors, also have the opportunity to participate
in the Company's Management by Objective ("MBO") bonus program. Participants in
the MBO program are provided a cash bonus based upon the percentage of
definitive performance objectives completed during each calendar quarter. The
participant's potential MBO bonus is a percentage of such participant's annual
base salary, paid quarterly based upon the participant's completion of his/her
objectives. For 1996, MBO bonuses ranged from 5% to 10% of executive officers'
annual
14
<PAGE> 18
base salaries. The MBO bonus program is intended to provide officers with an
incentive to focus on short-term performance goals that enhance the operating
efficiency of the Company and enhance shareholder value.
Stock Options/Equity Ownership
The Compensation Committee believes that the grant of stock options will
motivate executives to create long-term growth in shareholder value. Pursuant to
the Company's Fourth Amended and Restated 1991 Stock Option Plan (the "Stock
Option Plan"), options are granted at the discretion of the Compensation
Committee, usually annually. The number of option shares covered by such grants
are determined based upon assessment of the individual's performance. The
Compensation Committee considers the recommendation of and relies on information
provided by the CEO in determining the number of option shares to be granted to
the non-CEO executive officers. The Compensation Committee believes that the
periodic grant of time-vested stock options provides an incentive that focuses
the executives' attention on managing the business as owners of an equity stake
in the Company. It further motivates executives to maximize long-term growth and
profitability because value is created in the options only as the Company's
stock price increases after the option is granted.
CEO Compensation
The Compensation Committee believes that, as with the other executive
officers, the CEO's compensation should, in large part, be tied directly to the
performance of the Company and that the CEO should share in the same risks and
rewards as do the Company's shareholders. Accordingly, the compensation of the
CEO is comprised of base salary, annual incentive bonus pursuant to the
Incentive Plan and long-term incentives through stock options. In setting Mr.
Beletic's compensation, the Compensation Committee analyzes subjective measures
of performance during the prior fiscal year as well as expected future
performance. Mr. Beletic's projected total compensation, based upon target
levels of Company performance was, the Compensation Committee believes,
comparable to the compensation paid to other CEOs of similar companies in the
paging industry.
Deductibility of Executive Compensation
The Omnibus Budget Reconciliation Act of 1993 provides that
non-performance-based compensation paid to any Named Executive Officer in excess
of one million dollars will not be deductible for federal income tax purposes.
The Compensation Committee intends to grant deductible awards subject to the
needs of the Company.
Respectively submitted,
Compensation Committee:
Frank V. Sica, Chairman
Guy L. de Chazal
Arthur Patterson
15
<PAGE> 19
PERFORMANCE GRAPH
The rules of the Securities and Exchange Commission ("SEC") require each
public company to include a performance graph comparing the cumulative total
shareholder return on such company's common stock for the five preceding fiscal
years, or such shorter period as the registrant's class of securities has been
registered with the SEC, with the cumulative total returns of a broad equity
market index (such as Nasdaq National Market -- U.S. Companies Index) and a peer
group or similar index. The Company's Common Stock began trading on the Nasdaq
National Market System under the symbol PMWI on June 14, 1996. Accordingly, the
performance graph included in this Proxy Statement shows the period from June
14, 1996 through December 31, 1996.
The following chart graphs the performance of the cumulative total return
to shareholders (stock price appreciation plus dividends) between June 14, 1996
and December 31, 1996 in comparison to returns of the Nasdaq National
Market -- U.S. Companies Price Index and a peer group index. The peer group
index was constructed specifically for the Company and includes the following
wireless messaging companies: American Paging, Inc., Arch Communications Group,
Inc., Metrocall, Inc., MobileMedia Communications, Inc., Mobile
Telecommunications Technologies Corp., Paging Network, Inc. and ProNet, Inc. In
calculating the peer group index, the returns of each company in the group have
been weighted according to such company's market capitalization at the beginning
of the period.
COMPARATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
NASDAQ
NATIONAL
MARKET - U.S.
MEASUREMENT PERIOD PAGEMART COMPANIES
(FISCAL YEAR COVERED) WIRELESS, INC. PEER GOUP INDEX
<S> <C> <C> <C>
JUN. 14, 1996 100 100 100
SEP. 30, 1996 83 75 101
DEC. 31, 1996 57 51 106
</TABLE>
* Cumulative total return assumes reinvestment of dividends. Assumes $100
invested on June 14, 1996 in the Company's Common Stock, Peer Group and Nasdaq
National Market -- U.S. Companies Index.
16
<PAGE> 20
PROPOSAL TWO:
PROPOSAL TO APPROVE AMENDMENT OF THE STOCK OPTION PLAN
The Board of Directors and stockholders of the Company previously approved
the Stock Option Plan. On April 15, 1997, the Board unanimously adopted, subject
to stockholder approval, an amendment to the Stock Option Plan to increase the
maximum number of authorized shares of the Company's Common Stock which may be
issued under the Stock Option Plan, to comply with changes in applicable law and
to restrict participation in the plan to eligible employees. The full text of
the Fifth Amended and Restated 1991 Stock Option Plan is attached to this Proxy
Statement as Exhibit A.
The Board of Directors is recommending that the number of shares available
for issuance under the Stock Option Plan be increased by 2,950,000 shares of
Common Stock to a total of 7,500,000 shares of Common Stock to permit the
Company to continue to use stock options as a means to attract, retain and
motivate qualified employees and provide them with the ability to acquire an
equity interest in the Company. As of March 31, 1997, options to acquire
3,259,059 shares were outstanding under the Stock Option Plan.
No determination has been made as to who will be granted options to acquire
the additional 2,950,000 shares of Common Stock to be made available under the
Stock Option Plan, and such shares will be reserved for future grants.
STOCK OPTION PLAN
The Stock Option Plan authorizes grants to eligible participants of options
to purchase shares of Common Stock. Eligible participants include key employees
(including officers and Directors) of the Company, its parent or subsidiaries.
Options granted under the Stock Option Plan may be either non-qualified options
("NSOs") or options qualifying as incentive stock options ("ISOs") under Section
422 of the Internal Revenue Code of 1986, as amended, (the "Code"). The
following summary of the material terms of the Stock Option Plan does not
purport to be complete, and is qualified in its entirety by the terms of the
Stock Option Plan, as amended, a copy of which is attached hereto as Exhibit A.
PURPOSE
The purpose of the Stock Option Plan is to provide eligible individuals who
are responsible for the management, growth and financial success of the Company
with the opportunity to acquire a proprietary interest in the company and to
attract and retain competent management.
ADMINISTRATION
The Stock Option Plan is administered by the Compensation Committee of the
Board, which has full power and authority, subject to the terms of the Stock
Option Plan, to establish rules relating to, and to construe and interpret, the
Plan.
NUMBER OF AUTHORIZED SHARES
Stock issuable under the Stock Option Plan includes shares of authorized
but unissued or reacquired Common Stock. The number of shares for which options
may be granted under the Stock Option Plan (net of any shares issued under the
PageMart Wireless, Inc. Third Amended and Restated Stock Issuance Plan) may not
exceed 7,500,000 shares. Shares underlying any options that are not exercised
prior to expiration or termination or are canceled are available for subsequent
option grants under the Stock Option Plan.
OPTION PRICES
The option exercise price per share will be set by the Compensation
Committee, but in no event may the option price per share be less than 85% (with
respect to NSOs) or 100% (with respect to ISOs) of the fair market value of a
share of Common Stock on the grant date. If the individual to whom an ISO is
granted is at the time the holder of more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent or subsidiaries (a
"Significant Stockholder"), then the option price per share may not be less than
110% of the fair market value of the Common Stock on the grant date.
17
<PAGE> 21
The exercise price may be paid in cash, shares of Common Stock or, if
approved by the Compensation Committee, through a cashless exercise program or
in installments or by borrowing the necessary funds from the Company.
VESTING; SURRENDER
Shares of Common Stock that are issued upon exercise of options granted
under the Stock Option Plan may be unvested, and subject to certain repurchase
rights of the Company. If a participant ceases to perform services for the
Company while holding unvested shares, the Company has the right to repurchase,
at the option price paid per share, all or (at the discretion of the Company and
with the written consent of the participant) less than all of those unvested
shares.
In the event of a "corporate transaction", as defined in the Stock Option
Plan, each option outstanding under the Stock Option Plan will automatically
become fully exercisable immediately prior to the effective date of such
corporate reorganization. Upon a "change in control", as defined in the Stock
Option Plan, option holders who are subject to Section 16 of the Exchange Act
have the right to exchange options held more than six months for cash in an
amount equal to the difference between the exercise price and the "acquisition
price" as defined in the Stock Option Plan.
EXPIRATION OF OPTIONS
Options are exercisable over such period as may be determined by the
Compensation Committee, but no option may remain exercisable more than ten years
from the grant date, and no ISO granted to a Significant Stockholder may remain
exercisable more than five years from the grant date.
TERMINATION OF EMPLOYMENT
If a participant ceases to perform services for the Company for any reason
other than for cause, as defined in the Stock Option Plan, while holding one or
more outstanding options under the Stock Option Plan, then each such option will
remain exercisable for the period of time specified by the Compensation
Committee in the option agreement or as otherwise extended by the Compensation
Committee, but in no event beyond the expiration date of such option. In the
event a participant is terminated for cause, all outstanding options of such
participant automatically terminate on the participant's termination date.
NONTRANSFERABILITY
NSOs and ISOs are not transferable except by will or the laws of descent
and distribution.
TERM OF STOCK OPTION PLAN
Unless earlier terminated by the Board, the Stock Option Plan will
terminate on the earlier of August 19, 2001 or the issuance or cancellation of
all shares of Common Stock issuable thereunder.
AMENDMENT AND TERMINATION
The Board may suspend, amend, modify or terminate the Stock Option Plan;
provided, however, that the Company's stockholders shall be required to approve
any amendment that would: (i) materially increase the aggregate number of shares
of Common Stock issuable under the Stock Option Plan; (ii) change the minimum
option price; (iii) increase the maximum term of options; (iv) remove the
administration of the Stock Option Plan from the Compensation Committee; (v)
materially increase the benefits accruing to participants under the Stock Option
Plan; or (vi) materially modify the requirements for eligibility to participate
in the Stock Option Plan.
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<PAGE> 22
STOCK OPTION PLAN
OPTIONS GRANTED IN FISCAL 1996
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS(1)
----------------- ----------
<S> <C>
John D. Beletic, Chairman, President and
Chief Executive Officer............... 100,000
Kenneth L. Hilton, Executive Vice
President, National Sales Office...... 10,000
Douglas S. Glen, Vice President,
Strategic Alliance Business Unit...... 25,000
Sandra D. Neal, Executive Vice
President, Administration............. 15,000
Douglas H. Kramp, Vice President,
National Retail Business Unit......... 25,000
All Executive Officers as a Group....... 475,000
All Current Directors who are not
Executive Officers as a Group......... --
All Employees other than Executive
Officers as a Group................... 650,900
---------
Total Options Granted in
Fiscal 1996................... 1,125,900
=========
</TABLE>
- ---------------
(1) Denominated in shares of Common Stock. As of March 31, 1997, the fair market
value of a share of Common Stock was $6.00.
FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE STOCK OPTION PLAN
There will be no federal income tax consequences to the employee or the
Company upon the grant of either an ISO or an NSO under the Stock Option Plan.
Upon exercise of an NSO, an employee will recognize ordinary income in an amount
equal to (i) the fair market value, on the date of exercise, of the acquired
shares of Common Stock; less (ii) the exercise price of the NSO. Subject to
Section 162(m) of the Code and the employee including such compensation in
income or the Company satisfying applicable reporting requirements, the Company
will be entitled to a tax deduction in the same amount.
If any profits associated with a sale of Common Stock acquired pursuant to
the exercise of an NSO under the Stock Option Plan could subject the optionee to
liability under Section 16(b) of the Exchange Act, there will be no concurrent
federal income tax consequences to either the optionee or the Company as a
result of the exercise of such NSO. The inclusion of such profits as income to
the optionee is generally deferred until the date on which the Section 16(b)
restrictions terminate. However, if the optionee makes a timely and proper 83(b)
election under Section 83(b) of the Code to be taxed at the time such Common
Stock is transferred to him, then the excess of the fair market value of the
shares of Common Stock on the exercise date over the exercise price will be
taxed as ordinary income. An 83(b) election must be made within thirty days of
the date of exercise of the NSO. In the absence of such an election, the excess
of the fair market value of the shares of Common Stock on the date the Section
16(b) restrictions expire over the exercise price will be considered
compensation taxable as ordinary income to the optionee. The Company will be
entitled to a tax deduction in an amount equal to the amount required to be
recognized as ordinary income by the optionee at the time the optionee is
subject to tax.
Upon the exercise of an ISO, an employee recognizes no immediate taxable
income. Income recognition is deferred until the employee sells the shares of
Common Stock. If the ISO is exercised no later than three months after the
termination of the employee's employment, and the employee does not dispose of
the shares acquired pursuant to the exercise of the ISO within two years from
the date the ISO was granted and within one year after the exercise of the ISO,
the gain on the sale will be treated as long-term capital gain. Certain of these
holding periods and employment requirements are liberalized in the event of an
employee's death or disability while employed by the Company. The Company is not
entitled to any tax deduction with respect to the grant or exercise of ISOs,
except that if the Common Stock is not held for the full term of the holding
period outlined above, the gain on the sale of such Common Stock, being the
lessor of: (i) the fair market value of the Common Stock on the date of exercise
minus the option price; or (ii) the amount realized on disposition minus the
exercise price, will be taxed to the employee as ordinary income and, subject to
Section 162(m) of the Code and the employee including such compensation in
income or the Company
19
<PAGE> 23
satisfying applicable reporting requirements, the Company will be entitled to a
deduction in the same amount. The excess of the fair market value of the Common
Stock acquired upon exercise of an ISO over the exercise price therefor
constitutes a tax preference item for purposes of computing the "alternative
minimum tax" under the Code.
REQUIRED VOTE
Approval of the amendment of the Stock Option Plan requires the affirmative
vote of a majority of the total voting power represented by the outstanding
shares of the Company's Common Stock present or represented at the Annual
Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF AMENDMENT OF THE
STOCK OPTION PLAN AS DESCRIBED HEREIN.
PROPOSAL THREE:
PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT AUDITORS OF THE COMPANY
The Board has appointed Arthur Andersen LLP, independent public
accountants, as the Auditors of the Company, to serve at the pleasure of the
Board for 1997. A member of that firm will be present at the Annual meeting with
the opportunity to make a statement and respond to appropriate questions by
shareholders.
The shareholders of the Company are asked to consider and act upon the
matter of ratifying the appointment of Arthur Andersen LLP.
REQUIRED VOTE
Approval of the independent auditors requires the affirmative vote of a
majority of the total voting power represented by outstanding shares of Common
Stock present or represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ARTHUR
ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposals of stockholders which are intended to be presented at the
next Annual Meeting of Stockholders, but which are not received by the Secretary
of the Company at the principal executive offices of the Company on or before
December 16, 1997, may be omitted by the Company from the Proxy Statement and
form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should come before the meeting, it is
the intention of each of the persons named in the proxy to vote in accordance
with his judgment on such matters.
20
<PAGE> 24
ANNUAL REPORTS
The Company's 1996 Annual Report to Shareholders, which contains financial
statements for the year ended December 31, 1996, accompanies this proxy
statement. The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1996, will be made available (without exhibits), free of charge, to
interested shareholders upon written request to the Secretary of the Company, at
6688 North Central Expressway, Suite 800, Dallas, Texas 75206.
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing the proxy form
and the form of material used in solicitation of proxies will be paid by the
Company. In addition to the use of the mails, solicitation may be made by
employees of the Company by telephone, mailgram, facsimile, telegraph, cable and
personal interview. The Company shall bear all expense for the solicitation of
proxies and has not retained a solicitation firm.
By Order of the Board of Directors
/s/ JOHN D. BELETIC
John D. Beletic
Chairman of the Board
21
<PAGE> 25
EXHIBIT A
PAGEMART WIRELESS, INC.
FIFTH AMENDED AND RESTATED 1991 STOCK OPTION PLAN
ARTICLE I
GENERAL PROVISIONS
1. PURPOSE
The purpose of the PageMart Wireless, Inc. Fifth Amended and Restated 1991
Stock Option Plan (the "Plan") is to strengthen PageMart Wireless, Inc., a
Delaware corporation (the "Corporation"), by providing eligible individuals who
are responsible for the management, growth and financial success of the
Corporation or who otherwise render valuable services to the Corporation with
the opportunity to acquire a proprietary interest, or increase their proprietary
interest, in the Corporation and thereby providing a means of attracting
competent personnel and encouraging them to remain in the service of the
Corporation.
2. ADMINISTRATION OF THIS PLAN
This Plan shall be administered by the Stock Option Committee of the Board
(the "Committee") which shall be comprised of two (2) or more non-employee
directors. The Committee shall have full power and authority (subject to the
provisions of this Plan) to establish such rules and regulations as it may deem
appropriate for the proper Plan administration and to construe the terms of and
make such determinations under, and issue such interpretations of, this Plan and
any outstanding option grants as it may deem necessary or advisable. Decisions
of the Committee shall be final and binding on all parties who have an interest
in this Plan or any outstanding option.
3. PERSONS ELIGIBLE TO RECEIVE OPTION GRANTS
(a) The persons eligible to receive option grants pursuant to this Plan
("Optionees") are limited to key employees (including officers and directors) of
the Corporation (or its Parent or Subsidiary (as such terms are hereinafter
defined) corporations) who render services which contribute to the success and
growth of the Corporation (or its Parent or Subsidiary corporations) or which
may reasonably be anticipated to contribute to the future success and growth of
the Corporation (or its Parent or Subsidiary corporations).
(b) The Committee shall have full authority to determine, with respect to
the option grants made under this Plan, which eligible individuals are to
receive option grants, the number of shares to be covered by each such grant,
the status of the granted option as either an Incentive Option or a
Non-Statutory Option (as such terms are hereinafter defined), the time or times
at which each granted option is to become exercisable and the maximum term for
which the option may remain outstanding.
4. STOCK SUBJECT TO THIS PLAN
(a) The stock issuable under this Plan shall be shares of the Corporation's
authorized but unissued or reacquired Class A convertible common stock, par
value $.0001 per share ("Common Stock"). The maximum number of shares which may
be issued over the term of this Plan shall not exceed 7,500,000 shares. However,
any shares of Common Stock issued under the Corporation's Third Amended and
Restated 1991 Stock Issuance Plan will reduce, on a share-for-share basis, the
number of shares issuable under this Plan. The total number of shares issuable
in the aggregate under this Plan and the Third Amended and Restated 1991 Stock
Issuance Plan shall be subject to adjustment from time to time in accordance
with the provisions of Section 4(c) of this Article I.
(b) Shares subject to (i) the portion of one or more outstanding options
which are not exercised prior to expiration or termination and (ii) outstanding
options cancelled in accordance with the cancellation-regrant provisions of
Section 5 of Article II will be available for subsequent option grants under
this Plan. The shares
A-1
<PAGE> 26
which shall not be available for subsequent option grants under this Plan
include (A) shares subject to an option surrendered under this Plan in
connection with a Change in Control (as such term is hereinafter defined) and
(B) shares issued pursuant to the exercise of an option (whether as vested or
unvested shares) which are repurchased by the Corporation.
(c) In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of shares of Common Stock or other
securities), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of securities of the Corporation, or other similar corporate transaction or
event affects the benefits or potential benefits intended to be made available
under this Plan such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Plan, then the
Committee may, in such manner as it may deem equitable, adjust any or all of (i)
the number of shares of Common Stock subject to this Plan and which thereafter
may be made the subject of options under this Plan, (ii) the number of shares of
Common Stock subject to outstanding options, (iii) the nature of the
consideration (including, without limitation, other securities of the
Corporation, securities of another entity and/or other property) to be received
upon exercise of an option and/or (iv) the grant, purchase or exercise price
with respect to any option, or, if deemed appropriate, make provisions for a
cash payment to the holder of an outstanding option; provided, however, in each
case, that with respect to Incentive Options no such adjustment shall be
authorized to the extent that such adjustment would cause this Plan to violate
Section 422(b)(1) or 424(a) of the Code (as such term is hereinafter defined) or
any successor provisions thereto; and provided further, however, that the number
of shares of Common Stock subject to any option payable or denominated in shares
of Common Stock shall always be a whole number. Notwithstanding the foregoing,
Non-Statutory Options shall be subject to only such adjustment as shall be
necessary to maintain the proportionate interest of the Optionee and preserve,
without exceeding, the value of such option.
(d) Common Stock issuable under this Plan may be subject to such
restrictions as may be determined by the Committee, including, without
limitation, restrictions on transfer, repurchase rights and other restrictions.
5. DEFINITIONS
The following definitional provisions shall be in effect for all purposes
under this Plan:
(a) Board means the board of directors of PageMart Wireless, Inc.
(b) Change in Control means the acquisition of fifty percent (50%) or
more of the Corporation's outstanding voting stock pursuant to a tender or
exchange offer made by a person or group of related persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by or is under common control with the Corporation) which the Board does
not recommend to the stockholders.
(c) Code means the Internal Revenue Code of 1986, as amended.
(d) Corporation means PageMart Wireless, Inc., a Delaware corporation.
(e) Corporate Transaction means one or more of the following
stockholder-approved transactions:
(i) a merger or consolidation in which the Corporation is not the
surviving entity, provided securities possessing fifty percent (50%) or
more of the total combined voting power of the Corporation's outstanding
voting securities are transferred to a person or persons different from
those who held such securities immediately prior to such transaction,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation other than in the
ordinary course of business, or
(iii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing fifty percent (50%) or more of
the total combined voting power of the Corporation's
A-2
<PAGE> 27
outstanding voting securities are transferred to person or persons
different from those who held such securities immediately prior to such
merger.
In no event shall any merger, consolidation or other reorganization
involving the Corporation be deemed to constitute a Corporate Transaction
if the primary purpose of such transaction is either to change the State in
which the Corporation is incorporated or to create a holding-company
structure whereby the Corporation's stockholders of record become the
stockholders of the holding company.
(f) Employee means an individual who is in the employ of the
Corporation or one or more Parent or Subsidiary corporations. An Optionee
shall be considered to be an Employee for so long as such individual
remains in the employ of the Corporation or one or more Parent or
Subsidiary corporations, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and
method of performance.
(g) Exercise Date shall be the date on which both (i) written notice
of the exercise of an outstanding option under this Plan and (ii) payment
of the option price are delivered to the Corporation.
(h) Fair Market Value of a share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded in the
over-the-counter market, the Fair Market Value shall be the mean between
the highest bid and the lowest asked prices (or, if such information is
available, the closing sales price) per share of Common Stock on the
date in question in the over-the-counter market, as such prices are
reported by the National Association of Securities Dealers through its
Nasdaq National Market System or any successor system. If there are no
reported bid and asked prices (or closing sales price) for the Common
Stock on the date in question, then the mean between the highest bid and
lowest asked prices (or closing sales price) on the last preceding date
for which such quotations exist shall be determinative of Fair Market
Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair Market Value
shall be the closing sales price per share of Common Stock on the date
in question on the national securities exchange determined by the
Committee to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such exchange
on the date in question, then the fair market value shall be the closing
sales price on the exchange on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is at the time neither listed nor
admitted to trading on any national securities exchange nor traded in
the over-the-counter market, or if the Committee determines that the
valuation provisions of subparagraphs (i) and (ii) above will not result
in a true and accurate valuation of the Common Stock, then the Fair
Market Value shall be determined by the Committee after taking into
account such factors as the Committee shall deem appropriate under the
circumstances.
(i) Incentive Option means an incentive stock option which satisfies
the requirements of Section 422 of the Code.
(j) Non-Statutory Option means an option that does not meet (whether
at the time of the grant of such option or subsequently) the statutory
requirements prescribed for an Incentive Option.
(k) Notice of Grant means written notification (in substantially the
form attached hereto as Exhibit B) of the grant of an option pursuant to
this Plan.
(l) Parent corporation means any corporation which, directly or
indirectly, owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock of the Corporation .
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<PAGE> 28
(m) Permanent Disability shall have the meaning set forth in Section
22(e)(3) of the Code, or any successor provision thereto.
(n) Plan means this Fifth Amended and Restated 1991 Stock Option Plan
of the Corporation.
(o) Service means the performance of services for the Corporation or
one or more Parent or Subsidiary corporations by an individual in the
capacity of an Employee or a non-employee member of the Board or the board
of directors of such Parent or Subsidiary corporations, unless a different
meaning is specified in the Stock Option Agreement. An Optionee shall be
deemed to remain in Service for so long as such individual renders services
to the Corporation or any Parent or Subsidiary corporation on a periodic
basis in the capacity of an Employee or a non-employee member of the Board
or the board of directors of such Parent or Subsidiary corporation.
(p) Stock Option Agreement means a stock option agreement, in
substantially the form attached hereto as Exhibit A and incorporated herein
by reference (the "Stock Option Agreement"), incorporating any repurchase
rights or first refusal rights retained by the Corporation with respect to
the Common Stock purchased under an option.
(q) Subsidiary corporation means any corporation of which the
Corporation, directly or indirectly, owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock of the corporation in
question.
(r) 10% Stockholder means the owner of stock (as determined under
Section 424(d) of the Code) possessing more than 10% of the total combined
voting power and value of all classes of stock of the Corporation or any
Parent or Subsidiary corporation.
ARTICLE II
OPTION GRANTS
1. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Plan shall be authorized by action of the
Committee and may, at the discretion of the Committee, be either Incentive
Options or Non-Statutory Options. Each granted option shall be evidenced by a
Stock Option Agreement and a Notice of Grant; provided, however, that each Stock
Option Agreement shall comply with and incorporate the terms and conditions
specified below. Each Stock Option Agreement evidencing an Incentive Option
shall, in addition, be subject to the applicable provisions of Section 2 of this
Article II.
(a) Option Price.
(i) The option price per share shall be fixed by the Committee;
provided, however, that in no event shall the option price per share be
less than eighty-five percent (85%) for Non-Statutory Options or less
than one hundred percent (100%) for Incentive Options of the Fair Market
Value of a share of Common Stock on the date of the option grant.
(ii) If the individual to whom the option is granted is at the time
a 10% Stockholder and the option granted is an Incentive Option, then
the option price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value of the Common Stock on the grant
date.
(iii) The option price shall be payable in such form and by such
method as shall be determined by the Committee, including, without
limitation, cash (subject to the provisions of Article III, Section 1),
shares of Common Stock, other securities or other property or any
combination thereof, having a fair market value (as determined in
accordance with the terms of this Plan in the case of Common Stock and
in all other cases by such methods or procedures as shall be authorized
by the Committee) on the Exercise Date equal to the relevant exercise
price (including payment in accordance with a cashless exercise program
under which, if so instructed by the person exercising
A-4
<PAGE> 29
the option, shares of Common Stock may be issued directly to such
person's broker or dealer upon receipt of the purchase price in cash
from the broker or dealer).
(b) Term and Exercise of Options. Each option granted under this Plan
shall be exercisable at such time or times, during such period, and for
such number of shares of Common Stock as shall be determined by the
Committee and set forth in the Stock Option Agreement evidencing such
option. However, no option granted under this Plan shall have a term in
excess of ten (10) years from the grant date, and no Incentive Option
granted to a 10% Stockholder shall have a term in excess of five (5) years
from the grant date.
(c) Nontransferability of Options. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee or by the
Optionee's duly appointed guardian or personal representative and shall not
be assignable or transferable by the Optionee otherwise than by will or by
the laws of descent and distribution following the Optionee's death.
(d) Termination of Service.
(i) Should an Optionee cease to remain in Service for any reason
other than (i) Permanent Disability, (ii) death or (iii) for Cause (as
such term is hereinafter defined), an option (to the extent otherwise
exercisable on the date of such termination) shall be exercisable by the
Optionee at any time prior to the expiration date of the option (except
as otherwise provided pursuant to Section 6 of this Article II) or
within three (3) months after the date of such termination, whichever is
the shorter period.
(ii) If an Optionee's Service ceases by reason of the Optionee's
Permanent Disability, an option (to the extent otherwise exercisable on
the date of such termination by reason of Permanent Disability) shall
remain exercisable by the Optionee at any time prior to the expiration
date of the option (except as otherwise provided pursuant to Section 6
of this Article II) or within twelve (12) months after the date of such
termination, whichever is the shorter period.
(iii) If an Optionee's Service ceases as a result of death, an
option (to the extent otherwise exercisable on the date of the death of
such Optionee) shall remain exercisable by the person or persons
entitled to do so under the Optionee's will, or, if the Optionee shall
fail to make testamentary disposition of said option or shall die
intestate, by the Optionee's legal representative or representatives, at
any time prior to the expiration date of the option (except as otherwise
provided pursuant to Section 6 of this Article II) or within twelve (12)
months after the date of such death, whichever is the shorter period.
(iv) If the Optionee's Service ceases as a result of termination
for Cause (as hereinafter defined), any then outstanding options of such
Optionee shall automatically terminate as of the termination date. As
used herein, termination for "Cause" shall mean termination upon the
occurrence of one or more of the following events:
(A) The Optionee's failure to substantially perform his duties
with the Corporation or any Parent or Subsidiary corporation as
determined by the Committee in its sole discretion following receipt
by the Optionee of written notice of such failure and the Optionee's
failure to remedy such failure within thirty (30) days after receipt
of such notice (other than failure from his incapacity during
physical or mental illness);
(B) The Optionee's willful failure or refusal to perform
specific directives of the Board, which directives are consistent
with the scope and nature of the Optionee's duties and
responsibilities, and which are not remedied by the Optionee within
thirty (30) days after being notified in writing of his failure by
the Board;
(C) The Optionee's conviction of a felony; or
(D) A breach of the Optionee's fiduciary duty to the Corporation
or any Parent or Subsidiary corporation or willful violation in the
course of performing his duties for the
A-5
<PAGE> 30
Corporation or any Parent or Subsidiary corporation of any law, rule
or regulation (other than traffic violations or other minor
offenses). No act or failure to act on the Optionee's part shall be
considered willful unless done or omitted to be done in bad faith and
without reasonable belief that the action or omission was in the best
interest of the Corporation or any Parent or Subsidiary corporation.
(e) Stockholder Rights. No shares of Common Stock shall be issued
until payment, as provided herein, therefor has been made. An Optionee
shall have none of the rights of a stockholder with respect to the Common
Stock covered by an option until such Optionee shall have exercised the
option and paid the option price.
2. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Plan. Incentive Options may only be granted
to individuals who are Employees. Options which are specifically designated as
Non-Statutory Options when issued under this Plan shall not be subject to such
terms and conditions.
(a) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the Fair Market Value of a share of Common Stock on the
grant date.
(b) Dollar Limitation. The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other plan
of the Corporation or any Parent or Subsidiary corporation) may for the
first time become exercisable as incentive stock options under the Federal
tax laws during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars ($100,000). To the extent the Employee holds two
or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability thereof
as Incentive Options under the Federal tax laws shall be applied on the
basis of the order in which such options are granted. In the event the
limits of this Section 2(b) would otherwise be exceeded, the Optionee may
still exercise the options, but such option, to the extent of such excess,
shall be deemed to be a Non-Statutory Option. Except as modified by the
preceding provisions of this Section 2, all the provisions of this Plan
shall be applicable to the Incentive Options granted hereunder.
3. LIMITED SURRENDER RIGHTS
(a) Should a Change in Control occur at a time when the Corporation's
outstanding capital stock is registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), then each Optionee who is
at the time an officer or director of the Corporation subject to the short-swing
profit restrictions of the Federal securities laws shall have the right to
surrender any or all options held by such individual under this Plan, to the
extent such options have been outstanding for at least six (6) months and are at
the time exercisable for vested shares. In return for each surrendered option,
the officer or director shall receive an appreciation distribution from the
Corporation in an amount equal to the excess of (i) the aggregate Acquisition
Price (as such term is hereinafter defined) of the number of shares in which
such individual is at the time vested under the surrendered option over (ii) the
aggregate option price payable for such vested shares. Such limited surrender
right shall be exercisable for a period not to exceed thirty (30) days following
the completion of the Change in Control. Neither the approval of the Committee
nor the consent of the Board shall be required for such surrender, and the
distribution to which such Optionee shall become entitled upon the option
surrender shall be made entirely in cash.
(b) The "Acquisition Price" per share of the vested Common Stock subject to
the surrendered option shall be deemed to be equal to the greater of (i) the
Fair Market Value per share on the date of surrender or (ii) the highest
reported price per share paid in effecting the Change in Control of the
Corporation's outstanding voting stock. However, if the surrendered option is an
Incentive Option, then the Acquisition Price of the vested shares subject to the
surrendered option shall not exceed the clause (i) value per share.
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4. CORPORATE TRANSACTIONS
(a) In the event of any Corporate Transaction, each option outstanding
under this Plan shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all
or any portion of such shares.
(b) Upon the consummation of the Corporate Transaction, each option
outstanding under this Plan shall terminate and cease to be exercisable.
(c) The exercisability as incentive stock options under the Federal tax
laws of any options accelerated in connection with the Corporate Transaction
shall remain subject to the applicable dollar limitation of subsection 2(b) of
this Article II.
(d) The grant of options under this Plan shall in no way affect the legal
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
5. CANCELLATION AND NEW GRANT OF OPTIONS
The Committee shall have the authority to effect, at any time and from time
to time, with the consent of the affected Optionees, the cancellation of any or
all outstanding options under this Plan and to grant in substitution therefor
new options under this Plan covering the same or different numbers of shares of
Common Stock but having an option price per share not less than eighty-five
percent (85%) of the Fair Market Value per share of Common Stock on the new
grant date (or one hundred percent (100%) of such Fair Market Value in the case
of an Incentive Option or, in the case of an Incentive Option held by a 10%
Stockholder, not less than one hundred and ten percent (110%) of such Fair
Market Value).
6. EXTENSION OF EXERCISE PERIOD
The Committee shall have full power and authority to extend (either at the
time while the option is granted or at any time while the option remains
outstanding) the period of time for which the option is to remain exercisable
following an Optionee's cessation of Service, from the limited period set forth
in the Stock Option Agreement to such greater period of time as the Committee
may deem appropriate under the circumstances. In no event, however, shall such
option be exercisable after the specified expiration date of the option term.
ARTICLE III
MISCELLANEOUS
1. LOANS
(a) The Committee may assist any Optionee (including an Optionee who is an
officer or director of the Corporation) in the exercise of one or more options
granted to such Optionee under this Plan, including the satisfaction of any
Federal, State and local income and employment tax obligations arising
therefrom, by
(i) authorizing the extension of a loan from the Corporation to such
Optionee, or
(ii) permitting the Optionee to pay the option price for the purchased
Common Stock in installments over a period of years.
(b) The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be established by the Committee in
its sole discretion. Loans or installment payments may be granted with or
without security or collateral. In all events the maximum credit available to
each Optionee may not exceed the sum of (i) the aggregate option price or
purchase price payable for the purchased shares
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(less the par value payable for the purchased shares) plus (ii) any Federal,
State or local income and employment tax liability incurred by the Optionee in
connection with such exercise.
(c) The Committee may, in its absolute discretion, determine that one or
more loans extended under the financial assistance program shall be subject to
forgiveness by the Corporation in whole or in part upon such terms and
conditions as the Committee in its discretion deems appropriate.
2. AMENDMENT OF THIS PLAN AND AWARDS
(a) The Board shall have complete and exclusive power and authority to
amend, modify, suspend, discontinue or terminate this Plan in any or all
respects whatsoever. However, no such amendment, modification, suspension,
discontinuance or termination shall adversely affect the rights and obligations
of an Optionee with respect to options at the time outstanding under this Plan,
unless the Optionee consents thereto. No option may be granted during any
suspension of this Plan or after its termination. In addition, the Board shall
not, without the approval of the Corporation's stockholders, amend this Plan to
(i) materially increase the maximum number of shares issuable under this Plan
(except for permissible adjustments under Article I, Section 4(c)), (ii) change
the minimum option price, (iii) increase the maximum terms for options granted
hereunder, (iv) remove the administration of this Plan from the Committee, (v)
materially increase the benefits accruing to individuals who participate in this
Plan or (vi) materially modify the eligibility requirements for participation in
this Plan.
(b) Options to purchase shares of Common Stock may be granted under this
Plan which are in excess of the number of shares then available for issuance
under this Plan, provided there is obtained Board approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under this Plan prior to the actual option grant and stockholder
approval of such amendment prior to the exercise of the option. If such
stockholder approval is not obtained within twelve (12) months after the date
the amendment to this Plan is approved by the Board, then all options
representing such excess shall terminate and cease to be exercisable.
3. EFFECTIVE DATE AND TERM OF PLAN
(a) This Plan shall become effective when adopted by the Board. All options
previously granted under this Plan shall remain in full force and effect,
subject to the terms of the Stock Option Agreements under which they were issued
and this Plan.
(b) This Plan shall terminate upon the earlier of (i) August 19, 2001 or
(ii) the date on which all shares available for issuance under this Plan have
been issued or cancelled pursuant to the exercise or surrender of options
granted hereunder. If the date of termination is determined under clause (i)
above, then no options outstanding on such date shall be affected by the
termination of this Plan, and such securities shall thereafter continue to have
force and effect in accordance with the provisions of the Stock Option
Agreements evidencing such options.
4. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the issuance of shares
of Common Stock under this Plan shall be used for general corporate purposes.
5. CONTINUATION OF EMPLOYMENT
Nothing contained in this Plan (or in any option granted pursuant to this
Plan) shall confer upon any Optionee any right to continue in the employ of the
Corporation or any Parent or Subsidiary corporation or constitute any contract
or agreement of employment or interfere in any way with the right of the
Corporation or any Parent or Subsidiary corporation to reduce any Optionee's
compensation from the rate in existence at the time of the granting of an option
or to terminate such Optionee's employment. Nothing contained herein or in any
Stock Option Agreement shall affect any other contractual rights of an Optionee.
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6. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise or
surrender of any options granted under this Plan shall be subject to the
satisfaction of all applicable Federal, State and local income and employment
tax withholding requirements. The Corporation or any Parent or Subsidiary
corporation that employs any Optionee shall have the right to deduct any sums
that the Committee reasonably determines that Federal, State or local tax law
requires to be withheld with respect to the exercise of any option or as
otherwise may be required by those laws. Neither the Corporation nor any Parent
or Subsidiary corporation shall be obligated to advise any Optionee of the
existence of the tax or the amount which the employer corporation will be so
required to withhold. Upon the exercise of a Non-Statutory Option, if tax
withholding is required, an Optionee may, with the consent of the Committee,
have shares of Common Stock withheld ("Share Withholding") by the Corporation
from the shares otherwise to be received; provided, however, that if the
Optionee is subject to the provisions of Section 16 under the Exchange Act, no
Share Withholding shall be permitted unless such transaction complies with the
requirements of Rule 16b-3 promulgated under the Exchange Act. The number of
shares so withheld should have an aggregate Fair Market Value on the date of
exercise sufficient to satisfy the applicable withholding taxes.
7. REGULATORY APPROVALS
The implementation of this Plan, the granting of any options hereunder and
the issuance of Common Stock upon the exercise or surrender of the option grants
made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over this Plan, the options granted under it and the Common Stock issued
pursuant to it. Without limiting the generality of the foregoing, no options
granted hereunder may be exercised and no shares of Common Stock issuable upon
exercise of such options may be transferred unless and until the Committee
determines that such exercise/transfer will be made in compliance with all
applicable laws, rules and regulations, including, without limitation,
applicable securities laws, rules and regulations. The Corporation does not have
any obligation to take any action to (i) register or qualify options or shares
of Common Stock pursuant to applicable laws or to perfect an exemption from such
registration/qualification requirements or (ii) list the shares of Common Stock
for trading on any stock exchange or automated transaction reporting system.
8. GOVERNING LAW
This Plan and the options issued hereunder shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas
applicable to contracts made and performed within that State.
9. COMPLIANCE WITH RULE 16b-3
At such time and so long as the Corporation shall have a class of equity
securities registered under Section 12 of the Exchange Act, it is intended that
this Plan be applied and administered in compliance with Rule 16b-3. If any
provision of this Plan would be in violation of Rule 16b-3 if applied as
written, such provision shall not have effect as written and shall be given
effect so as to comply with Rule 16b-3, as determined by the Committee. The
Board is authorized to amend this Plan and to make any such modifications to the
Stock Option Agreements to comply with Rule 16b-3, as it may be amended from
time to time, and to make any other such amendments or modifications deemed
necessary or appropriate to better accomplish the purposes of this Plan in light
of any amendments made to Rule 16b-3.
10. NO LIABILITY FOR GOOD FAITH DETERMINATIONS
Neither the members of the Board nor any member of the Committee shall be
liable for any action, failure to act, omission or determination taken or made
in good faith with respect to this Plan or any option granted under it.
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11. OTHER BENEFITS
Participation in this Plan shall not preclude the Optionee from eligibility
in any other stock option plan of the Company or any Parent or Subsidiary
corporation or any old age, benefit, insurance, pension, profit sharing,
retirement, bonus or other extra compensation plans which the Corporation or any
Parent or Subsidiary corporation has adopted, or may, at any time, adopt for the
benefit of its employees.
12. EXECUTION OF RECEIPTS AND RELEASES
Any payment or any issuance or transfer of shares of Common Stock to an
Optionee, or to his legal representative, heir, legatee or distributee, in
accordance with the provisions hereof, shall, to the extent thereof, be in full
satisfaction of all claims of such persons hereunder. The Committee may require
any Optionee, legal representative, heir, legatee or distributee, as a condition
precedent to such payment, to execute a release and receipt therefor in such
form as it shall determine.
13. PAYMENT OF EXPENSES
All expenses incident to the administration, termination or performance of
this Plan, including, without limitation, legal and accounting fees, shall be
paid by the Corporation. All expenses incurred by an Optionee shall be paid by
such Optionee.
14. CORPORATE RECORDS
Records of the Corporation or any Parent or Subsidiary corporation
regarding the Optionee's period of employment, termination of employment and the
reason therefor, leaves of absence, re-employment and other matters shall be
conclusive for all purposes hereunder, unless determined by the Board to be
incorrect.
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PAGEMART WIRELESS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John D. Beletic and G. Clay Myers, and each
of them, Proxies with power of substitution, and hereby authorizes them to
represent and to vote, as designated below, all of the shares of Common Stock
of PageMart Wireless, Inc. (the "Company") held of record by the undersigned on
April 11, 1997, at the Annual Meeting of Stockholders to be held in Dallas,
Texas on Tuesday, May 20, 1997, at 9:00 a.m., local time, and at all
adjournments thereof, with all powers the undersigned would possess if
personally present. In their discretion, the Proxies are authorized to vote
upon such other business that may properly come before the meeting.
<PAGE> 36
PAGEMART WIRELESS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
1. Election of Directors
NOMINEES: LEIGH ABRAMSON, JOHN D. BELETIC, GUY L. DE CHAZAL, ALEJANDRO
PEREZ ELIZONDO, ROGER D. LINQUIST, ARTHUR PATTERSON, FRANK V. SICA, PAMELA
D.A. REEVE
WITHHOLD
AUTHORITY
FOR all to vote for FOR all nominees, except
nominees all nominees as noted below.
[ ] [ ] [ ]
------------------------------------------------------
Nominee Exceptions
2. Proposal to approve the amendment to the PageMart Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made this proxy will be
voted "FOR" Items 1, 2, and 3.
- ---------------------------------------------------------------
Signature
- ---------------------------------------------------------------
Signature if held jointly
Dated: , 1997
--------------------------------------------------
Please sign exactly as name appears herein. When shares are held by Joint
Tenants, both should sign, and for signing as attorney, as executor, as
administrator, trustee or guardian, please give full title as such. If held by
a corporation, please sign in the full corporate name by the president or other
authorized officer. If held by a partnership, please sign in the partnership
name by an authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
