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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
VODAVI TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------
3) Filing Party:
----------------------------------------------------
4) Date Filed:
------------------------------------------------------
<PAGE>
VODAVI TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 7, 1999
- --------------------------------------------------------------------------------
The Annual Meeting of Stockholders of Vodavi Technology, Inc., a
Delaware corporation (the "Company"), will be held at 9:00 a.m. on Monday, June
7, 1999, at the Company's corporate headquarters at 8300 East Raintree Drive,
Scottsdale, Arizona 85260 for the following purposes:
1. To elect directors to serve until the next annual meeting of
stockholders and until their successors are elected and qualified.
2. To ratify the appointment of Arthur Andersen LLP as the
independent auditors of the Company for the fiscal year ending December 31,
1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
Only stockholders of record at the close of business on April 15,
1999 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in
person. To assure your representation at the meeting, however, you are urged to
mark, sign, date, and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder of record
attending the meeting may vote in person even if he or she previously has
returned a proxy.
Sincerely,
/s/Gregory K. Roeper
Gregory K. Roeper
Secretary
Scottsdale, Arizona
April 30, 1999
<PAGE>
VODAVI TECHNOLOGY, INC.
8300 EAST RAINTREE DRIVE
SCOTTSDALE, ARIZONA 85260
-----------------------------------
PROXY STATEMENT
-----------------------------------
VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of Vodavi Technology, Inc., a
Delaware corporation (the "Company"), by the Company's board of directors (the
"Board of Directors") for use at the Annual Meeting of Stockholders to be held
on Monday, June 7, 1999 at 9:00 a.m. (the "Meeting"), or at any adjournment or
adjournments thereof, for the purposes set forth in this Proxy Statement and in
the accompanying Notice of Annual Meeting of Stockholders. The Meeting will be
held at the Company's corporate headquarters at 8300 East Raintree Drive,
Scottsdale, Arizona 85260.
These proxy solicitation materials are being mailed on or about May 10, 1999 to
all stockholders entitled to vote at the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
Stockholders of record at the close of business on April 15, 1999 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, there were issued and outstanding 4,342,238 shares of the Company's
Common Stock, $0.001 par value per share (the "Common Stock").
The presence, in person or by proxy, of the holders of a majority of
the total number of shares of Common Stock outstanding constitutes a quorum for
the transaction of business at the Meeting. Each stockholder voting at the
Meeting, either in person or by proxy, may cast one vote per share of Common
Stock held on all matters to be voted on at the Meeting. Assuming that a quorum
is present, the affirmative vote of a majority of the shares of Common Stock of
the Company present in person or represented by proxy at the Meeting and
entitled to vote is required (i) for the election of directors, and (ii) for the
ratification of the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the year ending December 31, 1999.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting and will determine whether a
quorum is present. The election inspectors will treat abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
VOTING OF PROXIES
When a 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 (i) "for" the election of the nominees set
forth in this Proxy Statement and (ii) "for" the ratification of the appointment
of Arthur Andersen LLP as the independent auditors of the Company for the year
ending December 31, 1999.
<PAGE>
REVOCABILITY OF PROXIES
Any person giving a proxy may revoke the proxy at any time before its
use by delivering to the Company written notice of revocation or a duly executed
proxy bearing a later date or by attending the Meeting and voting in person.
SOLICITATION
The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Proxies also may be solicited
by certain of the Company's directors and officers, personally or by telephone
or telegram, without additional compensation.
ANNUAL REPORT AND OTHER MATTERS
The 1998 Annual Report to Stockholders, which was mailed to
stockholders with or preceding this Proxy Statement, contains financial and
other information about the activities of the Company, but is not incorporated
into this Proxy Statement and is not to be considered a part of these proxy
soliciting materials. The information contained in the "Compensation Committee
Report on Executive Compensation" and "Performance Graph" below shall not be
deemed "filed" with the Securities and Exchange Commission (the "SEC") or
subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
THE COMPANY WILL PROVIDE UPON WRITTEN REQUEST, WITHOUT CHARGE TO EACH
STOCKHOLDER OF RECORD AS OF THE RECORD DATE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998, AS FILED WITH THE SEC.
ANY EXHIBITS LISTED IN THE FORM 10-K REPORT ALSO WILL BE FURNISHED UPON REQUEST
AT THE ACTUAL EXPENSE INCURRED BY THE COMPANY IN FURNISHING SUCH EXHIBITS. ANY
SUCH REQUESTS SHOULD BE DIRECTED TO THE COMPANY'S SECRETARY AT THE COMPANY'S
EXECUTIVE OFFICES SET FORTH IN THIS PROXY STATEMENT.
ELECTION OF DIRECTORS
NOMINEES
The Company's bylaws provide that the number of directors shall be
fixed from time to time by resolution of the Board of Directors or stockholders.
All directors are elected at each annual meeting of the Company's stockholders
to serve until the next annual meeting of stockholders or until their successors
are elected and qualified.
A board of five directors is to be elected at the Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for each of the nominees named below. All of the nominees currently are
directors of the Company. In the event that any such nominee is unable or
declines to serve as a director at the time of the Meeting, the proxies will be
voted for any nominee designated by the current Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director. The term of office of each person elected as a director
will continue until the next annual meeting of stockholders or until a successor
has been elected and qualified.
2
<PAGE>
The following table sets forth certain information regarding the
nominees for directors of the Company:
NAME AGE POSITION
---- --- --------
William J. Hinz........................ 53 Chairman of the Board
Gilbert H. Engels...................... 69 Director
Stephen A McConnell.................... 46 Director
Nam K. Woo............................. 49 Director
Emmett E. Mitchell..................... 43 Director
WILLIAM J. HINZ has served as Chairman of the Board of the Company
since October 1997 and as a director of the Company since April 1997. Mr. Hinz
has served as President and Chief Executive Officer of Stolper-Fabralloy Company
("Stolper-Fabralloy"), a precision aerospace engine component manufacturer,
since October 1997 and as a director of Stolper-Fabralloy since March 1996. Mr.
Hinz served as Executive Vice President - Operations of Stolper-Fabralloy from
March 1996 to October 1997. Mr. Hinz was Vice President of Global Repair and
Overhaul Operations for AlliedSignal Aerospace Company from June 1994 until
March 1996. During this period, Mr. Hinz also was responsible for aerospace
aftermarket merger and acquisition activity. Mr. Hinz served as President of
European Operations for AlliedSignal Aerospace Company from December 1991 until
June 1994 and served in various other executive management positions with Allied
Signal Aerospace Company from 1968 to 1991.
GILBERT H. ENGELS has served as a director of the Company since January
1996. Mr. Engels currently is involved in commercial real estate development
activities. From 1991 to 1993, Mr. Engels served as President of the Government
and Institutional Systems Division of WilTel Communications Systems, Inc. Mr.
Engels served as a Senior Vice President of TIE Communications, Inc. from 1971
to 1992; served as President and Chief Executive Officer of TIE International, a
division of TIE Communications, Inc., from 1971 to 1991; and served as President
and Chief Executive Officer of TIE Canada from 1990 to 1992. Mr. Engels was
involved in sales and marketing activities in the telecommunications industry
from 1957 to 1993.
STEPHEN A MCCONNELL has served as a director of the Company since
January 1996. Mr. McConnell currently serves as the principal of Solano
Ventures, an investment fund devoted to small- to mid-sized companies. Mr.
McConnell served as Chairman of the Board of Mallco Lumber & Building Materials
from 1991 to 1997. Mr. McConnell also served as President of Belt Perry
Associates, Inc. from 1991 to 1995 and as President and Chief Executive Officer
of N-W Group, Inc., a publicly held company, from 1985 to 1991. Mr. McConnell
currently serves as a director of Pilgrim America Capital Corp., Capital Title
Group, Inc., Mobile Mini, Inc., and JDA Software Group, Inc., all of which are
publicly held companies. In addition, Mr. McConnell currently serves as a
director of several privately held companies.
NAM K. WOO has served as a director of the Company since March 1998.
Mr. Woo also served as a director of the Company from February 1995 to April
1997. Mr. Woo serves as an Executive Vice President and a director of LG
Electronics, Inc. ("LGE"), a member of the multi-billion dollar Korean-based LG
Group with which the Company has had a long-term relationship. Mr. Woo also
currently is President of North American Operations for LG Electronics U.S.A.,
Inc., a subsidiary of LGE. Mr. Woo also currently serves as a director of Zenith
Electronics Corp., a publicly held corporation, and LG Electronics U.S.A., Inc.,
LG Electronics Canada, Inc., and LG Electronics Alabama, Inc., which are
privately held. Mr. Woo joined LGE in July 1974 and has served in a number of
capacities with LGE, including president of European Operations from January
1991 to December 1994. LGE designated Mr. Woo to serve as a director of the
Company and its subsidiary, Vodavi Communications Systems, Inc., pursuant to its
rights under a stockholders' agreement among the Company and various
stockholders. In September 1998, LGE transferred certain business assets,
812,500 shares of the Company's Common Stock, and its rights under the
stockholders' agreement to LG Information and Communications, Ltd. ("LGIC"), a
publicly held Korean corporation of which LGE owns 18.6% of the outstanding
common stock. Mr. Woo continues to serve as LGIC's designee pursuant to its
rights under the stockholders' agreement. See "Security Ownership of Principal
Stockholders, Directors, and Officers - Stockholders' Agreement."
3
<PAGE>
EMMETT E. MITCHELL has served as a director of the Company since
February 1999. Mr. Mitchell has been employed with Paradise Valley Securities,
Inc., a NASD broker dealer and investment banking firm ("PVS"), since October
1991. Mr. Mitchell is responsible for corporate finance at PVS, which was the
underwriter of the Company's initial public offering in 1995. Mr. Mitchell also
serves as a director of SJ Technologies, LLC, a privately held entity.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's bylaws authorize the Board of Directors to appoint among
its members one or more committees consisting of one or more directors. The
Board of Directors has appointed an Executive Committee, an Audit Committee, and
a Compensation Committee. The Executive Committee evaluates various business
opportunities and advises the Board of Directors with respect to strategic
planning, product development, and management issues. The Audit Committee
reviews with the Company's independent auditors the annual financial statements,
any significant accounting issues, and the scope of the audit, and is available
to discuss with the auditors any other audit-related matters that may arise
during the year. The Compensation Committee reviews and acts on matters relating
to compensation levels and benefit plans for key executives of the Company. Mr.
Hinz serves as the Chairman of the Executive Committee, and Messrs. Engels and
McConnell serve as the other members of the Executive Committee. Messrs.
McConnell, Engels, and Hinz currently serve as the members of the Audit
Committee, with Mr. McConnell serving as Chair of the Audit Committee. Messrs.
McConnell, Engels and Hinz currently serve as the members of the Compensation
Committee, with Mr. Engels serving as Chair of the Compensation Committee.
The Board of Directors of the Company held a total of seven meetings
during the fiscal year ended December 31, 1998. The Executive Committee held two
formal meetings, the Compensation Committee held one formal meeting, and the
Audit Committee held four formal meetings during the year ended December 31,
1998. No director other than Ki-Song Cho, a former member of the Board of
Directors, attended fewer than 75% of the aggregate of (i) the total number of
meetings of the Board of Directors, and (ii) the total number of meetings held
by all committees of the Board of Directors on which such director was a member.
DIRECTOR COMPENSATION AND OTHER INFORMATION
Employees of the Company do not receive compensation for serving as
members of the Company's Board of Directors. Mr. Hinz receives a monthly
retainer of $6,000 for serving as the Company's Chairman of the Board. Mr. Hinz
receives no additional cash compensation for meetings attended. Each other
independent director receives an annual retainer fee of $10,000, plus a $500 fee
for each meeting attended by telephone or in person and reimbursement for
expenses incurred in attending meetings of the Board of Directors. Committee
members other than Mr. Hinz receive a $500 fee for attendance at committee
meetings that are held on days other than days on which a Board of Directors
meeting is held. Non-employees who serve as directors of the Company also
receive automatic grants of stock options under the Company's Amended and
Restated 1994 Stock Option Plan. See "Executive Compensation - Stock Option
Plan."
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth certain information with respect to the
compensation received by the Company's Chairman of the Board and each person who
served as the Company's President for the fiscal year ended December 31, 1998
(the "Named Officers"). The Company had no other executive officers who received
cash compensation in excess of $100,000 during fiscal 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($) OPTIONS(#)(1) COMPENSATION($)(2)
--------------------------- ---- --------- --------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
William J. Hinz, Chairman of the 1998 $74,984(4) -- 5,000(5) --
Board (3) 1997 10,094(4) -- 5,000(5) --
Glenn R. Fitchet, President and 1998 $175,000 -- -- $5,750
Chief Executive Officer(6) 1997 163,934 -- 100,000 5,750
1996 157,476 -- -- 5,000
Gregory K. Roeper, President, 1998 $134,836 -- -- $1,750
Chief Operating Officer, Chief 1997 121,224 -- 50,000 1,750
Financial Officer, Secretary, 1996 121,492 $35,000 25,000 988
and Treasurer(7)
</TABLE>
- ----------
(1) The exercise price of all stock options granted were equal to the fair
market value of the Company's Common Stock on the date of grant.
(2) Amounts for 1998 represent (i) 401(k) plan matching contributions in
the amount of $750 for each of Mr. Fitchet and Mr. Roeper accrued by
the Company in 1998 and paid during 1999; and (ii) payments related to
life insurance policies of $5,000 and $1,000 paid by the Company on
behalf of Messrs. Fitchet and Roeper, respectively.
(3) Mr. Hinz became a director of the Company in April 1997 and became
Chairman of the Board in October 1997.
(4) Represents the amount paid to Mr. Hinz as a retainer for serving as
Chairman of the Board. See "Election of Directors - Director
Compensation and Other Information."
(5) Represents options automatically granted to Mr. Hinz under the
Automatic Program of the Company's stock option plan. See "Executive
Compensation - Stock Option Plan."
(6) Mr. Fitchet resigned as President and Chief Executive Officer of the
Company in December 1998 and resigned as a director of the Company
effective January 1, 1999.
(7) Mr. Roeper became President of the Company in December 1998. Mr. Roeper
served as a Vice President of the Company from November 1994 until
December 1998.
5
<PAGE>
OPTIONS GRANTS
The following table sets forth certain information with respect to
stock options granted to the Named Officers during the fiscal year ended
December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
---------------------------------------------------- REALIZABLE
PERCENTAGE VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM(2)
NAME GRANTED (#) FISCAL YEAR ($/SH)(1) DATE 5% 10%
---- ------------ ----------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William J. Hinz......... 5,000(3) (3) $3.25 6/29/08 $10,220 $25,898
Glenn R. Fitchet........ -- -- -- -- -- --
Gregory K. Roeper....... -- -- -- -- -- --
</TABLE>
- ----------
(1) The options were granted at the fair value of the shares on the date of
grant.
(2) Potential gains are net of the exercise price, but before taxes
associated with the exercise. Amounts represent hypothetical gains that
could be achieved for the respective options if exercised at the end of
the option term. The assumed 5% and 10% rates of stock price
appreciation are provided in accordance with SEC rules and do not
represent the Company's estimate or projection of the future price of
the Company's Common Stock. Actual gains, if any, on stock option
exercises will depend upon the future market prices of the Company's
Common Stock.
(3) Such options were automatically granted to Mr. Hinz under the Automatic
Program of the Company's stock option plan. See "Executive Compensation
- Stock Option Plan." The options vest and become exercisable on the
day before the date of the Meeting.
OPTION HOLDINGS
The following table provides information on the value of each Named
Officer's unexercised options as of December 31, 1998. None of the Named
Officers exercised any options during 1998.
YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
---- ----------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
William J. Hinz....... 5,000 5,000 $-- $--
Glenn R. Fitchet...... 50,000 50,000 $-- $--
Gregory K. Roeper..... 50,000 50,000 $-- $--
- ----------
(1) The exercise prices of all options held by the Named Officers are
greater than the closing sales price of the Common Stock as quoted on
the Nasdaq National Market on December 31, 1998 of $2.75 per share.
6
<PAGE>
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has no written employment or consulting contracts with any
of its officers, directors, or employees. The Company, however, maintains
agreements with each of its officers and employees that prohibit
such persons from disclosing confidential information obtained while employed
with the Company. The Company offers its employees medical, life, and disability
insurance benefits. The executive officers and other key personnel of the
Company (including directors who also are employees of the Company) are eligible
to receive stock options under the Company's Stock Option Plan. See "Executive
Compensation - Stock Option Plan."
Glenn R. Fitchet resigned as President and Chief Executive Officer of
the Company in December 1998 and resigned as a director of the Company effective
January 1, 1999. In connection with his resignation, the Company and Mr. Fitchet
entered into a separation agreement and a consulting agreement. Under the
consulting agreement, Mr. Fitchet will serve as an independent contractor to the
Company through April 2000 for a monthly consulting fee of $14,583. The
consulting agreement contains provisions that prohibit Mr. Fitchet from engaging
in certain activities that would compete with the Company's business. Pursuant
to the separation agreement, the Company will pay COBRA health insurance
premiums on behalf of Mr. Fitchet.
401(k) PROFIT SHARING PLAN
In April 1994, the Company adopted a profit sharing plan pursuant to
Section 401(k) (the "401(k) Plan") of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"). Pursuant to the 401(k) Plan, all eligible
employees may make elective contributions through payroll deductions. In
addition, the 401(k) Plan provides that the Company may make matching and
discretionary contributions in such amounts as may be determined by the Board of
Directors. During fiscal 1998, the Company expensed matching contributions
pursuant to the 401(k) Plan to all executive officers as a group in the amount
of $2,250.
STOCK OPTION PLAN
The Vodavi Technology, Inc. Stock Option Plan (the "Plan") was adopted
by the Company's Board of Directors in December 1994 and was approved by the
stockholders of the Company in July 1995. The Board of Directors amended and
restated the Plan in February 1996, and the stockholders approved the amended
and restated Plan in May 1996. The Board of Directors further amended the Plan
in October 1997. Those amendments did not require stockholder approval.
The Plan provides for (i) the granting of incentive stock options or
nonqualified options to acquire Common Stock of the Company ("Options"); (ii)
the granting of stock appreciation rights ("SARs"); (iii) the direct granting of
the Company's Common Stock ("Stock Awards"); and (iv) the granting of other cash
awards ("Cash Awards") (SARs, Stock Awards, and Cash Awards are collectively
referred to herein as "Awards") to key employees of the Company or its
subsidiaries and to consultants or independent contractors who provide valuable
services to the Company or its subsidiaries ("Eligible Persons") under a
Discretionary Program. The Plan also provides for automatic grants of stock
options to non-employee directors of the Company under an Automatic Program.
A maximum of 850,000 shares of Common Stock of the Company may be
issued under the Plan. If any Option or SAR terminates or expires without having
been exercised in full, stock not issued under such Option or SAR will again be
available for the purposes of the Plan. As of April 15, 1999, no shares of
Common Stock have been issued upon exercise of options granted under the Plan;
there were outstanding Options to acquire 592,400 shares of the Company's Common
Stock under the Plan; and an additional 257,600 shares of Common Stock were
available for grant under the Plan.
Options that are incentive stock options may only be granted to key
personnel of the Company (or its subsidiaries) who are also employees of the
Company (or its subsidiaries). To the extent that granted Options are incentive
stock options, the terms and conditions of those Options, including the exercise
price and expiration date, must be consistent with the qualification
requirements set forth in the Internal Revenue Code. The
7
<PAGE>
maximum number of shares with respect to which Options or Awards may be granted
to any one employee (including officers) during the term of the Plan may not
exceed 50% of the shares of Common Stock authorized for issuance under the Plan.
Under the Automatic Program, each non-employee director serving on the
Board of Directors on the date the amendments to and restatement of the Plan
were approved by the Company's stockholders received an automatic grant of
Options ("Automatic Options") to acquire 5,000 shares of Common Stock on that
date (an "Initial Grant"). Each subsequent newly elected non-employee member of
the Board of Directors will receive an Initial Grant of Automatic Options to
acquire 5,000 shares of Common Stock on the date of his or her first appointment
or election to the Board of Directors. In addition, Automatic Options to acquire
5,000 shares of Common Stock will be automatically granted to each non-employee
director at the meeting of the Board of Directors held immediately after each
annual meeting of stockholders (an "Annual Grant"). A non-employee member of the
Board of Directors will not be eligible to receive the Annual Grant if that
option grant date is within 90 days of such non-employee member receiving his or
her Initial Grant.
To exercise an Option, the option holder will be required to deliver to
the Company full payment of the exercise price for the shares as to which the
Option is being exercised. Generally, Options may be exercised by delivery of
cash, bank cashier's check, or shares of Common Stock of the Company.
LIMITATION OF DIRECTOR'S LIABILITY AND INDEMNIFICATION
The Company's Amended Certificate of Incorporation (the "Amended
Certificate") provides that no director of the Company will be personally liable
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption or limitation of
liability is not permitted under the Delaware General Corporation law (the
"Delaware GCL"). Under the Delaware GCL, a director may be held liable (a) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) in respect of certain unlawful
dividend payments or stock purchases, or (d) for any transaction from which the
director derived an improper personal benefit. The effect of this provision in
the Amended Certificate is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of the Company)
to recover monetary damages from a director for breach of the fiduciary duty of
care as a director (including breaches resulting from negligent or grossly
negligent behavior) except in the situations described in clauses (a) through
(d) above. In addition, the Amended Certificate provides that any repeal or
modification of this provision by the Company's stockholders will not adversely
affect any right or protection of a director of the Company existing at the time
of such repeal or modification with respect to acts or omissions occurring prior
to such repeal or modification. These provisions do not limit or eliminate the
rights of the Company or any stockholder to seek non-monetary relief such as an
injunction or recision in the event of a breach of a directors' duty of care.
The Company's Amended Certificate requires the Company to indemnify its
directors, officers, and certain other representatives of the Company against
expenses and certain other liabilities arising out of their conduct on behalf of
the Company to the maximum extent permitted by the Delaware GCL. Indemnification
is not available with respect to proceedings or claims initiated or brought
voluntarily by an officer, director, or other representative of the Company
against the Company unless such proceeding or claim is approved by the Board of
Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, its wholly owned subsidiary Vodavi Communications Systems,
Inc. ("VCS"), LGIC, Steven A. Sherman (a beneficial owner of more than 10% of
the Company's Common Stock and a former director of the Company), and Glenn R.
Fitchet (a beneficial owner of more than 5% of the Company's Common Stock and a
former officer and director of the Company) are parties to a stockholders'
agreement (the "Stockholders' Agreement"). Under the terms of the Stockholders'
Agreement, LGIC has the right to purchase
8
<PAGE>
from the Company additional shares of the Company's Common Stock in order to
maintain its percentage of ownership of the Company; 50,000 of Mr. Sherman's
shares of the Company's Common Stock are held in escrow pending LGIC's rights to
those shares; and LGIC has the right to designate a certain number of persons to
serve as directors of both the Company and VCS. See "Security Ownership of
Principal Stockholders, Directors, and Officers - Stockholders' Agreement."
During 1998, LGE transferred certain of its assets related to business
communications systems to LGIC. The Company now purchases certain of its key
telephone systems and commercial grade telephones from LGIC and LG Srithai, Inc.
("LGST"), a joint venture between LGIC and a Thailand-based entity. The Company
purchased approximately $16.3 million of telephone systems and commercial grade
telephones from LGIC, LGE, and LGST during 1998, representing approximately 60%
of the Company's total purchases of these products during 1998.
In August 1996, Novatel Wireless, Inc. ("Novatel Wireless"), of which
Steven A. Sherman, a director of the Company from March 1994 until June 1998,
and the beneficial owner of approximately 18.4% of the Company's Common Stock,
is the Chairman of the Board and a significant shareholder, acquired certain
assets from NovAtel Communications, Ltd., a Canadian company ("NovAtel"). The
acquired assets included an agreement with the Company to jointly develop
certain wireless telephone systems. During 1997, the Company and Novatel
Wireless terminated joint development of wireless telephone systems and the
Company entered into an alliance with a third party to market a wireless
telephone system developed by the third party. Payments by the Company to
Novatel Wireless during the term of the agreement totaled approximately
$205,000. During 1998, the Company, Novatel Wireless, and NovAtel finalized an
agreement under which the Company and Novatel Wireless terminated a supply
agreement for wireless telephone systems; Novatel Wireless transferred certain
tooling and finished products to the Company; Novatel Wireless and NovAtel
refunded $64,170 and $50,000, respectively, to the Company; the parties granted
mutual releases; and the Company and Novatel Wireless entered into a
non-exclusive license agreement that gives the Company the right to sell certain
wireless telephone products.
On December 5, 1997, the Company entered into a consulting agreement
(the "Consulting Agreement") with Steven A. Sherman, pursuant to which Mr.
Sherman rendered advice and recommendations to the Company as requested by the
Chairman of the Board of Directors. The Company paid Mr. Sherman a consulting
fee of $10,000 per month during the term of the Consulting Agreement, which
expired on May 30, 1998. In addition, pursuant to the Consulting Agreement, the
Company granted to Mr. Sherman options to acquire 75,000 shares of Common Stock
at an exercise price of $5.50 per share.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers, and persons who own more than 10 percent of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and greater than 10 percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely upon the Company's review of
the copies of such forms received by it during the fiscal year ended December
31, 1998, and written representations that no other reports were required, the
Company believes that each person who, at any time during such fiscal year, was
a director, officer, or beneficial owner of more than 10 percent of the
Company's Common Stock complied with all Section 16(a) filing requirements
during such fiscal year, except that (a) LGE filed a late report on Form 5 to
disclose the transfer of shares of the Company's Common Stock to LGIC, which
should have been reported earlier on Form 4; (b) LGIC filed a late report Form 3
to disclose its beneficial ownership of more than 10% of the Company's Common
Stock; and (c) William J. Hinz filed a late report on Form 5 to disclose the
automatic grant of 5,000 options during 1998.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Company's Board of Directors has appointed a Compensation Committee
(the "Committee") consisting entirely of non-management directors, which made
decisions on compensation of the Company's executives during 1998. The
Compensation Committee makes every effort to ensure that the compensation plan
is consistent with the Company's values and is aligned with the Company's
business strategy and goals.
The Company's compensation program for executive officers consists
primarily of base salary, bonus, and long-term incentives in the form of stock
options. Executives also participate in various other benefit plans, including
medical and retirement plans, which generally are available to all employees of
the Company.
The Company's philosophy is to pay base salaries to executives at
levels that enable the Company to attract, motivate, and retain highly qualified
executives. The bonus program is designed to reward individuals for performance
based on the Company's financial results as well as the achievement of personal
and corporate objectives that contribute to the long-term success of the Company
in building stockholder value. Stock option grants are intended to result in
minimal or no rewards if stock price does not appreciate, but may provide
substantial rewards to executives as stockholders benefit from stock price
appreciation.
The Company follows a subjective and flexible approach rather than an
objective or formula approach to compensation. Various factors, as discussed
below, receive consideration without any particular weighting or emphasis on any
one factor. In establishing compensation for the year ended December 31, 1998,
the Committee took into account, among other things, the financial results of
the Company, compensation paid in prior years, and compensation of executive
officers employed by companies of similar size in similar industries.
BASE SALARY AND ANNUAL INCENTIVES
Base salaries for executive positions are established relative to the
Company's financial performance and comparable positions in similarly sized
companies. From time to time, the Company may use competitive surveys and
outside consultants to help determine the relative competitive pay levels. The
Company targets base pay at the level required to attract and retain highly
qualified executives. In determining salaries, the Committee also takes into
account individual experience and performance, salary levels relative to other
positions with the Company, and specific needs particular to the Company. The
Committee's evaluation of the factors described above is subjective, and the
Committee does not assign a particular weight to any one factor.
Annual incentive awards are based on the Company's financial
performance and the efforts of its executives. Performance is measured based on
profitability and revenue and the successful achievement of functional and
personal goals. The Company paid no bonuses to the Company's executive officers
for fiscal 1998.
STOCK OPTION GRANTS
The Company strongly believes in tying executive rewards directly to
the long-term success of the Company and increases in stockholder value through
grants of executive stock options. Stock option grants also will enable
executives to develop and maintain a significant stock ownership position in the
Company's Common Stock. The amount of options granted takes into account options
previously granted to an individual. The Company did not grant any options to
executives or other employees during the year ended December 31, 1998.
OTHER BENEFITS
Executive officers are eligible to participate in benefit programs
designed for all full-time employees of the Company. These programs include
medical insurance, a qualified retirement program allowed under Section 401(k)
of the Internal Revenue Code, and life insurance coverage.
10
<PAGE>
COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
During fiscal 1998, the Committee evaluated the factors described above
in determining the base salary and other compensation of Glenn R. Fitchet, the
Company's President and Chief Executive Officer until December 1998. The
Committee currently evaluates the various factors described above in determining
the base salary and other compensation of Gregory K. Roeper, the Company's
President and Chief Operating Officer. The Committee's evaluation of Mr.
Roeper's base salary is, and its evaluation of Mr. Fitchet's base salary during
fiscal 1998 was, subjective with no particular weight assigned to any one
factor. The Committee believes that Mr. Roeper's current base salary is and Mr.
Fitchet's base salary during fiscal 1998 was competitive with the base salary
paid to chief executive officers of comparable companies.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code currently limits the
deductibility for federal income tax purposes of compensation paid to the
Company's Chief Executive Officer and four other most highly compensated
executive officers. The Company may deduct certain types of compensation paid to
any of these individuals only to the extent that such compensation during any
fiscal year does not exceed $1.0 million. Qualifying performance-based
compensation is not subject to the deduction limits if certain requirements are
met. The Company does not believe that its compensation arrangements with any of
its executive officers will exceed the limits on deductibility during its
current fiscal year. The Company also intends to structure the performance-based
portion of the compensation of its executive officers in a manner that complies
with Section 162(m).
This report has been furnished by the members of the Compensation
Committee of the Board of Directors of Vodavi Technology, Inc.
Gilbert H. Engels
William J. Hinz
Stephen A McConnell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Performance evaluation and compensation decisions relating to 1998 were
made by the Compensation Committee of the Board of Directors, which consisted of
Messrs. Engels, McConnell, Ki-Song Cho (from April 1997 to March 1998), and
Stephen A. McConnell (beginning in June 1998). In connection with the
acquisition of the Company's business operations in April 1994, the Company,
VCS, LGE, Steven A. Sherman, Glenn R. Fitchet, and certain other stockholders of
the Company entered into the Stockholders' Agreement. See "Security Ownership of
Principal Stockholders, Directors, and Officers - Stockholders' Agreement." Mr.
Cho served as LGE's designee as a director of the Company pursuant to LGE's
rights under the Stockholders' Agreement. During 1998, LGE transferred certain
of its assets related to business communications systems to LGIC. The Company
purchased a total of approximately $16.3 million of key telephone systems and
commercial grade telephones from LGE, LGIC, and LGST during 1998, representing
approximately 60% of the Company's total purchases of these products during
1998.
11
<PAGE>
PERFORMANCE GRAPH
The following line graph compares cumulative total stockholder returns
for (i) the Company's Common Stock; (ii) the Standard & Poor's Small Cap 600
Index (the "Index"); and (iii) a peer group consisting of the following four
companies in the business telephone systems industry: Comdial Corp., Mitel
Corp., Inter-Tel Corp., and Executone Information Systems, Inc. (the "Peer
Group"). The graph covers the period from October 6, 1995 through December 31,
1998. The graph assumes an investment of $100 in each of the Company's Common
Stock and the Peer Group on October 6, 1995, the date on which the Company's
Common Stock became registered under Section 12 of the Exchange Act as a result
of the Company's initial public offering, and an investment in the Index of $100
on September 30, 1995. The calculation of cumulative stockholder return on the
Peer Group and the Index include reinvestment of dividends, but the calculation
of cumulative stockholder return on the Company's Common Stock does not include
reinvestment of dividends because the Company did not pay dividends during the
measurement period. The performance shown is not necessarily indicative of
future performance.
CUMULATIVE TOTAL RETURN
------------------------------------------
10/6/95 12/95 12/96 12/97 12/98
VODAVI TECHNOLOGY, INC 100 91 50 63 39
PEER GROUP 100 106 106 148 151
S & P SMALLCAP 600 100 100 122 153 157
12
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS, AND OFFICERS
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of April 15, 1999 by (i)
each director of the Company, (ii) each executive officer of the Company, (iii)
all directors and executive officers of the Company as a group, and (iv) each
person known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock.
SHARES BENEFICIALLY OWNED
-------------------------
NAME OF BENEFICIAL OWNER(1) NUMBER(2)(3) PERCENT(3)
- --------------------------- ------------ ----------
DIRECTORS AND EXECUTIVE OFFICERS:
William J. Hinz.............................. 12,000(4) *
Gregory K. Roeper............................ 88,850(5) 2.0%
Gilbert H. Engels............................ 35,000(6) *
Stephen A McConnell.......................... 18,700(7) *
Nam K. Woo................................... 5,000(8) *
Emmett E. Mitchell........................... 10,000(9) *
All directors and officers as a
group (six persons)........................ 169,550 3.8%
NON-MANAGEMENT 5% STOCKHOLDERS:
LG Information and Communications, Ltd....... 812,500(10) 18.7%
Steven A. Sherman............................ 810,541(11) 18.4%
Glenn R. Fitchet............................. 275,000(12) 6.8%
- ----------
* Less than 1% of the outstanding shares of Common Stock.
(1) Addresses of 5% stockholders: The address of LGIC is LG Twin Tower, West
Tower 20F, #20, Yoido-dong, Youngdungpo-gu, Seoul 150-721, Korea; the
address of Steven A. Sherman is 4757 E. Greenway Road, Suite 103-187,
Phoenix, Arizona 85032; and the address of Glenn R. Fitchet is 11087 E.
Mission Lane, Scottsdale, Arizona 85260.
(2) Includes, when applicable, shares owned of record by such person's minor
children and spouse and by other related individuals and entities over
whose shares of Common Stock such person has sole or shared voting control
or power of disposition. Also includes shares of Common Stock that the
identified person had the right to acquire within 60 days of April 15,
1999, by the exercise of stock options.
(3) The percentages shown include the shares of Common Stock that each named
stockholder has the right to acquire within 60 days of April 15, 1999. In
calculating percentage ownership, all shares of Common Stock that the named
stockholder has the right to acquire upon exercise of stock options within
60 days of April 15, 1999 are deemed to be outstanding for the purpose of
computing the percentage of Common Stock owned by such stockholder, but are
not deemed to be outstanding for the purpose of computing the percentage of
Common Stock owned by any other stockholder. Percentages may be rounded.
(4) Represents 7,000 shares of Common Stock and 5,000 shares issuable upon
exercise of vested options.
(5) Represents 19,750 shares of Common Stock, 68,600 shares issuable upon
exercise of vested options held by Mr. Roeper, and 500 shares of Common
Stock beneficially owned by Mr. Roeper's spouse as custodian for their
minor child.
(6) Represents 25,000 shares of Common Stock and 10,000 shares issuable upon
exercise of vested options.
(7) Represents 8,700 shares of Common Stock and 10,000 shares issuable upon
exercise of vested options.
(8) Represents 5,000 shares of Common Stock issuable upon exercise of vested
options. Mr. Woo currently serves as a director and officer of LGE. LGE and
LGIC designated Mr. Woo to serve as a director of the Company pursuant to
their respective rights under the Stockholders' Agreement. See "Security
Ownership of
13
<PAGE>
Principal Stockholders, Directors, and Officers - Stockholders' Agreement."
Mr. Woo disclaims beneficial ownership of any shares of the Company's
Common Stock beneficially owned by LGIC.
(9) Includes 500 shares of Common Stock held by Mr. Mitchell as custodian for
his minor children, but excludes warrants to purchase 133,333 shares of the
Company's Common Stock held by Paradise Valley Securities, of which Mr.
Mitchell is a minority shareholder.
(10) Does not include 50,000 shares of Common Stock held in escrow subject to
LGIC's right to claim those shares.
(11) Represents shares of Common Stock held by a stockholder group. Includes
253,250 shares of Common Stock held by Mr. Sherman (including 50,000 shares
held in escrow subject to LGIC's right to claim those shares); 75,000
shares issuable upon exercise of vested options held by Mr. Sherman; 4,000
shares held by Mr. Sherman as custodian for certain of his children;
86,830 shares held by Sherman Capital Group, L.L.C., of which Mr. Sherman
is the managing member; and 137,500 shares held by Sherman Capital
Partners, L.L.C., of which Mr. Sherman is a managing member. Mr. Sherman
disclaims beneficial ownership of all shares held by Sherman Capital Group,
L.L.C. and Sherman Capital Partners, L.L.C. except to the extent that his
individual interest in such shares arises from his interest in each such
entity. Mr. Sherman is a former director of the Company. Other members of
the group are Fereydoun Taslimi (61,491 shares), Nahid Loudermilk (61,491
shares), Michael Mittel (113,979 shares), and Noor Research Corporation
(17,000 shares). Mr. Sherman has entered into a voting agreement with the
other members of the group whereby those members will vote their shares of
Common Stock, as well as shares of Common Stock subsequently acquired by
them, in all Company matters as designated by Mr. Sherman. The voting
agreement is effective until October 1, 1999, unless terminated earlier by
any party to the voting agreement. The source of the information relating
to this group of stockholders is a Schedule 13D filed with the SEC on April
14, 1999.
(12) Represents 250,000 shares of Common Stock and 50,000 shares issuable upon
exercise of vested options. Mr. Fitchet is a former officer and director of
the Company.
STOCKHOLDERS' AGREEMENT
In connection with the acquisition of its business operations in April
1994, the Company, VCS, LGE, Steven A. Sherman, and Glenn R. Fitchet entered
into the Stockholders' Agreement. In connection with its acquisition of certain
business assets and 812,500 shares of the Company's Common Stock from LGE, LGIC
acquired LGE's rights under the Stockholders' Agreement. The Stockholders'
Agreement provides that, if at any time during the term of the Stockholders'
Agreement the Company issues shares of Common Stock in a public offering or a
private placement in an aggregate amount of 1% or more of the Company's issued
and outstanding Common Stock, LGIC has the right to purchase a sufficient number
of shares being issued as may be required to enable it to maintain the
percentage of ownership of Common Stock that it holds immediately prior to such
sale or issuance. The purchase price to LGIC for such shares will be the public
offering price per share in the case of a public offering or the price per share
paid by purchasers in any private placement.
Also pursuant to the terms of the Stockholders' Agreement, Mr. Sherman
and Mr. Fitchet have agreed to vote their shares of Common Stock to elect as
directors of the Company that number of persons designated by LGIC that
comprises a percentage of the Board of Directors equal to LGIC's then percentage
of ownership of the Company's Common Stock. In addition, as long as LGIC owns 8%
or more of the outstanding Common Stock of the Company, those persons have
agreed to vote their shares in favor of election of at least one designee of
LGIC as a director of the Company. All designees of LGIC to the Board of
Directors must be executive officers or directors of LGIC, directors of any
affiliate of LGIC, or other persons reasonably acceptable to the Company and the
other parties to the Stockholders' Agreement. Unless LGIC consents in writing,
no LGIC designee may be removed as a director of the Company, except for cause.
The Stockholders' Agreement also requires the Company to employ one of the LGIC
designees in a position and at such salary as is mutually agreed upon by the
Company and LGIC. The Stockholders' Agreement also establishes the Board of
Directors of VCS at four directors, of which two must be designees of LGIC, and
provides that unless LGIC consents in writing, no LGIC designee to the Board of
Directors of VCS may be removed, except for cause.
14
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending December 31, 1999 and recommends that
stockholders vote in favor of the ratification of such appointment. In the event
of a negative vote on such ratification, the Board of Directors will reconsider
its selection. The Board of Directors anticipates that representatives of Arthur
Andersen LLP will be present at the Meeting, will have the opportunity to make a
statement if they desire, and will be available to respond to appropriate
questions.
DEADLINE FOR RECEIPT OF STOCKHOLDERS PROPOSALS
Stockholder proposals that are intended to be presented at the annual
meeting of stockholders of the Company to be held during calendar 2000 must be
received by the Company no later than January 11, 1999 in order to be included
in the proxy statement and form of proxy relating to such meeting. Pursuant to
Rule 14a-4 under the Exchange Act, the Company intends to retain discretionary
authority to vote proxies with respect to stockholder proposals for which the
proponent does not seek to have the Company include the proposed matter in the
proxy statement for the annual meeting to be held during calendar 2000, except
in circumstances where (i) the Company receives notice of the proposed matter no
later than March 24, 1999 and (ii) the proponent complies with the requirements
set forth in Rule 14a-4.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Meeting.
If any other matters properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
Dated: April 30, 1999
15
<PAGE>
VODAVI TECHNOLOGY, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of VODAVI TECHNOLOGY, INC., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement of the Company, each dated April 30,
1999, and hereby appoints William J. Hinz and Gregory K. Roeper, and each of
them, proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1999 Annual Meeting of Stockholders of the Company to be held on Monday, June 7,
1999, at 9:00 a.m., local time, at the Company's corporate headquarters at 8300
Raintree Drive, Scottsdale, Arizona 85260, and at any adjournment or
adjournments thereof, and to vote all shares of the Company's Common Stock that
the undersigned would be entitled to vote if then and there personally present,
on the matters set forth below:
1. ELECTION OF DIRECTORS: [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for all
as indicated) nominees listed below.
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below:
William J. Hinz, Gilbert H. Engels, Stephen A McConnell,
Nam K. Woo, Emmett E. Mitchell
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such matters which may properly come before the meeting or any
adjournment or adjournments thereof.
(CONTINUED, AND TO BE SIGNED AND DATED, ON THE REVERSE SIDE.)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY; AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.
A majority of such proxies or substitutes as shall be present and shall act
at said meeting or any adjournment or adjournments thereof (or if only one shall
be present and act, then that one) shall have and may exercise all of the powers
of said proxies hereunder.
Dated ______________________, 1999 _______________________________________
Signature
_______________________________________
Signature
(This Proxy should be dated, signed by
the stockholder(s) exactly as his or
her name appears hereon, and returned
promptly in the enclosed envelope.
Persons signing in a fiduciary capacity
should so indicate. If shares are held
by joint tenants or as community
property, both stockholders should
sign.)
SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Votes must be indicated in Black or Blue ink. [X]
