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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act ofOF 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
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[X]/X/ Definitive Proxy Statement
[_]/ / Definitive Additional Materials
[_]/ / Soliciting Material Pursuant to Section 240.14a-11(c)Rule 14a-11(c) or Section 240.14a-12Rule 14a-12
View Tech, Inc.
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(Name of Registrant as Specified Inin Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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3) Per unit price or other underlying or other underlying value of
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the amount on which the filing fee is calculated and state how it
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Notes:---------------------------------------------------------------
VIEW TECH, INC.
950 Flynn Road
Camarillo, California3760 CALLE TECATE, SUITE A
CAMARILLO, CALIFORNIA 93012
April 21, 199730, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting (the "Annual
Meeting") of Stockholders of View Tech, Inc., a Delaware corporation (the
"Company"), which will be held at 10:00 a.m. on May 19, 1997,June 3, 1998, at the
Hyatt
Westlake Plaza, locatedCompany's corporate office at 880 South Westlake Boulevard, Westlake Village,3760 Calle Tecate, Suite A, Camarillo
California 91361.93012. All holders of the Company's outstanding Common Stock as
of April 7, 19971998 are entitled to vote at the Annual Meeting.
Enclosed is a copy of the Notice of Annual Meeting of Stockholders,
proxy statement and proxy. A current report on the business operations of
the Company will be presented at the meeting, and stockholders will have an
opportunity to ask questions.
We hope you will be able to attend the Annual Meeting. Whether or not
you expect to attend, it is important you complete, date, sign, date, and return
the proxy in the enclosed envelope in order to make certain that your shares
will be represented at the Annual Meeting.
Sincerely,
/s/ Robert G. Hatfield
Robert G. HatfieldWilliam J. Shea
Chief Executive Officer
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VIEW TECH, INC.
950 Flynn Road
Camarillo, California3760 CALLE TECATE, SUITE A
CAMARILLO, CALIFORNIA 93012
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 1997TO BE HELD JUNE 3, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Stockholders of View Tech, Inc., a Delaware corporation (the "Company"), will
be held at 10:00 a.m. local time, on May 19, 1997,June 3, 1998, at the Hyatt Westlake Plaza,Company's corporate
office, located at 880 South Westlake Boulevard, Westlake Village,3760 Calle Tecate, Suite A, Camarillo, California 9136193012
for the following purposes:
1. To elect threetwo Class IIIII Directors to the Board of Directors;
2. To approve amendmentsan amendment to the 1997 Non-Employee Director Stock IncentiveOption
Plan to (i) increase the shares of capital stockCommon Stock of the Company reserved
for issuance under the planPlan by 300,000100,000 to a total of 600,000 shares and
(ii) increase the maximum number of shares for which any one person
may receive option grants from 150,000 shares to 200,000 shares in
the aggregate per calendar year;shares;
3. To approve and adopt the Employee Stock Purchase Plan;
4. To approve and adopt the 1997 Non-Employee Directors Stock Option
Plan;
5. To ratify the selection of Arthur Andersen LLP as the Company's
independent accountants for the year ended December 31, 1997;1998; and
6.4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 7, 1997,1998,
as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and all adjourned meetings thereof.
By Order of the Board of Directors
/s/ Robert G. Hatfield
Robert G. HatfieldWilliam J. Shea
Chief Executive Officer
Dated: April 21, 199730, 1998
PLEASE COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE RETURN
ENVELOPE FURNISHED FOR THAT PURPOSE 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.
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VIEW TECH, INC.
950 Flynn Road
Camarillo, California3760 CALLE TECATE, SUITE A
CAMARILLO, CALIFORNIA 93012
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of View Tech, Inc. (the
"Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 10:00 a.m., local time, on May 19, 1997,June 3, 1998, at the
Hyatt Westlake
Plaza,Company's corporate office, located at 880 South Westlake Boulevard, Westlake Village,3760 Calle Tecate, Suite A, Camarillo,
California 9136193012, and at any adjournment thereof. When suchthe enclosed proxy is
properly executed and returned, the shares it represents will be voted in
accordance with any directions noted thereon. If no specification is
indicated, the shares will be voted "FOR" (i) the election as directorsClass II
Directors of the threetwo nominees listed thereon, (ii) the approval of the amendmentsan
amendment to the Company's 1997 Stock Incentive Plan,
(iii) the approval and adoption of the Employee Stock Purchase Plan, (iv) the
approval and adoption of the 1997 Non-Employee DirectorsDirector Stock Option Plan to
increase the shares of Common Stock of the Company reserved for issuance
under the Plan by 100,000 to a total of 150,000 shares, and (v)(iii) the
approval of Arthur Andersen LLP as the Company's independent accountants for
the year ending December 31, 1997.1998. Any shareholderstockholder giving a proxy has the
power to revoke it at any time before it is voted by written notice to the
Secretary of the Company, by issuance of a subsequent proxy, or by voting at
the Annual Meeting in person.
At the close of business on April 7, 1997,1998, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding 6,381,7446,701,310 shares of Common
Stock, $0.0001 par value per share ("Common Stock"). Each share of Common
Stock entitles the holder of record thereof to one vote on any matter coming
before the Annual Meeting. Only stockholders of record at the close of
business on April 7, 19971998 are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
The enclosed proxy, when properly signed, also confers discretionary
authority with respect to amendments or variations to the matters identified
in the Notice of Annual Meeting and with respect to other matters which may
be properly brought before the Annual Meeting. At the time of printing this
Proxy
Statement, theproxy statement, management of the Company is not aware of any other matters
to be presented for action at the Annual Meeting. If, however, other matters
which are not now known to the management should properly come before the Annual
Meeting, the proxies hereby solicited will be exercised on such matters in
accordance with the best judgment of the proxyholders.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling, and mailing the proxy
solicitation materials. Proxies may be solicited personally, by mail, or by
telephone, by directors, officers, and regular employees of the Company who
will not be additionally compensated therefor. It is anticipated that this
proxy statement and accompanying proxy will be mailed on or about April 21, 1997May 11,
1998 to all stockholders entitled to vote at the Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are more fully discussed below.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND OFFICERS
The following table sets forth certain information with respect to (i)
each director and nominee for director of the Company, (ii) the named
executive officers in the Summary Compensation Table on page 7,8, (iii) all
directors and executive officers of the Company as a group at April 15, 1997,17, 1998,
including the number of shares of Common Stock beneficially owned by each of
them, and (iv) each person known by the Company to own beneficially more than
5% of the outstanding shares of the Company's Common Stock. Unless otherwise indicated
below, the business address of each individual is the same as the address of
the Company's principal executive offices.
Amount and Nature Percent of
of Beneficial Class of
Ownership of Common
Named Executives Common Stock(1) Stock
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Robert G. Hatfield(2) 720,000 11.0%
John W. Hammon(3) 600,000 9.2%
William M. McKay(4) 73,300 1.1%Shea(2) 50,000 *
Franklin A. Reece, III(5)III(3) 562,663 8.7%
Directors8.4%
David A. Kaplan(4) - *
Calvin M. Carrera(6) 24,000Carrera(5) 26,000 *
Angelo P. Gentile(6) 11,631 *
Directors
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Robert F. Leduc(7) 14,00011,000 *
David F. Millet(8) 228,658 3.6%251,158 3.8%
Paul C. O'Brien(9) 1,061,250 15.6%1,164,250 17.4%
All Directors and Executive 3,345,502 45.7%2,076,702 31.0%
Officers as a Group
(9(8 People)
5% Stockholders
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Robert G. Hatfield(10) 517,500 7.7%
John W. Hammon(11) 503,500 7.5%
Mark P. Kiley(10) 1,056,250 15.6%Kiley(12) 1,089,250 16.3%
Telcom Holding, LLC(11) 975,000 14.5%LLC(13) 1,008,000 15.0%
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* Less than 1%
2
(1) Includes shares issuable upon the exercise of options or warrants that are
exercisable within 60 days of the date of this Proxy Statement.proxy statement. The shares
underlying such options or warrants are deemed to be outstanding for the
purpose of computing the percentage of outstanding stock owned by such
personsperson individually and by each group of which they aresuch person is a member, but
are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(2) Chief Executive Officer and director of the Company. Includes 150,000
shares issuable upon exercise of options and 120,000 shares held in an
irrevocable trust for the benefit of Mr. Hammon's minor children, of
which Mr. Hatfield is trustee. Mr. Hatfield has sole investment and
voting power with respect to such shares. (3) EffectiveCompany effective April 17,
1997, Mr. Hammon resigned as President and Chief Operating Officer of
the Company and as a director effective May 20, 1997. See "Employment
and Other Compensatory Agreements."1998. Includes 150,00050,000 shares issuable upon exercise of options. Mr.
Hammon'sShea's address is 35065 Beach Road,
San Juan Capistrano, California 92675. (4) Chief Financial Officer745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(3) President and Secretary of the Company. Includes 73,300 shares issuable upon
exercise of options.
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(5) President anda director of the Company and Chief Executive Officer of
USTeleCenters, Inc., a wholly-owned subsidiary of the Company ("UST").
Includes 73,602 shares issuable upon exercise of options. Mr. Reece's
address is 745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(6)(4) Chief Financial Officer of the Company and USTeleCenters. Mr. Kaplan's
address is 745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(5) General Manager of the Company. Includes 14,00016,000 shares issuable upon
exercise of options.
(6) Vice President of Finance of the Company and USTeleCenters. Mr. Carrera'sGentile's
address is 10550 Summer View Circle, Camarillo, California
93012.745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(7) Consists of 14,0006,000 shares issuable upon exercise of options. Mr. Leduc's
address is 26 Thorn Oak, Trabuco Canyon, California 92679.
(8) Includes 10,00012,000 shares issuable upon exercise of options. Mr. Millet's
address is 623 Chestnut Street, Needham, Massachusetts 02192.
(9) Chairman of the Company. Includes 650,000 shares of Common Stock and
325,000 Common Stock purchase warrants currently owned by Telcom Holding,
LLC ("Telcom"), of which Mr. O'Brien is a managing member, and 81,250
Common Stock purchase warrants owned by Mr. O'Brien individually.individually and 12,000
shares issuable upon exercise of options. See "Certain Relationships and
Related Transactions--Transactions with Telcom Holding, LLC." Mr.
O'Brien's address is 205 Mattison Drive, Concord, Massachusetts 01742.
(10) Prior Chief Executive Officer and a director of the Company. Mr. Hatfield
resigned effective April 17, 1998. See "Certain Relationships and Related
Transactions." Includes 150,000 shares issuable upon exercise of options.
(11) Mr. Hammon resigned as President and Chief Operating Officer of the Company
effective April 17, 1997, and resigned as a director of the Company
effective May 20, 1997. See "Employment and Other Compensatory
Agreements." Includes 150,000 shares issuable upon exercise of options.
Mr. Hammon's address is 35065 Beach Road, San Juan Capistrano, California
92675.
(12) Consists of 650,000 shares of Common Stock and 325,000 Common Stock
purchase warrants currently owned by Telcom, of which Mr. Kiley is a
managing member, and 81,250 Common Stock purchase warrants owned by Mr.
Kiley individually. See "Certain Relationships and Related
Transactions--Transactions with Telcom Holding, LLC." Mr. Kiley's address
is 278 River Road, Andover, Massachusetts 01810.
(11)(13) Consists of 650,000 shares of Common Stock and 325,000 Common Stock
purchase warrants currently owned by Telcom. See "Certain Relationships
and Related Transactions--Transactions with Telcom Holding, LLC." Telcom's
address is c/o The O'Brien Group, Inc., Two International Place, Boston,
Massachusetts 02110.
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ELECTION OF DIRECTORS
(Item(ITEM 1 of the Proxy Card)OF THE PROXY CARD)
The Company has a classified Board of Directors consisting of two Class
I Directors (Robert G. Hatfield and Franklin A. Reece, III),III and one (1) vacancy, two Class II
Directors (John W. Hammon(William Shea and David F. Millet), and three Class III Directors
(Calvin M. Carrera, Robert F. Leduc and Paul C. O'Brien), who will serve
until the annual meetings of stockholders to be held in 1999, 1998, and 1997,2000,
respectively, andor until their respective successors are elected and qualified.
At each annual meeting of stockholders, directors are elected for a full
term of three years to succeed those directors whose terms expire on the
annual meeting dates.
Management's nominees for election at the Annual Meeting as Class IIIII
directors are Calvin M. Carrera, RobertWilliam J. Shea and David F. Leduc and Paul C. O'Brien.Millet. If elected, the nominees
will serve as directors until the Company's annual meeting of stockholders in
the year 2000, and2001, or until their successors are elected and qualified. If any
nominee declines to serve or becomes unavailable for any reason, or if a
vacancy occurs before the election (although management knows of no reason to
anticipate that this will occur), the proxies may be voted for such
substitute nominees as management may designate.
If a quorum is present and voting, the threetwo nominees for Class IIIII
directors receiving the highest number of votes will be elected as Class IIIII
directors. Abstentions and shares held by brokers that are present, but not
voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-votes," will be counted as present for purposes
of determining if a quorum is present.
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The table below sets forth for the current directors and director
nominees, including the Class IIIII nominees to be elected at this meeting,the Annual
Meeting, certain information with respect to age and background.
Name Position with Company Age Director SinceNAME POSITION WITH COMPANY AGE DIRECTOR SINCE
- ---- --------------------- --- --------------
ClassCLASS I directors whose term expires at theDIRECTOR WHOSE TERM EXPIRES AT THE 1999
Annual Meeting of Stockholders
(to be held inANNUAL MEETING OF STOCKHOLDERS (TO BE HELD IN
1999):
Robert G. Hatfield Chief Executive Officer 51 1992
and Director of the
Company
Franklin A. Reece, III President, Chief Operating 51 1996
Officer and Director
50 1996
3
Name Position with Company Age Director Since
- ---- --------------------- --- --------------
ClassCLASS II directors whose term expires at the 1998
Annual Meeting of Stockholders
(to be held in 1998):
John W. Hammon Director 45 1992DIRECTORS AND DIRECTOR NOMINEES WHO ARE
CURRENTLY UP FOR ELECTION:
David F. Millet Director 5253 1996
ClassWilliam J. Shea(1) Chief Executive Officer 49 1998
and Director
CLASS III directors who are currently up for
re-election:DIRECTORS WHOSE TERM EXPIRES AT THE 2000
ANNUAL MEETING OF STOCKHOLDERS (TO BE HELD IN 2000):
Calvin M. Carrera Director 5152 1994
Robert F. Leduc Director 5152 1994
Paul C. O'Brien Chairman of the Board of 5758 1997
Directors
Business Experience
Directors and Nominees for Director
Class I Directors
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Robert G. Hatfield co-founded the Company in 1992 and has served as a
director and its(1) Appointed Chief Executive Officer since the Company's inception. From
1992 until January 1997, Mr. Hatfield also served as the Company's Chairman.
From 1977 to December 1991, Mr. Hatfield was Executive Vice President of Delphi
Information Systems, Inc., a provider of data processing systems for the
distribution portion of the property and casualty insurance industry. During Mr.
Hatfield's 14 years with Delphi, the firm grew from $100,000 in annual revenues
and six employees, to $50,000,000 in annual revenues and 350 employees. Mr.
Hatfield's education includes a B.B.A. from California Western University and an
M.B.A. from Thunderbird: American Institute for Foreign Trade.
Franklinon April 17, 1998.
BUSINESS EXPERIENCE
DIRECTORS AND NOMINEES FOR DIRECTOR
Class I Director
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FRANKLIN A. Reece,REECE, III has been a director of the Company since November
29, 1996 and President and Chief Operating Officer of the Company since April
21, 1997. Mr. Reece is also President and Chief Executive Officer of
USTeleCenters, Inc., a wholly-owned Subsidiary of the Company ("UST"). From
November 29, 1996 until April 21, 1997, Mr. Reece was a Vice President of the
Company. In 1986, Mr. Reece founded USTeleCenters, Inc., a Massachusetts
corporation ("USTeleCenters"), which merged with the Company in 1996 (the
"Merger"). Mr. Reece's positions with USTeleCenters have been Chairman,
President and Chief Executive Officer. Prior to establishing USTeleCenters,
he was Director of Manufacturing for Zymark Corporation, a manufacturer of
robotic systems for laboratory automation from 1983 until 1986. From 1968
until 1983, he was General Manager of Sales for The Reece Corporation, a
manufacturer of specialized automatic equipment for the apparel industry. A
graduate of Harvard College, Mr. Reece has extensive international and
domestic sales, distribution and management experience. Mr. Reece serves on
the boards of several Boston-based non-profit organizations. Mr. Reece
originally was nominated as a director pursuant to an agreement between the
Company and USTeleCenters in connection with the Merger. In the event Mr.
Reece does not complete his term as a director, the individuals that
comprised the board of directors of USTeleCenters may designate a replacement.
4
Class II Directors and Director Nominees
- ------------------
John W. Hammon co-founded the Company and currently serves as a
director of the Company. From the Company's inception until April 17, 1997, Mr.
Hammon served as President and Chief Operating Officer of the Company. From
inception until May 1995, Mr. Hammon also served as Secretary. However, Mr.
Hammon resigned as a director of the Company effective May 20, 1997. See
"Employment and Other Compensatory Agreements." Mr. Hammon has over 16 years of
experience in the computer industry, including the marketing of advanced
software and hardware products. From 1987 to December 1991, he was Western
Regional Director of PictureTel Corporation. Prior to joining PictureTel, he
held positions in field sales, customer service, and regional sales management
with
4
ADP, EDS, and Tandem Computers. Mr. Hammon's educational background includes a
B.S. in Finance from California State University - Los Angeles.
David----------------------------------------
DAVID F. MilletMILLET has been a director of the Company since the Merger.
Mr. Millet was one of the original founders of USTeleCenters and was a
director of USTeleCenters from its inception in 1986 through the date of the
Merger. Since 1988, he has served as President of Chatham Venture
Corporation, a private investment firm. Since 1994, he has served as a
director and President of Thomas Emery Son's, L.L.C., an investment company.
Since 1996, he has served as President and Chief Executive Officer of
Holographix, Inc., a manufacturer of holographic optical components and
systems. Mr. Millet, a graduate of Harvard College, is also a director of
Wall Data, Inc. and Natural MicroSystems Inc. Class III Directors
- -------------------
Calvin M. CarreraMr. Millet originally was
nominated as a director pursuant to an agreement between the Company and
USTeleCenters in connection with the Merger.
WILLIAM J. SHEA has been a director of the Company since February, 1998
and was appointed Chief Executive Officer on April 17, 1998. Mr. Shea is the
former BankBoston Corp. vice chairman and retired in July 1997. Mr. Shea had
a long career with Coopers & Lybrand before joining the BankBoston and was
responsible for engineering the bank's recovery from the real estate collapse
of the early 1990s. In December 1997, Mr. Shea became chairman of the board
of Centennial Technologies, Inc. in Wilmington. In addition to his role at
Centennial, Mr. Shea also serves on the board of Starmet Corp., Micros Inc.,
the finance committee of Children's Hospital, the board of trustees of
Northeastern University, and the executive committee of the Boston Stock
Exchange.
Class III Directors
- -------------------
CALVIN M. CARRERA has been General Manager of the Company since August
1997 and a director of the Company since September 1994. From April 1995
through August 1997, Mr. Carrera iswas Director of Advanced Programs for
Engineering Management Concepts ("EMC"), a firm which specializes in
professional engineering and management services for government and industry
clients. He iswas responsible for advanced program development and execution and has been with EMC since April
1995.execution.
From July 1994 to April 1995, he was Director of Western Operations for APEX
Technologies, Inc. ("APEX"), a privately held company which provides
engineering and training services for the federal and state governments.
Prior to joining APEX, Mr. Carrera served for 15 years as General Manager of
Veda Incorporated, a privately held firm which provides professional
engineering services for a diverse client base. Since 1991, he has served
as President of the Defense Services Industry Executive Association, a
non-profit corporation with 43 member companies dedicated to improving
communications within the defense services industry and between the defense
services industry and government. Mr. Carrera holds a B.S. in Electrical
Engineering from the University of Utah and a M.S. in Electrical Engineering
from the University of Southern California, where he has also completed
classroom work fortoward a doctoral degree.
RobertROBERT F. LeducLEDUC has been a director of the Company since September 1994.
From January 1992 to the present, he has been President and Chief Executive
Officer of EconomicsAmerica of California, a California-based not-for-profitnon-profit
funding organization that promotes education in economics. From January 1990
to January 1992, he was President of Foundation Group, another non-profit
organization. Mr. Leduc also has been a Visiting Professor at the L.B.J.
School of Public Affairs at the University of Texas at Austin since 1990 and
was previously a visiting professor or lecturer at the Kennedy School of
Public Administration at Harvard University, the University of Alberta, and
Rutgers University. Mr. Leduc has specialized in providing consulting
services to not-for-profit organizations since 1972, and served as Executive
Director of a charitable foundation from 1982 to 1985 and a trade association
from 1985 to 1988. Mr. Leduc has ana M.B.A. from Wayne State University and is
currently completing the requirements for a Ph.D. in Public Administration
from the University of Colorado.
PaulPAUL C. O'BrienO'BRIEN has been chairmanChairman of the Company since January 1997. He
is the founder and managing member of Telcom Holding, LLC, ("Telcom"),a Massachusetts
limited liability company and an affiliate of the Company ("Telcom"), that
was formed in December 1996. From 1987 until 1994, Mr. O'Brien was with New
England Telephone and Telegraph Company ("New England Telephone"), the unit
of NYNEX covering the New England region. He joined New England Telephone in
1987 as Executive Vice President and Chief Operating Officer; in 1988 he was
appointed President and Chief Executive Officer; and in 1993 he was elected
Chairman. Mr. O'Brien serves on the boards of several companies, including
Bank of Boston Corp., Shiva Corporation,
5
First Pacific Networks, Inc. and Cambridge NeuroScience, Inc. Mr. O'Brien is
currently President of The O'Brien Group, Inc. and of Pan-Asia Development
Corporation, an investment firm concentrating on Asian ventures. He received
a degree in electrical engineering from Manhattan College and an MBAM.B.A. from
New York University. Mr. O'Brien was elected to the Board of Directors and
nominated Chairman pursuant to the terms of the agreement between the Company
and Telcom. See "Certain Relationships and Related Transactions."
Executive Officers
- ------------------
AngeloANGELO P. Gentile, age 37,GENTILE, has been a Vice President of Finance of the Company and
of UST since the Merger. Mr. Gentile was Chief Financial Officer of UST sincefrom
the Merger.Merger until February 1998. He was formerly with USTeleCenters from
August 1991, serving as its Chief Financial Officer since May 1995. Prior to
joining USTeleCenters, Mr. Gentile served as a Senior Auditor and Consultant
with Arthur
5
Andersen LLP's entrepreneurial and emerging business group. He
is a certified public accountant in Massachusetts and a member of both the
American Institute of Certified Public Accountants and the Massachusetts
Society of Certified Public Accountants. Mr. Gentile received a B.S. in
business administration from Northeastern University.
William M. McKay, age 42,DAVID A. KAPLAN, has been the Chief Financial Officer of the Company and
of UST since February 1998. For the past ten years, he served as the Chief
Financial Officer and Legal Officer, Regional Operating Officer and Secretary
of theMonitor Company since May 1995. From October 1992 through April 1995,
heInc., of Cambridge, Massachusetts, a world leader in
strategic management consulting whose clients are primarily international and
Fortune 500 companies. Previously, Mr. Kaplan was an independent consultant and principal of MK Associates, a firm that
provides financial and operational consulting services to businesses. From
January 1991 to October 1992, Mr. McKay was Senior Vice President and Chief Financial Officer at
Lifeline Systems, Inc. a public, nationwide producer of Kennedy-Wilson, Inc.,emergency response
systems. He has also been associated with Simplex Time Recorder Company and
Peat Marwick, Mitchell & Company. Mr. Kaplan graduated summa cum laude from
Fairleigh Dickinson University and holds a real estate brokerage concern.
Prior to his service with Kennedy-Wilson, Mr. McKay was Vice President and
Controller of HSM Group, a real estate investment company that is affiliated
with Kennedy-Wilson with interests in partnerships owning residential and
commercial properties. Mr. McKay also has ten years of public accounting
experience with Deloitte & Touche, most recently as a senior manager in its
audit department. Mr. McKay is a member of the American Institute of Certified
Public Accountants, and has a B.S. in business administration with an emphasis
in accountingJ.D. from the University of Southern California - Los Angeles.
Robert G. Hatfield and John W. Hammon are brothers. There are no other
family relationships among the directors and the executive officers of the
Company.
Board of Directors Meetings and Committees of the Board of DirectorsBoston College Law
School.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
There were eighteleven (11) meetings (including telephonic meetings) of the
Board of Directors during the six
monthsyear ended December 31, 1996.1997. All of the
directors attended each of these meetings. The Board of Directors has
authorized an Audit Committee and a Stock Option and Compensation Committee. There is no nominating committeeCommittee,
and the members of each committee are nominated by the majority vote of the
Board of Directors. Audit CommitteeThe Board of Directors does not have a nominating
committee.
AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee, which is currently
comprised of Messrs. Carrera,O'Brien, Leduc and Millet. Mr. Carrera was a member of
the Audit Committe through September 1997. The Audit Committee did not meetmet 4 times
(including telephonic meetings) during the six monthsyear ended December 31, 1996.1997, and
all members attended each meeting. The Audit Committee was formed to, among
other things, consult and meet with the Company's auditors and its Chief
Financial Officer and accounting personnel, review potential conflict of
interest situations, where appropriate, and report and make recommendations
to the full Board of Directors regarding such matters.
Compensation CommitteeSTOCK OPTION AND COMPENSATION COMMITTEE
The Board of Directors also has a Stock Option and Compensation
Committee, (the
"Compensation Committee"), which is comprised of Messrs. Carrera,Millet, Leduc and O'Brien. Mr.
Carrera was a member of the Stock Option and Compensation Committee through
September 1997. The Stock Option and Compensation Committee is responsible
for supervising the Company's executive compensation policies, administering the
employee incentive plans, reviewing officers' salaries, approving significant
changes in employee benefits, and recommending to the Board of Directors such
other forms of remuneration as it deems appropriate. The Stock Option and
Compensation Committee did not meetmet one (1) time during the six monthsyear ended December 31,
1996, but took action by unanimous written consent on one
occasion.
Director Compensation1997, and all members attended the meeting.
6
DIRECTOR COMPENSATION
All directors are reimbursed for out-of-pocket expenses in connection
with attendance at Board of Directors' meetings and all directors who are not
executive officers or employees of the Company currently receive a director's
fee of $1,000 per meeting attended (including telephonic meetings) and $1,000
per month for service as a director. Additionally, outside directors also
receive $500 per month for membership on committees of the Board of Directors.Directors
and an additional $250 per month is paid to the chairman of each committee.
Pursuant to the 1997 Non-Employee Director Stock Option Plan, proposed to be adopted, outside
directors will also receive 10,000 non-qualified stock options upon election as a
director and, after ninety (90) days of continuous service as an outside
director, 2,000 non-qualified stock options on the date of each annual
meeting,
commencing with this Annual Meeting.meeting. The 10,000 non-qualified stock options are automatically
exercisable but vest six (6) months following their issuance and have an
exercise price equal to the fair market value of the Common Stock on the
option grant date. The 2,000 non-qualified 6
stock options are fully vested
and exercisable as of the grant date and have an exercise price equal to the
fair market value of the Common Stock on the option grant date.
Compliance with Beneficial Ownership Reporting RulesCOMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than 10% of a registered class of the
Company's outstanding Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("Commission"). Such officers, directors, and stockholders are required by
Commission regulations to furnish the Company with copies of all such reports
that they file.
Based solely upon a review of copies of such reports furnished to the
Company during the six monthsyear ended December 31, 19961997 and thereafter, and written
representations received by the Company from directors, officers, and
beneficial owners of more than 10% of the Company's outstanding Common Stock
("reporting persons"), except as disclosed herein, the Company believes that,
during the sixtwelve months ended December 31, 1996,1997, all filing requirements
under Section 16(a) filing requirementsof Exchange Act applicable to the Company's reporting
persons were complied with. Compensation Committee InterlocksMr. O'Brien filed a late Form 3 that was due in
January 1997, a Form 4 relating to a transaction in October 1997 and Insider Participationa Form 5
that related to a transaction in March 1997. Mr. Millet filed a late Form 4
relating to a transaction in June 1997.
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Stock Option and Compensation Committee of the Board of
Directors of the Company was, during the sixtwelve months ended December 31,
1996,1997, an officer or employee of the Company or any of its subsidiaries, or
was formerly an officer of the Company or any of its subsidiaries or had any
relationshipsrelationship requiring disclosure by the Company under Item 404 of Regulation
S-K.S-K promulgated by the Commission.
During the sixtwelve months ended December 31, 1996,1997, no executive officer
of the Company served as (i) a member of the compensation committee (or other
board committee performing equivalent functions) of another entity, one of
whose executive officers served on the Compensation Committee of the Board of
Directors, (ii) a director of another entity, one of whose executive officers
served on the Compensation Committee of the Board of Directors, or (iii) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers
served as a director of the Company.
Executive Compensation7
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the Chief Executive
Officer and each of the most highly compensated executive officers whose
individual remuneration exceeded $100,000 (or would have exceeded $100,000 if
the reporting period covered herein was for twelve months) for the six monthsyear ended December 31,
19961997 (the "Named Executives"):
7
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
-------------------------------------------------------------------------- ------------
Name and Principal Position Year Salary Bonus Options(1)
- --------------------------- ---- -------------- ----- ----------------------
Robert G. Hatfield 1996(2) $114,6031997 $220,000 -- --50,000
Former Director and Chief Executive 1996(3) $114,603 -- --
Officer(2) 1996 $168,000 -- 100,000
Officer 1995 $126,000 -- 50,000
John W. Hammon(3) 1996(2) $114,603 -- --
Director and Former President 1996 $168,000 -- 100,000
and Chief Operating Officer 1995 $160,000 -- 50,000
William M. McKay 1996(2) $ 68,000 -- --1997 $136,000 25,000 15,000
Former Secretary and Chief 1996(3) $68,000 -- --
Financial Officer(4) 1996 $118,216 -- 25,000
Officer 1995 $ 17,914$17,914 -- 72,800
Franklin A. Reece, III 1996(2) $ 64,4921997 $198,000 $54,131 50,000
President and Director(5) 1996(3) $64,492 $43,111 --
President and Director(4) 1996 $120,000 $27,693 73,602
1995 $137,500 $20,300 --
Angelo P. Gentile 1997 $125,000 $15,000 15,000
Vice President of Finance(5) 1996(3) $50,497 $28,578 --
1996 $100,994 $36,145 49,068
1995 $75,000 $5,757 --
- ---------------------------
(1) All stock options granted to Messrs. Hatfield, HammonMcKay, Reece and Gentile in 1997
were granted under the Company's 1997 Section 16 Insiders Stock Option
Plan. All previous stock options granted to Messrs. Hatfield and McKay
were granted under the Company's 1995 Stock Option Plan. Mr.Messrs. Reece's
and Gentile's stock options were originally options to acquire
USTeleCentersUSTeleCenters' Common Stock that were converted into options to acquire the
Company's Common Stock upon consummation of the Merger.
(2) TheMr. Hatfield resigned as a director and Chief Executive Officer effective
April 17, 1998.
(3) During calendar year 1996, the Company changed its year end from June 30 to
December 31,31; therefore, the information presented for the footnoted 1996 represents the period
from July 1, 1996 to December 31, 1996.
(3) Effective April 17, 1997,(4) Mr. HammonMcKay resigned as PresidentChief Financial Officer effective January 31, 1998.
(5) Messrs. Reece and Chief
Operating Officer and as a director effective May 20, 1997. See
"Employment and Other Compensatory Agreements."
(4) Mr. ReeceGentile became an employeeemployees of the Company on November 29,
1996 in connection with the Merger, which was treated as a pooling of
interests for financial reporting purposes. The amounts shown up untilthrough such
date were paid by USTeleCenters. HeMr. Reece was appointed President and
Chief Operating Officer of the Company on April 21, 1997. From November 29,
1996 until April 21, 1997, Mr. Reece was Vice President of the Company.
Year End OptionsMr. Gentile was appointed Vice President of Finance of the Company on
November 29, 1996.
8
YEAR END OPTIONS
The following table sets forth information regarding unexercised options held by
the Named Executives.
No options were exercised during the six
months ended December 31, 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Unexercised Options ValueValued of In-the Money
at Fiscal Year End Options at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
Robert G. Hatfield 150,000/0 $247,500/$0
John W. Hammon(1) 150,000/050,000 $247,500/$0
William M. McKay 85,300/0 $193,035/72,800/15,000 $123,425/$074,055
Franklin A. Reece, III 73,602/0 $370,586/50,000 $363,373/$0246,850
Angelo P. Gentile 0/15,000 0/$74,055
- ---------------------------
(1) Effective April 17, 1997, Mr. Hammon resigned as President and Chief
Operating Officer and as a director effective May 20, 1997. See
"Employment and Other Compensatory Agreements."
8
Employment and Other Compensatory AgreementsEMPLOYMENT AND OTHER COMPENSATORY AGREEMENTS
The Company entered into an employment agreement with Mr. Reece on
November 29, 1996, which expires on December 31, 1998. Under the terms of
this agreement, Mr. Reece's annual base salary is $150,000 and he is entitled
to receive from the Company a minimum annual cash bonus of $25,000 for each
of 1997 and 1998. Any bonuses in excess of such minimum amounts are subject
to determination by the Company. On December 9, 1996, theThe Board of Directors of the Company
increased Mr. Reece's base salary to $198,000.$198,000 on December 9, 1996. The
agreement provides that upon termination of Mr. Reece's employment with the
Company, either by Mr. Reece for Good Reason"Good Reason" or by the Company without
Cause"Cause" (as those terms are defined in the employment agreement) he is
entitled to receive base salary payments through the first anniversary of the
date on which his employment was terminated (the "Termination Date"), or
December 31, 1998, whichever date is later, in addition to a cash lump-sum
payment of any accrued bonus and the continuation of fringe benefits until
the first anniversary of the Termination Date. Upon the voluntary
termination of his employment with the Company, he
shallMr. Reece is entitled to
receive all accrued base salary, bonus and other benefits. In the event that
his employment is terminated by the Company in connection with a change ofin
control of the Company, he will receive, for a period of time which is to be
not less than one year, his base salary, all fringe benefits to which he is
entitled and a cash lump-sum payment.payment of any accrued bonus.
On April 17, 1998, William J. Shea was appointed Chief Executive Officer
of the Company. In December 1996,connection with his appointment the Company also reaffirmed annual salary levels for
eachCompensation
Committee of Messrs. Hatfield, Hammon and McKaythe Board of $220,000, $220,000 and $136,000,
respectively. The Company is inDirectors granted Mr. Shea an option to purchase
200,000 shares of Common Stock at an exercise price of $4.38 per share which
was the processclosing price of negotiating an employment
agreement with Mr. Hatfield. In February 1997, the Company entered into a new
agreement with Mr. McKay which provides for similar benefits as those provided
for in Mr. Reece's employment agreement (except with a $136,000 salary and no
guaranteed bonus), which agreement is effective asCompany's Common Stock on the NASDAQ National
Market System on the date of December 9, 1996.his appointment. The Company and Mr. HammonShea also
agreed to a base annual salary of $225,000. It is anticipated that the
Company and Mr. Shea will enter into an employment agreement which will
provide the customary benefits for a Chief Executive Officer of a public
company.
AMENDMENT TO THE 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(ITEM 2 OF THE PROXY CARD)
INTRODUCTION
The stockholders are being asked to approve an amendment to the
Company's 1997 Non-Employee Director Stock Option Plan (the "Director Plan")
which will increase the maximum number of shares of Common Stock reserved for
issuance over the term of the Plan from 50,000 to 150,000 shares.
9
The Board of Directors adopted the amendment on February 18, 1998,
subject to stockholder approval at the Annual Meeting. The Board believes
the amendment is necessary in order to assure that the Company will have reacheda
sufficient reserve of Common Stock over the term of the Director Plan, to
provide option grants as an agreementequity incentive to attract and retain the
services of key individuals essential to the Company's long-term success.
The following is a summary of the principal features of the amended
Director Plan. The summary, however, does not purport to be a complete
description of all the provisions of the Director Plan. Any stockholder of
the Company who wishes to obtain a copy of the actual plan document may do so
upon written request to the Corporate Secretary at the Company's principal
executive offices in principle (the
"AgreementCamarillo, California.
SHARE RESERVE
A reserve of 150,000 shares of Common Stock has been set aside for
issuance over the ten (10)-year term of the Director Plan. Should any
options granted under the Director Plan terminate prior to exercise in Principle")full,
the shares subject to the unexercised portion of those options will be
available for subsequent option grants. In addition, any unvested shares
issued under the Director Plan and subsequently repurchased by the Company at
the option exercise price paid per share pursuant to the Company's repurchase
rights will be added back to the number of shares of Common Stock reserved
for issuance under the Director Plan and will accordingly be available for
reissuance through one or more subsequent option grants made under the
Director Plan.
CHANGES IN CAPITALIZATION
In the event any change is made to the outstanding shares of Common
Stock by reason of any merger, consolidation or reorganization of the Company
or any recapitalization, stock dividend, stock split, combination of shares,
exchange of shares or other change in corporate structure effected without
the Company's receipt of consideration, appropriate adjustments will be made
to the maximum number and/or class of securities available for issuance under
the Director Plan and the number and/or class of securities and exercise
price per share in effect under each outstanding option under the Director
Plan. All such adjustments will be designed to preclude the enlargement or
dilution of participant rights and benefits under the Director Plan.
ELIGIBILITY
Only the non-employee members of the Board will be eligible to
participate in the Director Plan. As of April 17, 1998, three non-employee
Board members were eligible to participate in the Director Plan.
VALUATION
The fair market value per share of Common Stock on any relevant date
under the Director Plan will be the closing selling price per share on that
date on the NASDAQ National Market. On April 17, 1998, the closing selling
price per share was $4.38.
AUTOMATIC OPTION GRANTS
All automatic option grants under the Director Plan will be made in
strict compliance with the express provisions of such Plan. Accordingly,
stockholder approval of this Proposal will also constitute pre-approval of
each option granted pursuant to the provisions of the Director Plan
summarized below and the subsequent exercise of that option in accordance
with such provisions.
1. Each individual who first becomes a non-employee Board member will, upon
election, automatically be granted at that time an option grant for 10,000
shares of Common Stock, provided such individual has not previously been in
the Company's employ.
10
2. On the date of each Annual Meeting of Stockholders, beginning with this
Annual Meeting, each individual who is to continue to serve as a
non-employee Board member will automatically be granted an option to
purchase 2,000 shares of Common Stock, provided that individual has
continuously served as a non-employee Board member for at least ninety (90)
days. There will be no limit on the number of such 2,000-share option
grants which any one non-employee Board member may receive over his or her
period of Board service, and non-employee Board members who have previously
served in the Company's employ will be eligible for one or more 2,000-share
option grants.
3. Each automatic option grant will have an exercise price per share equal to
100% of the fair market value per share of Common Stock on the option grant
date. Each option will have a maximum term of ten (10) years measured from
the option grant date, subject to earlier termination following the
optionee's cessation of Board service.
4. Each automatic option will remain exercisable for a twelve (12)-month
period following the optionee's cessation of service as a Board member. In
no event, however, may the option be exercised after the expiration date of
the option term. During the applicable post-service exercise period, the
option may not be exercised for more than the number of option shares (if
any) in which the Board member is vested at the time of his or her
cessation of Board service.
5. Each initial 10,000-share option grant will be immediately exercisable for
all the option shares, but any unvested shares purchased by the optionee
under that grant will be subject to repurchase by the Company, at the
exercise price paid per share, upon the optionee's cessation of Board
service prior to vesting in those shares. The shares subject to the
initial 10,000-share option grant will vest (and the Company's repurchase
rights will lapse) upon the optionee's completion of six (6) months of
Board service measured from the grant date. Each annual 2,000-share option
grant will be immediately exercisable for all the option shares as
fully-vested shares.
LIMITED TRANSFERABILITY
Options granted under the Director Plan may be transferred or assigned
during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more such
family members, to the extent such transfer or assignment is in furtherance
of the optionee's estate plan.
ACCELERATION
The shares subject to each initial 10,000-share option grant immediately
vests upon (i) the optionee's death or permanent disability while serving as
a Board member, (ii) an acquisition of the Company by a merger in which there
is a change in ownership of seventy-five percent (75%) or more of the
Company's outstanding voting securities or through a sale of all or
substantially all of the Company's assets or (iii) a change in control of the
Company effected by a successful tender offer for more than seventy-five
percent (75%) of the Company's outstanding voting securities or by a change
in the majority of the Board as a result of one or more contested elections
for Board membership.
The acceleration of vesting in the event of a change in the ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.
AMENDMENT AND TERMINATION
The Board may amend or modify the Director Plan in any or all respects
whatsoever, subject to any stockholder approval required under applicable
laws or regulations. The Board may terminate the Director Plan at any time,
and the Director Plan will in all events terminate on March 10, 2007.
11
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Director Plan are non-statutory options which
are not intended to satisfy the requirements of Section 422 of the Internal
Revenue Code (the "Code"). The Federal income tax treatment for such options
is as follows:
No taxable income is recognized by an optionee upon the grant of a
non-statutory option. The optionee will in general recognize ordinary
income, in the year in which the option is exercised, equal to the excess of
the fair market value of the purchased shares on the exercise date over the
exercise price paid for the shares, and the optionee will be required to
satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the
optionee's termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of exercise but
will have to report as ordinary income, as and when the Company's repurchase
right lapses, an amount equal to the excess of (i) the fair market value of
the shares on the date the repurchase right lapses over (ii) the exercise
price paid for the shares. The optionee may, however, elect under Section
83(b) of the Code to include as ordinary income in the year of exercise of
the option an amount equal to the excess of (i) the fair market value of the
purchased shares on the exercise date over (ii) the exercise price paid for
such shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for
the taxable year of the Company in which such ordinary income is recognized
by the optionee.
ACCOUNTING TREATMENT
Option grants with an exercise price equal to the fair market value of
the shares on the grant date will not result in any direct compensation
expense to the Company's earnings, but such options may be a factor in
determining the Company's earnings per share on a diluted basis. In
addition, the Company must disclose, in pro-forma statements to the Company's
financial statements, the impact those options would have upon the Company's
reported earnings were the value of those options at the time of grant
treated as compensation expense.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the issued and outstanding shares
present or represented and entitled to vote at the Annual Meeting is sought
for the 100,000-share increase to the Director Plan. The Board of Directors
believes that option grants under the Director Plan play an important role in
the Company's efforts to attract, employ, and retain individuals essential to
the Company's long-term success. If the stockholders do not approve the
proposal, then the Director Plan will continue to remain in effect, and
option grants may continue to be made pursuant to the provisions of the
Director Plan until the available reserve of Common Stock as last approved by
the stockholders has been issued pursuant to option grants made under the
Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THIS PROPOSAL.
NEW PLAN BENEFITS
As of April 17, 1998, no options had been granted on the basis of the
100,000 share increase which is the subject of this proposal.
-----------------------
12
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(ITEM 3 OF THE PROXY CARD)
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31, 1998, and has
further directed that management submit the selection of independent
accountants for ratification by the stockholders at the Annual Meeting.
Arthur Andersen LLP has no financial interest in the Company and neither it
nor any member or employee of the firm has had any connection with the
Company in the capacity of promoter, underwriter, voting trustee, director,
officer or employee. The Delaware General Corporation Law does not require
the ratification of the selection of independent accountants by the Company's
stockholders, but in view of the importance of the financial statements to
the stockholders, the Board of Directors deems it advisable that they pass
upon such selection.
Arthur Andersen LLP acted as the Company's independent accountants for
the year ended December 31, 1997. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting. They have been offered the
opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
In the event the stockholders fail to ratify the selection of Arthur
Andersen LLP , the Audit Committee of the Board of Directors will reconsider
whether or not to retain the firm. Even if the selection is ratified, the
Audit Committee and the Board of Directors in their discretion may direct the
appointment of a different independent accounting firm at any time during the
year if they determine that such a change would be in the best interests of
the Company and its stockholders.
BOARD COMPENSATION COMMITTEE REPORT
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation plan is administered by the Stock
Option and Compensation Committee, which was comprised of three non-employee
directors during the period from January 1, 1997 through December 31, 1997.
The Stock Option and Compensation Committee works with management to develop
compensation plans for the Company and is responsible for determining the
compensation of each executive officer and recommending such compensation to
the Board of Directors.
The Company's executive compensation program is designed to align
executive compensation with the Company's business objectives and the
executive's individual performance, and to enable the Company to attract,
retain and reward executive officers who contribute, and are expected to
contribute, to the Company's long-term success. In establishing executive
compensation, the Stock Option and Compensation Committee is guided by the
following principles: (i) the total compensation for executive officers
should be sufficiently competitive with the compensation paid by other
high-growth companies in the telecommunications industry for officers in
comparable positions so that the Company can attract and retain qualified
executives and (ii) individual compensation should include components that
reflect the financial performance of the Company and the performance of the
individual.
The compensation of the Company's executive officers consists of a
combination of base salary, bonuses and equity-based compensation. The Stock
Option and Compensation Committee believes that executive compensation should
be designed to motivate executives to increase stockholder values, and
further believes that executive officers can best increase stockholder value
through the Company's operating results by supplying high quality products
and services to the Company's customers.
BASE SALARY. The Stock Option and Compensation Committee sets the base
salary for executive officers by reviewing the salaries for comparable
positions in high-growth companies in the Company's industry, the historical
compensation levels of the Company's executives and the executive's
individual performance in the preceding year. The Compensation Committee
utilizes salary surveys for reference purposes, but its salary determinations
are not subject to specific criteria.
13
CHIEF EXECUTIVE OFFICER COMPENSATION. The compensation for the
Company's Chief Executive Officer, Mr. Robert G. Hatfield, was determined
based on the same policies and criteria as the compensation for other
executive officers.
The Stock Option and Compensation Committee
Paul C. O'Brien, Chairman
David F. Millet
Robert F. Leduc
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TERMINATION AGREEMENTS. John W. Hammon has resigned as President and Chief
Operating Officer of the Company effective April 17, 1997, and has also resigned fromas a
director of the Company's Board of Directors,Company effective May 20, 1997. Under the
Agreement in Principle, Mr. Hammon will perform certain consulting services foris the brother of
Robert G. Hatfield, the former Chief Executive Officer and a former director
of the Company. In April 1997, the Company entered into a Severance and
Consulting Agreement (the "Severance Agreement") with Mr. Hammon pursuant to
which the Company agreed to pay Mr. Hammon $19,335 per month through December
31, 1998 (the "Consulting Period").
During the Consulting Period, Mr. Hammon will receive a consulting fee
of $19,335 per month and will be provided with groupto reimburse him for his health
coverage by the
Company.insurance costs and pre-approved normal and reasonable business expenses.
The Company has also agreed to paycancel $26,300 on Mr. Hammon's legaladvance account for
expenses that he had incurred in connection with his employment with the
Company, and to pay $2,500 of attorneys' fees incurred by Mr. Hammon in
connection with the negotiation and preparationdrafting of the definitive written
agreement, up to a maximumSeverance Agreement. In
consideration of $2,500. During the Consulting Period,these payments, Mr. Hammon will be subjectagreed (i) to among other things, a non-competition covenant and certain
restrictions on disclosing confidential information about the Company.
Mr. Hammon's options, exercisable for an aggregate of 150,000 shares of
the Company's Common Stock, expire ninety days after the Consulting Period ends.
Pursuantprovide consulting
services to the Agreement in Principle, the Company has granted Mr. Hammon
certain "piggyback" registration rights with respect to 450,000 shares of Common
Stock he currently owns and the 150,000 shares of Common Stock he may acquire
upon exercise of his options. Mr. Hammon has agreed that he will not sell or
otherwise dispose of his shares of the Company's Common Stock in connection with
any underwritten public offering without the written consent of the Company. In
addition, Mr. Hammon will not, during the Consulting Period, (ii) not to compete
with the Company during the Consulting Period, and (iv) to not sell an amount of
shares totaling more than one percentany of
the Company's outstanding shares of
Common Stock of the Company during any three month period.
The parties arecertain periods specified in the
processSeverance Agreement. The Severance Agreement was the result of reducing the Agreement in Principle
to written form and expect the definitive written agreement to be executed
shortly. There can be no assurance, however, that the parties will reach a
definitive agreement based on the terms of the Agreement in Principle.
Certain Relationships and Related Transactions
Transactions with USTeleCenters, Inc. On November 29, 1996,arms' length
negotiations between the Company completed the acquisition of USTeleCenters, Inc., a Massachusetts corporation
("USTeleCenters"), by means of a merger of USTeleCenters with and into View Tech
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of View
Tech ("VTAI") (the "Merger"). The Merger was effected pursuant to a Merger
Agreement by and among the Company, VTAI and
9
USTeleCenters datedMr. Hammon.
William M. McKay resigned as of September 5, 1996, as amended on October 31, 1996 (the
"Merger Agreement"). In exchange for all of the outstanding shares of
USTeleCenters common stock, $0.01 par value, the USTeleCenters stockholders
received 2,240,976 shares of Common Stock (excluding options convertible into
184,003 shares of Common Stock).
The Merger Agreement provided that Franklin A. Reece, III, the Chairman
and President of USTeleCenters, and Angelo P. Gentile, the Chief Financial Officer of USTeleCenters, would enter intothe Company
effective January 31, 1998. Under the terms of Mr. McKay's employment
agreementsagreement with the Company.Company, as amended, Mr. McKay received an aggregate
severance payment of $142,000. The Agreement further provided that Messrs. ReeceCompany also extended the exercise date
for Mr. McKay's outstanding stock options from May 2, 1998 until May 1, 1999.
Robert G. Hatfield resigned as Chief Executive Officer and David F. Millet
would be elected to the Board of Directors of the Company. All these events
occurred as required by the Merger Agreement.
Following the Merger, VTAI changed its name to "USTeleCenters, Inc."
("UST") and continued to operate the former businesses of USTeleCenters.
Concurrent with the Merger, which was approved at the Company's annual meeting
of stockholders on November 26, 1996, the Company reincorporated in Delaware
from California, changed the par value of the Common Stock and its preferred
stock to $0.0001 from $0.01, amended its bylaws to provide for a staggered board
of directors, and increased its authorized number of shares of Common Stock to
20,000,000 shares from the original 10,000,000 shares.
Mr. Reece, an executive officer and director of the Company, was the
beneficial owner of approximately 23.2% of the outstanding common stock of
USTeleCenters and was an executive officer and director of USTeleCenters. Mr.
Gentile, an executive officer of the Company, was the beneficial owner of
approximately 2.5% of the outstanding common stock of USTeleCenters and was an
executive officer of USTeleCenters. Mr. Millet, a director of
the Company was
the beneficial owner of approximately 9% of the outstanding common stock of
USTeleCenters and was a director of USTeleCenters.
The conversion ratio for the shares of USTeleCenters common stockeffective April 17, 1998. Mr. Hatfield and the otherCompany are
currently negotiating the terms of the Merger Agreement were negotiated at arms-length between
the managementa severance agreement. Pursuant to a
Memorandum of the Company and the management of USTeleCenters. Prior to the
Merger, there was no relationshipUnderstanding between the Company and Mr. Hatfield, Mr.
Hatfield will receive two (2) years compensation over the next eighteen
months. The first year's compensation will be paid during the first six (6)
months of the agreement. Mr. Hatfield will forfeit his severance benefits in
the event he competes with the Company or makes any disparaging remarks about
the Company.
TRANSACTIONS WITH ROBERT G. HATFIELD. In October 1997, the Company
purchased five (5) manufacturing systems (the "Systems") from Robert G.
Hatfield, the then Chief Executive Officer and a director of its officers,
directorsthe Company, for
an aggregate purchase price of $162,500. The Systems were acquired by Mr.
Hatfield from an officer and employees,director of Power-Data Services, Inc. ("PDS") in
settlement of certain claims in connection with a loan of $200,000 by Mr.
Hatfield to such officer and USTeleCenters,director incident to the proposed acquisition of
PDS by the Company. The Company ultimately determined not to proceed with
such acquisition. The purchase price paid for the Systems by the Company to
Mr. Hatfield was less than the wholesale price that the Company otherwise
would pay therefor, and the Systems subsequently were sold by the Company at
a profit. The Company loaned PDS a total of $265,000 in connection with the
same proposed acquisition. Such amount has not been repaid and the Company
is taking legal action to effect collection. However, there can be no
assurance that any of its officers, directors
and employees.
Transactions with Telcom Holding,amount ultimately will be collected from PDS.
TRANSACTIONS WITH TELCOM HOLDING, LLC. On December 31, 1996, the
Company entered into an agreement (the "Purchase Agreement") with Telcom
Holding,Holdings LLC ("Telcom"), a Massachusetts limited liability company, ("Telcom") formed by
The O'Brien Group, Inc., a Massachusetts corporation (the "O'Brien Group"), pursuant
to which Telcom agreed to use its reasonable best efforts to purchase (i) up
to 650,000 shares of Common Stock (the "Purchase Shares") and (ii) Common
Stock Purchase Warrants of the Company (the "Telcom Purchase
14
Warrants," and together with the Purchased Shares the "Purchased Securities")
to purchase up to 325,000 shares of Common Stock, at a price of $4.40 per
unit ("Unit"). Each Unit consists of one (1) share of Common Stock and one
(1) Telcom Purchase Warrant for the purchase of one-half (1/2) share of
Common Stock at a purchase price per share of $6.50. The Purchase Agreement
provided that if the aggregate purchase price for the Purchased Securities
issued and sold to Telcom was at least $2,500,000, the Company would issue to
Paul C. O'Brien and Mark P. Kiley, managing members of Telcom, additional
Common Stock Purchase Warrants of the Company (the "O'Brien Purchase
Warrants") for the purchase of one-half (1/2) the aggregate number of shares
of Common Stock that are purchasable under the Telcom Purchase Warrants
issued and sold to Telcom, at a purchase price per share of $6.50. The
Purchase Agreement further provided that the aggregate number of Purchased
Securities may be increased by mutual agreement of the Company and Telcom,
but not to a number that would require the Company to obtain stockholder
approval under applicable rules promulgated by the NASDAQ National Market.
The Purchase Agreement further provided that upon the first issuance and
sale of any Purchased Securities to Telcom under the Agreement, which
occurred on January 15, 1997 (the "Initial Closing"), the Company was
required to take such actions as may be reasonably practicable to cause Paul
C. O'Brien, the president of The O'Brien Group, to be nominated and elected
to serve as Chairman and as a member of the Board of Directors. The Purchase
Agreement also provides that if Mr. O'Brien does not serve in such capacity
for any reason, the Company is required to take such actions as may be
reasonably practicable to cause another person designated by Telcom and
reasonably acceptable to 10
a majority of the Board of Directors to be nominated
and elected to serve as a member of the Board of Directors. The foregoing
requirements expire at the end of the initial three-year director term to
which Mr. O 'BrienO'Brien is elected.
As long as Telcom Purchase Warrants to purchase at least fifty percent
(50%) of the aggregate number of shares of Common Stock purchasable under all
Telcom Purchase Warrants issued under the Purchase Agreement are outstanding,
but not longer than six (6) months after the Initial Closing, i.e., July 15,
1997, subject to certain exceptions, (i) if the Company intends to issue any
equity securities to a third party, it must offer to each holder of Purchased
Shares and to each holder of shares of Common Stock issued upon exercise of
the Telcom Purchase Warrants or the O'Brien Purchase Warrants (the "Warrant
Shares") the right, for a period of twenty (20) days, to purchase for cash,
at a purchase price equal to the price or other consideration for which such
securities are to be issued, a number of such securities (up to but not
exceeding that number of such equity securities that the Company intends to
issue or has received an offer to purchase) that would enable, after giving
effect to such issuance, such holder to maintain its same proportionate
fully-diluteddiluted equity ownership in the Company as it held on the date of such
notice, and (ii) the Company will not, except with the affirmative vote or
consent of at least five (5) members of the Board of Directors, (A) merge or
consolidate with, or sell, assign, lease or otherwise dispose of or
voluntarily part with the control of (whether in one transaction or in a
series of transactions) all or substantially all of its assets to any third
party, or (B) permit any of its subsidiaries to do any of the foregoing,
other than sales or other dispositions of assets in the ordinary course of
business. In addition, holders of Purchased Shares and Warrant Shares are
granted certain "piggyback" registration rights and certain registration
rights on Form S-3 (or Form S-1 if the Company is not eligible for any reason
to use Form S-3) under the Purchase Agreement.
The Telcom Purchase Warrants and the O'Brien Purchase Warrants are
redeemable at the Company's option on 30 days' notice to the holders thereof
at a price of $0.50 per share of underlying Common Stock if (i) the average
closing bid price of the Common Stock has been at least $10.00 per share for
a period of 60 consecutive trading days ending within ten days prior to the
Company's written notice of redemption, or (ii) the Company effects a best
efforts or firm commitment underwritten public offering of Common Stock
resulting in aggregate gross proceeds to the Company of not less than
$7,500,000, provided that in such case the exercise price for the Telcom
Purchase Warrants and the O'Brien Purchase Warrants will be reduced in
proportion to any amount by which the public offering price is less than
$10.00 per share.
Telcom purchased all the Purchased Securities by March 10, 1997. The
Purchase Agreement provides that all net proceeds from the sale of the
Purchased Securities are required to be used by the Company for working
capital purposes, including payment of up to $500,000 toward professional
fees, costs and expenses associated with the Merger.
15
Mr. O'Brien, the Chairman of the Company's Board of Directors, is a
managing member of Telcom. For the six months ended December 31, 1996, UST
incurred $45,000 in consulting fees to The O'Brien Group under a consulting
agreement dated October 21, 1996. The agreement related to the organizational
structure of USTeleCenters. Mr. O'Brien is theTelcom and President of Thethe O'Brien Group. Prior to the
execution of the Purchase Agreement, there were no other relationships
between the Company, and any of its officers and employees, and Telcom, and
any of its members. The purchase price for the Purchased Securities, and the
other terms of the Purchase Agreement were negotiated at arm's length by
the management of the Company and the managing members of Telcom.
------------------------
AMENDMENT TO THE 1997 STOCK INCENTIVE PLAN
(Item 2 of the Proxy Card)
Introduction
The stockholders are being asked to approve two (2) amendments to the
Company's 1997 Stock Incentive Plan (the "Plan") which will (i) increase the
maximum number of shares of Common Stock reserved for issuance over the term of
the Plan from 300,000 to 600,000 shares and (ii) increase the maximum number of
shares for which any one person may receive option grants from 150,000 shares to
200,000 shares in the aggregate per calendar year.
11
The Board of Directors adopted the amendment on March 11, 1997, subject
to stockholder approval at the Annual Meeting. The Board believes the amendments
are necessary in order to assure that the Company will have a sufficient reserve
of Common Stock, both over the term of the Plan and on an annual basis under the
Plan, to provide option grants as an equity incentive to attract and retain the
services of key individuals essential to the Company's long-term success.
The following is a summary of the principal features of the amended
Plan, together with the tax and accounting implications of transactions effected
under the Plan. The summary, however, is not intended to be a complete
description of all the terms of the Plan. A copy of the Plan will be furnished
by the Company to any stockholder upon written request to the Secretary of the
Company at the corporate offices in Camarillo, California.
Eligibility
Under the Plan, options may be issued from time to time to key
employees (including officers, non-employee Board members and independent
consultants in the service of the Company (or any parent or subsidiary company)
who contribute to the management, growth and financial success of the Company
(or its parent or subsidiary companies).
As of April 15, 1997, approximately 300 employees (including four (4)
executive officers) and four (4) non-employee Board members were eligible to
participate in the Plan.
Administration
The Compensation Committee of the Board administers the Plan with
respect to the Company's executive officers subject to the short-swing profit
liabilities of Section 16 of the Securities Exchange Act of 1934 ("Section 16
Insiders"). With respect to all other participants, the Plan may be administered
by the Compensation Committee, a special committee (the "Secondary Committee")
comprised of one or more employee-Board members appointed by the Board, or by
the entire Board itself. Each entity whether the Compensation Committee, the
Secondary Committee or the Board, will be referred to in this summary as the
Plan Administrator with regard to its particular functions under the Plan, and
each Plan Administrator will have complete discretion (subject to the provisions
of the Plan) to authorize option grants under the Plan within the scope of its
administrative jurisdiction.
Share Reserve
The total number of shares of Common Stock issuable over the term of
the Plan may not exceed 600,000 shares (including the 300,000-share increase for
which stockholder approval is sought under this Proposal). However, under the
Plan as amended, no individual participating in the Plan may be granted stock
options for more than 200,000 shares in the aggregate per calendar year. Should
any option terminate prior to exercise in full, the shares subject to the
unexercised portion of that option will be available for subsequent option
grants. In addition, any unvested shares issued under the Plan and subsequently
repurchased by the Company at the original exercise price paid per share
pursuant to the Company's repurchase rights under the Plan will be added back to
the number of shares of Common Stock reserved for issuance under the Plan and
will accordingly be available for reissuance through one or more subsequent
option grants made under the Plan.
As of April 15, 1997, 63,000 shares were subject to outstanding option
grants and 537,000 shares remained available for future grant (assuming approval
of this Proposal) under the Plan.
Changes in Capitalization
If any change is made to the Common Stock issuable under the Plan (by
reason of any merger, consolidation or reorganization of the Company or any
recapitalization, stock split, stock dividend, combination of shares, exchange
of shares or other similar change affecting the outstanding Common Stock without
the Company's receipt of consideration), then appropriate adjustments will be
made to the maximum number and/or class of securities available for issuance
under the Plan, the number and/or class of securities and exercise price per
share in effect under each
12
outstanding option under the Plan, and the maximum number and/or class of
securities for which stock options may be granted to any one participant per
calendar year. All such adjustments will be designed to preclude the enlargement
or dilution of participant rights and benefits under the Plan.
Valuation
The fair market value per share of Common Stock on any relevant date
under the Plan will be the closing selling price per share on that date on the
NASDAQ National Market. On April 15, 1997, the closing selling price per share
determined on such basis was $3.63.
Grants
The Plan Administrator has complete discretion (subject to the
provisions of the Plan) to determine which eligible individuals are to receive
option grants under the Plan, the time or times when those grants are to be
made, the number of shares subject to each such grant, the vesting schedule
applicable to the grant, the status of that grant as an incentive stock option
or non-statutory option under the Federal tax laws, the maximum term for which
the option is to remain outstanding and the remaining terms of each such grant.
The Company will pay all expenses incurred in administering the Plan.
Price and Exercisability
The exercise price per share for options granted under the Plan may not
be less than one hundred percent (100%) of the fair market value per share of
Common Stock on the grant date. No granted option will have a term in excess of
ten (10) years, and each option will generally become exercisable in a series of
installments over the optionee's period of service with the Company. The shares
of Common Stock acquired upon the exercise of one or more options may, however,
be unvested and subject to repurchase by the Company, at the exercise price paid
per share, if the optionee ceases service with the Company prior to vesting in
those shares. The Plan Administrator may at any time cancel the Company's
outstanding repurchase rights with respect to those shares and thereby
accelerate the vesting of those shares.
The exercise price may be paid in cash or in shares of the Common
Stock. Outstanding options may also be exercised through a same-day sale program
pursuant to which a designated brokerage firm is to effect an immediate sale of
the shares purchased under the option and pay over to the Company, out of the
sales proceeds available on the settlement date, sufficient funds to cover the
exercise price for the purchased shares plus all applicable withholding taxes.
No optionee will have any stockholder rights with respect to the option
shares until he or she has exercised the option and paid the exercise price for
the purchased shares. Options are generally not assignable or transferable other
than by will or the laws of inheritance and, during the optionee's lifetime, the
option may be exercised only by such optionee. However, the Plan Administrator
may allow non-statutory options to be transferred or assigned during the
optionee's lifetime to one or more members of the optionee's immediate family or
to a trust established exclusively for one or more such family members, to the
extent such transfer or assignment is in furtherance of the optionee's estate
plan.
Termination of Service
The optionee will have a limited period of time following his or her
cessation of employment or service in which to exercise his or her outstanding
options under the Plan. During this limited exercise period, the option may not
be exercised for more than the number of shares (if any) in which the optionee
is vested at the time of his or her cessation of employment or service. However,
the Plan Administrator will have complete discretion, exercisable at any time
while the options remain outstanding, to extend the period following the
optionee's cessation of employment or service during which his or her
outstanding options may be exercised and to accelerate the exercisability or
vesting of those options in whole or in part.
13
Acceleration
In the event that the Company is acquired by a merger in which there is
a change in ownership of seventy-five percent (75%) or more of the Company's
outstanding voting securities or through a sale of all or substantially all of
the Company's assets ("Acquisition"), each outstanding option under the Plan
which is not to be assumed by the successor corporation will automatically
accelerate in full, and all unvested shares under the Plan will immediately
vest, except to the extent the Company's repurchase rights with respect to those
shares are to be assigned to the successor corporation. Immediately following
such Acquisition, all outstanding options will terminate, except to the extent
assumed by the successor corporation.
The Plan Administrator will have complete discretion to grant one or
more options under the Plan which will become fully exercisable for all the
option shares in the event those options are assumed in the Acquisition and the
optionee's service with the Company or the acquiring entity is involuntarily
terminated within a designated period (not to exceed eighteen (18) months)
following such Acquisition. The Plan Administrator will have similar discretion
to grant options which will become fully exercisable for all the option shares
should the optionee's service terminate, whether involuntarily or through a
resignation for good reason, within a designated period (not to exceed eighteen
(18) months) following a change in control of the Company (whether by successful
tender offer for more than 75% of the outstanding voting stock or a change in
the majority of the Board as a result of one or more contested elections for
Board membership). In addition, the Plan Administrator may structure one or more
of the Company's outstanding repurchase rights so that those rights will
terminate (and the shares subject to those rights will immediately vest) upon an
involuntary termination of the optionee's service following either an
Acquisition or change in control.
The Plan originally provided that the triggering event for the
acceleration based upon a change of control was a 35% change in ownership. On
March 11, 1997, the Board of Directors amended the Plan to provide that a 75%
change in ownership triggered a change in control. Any outstanding options
granted prior to the amendment will vest upon a 35% change in ownership.
Special Tax Election
The Plan Administrator may provide one or more holders of options or
unvested shares with the right to have the Company withhold a portion of the
shares otherwise issuable to such individuals in satisfaction of the tax
liability incurred by such individuals in connection with the exercise of those
options or the vesting of those shares. Alternatively, the Plan Administrator
may allow such individuals to deliver previously acquired shares of Common Stock
in payment of such tax liability.
Options Granted
The table below shows, as to each of the Named Executive Officers and
each of the indicated groups, the following information with respect to stock
options granted during the period from the November 26, 1996, effective date of
the Plan, through April 15, 1997: (i) the number of shares of Common Stock
subject to options granted under the Plan during that period and (ii) the
weighted average option price per share for such options.
14
OPTION TRANSACTIONS
Options Granted Weighted Average
Name Number of Shares Exercise Price
- ---- ---------------- --------------
Paul C. O'Brien 10,000 $5.00
Chairman of the Board of Directors
John W. Hammon(1) 0 N/A
Director and Former Chief Operating Officer
and President
Robert G. Hatfield 0 N/A
Chief Executive Officer and Director
William M. McKay 0 N/A
Chief Financial Officer and Secretary
Franklin A. Reece, III 0 N/A
President and Director
Angelo P. Gentile 0 N/A
Vice President
Calvin M. Carrera 2,000 $6.38
Director
Robert F. Leduc 2,000 $6.38
Director
David F. Millet 10,000 $6.25
Director
All current executive officers as a group (4 persons) 0 N/A
All current directors (other than executive officers) 24,000 $5.75
as a group (5 persons)
All employees including current officers, who are not 36,000 $5.81
executive officers, as a group (9 persons)
- ----------------------------------------------------
(1) Effective April 17, 1997, Mr. Hammon resigned as President and Chief
Operating Officer of the Company and as a director effective May 20,
1997. See "Employment and Other Compensatory Agreements."
Amendment and Termination of the Plan
The Board may amend or modify the Plan in any or all respects
whatsoever. However, certain amendments to the Plan may require stockholder
approval pursuant to applicable laws or regulations.
The Board may terminate the Plan at any time, but in all events the
Plan will terminate upon the earlier of December 31, 2006 or the date all shares
available for issuance under the Plan are issued or canceled pursuant to the
exercise or surrender of options granted under the Plan. Any options outstanding
at the time of the termination of the Plan will remain in force in accordance
with the provisions of the instruments evidencing such grants.
15
Federal Income Tax Consequences
Options granted under the Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For Federal tax purposes, dispositions are
divided into two categories: qualifying and disqualifying. A qualifying
disposition occurs if the sale or other disposition is made after the optionee
has held the shares for more than two (2) years after the option grant date and
more than one (1) year after the exercise date. If either of these two holding
periods is not satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition, the optionee will recognize long-term
capital gain in an amount equal to the excess of (i) the amount realized upon
the sale or other disposition of the purchased shares over (ii) the exercise
price paid for the shares. If there is a disqualifying disposition of the
shares, then the excess of (i) the fair market value of those shares on the
exercise date over (ii) the exercise price paid for the shares will be taxable
as ordinary income to the optionee. Any additional gain or loss recognized upon
the disposition will be recognized as a capital gain or loss by the optionee.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction, for the
taxable year in which such disposition occurs, equal to the excess of (i) the
fair market value of such shares on the option exercise date over (ii) the
exercise price paid for the shares. If the optionee makes a qualifying
disposition, the Company will not be entitled to any income tax deduction.
Non-Statutory Options. No taxable income is recognized by an optionee
upon the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
Deductibility of Executive Compensation
The Company anticipates that any compensation deemed paid by it in
connection with the disqualifying disposition of incentive stock option shares
or the exercise of non-statutory options will qualify as performance-based
compensation for purposes of Code Section 162(m) and will not have to be taken
into account for purposes of the $1 million limitation per covered individual on
the deductibility of the compensation paid to certain executive officers of the
Company. Accordingly, all compensation deemed paid under the Plan will remain
deductible by the Company without limitation under Code Section 162(m).
16
Accounting Treatment
Option grants with an exercise price not less than the fair market
value of the shares on the grant date will not result in any direct compensation
expense to the Company's earnings, but such options may be a factor in
determining the Company's earnings per share on a fully-diluted basis. In
addition, the Company must disclose, in pro-forma statements to the Company's
financial statements, the impact those options would have upon the Company's
reported earnings were the value of those options at the time of grant treated
as compensation expense.
Recommendation of the Board of Directors
The affirmative vote of a majority of the issued and outstanding shares
present or represented and entitled to vote at the Annual Meeting is sought for
the 300,000-share increase to the Plan. The Board of Directors believes that
option grants under the Plan play an important role in the Company's efforts to
attract, employ, and retain individuals essential to the Company's long-term
success. If the stockholders do not approve the proposal, then the Plan will
continue to remain in effect, and option grants may continue to be made pursuant
to the provisions of the Plan until the available reserve of Common Stock as
last approved by the stockholders has been issued pursuant to option grants made
under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THIS PROPOSAL.
New Plan Benefits
As of April 15, 1997, no options had been granted on the basis of the
300,000-share increase which is the subject of this Proposal.
Stockholder Approval
The affirmative vote of a majority of the shares present or represented
and entitled to vote at the Annual Meeting is required for approval of the
amendment to the 1997 Stock Incentive Plan. Should such stockholder approval not
be obtained, then the number of shares reserved for issuance under the 1997
Stock Incentive Plan will not be increased.
-------------------------------
APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN
(Item 3 of the Proxy Card)
The stockholders are being asked to vote on a proposal to approve the
adoption of the Company's Employee Stock Purchase Plan (the "Purchase Plan"),
pursuant to which 100,000 shares of Common Stock will be reserved for issuance.
The Purchase Plan is intended to provide eligible employees of the Company and
its participating affiliates with the opportunity to acquire a proprietary
interest in the Company through participation in a payroll-deduction based
employee stock purchase plan designed to operate in compliance with Section 423
of the Internal Revenue Code. The Purchase Plan was adopted by the Board on
March 11, 1997 and will become effective on August 1, 1997 (the "Effective
Date"), if the stockholders approve this Proposal at the Annual Meeting.
The following is a summary of the principal features of the Purchase
Plan. The summary, however, does not purport to be a complete description of all
the provisions of the Purchase Plan. Any stockholder of the Company who wishes
to obtain a copy of the actual plan document may do so upon written request to
the attention of the Corporate Secretary of the Company at the Company's
corporate offices in Camarillo, California.
17
Administration
The Purchase Plan will be administered by the Compensation Committee of
the Board. Such committee, as Plan Administrator, will have full authority to
adopt such rules and procedures as it may deem necessary for proper plan
administration and to interpret the provisions of the Purchase Plan. All costs
and expenses incurred in plan administration will be paid by the Company without
charge to participants.
Share Reserve
A reserve of 100,000 shares of Common Stock has been set aside for
issuance over the ten (10)-year term of the Purchase Plan. In the event any
change is made to the outstanding shares of Common Stock by reason of any
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares or other change in corporate structure effected without the Company's
receipt of consideration, appropriate adjustments will be made to (i) the class
and maximum number of securities issuable under the Purchase Plan, (ii) the
class and number of securities purchasable per participant during any one
purchase period and (iii) the class and number of securities subject to each
outstanding purchase right and the purchase price payable per share thereunder.
Purchase Periods
The Purchase Plan will be implemented in a series of successive six
(6)-month purchase periods. Purchase periods will run from the first business
day in February to the last business day in July each year, and from the first
business day in August each year to the last business day in January of the
following year. The first purchase period will begin on August 1, 1997.
Eligibility
Individuals regularly scheduled to work more than twenty (20) hours per
week for more than five (5) months per calendar year in the employ of the
Company or any participating affiliate will be eligible to participate in the
Purchase Plan, subject to the limitations below under the "Special Limitations"
section. Only individuals who are such eligible employees on the start date of a
purchase period under the Purchase Plan may participate in that purchase period.
Participating affiliates include any parent or subsidiary corporations
of the Company, whether now existing or hereafter organized, which elect, with
the approval of the Plan Administrator, to extend the benefits of the Purchase
Plan to their eligible employees. The Company's subsidiary, UST, is expected to
participate in the Purchase Plan as of the August 1, 1997 initial purchase
period and is listed in Schedule A attached to the Purchase Plan. The
stockholders will be notified periodically in the event one or more other
subsidiary corporations subsequently becomes a participating company in the
Purchase Plan.
As of April 15, 1997, approximately 300 employees, including two
executive officers, were eligible to participate in the Purchase Plan.
Purchase Provisions
Each participant will be granted a separate purchase right for each
purchase period in which he or she participates. The purchase right will be
granted on the start date of that purchase period and will be automatically
exercised on the last business day of that purchase period.
Each participant may authorize payroll deductions in any multiple of
one percent (1%) of his or her cash earnings (including base salary, commissions
and bonus) for the purchase period, up to a maximum of ten percent (10%).
18
On the last business day of each purchase period, the accumulated
payroll deductions of each participant will automatically be applied to the
purchase of shares of Common Stock at the purchase price in effect for that
purchase period. No participant may, during any one purchase period, purchase
more than 2,000 shares of Common Stock.
Purchase Price
The purchase price per share at which Common Stock will be purchased on
the participant's behalf on each purchase date will be equal to eighty-five
percent (85%) of the lower of (i) the fair market value per share of Common
-----
Stock on the start date of the purchase period or (ii) the fair market value per
share of Common Stock on the purchase date.
Valuation
The fair market value per share of Common Stock on any relevant date
will be the closing selling price per share on such date on the NASDAQ National
Market. On April 15, 1997, the fair market value per share of Common Stock
determined on such basis was $3.63 per share.
Special Limitations
The Purchase Plan imposes certain limitations upon a participant's
rights to acquire Common Stock, including the following limitations:
(i) No purchase right may be granted to any individual who owns
stock (including stock purchasable under any outstanding purchase rights)
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or any of its affiliates.
(ii) No purchase right granted to a participant may permit such
individual to purchase Common Stock at a rate greater than $25,000 worth of such
Common Stock (valued at the time such purchase right is granted) for each
calendar year the purchase right remains outstanding at any time.
Termination of Purchase Rights; Withdrawal
The purchase right will immediately terminate upon the participant's
loss of eligible employee status, and the payroll deductions collected on his or
her behalf for the purchase period in which so loss of status occurs will be
refunded.
A participant may withdraw from a purchase period at any time prior to
the purchase date in effect for that purchase period. The payroll deductions
collected on such individual's behalf for the purchase period in which such
withdrawal occurs will, at his or her election, either be applied to the
purchase of Common Stock on the next scheduled purchase date or refunded.
Stockholder Rights
No participant will have any stockholder rights with respect to the
shares of Common Stock covered by his or her purchase right until the shares are
actually purchased on the participant's behalf. No adjustment will be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.
Assignability
No purchase right will be assignable or transferable other than in
connection with the participant's death and will be exercisable only by the
participant during his or her lifetime.
19
Acquisition
In the event that the Company is acquired by a merger in which there is
a change in ownership of seventy-five percent (75%) or more of the Company's
outstanding voting securities or by sale of all or substantially all of the
Company's assets ("Acquisition"), all outstanding purchase rights will
automatically be exercised immediately prior to the effective date of such
Acquisition. The purchase price will be equal to eighty-five percent (85%) of
the lower of (i) the fair market value per share of Common Stock on the start
date of the purchase period in which the Acquisition occurs or (ii) the fair
market value per share of Common Stock immediately prior to the effective date
of such Acquisition.
Amendment and Termination
The Purchase Plan will terminate upon the earliest to occur of (i) the
last business day in July 2007, (ii) the date on which all available shares are
issued or (iii) the date on which all outstanding purchase rights are exercised
in connection with an acquisition of the Company.
The Board may at any time alter, suspend or discontinue the Purchase
Plan. However, the Board may not, without stockholder approval, (i) materially
increase the number of shares issuable under the Purchase Plan or the number of
shares purchasable per participant during any one purchase period, except in
connection with certain changes in the Company's capital structure, (ii) alter
the purchase price formula so as to reduce the purchase price or (iii) modify
the requirements for eligibility to participate in the Purchase Plan.
Federal Income Tax Consequences
The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant, and
no deductions will be allowable to the Company, in connection with the grant or
the exercise of an outstanding purchase right. Taxable income will not be
recognized until there is a sale or other disposition of the shares acquired
under the Purchase Plan or in the event the participant should die while still
owning the purchased shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after the start date of the purchase period in which such
shares were acquired, then the participant will recognize ordinary income in the
year of sale or disposition equal to the amount by which the fair market value
of the shares on the purchase date exceeded the purchase price paid for those
shares, and the Company will be entitled to an income tax deduction, for the
taxable year in which such sale or disposition occurs, equal in amount to such
excess.
If the participant sells or otherwise disposes of the purchased shares
more than two (2) years after the start date of the purchase period in which
such shares were acquired, then the participant will recognize ordinary income
in the year of sale or disposition equal to the lesser of (i) the amount by
which the fair market value of the shares on the sale or disposition date
exceeded the purchase price paid for those shares or (ii) fifteen percent (15%)
of the fair market value of the shares on the start date of the purchase period,
and any additional gain upon the disposition will be taxed as a long-term
capital gain. The Company will not be entitled to any income tax deduction with
respect to such sale or disposition.
If the participant still owns the purchased shares at the time of
death, the lesser of (i) the amount by which the fair market value of the shares
on the date of death exceeds the purchase price or (ii) fifteen percent (15%) of
the fair market value of the shares on the start date of the purchase period in
which those shares were acquired will constitute ordinary income in the year of
death.
20
Accounting Treatment
The issuance of Common Stock under the Purchase Plan will not result in
any direct compensation expense chargeable against the Company's reported
earnings. However, the Company must disclose, in pro-forma statements to the
Company's financial statements, the impact the purchase rights granted under the
Purchase Plan would have upon the Company's reported earnings were the value of
those purchase rights treated as compensation expense.
Stockholder Approval
The affirmative vote of a majority of the shares present or represented
and entitled to vote at the Annual Meeting is required for approval of the
Purchase Plan. Should such stockholder approval not be obtained, then the
Purchase Plan will not be implemented.
Recommendation of the Board of Directors
The Board believes that it is in the best interests of the Company to
implement a program of stock ownership for the Company's employees which
provides them with an opportunity to acquire a substantial proprietary interest
in the Company and thereby encourage such individuals to remain in the Company's
service and more closely align their interests with those of the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THIS PROPOSAL.
--------------------------
APPROVAL OF THE 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(Item 4 of the Proxy Card)
The Company's stockholders are being asked to approve the adoption of
the 1997 Non-Employee Directors Stock Option Plan (the "Directors Plan"),
pursuant to which 50,000 shares of Common Stock will be reserved for issuance.
The Directors Plan is intended to serve as a special equity incentive program
for the non-employee members of the Company's Board of Directors (the "Board").
The Directors Plan was adopted by the Board on March 11, 1997 and will become
effective on the date of the Annual Meeting (the "Effective Date"), if the
stockholders approve this Proposal.
The following is a summary of the principal features of the Directors
Plan. The summary, however, does not purport to be a complete description of all
the provisions of the Directors Plan. Any stockholder of the Company who wishes
to obtain a copy of the actual plan document may do so upon written request to
the Corporate Secretary at the Company's principal executive offices in
Camarillo, California.
Share Reserve
A reserve of 50,000 shares of Common Stock has been set aside for
issuance over the ten (10)-year term of the Directors Plan. Should any options
granted under the Directors Plan terminate prior to exercise in full, the shares
subject to the unexercised portion of those options will be available for
subsequent option grants. In addition, any unvested shares issued under the
Directors Plan and subsequently repurchased by the Company at the option
exercise price paid per share pursuant to the Company's repurchase rights will
be added back to the number of shares of Common Stock reserved for issuance
under the Directors Plan and will accordingly be available for reissuance
through one or more subsequent option grants made under the Directors Plan.
Changes in Capitalization
In the event any change is made to the outstanding shares of Common
Stock by reason of any merger, consolidation or reorganization of the Company or
any recapitalization, stock dividend, stock split, combination of
21
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will be
made to the maximum number and/or class of securities available for issuance
under the Directors Plan and the number and/or class of securities and exercise
price per share in effect under each outstanding option under the Directors
Plan. All such adjustments will be designed to preclude the enlargement or
dilution of participant rights and benefits under the Directors Plan.
Eligibility
Only the non-employee members of the Board will be eligible to
participate in the Directors Plan. As of April 15, 1997, four non-employee Board
members were eligible to participate in the Directors Plan.
Valuation
The fair market value per share of Common Stock on any relevant date
under the Directors Plan will be the closing selling price per share on that
date on the NASDAQ National Market. On April 15, 1997, the closing selling price
per share was $3.63.
Automatic Option Grants
All automatic option grants under the Directors Plan will be made in
strict compliance with the express provisions of such plan. Accordingly,
stockholder approval of this Proposal will also constitute pre-approval of each
option granted pursuant to the provisions of the Directors Plan summarized below
and the subsequent exercise of that option in accordance with such provisions.
1. Each individual who first becomes a non-employee Board member on or
after the Effective Date will automatically be granted at that time an
option grant for 10,000 shares of Common Stock, provided such
individual has not previously been in the Company's employ.
2. On the date of each Annual Stockholders Meeting, beginning with this
Annual Meeting, each individual who is to continue to serve as a
non-employee Board member will automatically be granted an option to
purchase 2,000 shares of Common Stock, provided that individual has
continuously served as a non-employee Board member for at least ninety
(90) days. There will be no limit on the number of such 2,000-share
option grants which any one non-employee Board member may receive over
his or her period of Board service, and non-employee Board members who
have previously served in the Company's employ will be eligible for
one or more 2,000-share option grants.
3. Each automatic option grant will have an exercise price per share
equal to 100% of the fair market value per share of Common Stock on
the option grant date. Each option will have a maximum term of ten
(10) years measured from the option grant date, subject to earlier
termination following the optionee's cessation of Board service.
4. Each automatic option will remain exercisable for a twelve (12)-month
period following the optionee's cessation of service as a Board
member. In no event, however, may the option be exercised after the
expiration date of the option term. During the applicable post-service
exercise period, the option may not be exercised for more than the
number of option shares (if any) in which the Board member is vested
at the time of his or her cessation of Board service.
5. Each initial 10,000-share option grant will be immediately exercisable
for all the option shares, but any unvested shares purchased by the
optionee under that grant will be subject to repurchase by the
Company, at the exercise price paid per share, upon the optionee's
cessation of Board service prior to vesting in those shares. The
shares subject to the initial 10,000-share option grant will vest (and
the Company's repurchase rights will lapse) upon the optionee's
completion of six (6) months of Board service measured from the grant
date. Each annual 2,000-share option grant will be immediately
exercisable for all the option shares as fully-vested shares.
22
Limited Transferability
Options granted under the Directors Plan may be transferred or assigned
during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more such
family members, to the extent such transfer or assignment is in furtherance of
the optionee's estate plan.
Acceleration
The shares subject to each initial 10,000-share option grant will
immediately vest upon (i) the optionee's death or permanent disability while
serving as a Board member, (ii) an acquisition of the Company by a merger in
which there is a change in ownership of seventy-five percent (75%) or more of
the Company's outstanding voting securities or through a sale of all or
substantially all of the Company's assets or (iii) a change in control of the
Company effected by a successful tender offer for more than seventy-five percent
(75%) of the Company's outstanding voting securities or by a change in the
majority of the Board as a result of one or more contested elections for Board
membership.
The acceleration of vesting in the event of a change in the ownership
or control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.
Amendment and Termination
The Board may amend or modify the Directors Plan in any or all respects
whatsoever, subject to any stockholder approval required under applicable laws
or regulations. The Board may terminate the Directors Plan at any time, and the
Directors Plan will in all events terminate on March 10, 2007.
Federal Income Tax Consequences
Options granted under the Directors Plan will be non-statutory options
which are not intended to satisfy the requirements of Section 422 of the
Internal Revenue Code (the "Code"). The Federal income tax treatment for such
options is as follows:
No taxable income is recognized by an optionee upon the grant of a
non-statutory option. The optionee will in general recognize ordinary income, in
the year in which the option is exercised, equal to the excess of the fair
market value of the purchased shares on the exercise date over the exercise
price paid for the shares, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Code to include as
ordinary income in the year of exercise of the option an amount equal to the
excess of (i) the fair market value of the purchased shares on the exercise date
over (ii) the exercise price paid for such shares. If the Section 83(b) election
is made, the optionee will not recognize any additional income as and when the
repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
23
Accounting Treatment
Option grants with an exercise price equal to the fair market value of
the shares on the grant date will not result in any direct compensation expense
to the Company's earnings, but such options may be a factor in determining the
Company's earnings per share on a fully-diluted basis. In addition, the Company
must disclose, in pro-forma statements to the Company's financial statements,
the impact those options would have upon the Company's reported earnings were
the value of those options at the time of grant treated as compensation expense.
Stockholder Approval
The affirmative vote of a majority of the outstanding voting shares of
the Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the Directors Plan. Should such stockholder approval
not be obtained, then the Directors Plan will not be implemented.
The Board believes that it is in the best interests of the Company to
implement an equity incentive program which will provide the non-employee Board
members with a meaningful opportunity to acquire a substantial proprietary
interest in the Company and thereby encourage such individuals to remain in the
Company's service and more closely align their interests with those of the
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THIS PROPOSAL.
New Plan Benefits
Each of the following non-employee Board members will, upon their
re-election to the Board at the Annual Meeting, receive an option grant for
2,000 shares under the Directors Plan, if this Proposal is approved by the
stockholders: Calvin M. Carrera, Robert F. Leduc, David F. Millet and Paul C.
O'Brien. Each such option will have an exercise price per share equal to the
closing selling price per share of Common Stock on that date on the NASDAQ
National Market.
-------------------------------
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(Item 5 of the Proxy Card)
The Board of Directors has selected Arthur Andersen LLP as the
Company's independent accountants for the year ending December 31, 1997, and has
further directed that management submit the selection of independent accountants
for ratification by the stockholders at the Annual Meeting. Arthur Andersen LLP
has no financial interest in the Company and neither it nor any member or
employee of the firm has had any connection with the Company in the capacity of
promoter, underwriter, voting trustee, director, officer or employee. The
Delaware General Corporation Law does not require the ratification of the
selection of independent accountants by the Company's stockholders, but in view
of the importance of the financial statements to the stockholders, the Board of
Directors deems it advisable that they pass upon such selection.
Carpenter Kuhen & Sprayberry acted as the Company's independent
accountants for the fiscal year ended December 31, 1996. Representatives of
Carpenter Kuhen & Sprayberry and Arthur Andersen LLP are expected to be present
at the Annual Meeting. They have been offered the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
In the event the stockholders fail to ratify the selection of Arthur
Andersen LLP , the Audit Committee of the Board of Directors will reconsider
whether or not to retain the firm. Even if the selection is ratified, the Audit
Committee and the Board of Directors in their discretion may direct the
appointment of a different independent accounting firm at any time during the
year if they determine that such a change would be in the best interests of the
Company and its stockholders.
24
BOARD COMPENSATION COMMITTEE REPORT
Compensation Committee Report on Executive Compensation
The Company's executive compensation plan is administered by the
Compensation Committee, which was comprised of two non-employee Directors during
the period from July 1, 1996 through December 31, 1996. The Compensation
Committee works with management to develop compensation plans for the Company
and is responsible for determining the compensation of each executive officer
and recommending such compensation to the Board of Directors.
The Company's executive compensation program is designed to align
executive compensation with the Company's business objectives and the
executive's individual performance, and to enable the Company to attract, retain
and reward executive officers who contribute, and are expected to contribute, to
the Company's long-term success. In establishing executive compensation, the
Compensation Committee is guided by the following principles: (i) the total
compensation for executive officers should be sufficiently competitive with the
compensation paid by other high-growth companies in the telecommunications
industry for officers in comparable positions so that the Company can attract
and retain qualified executives and (ii) individual compensation should include
components that reflect the financial performance of the Company and the
performance of the individual.
The compensation of the Company's executive officers consists of a
combination of base salary, bonuses and equity-based compensation. The
Compensation Committee believes that executive compensation should be designed
to motivate executives to increase shareholder values, and further believes that
executive officers can best increase shareholder value through the Company's
operating results by supplying high quality products and services to the
Company's customers.
Base Salary. The Compensation Committee sets the base salary for
executive officers by reviewing the salaries for comparable positions in
high-growth companies in the Company's industry, the historical compensation
levels of the Company's executives and the executive's individual performance in
the preceding year. The Compensation Committee utilizes salary surveys for
reference purposes, but its salary determinations are not subject to specific
criteria.
Chief Executive Officer Compensation. The compensation for the
Company's Chief Executive Officer, Mr. Robert Hatfield was determined based on
the same policies and criteria as the compensation for other executive officers.
The Compensation Committee
Paul C. O'Brien, Chairman(1)
Calvin M. Carrera
Robert F. Leduc
- ------------------------------
(1) Mr. O'Brien was not a director or a member of the Compensation
Committee during the six months ended December 31, 1996.
Accordingly, he did not participate in any of the decisions
regarding compensation during such period.
25
Stock Price PerformancePRICE PERFORMANCE
The following graph compares the total cumulative stockholder return on
the Common Stock from June 15, 1995 (date(the date of the Company's initial public
offering) to December 31, 19961997 to that of the (a) NASDAQ 100 Index, the index
is derived from performance data from 100 companies, and (b) the NASDAQ
Telecommunications Index, over the same period which is derived from the
performance data from 177the peer group companies. The graph assumes that the
value of an investment in Common Stock and in each such index was $100 on
June 15, 1995, and that all dividends have been reinvested.
[GRAPHCOMPARISON OF VIEW TECH, INC.]
Plot Points
- -----------
Based on a $100 dollar investment as of June 15, 1995
PERFORMANCE GRAPH APPEARS HERECUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
NASDAQ NASDAQ
Measurement Period VIEW TECH COMPOSITE TELECOMMUNICATIONS
(Fiscal Year Covered) INC. INDEX INDEX
- ------------------- --------- --------- --------------------------------------FISCAL YEAR ENDING-----------------------
Measurement Pt-
COMPANY 6/15/1995 $100 $100 $100
FYE 6/30/16/95 $100 $105 $105
FYE 6/30/96 $109 $133 $133
FYE12/31/95 12/31/96 $78 $162 $12312/31/97
VIEW TECH INC 100.00 118.52 79.63 73.15
PEER GROUP 100.00 114.44 116.99 172.85
BROAD MARKET 100.00 113.41 139.67 171.27
THE PEER GROUP CHOSEN WAS:
NASDAQ TELECOMMUNICATIONS INDEX
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ MARKET INDEX-U.S. COMPANIES
16
FORM 10-K REPORT
A copy of the Company's annual report to the Securities and Exchange
Commission on Form 10-K is available without charge to stockholders and may
be obtained by writing to William M. McKay, Chief Financial Officer,Teri Brath, Investor Relations Manager, View Tech,
Inc., 950 Flynn Road,3760 Calle Tecate, Suite A, Camarillo, California 93012.
SHAREHOLDERSTOCKHOLDER PROPOSALS
Any proposals of security holders which are intended to be presented at
next year's Annual Meeting must be received by the Company at its principal
executive offices on or before December 22, 1997,31, 1998, in order to be considered
for inclusion in the Company's proxy materials relating to that meeting.
26
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 Annual
Meeting, it is the intention of the person named in the proxy to vote such
proxy in accordance with his judgment on such matters.
By Order of the Board of Directors
/s/ William M. McKay
William M. McKayDavid A. Kaplan
Secretary
Camarillo, California
April 21, 199730, 1998
Please complete, date, and sign the enclosed proxy and return it promptly in
the enclosed reply envelope. No postage is required if mailed in the United
States.
2717
View Tech, Inc.
Index to AppendicesVIEW TECH, INC.
INDEX TO APPENDICES
-------------------------
Appendix A 1997 Stock Incentive Plan
Amended and Restated Effective March 11, 1997
Appendix B Employee Stock Purchase Plan
Appendix C 1997 Non-Employee Directors Stock Option Plan
28
APPENDIX A
VIEW TECH, INC.
1997 STOCK INCENTIVE PLAN
-------------------------
(AsPlan;
Amended and Restated Effective March 11, 1997)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1997 Stock Incentive Plan is intended to promote the interests of
View Tech, Inc., a Delaware corporation, by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority to
administer the Plan with respect to Section 16 Insiders.
B. Administration of the Plan with respect to all other persons may,
at the Board's discretion, be vested in the Primary Committee or a Secondary
Committee, or the Board may retain the power to administer the Plan with respect
to such persons. The members of the Secondary Committee may be Board members
who are Employees eligible to receive discretionary option grants under the Plan
or any other stock option, stock appreciation, stock bonus or other stock plan
of the Corporation (or any Parent or Subsidiary).
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.February 18, 1998
18
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the provisions of the
Plan and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Plan under its jurisdiction or any option or
stock issuance thereunder.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.
III. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine
which eligible persons are to receive option grants under the Plan, the time or
times when such option grants are to be made, 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, the time or times when each option is to
become exercisable, the vesting schedule (if any) applicable to the option
shares and the maximum term for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 600,000 shares.
2
B. No one person participating in the Plan may receive stock options
for more than 200,000 shares of Common Stock in the aggregate per calendar year.
C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent those options
expire or terminate for any reason prior to exercise in full. Unvested shares
issued under the Plan and subsequently repurchased by the Corporation, at the
option exercise price paid per share, pursuant to the Corporation's repurchase
rights under the Plan shall be added back to the number of shares of Common
Stock reserved for issuance under the Plan and shall accordingly be available
for reissuance through one or more subsequent option grants under the Plan.
However, should the exercise price of an option under the Plan be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable under
the Plan be withheld by the Corporation in satisfaction of the withholding taxes
incurred in connection with the exercise of an option, then the number of shares
of Common Stock available for issuance under the Plan shall be reduced by the
gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
D. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted stock options under the Plan per calendar year and (iii) the number
and/or class of securities and the exercise price per share in effect under each
outstanding option under the Plan. Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement or dilution
of rights and benefits under such options. The adjustments determined by the
Plan Administrator shall be final, binding and conclusive.
3
ARTICLE TWO
PROVISIONS OF THE PLAN
----------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
-------- -------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. EXERCISE PRICE.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Three
and the documents evidencing the option, be payable in one or more of the forms
specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
4
B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable
----------------------------
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
C. EFFECT OF TERMINATION OF SERVICE.
--------------------------------
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by the personal
representative of the Optionee's estate or by the person or persons to whom
the option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution.
(iii) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(iv) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall,
immediately upon the Optionee's cessation of Service, terminate and cease
to be outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
limited exercise period otherwise in effect for that option to such greater
period of time as
5
the Plan Administrator shall deem appropriate, but in no event beyond the
expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested had the
Optionee continued in Service.
D. STOCKHOLDER RIGHTS. The holder of an option shall have no
------------------
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. REPURCHASE RIGHTS. The Plan Administrator shall have the
-----------------
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right.
F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
----------------------------------
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
---
6
A. ELIGIBILITY. Incentive Options may only be granted to Employees.
-----------
B. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares
-----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
C. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the 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 any or all of those
shares as fully-vested shares of Common Stock. However, an outstanding option
shall not so accelerate if and to the extent: (i) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof), (ii) such option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
option shares at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
those option shares or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
7
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
- --------
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options under
the Plan per calendar year.
E. The Plan Administrator shall have full power and authority to
grant options under the Plan which will automatically accelerate in the event
the Optionee's Service subsequently terminates by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Corporate Transaction in which those options
are assumed or replaced and do not otherwise accelerate. Any options so
accelerated shall remain exercisable for fully-vested shares until the earlier
-------
of (i) the expiration of the option term or (ii) the expiration of the one (1)-
year period measured from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may provide that one or more of the
Corporation's outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately
terminate, and the shares subject to those terminated repurchase rights shall
accordingly vest in full.
F. The Plan Administrator shall have full power and authority to
grant options under the Plan which will automatically accelerate in the event
the Optionee's Service subsequently terminates by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Change in Control. Each option so
accelerated shall remain exercisable for fully-vested shares until the earlier
-------
of (i) the expiration of the option term or (ii) the expiration of the one (1)-
year period measured from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may provide that one or more of the
Corporation's outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately
terminate, and the shares subject to those terminated repurchase rights shall
accordingly vest in full.
G. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
8
H. The outstanding options shall in no way affect the 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.
9
ARTICLE THREE
MISCELLANEOUS
-------------
I. FINANCING
The Plan Administrator may permit any Optionee to pay the option
exercise price under the Plan by delivering a full-recourse, interest bearing
promissory note payable in one or more installments. The terms of any such
promissory note (including the interest rate and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion. In no event
may the maximum credit available to the Optionee exceed the sum of (i) the
aggregate option exercise price payable for the purchased shares plus (ii) any
Federal, state and local income and employment tax liability incurred by the
Optionee in connection with the option exercise or share purchase.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options under the Plan shall be subject to the satisfaction
of all applicable Federal, state and local income and employment tax withholding
requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options under the Plan with the right to use shares of
Common Stock in satisfaction of all or part of the Taxes incurred by such
holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
Stock Withholding: The election to have the Corporation
-----------------
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the Corporation, at
--------------
the time the Non-Statutory Option is exercised, one or more shares of
Common Stock previously acquired by such holder (other than in connection
with the option exercise triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes (not to exceed one
hundred percent (100%)) designated by the holder.
10
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective upon approval by the Corporation's
stockholders at the 1996 Annual Meeting.
B. The Plan was amended by the Board on March 11, 1997 to (i)
increase the maximum number of shares of Common Stock authorized for issuance
over the term of the Plan by an additional 300,000 shares and (ii) increase the
maximum number of shares for which any one person may receive option grants from
150,000 shares to 200,000 shares in the aggregate per calendar year. Both the
300,000-share increase to the total share reserve and the 50,000-share increase
to the annual per-participant limit under the Plan are subject to stockholder
approval at the 1997 Annual Meeting, and no option grants made on the basis of
those increases shall become exercisable in whole or in part unless and until
the stockholders approve such increases. Should such stockholder approval not
be obtained at the 1997 Annual Meeting, then each option grant made on the basis
of such 300,000-share increase or 50,000-share increase, as the case may be,
shall terminate and cease to remain outstanding, and no further option grants
shall be made on the basis of those increases. Subject to the foregoing
limitation, the Plan Administrator may make option grants under the Plan at any
time before the date fixed herein for the termination of the Plan.
C. The Plan shall terminate upon the earliest of (i) December 31,
--------
2006, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such plan
termination, all outstanding option grants shall thereafter continue to have
force and effect in accordance with the provisions of the documents evidencing
such grants.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to stock options at the time outstanding under the Plan unless the Optionee
consents to such amendment or modification. In addition, certain amendments may
require stockholder approval in accordance with applicable laws and regulations.
B. Options to purchase shares of Common Stock may be granted under
the Plan that are in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued shall be held in
escrow until there is obtained stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under the
Plan. If such stockholder approval is not obtained within twelve (12) months
11
after the date the first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees the exercise price paid for any excess shares issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow, and such shares
shall thereupon be automatically cancelled and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock upon the exercise
of any granted option shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options granted under it and the shares of Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
12
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
-----
B. CHANGE IN CONTROL shall mean a change in ownership or control of the
-----------------
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing seventy-five
percent (75%) or more of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following stockholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
seventy-five percent (75%) or more of the total combined voting power of
the Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
A-1
F. CORPORATION shall mean View Tech, Inc., a Delaware corporation, and
-----------
its successors.
G. EMPLOYEE shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), 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.
H. EXERCISE DATE shall mean the date on which the Corporation shall have
-------------
received written notice of the option exercise.
I. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be deemed equal to the
closing selling price per share of Common Stock on the date in question, as
such price is reported on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator 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 closing
selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
J. INCENTIVE OPTION shall mean an option which satisfies the requirements
----------------
of Code Section 422.
K. INVOLUNTARY TERMINATION shall mean the termination of the Service of
-----------------------
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially reduces
his or her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and target bonuses
under any corporate-
A-2
performance based bonus or incentive programs) by more than fifteen percent
(15%) or (C) a relocation of such individual's place of employment by more
than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's consent.
L. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by the Optionee, any unauthorized use or disclosure by such person
of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary), or any other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee or other person in the Service of the Corporation (or any Parent or
Subsidiary).
M. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
--------
N. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
O. OPTIONEE shall mean any person to whom an option is granted under the
--------
Plan.
P. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) 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 in one of the other corporations
in such chain.
Q. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability
--------------------------------------------
of the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.
R. PLAN shall mean the Corporation's 1997 Stock Incentive Plan, as set
----
forth in this document and as amended from time to time.
S. PLAN ADMINISTRATOR shall mean the particular entity, whether the
------------------
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Plan with respect to one or more classes of eligible persons, to
the extent such entity is carrying out its administrative functions with respect
to the persons under its jurisdiction.
T. PRIMARY COMMITTEE shall mean the committee of two (2) or more non-
-----------------
employee Board members appointed by the Board to administer the Plan with
respect to Section 16 Insiders.
A-3
U. SECONDARY COMMITTEE shall mean a committee of two (2) or more Board
-------------------
members appointed by the Board to administer the Plan with respect to eligible
persons other than Section 16 Insiders.
V. SECTION 16 INSIDER shall mean an officer or director of the
------------------
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
W. SERVICE shall mean the performance of services for the Corporation (or
-------
any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
X. STOCK EXCHANGE shall mean either the American Stock Exchange or the
--------------
New York Stock Exchange.
Y. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain 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 in one of the other
corporations in such chain.
Z. TAXES shall mean the Federal, state and local income and employment
-----
tax liabilities incurred by the holder of Non-Statutory Options in connection
with the exercise of those options.
AA. 10% STOCKHOLDER shall mean the owner of stock (as determined under
---------------
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
A-4
APPENDIX B
VIEW TECH, INC.
EMPLOYEE STOCK PURCHASE PLAN
----------------------------
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of View Tech, Inc. by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed One Hundred
Thousand (100,000) shares.
B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six (6) months.
Purchase periods shall run from the first business day in February to the last
business day in July each year and from the first business day in August each
year to the last business day in January of the following year. The first
purchase period shall begin on August 1, 1997 and end on the last business day
in January 1998.
V. ELIGIBILITY
A. Subject to Section VII.A. of the Plan, each individual who is an
Eligible Employee on the start date of any purchase period shall be eligible to
participate in the Plan for that purchase period.
B. To participate in the Plan for a particular purchase period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization form) and file such forms with the Plan Administrator (or its
designate) on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Cash Earnings paid to the Participant during each purchase
period, up to a maximum of ten percent (10%). The deduction rate so authorized
shall continue in effect for the entire purchase period. The Participant may not
increase his or her rate of payroll deduction during a purchase period. However,
the Participant may, at any time during the purchase period, reduce his or her
rate of payroll deduction to become effective as soon as possible after filing
the appropriate form with the Plan Administrator. The Participant may not,
however, effect more than one (1) such reduction per purchase period.
B. Payroll deductions shall begin on the first pay day following the
start date of the purchase period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in such account. The amounts
collected from the Participant shall not be required to be held in any
segregated account or trust fund and
2
may be commingled with the general assets of the Corporation and used for
general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a
-----------------------
separate purchase right on the start date of each purchase period in which he or
she participates. The purchase right shall provide the Participant with the
right to purchase shares of Common Stock on the Purchase Date upon the terms set
forth below. The Participant shall execute a stock purchase agreement embodying
such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
------------------------------
automatically exercised on the Purchase Date, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant on such date. The
purchase shall be effected by applying the Participant's payroll deductions for
the purchase period ending on such Purchase Date to the purchase of shares of
Common Stock at the purchase price in effect for that purchase period.
C. PURCHASE PRICE. The purchase price per share at which Common
--------------
Stock will be purchased on the Participant's behalf on each Purchase Date shall
be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value
-----
per share of Common Stock on the start date of the purchase period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common
----------------------------
Stock purchasable by a Participant on each Purchase Date shall be the number of
whole shares obtained by dividing the amount collected from the Participant
through payroll deductions during the purchase period ending with that Purchase
Date by the purchase price in effect for that Purchase Date. However, the
maximum number of shares of Common Stock purchasable per Participant
3
on any one Purchase Date shall not exceed Two Thousand (2,000) shares, subject
to periodic adjustments in the event of certain changes in the Corporation's
capitalization.
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to
-------------------------
the purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
F. TERMINATION OF PURCHASE RIGHT. The following provisions shall
-----------------------------
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last day
of the purchase period, terminate his or her outstanding purchase right by
filing the appropriate form with the Plan Administrator (or its designate),
and no further payroll deductions shall be collected from the Participant
with respect to the terminated purchase right. Any payroll deductions
collected during the purchase period in which such termination occurs
shall, at the Participant's election, be immediately refunded or held for
the purchase of shares on the next Purchase Date. If no such election is
made at the time such purchase right is terminated, then the payroll
deductions collected with respect to the terminated right shall be refunded
as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the purchase
period for which the terminated purchase right was granted. In order to
resume participation in any subsequent purchase period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the start date of the new purchase period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the purchase period in which the purchase right so
terminates shall be immediately refunded. However, should the Participant
cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up until
the last business day of the purchase period in which such leave commences,
to (a) withdraw all the payroll deductions collected to date on his or her
behalf during such purchase period or (b) have such funds held for the
purchase of shares on the next scheduled Purchase Date. In no event,
however, shall any further payroll deductions be collected on the
Participant's
4
behalf during such leave. Upon the Participant's return to active service,
his or her payroll deductions under the Plan shall automatically resume at
the rate in effect at the time the leave began, unless the Participant
withdraws from the Plan prior to his or her return.
G. CORPORATE TRANSACTION. Each outstanding purchase right shall
---------------------
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the purchase period in which such Corporate Transaction occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
-----
Common Stock on the start date of the purchase period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Corporate Transaction. However,
the applicable limitation on the number of shares of Common Stock purchasable
per Participant shall continue to apply to any such purchase.
The Corporation shall use its best efforts to provide at least ten
(10) days prior written notice of the occurrence of any Corporate Transaction,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares
----------------------------
of Common Stock which are to be purchased pursuant to outstanding purchase
rights on any particular date exceed the number of shares then available for
issuance under the Plan, the Plan Administrator shall make a pro-rata allocation
of the available shares on a uniform and nondiscriminatory basis, and the
payroll deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. ASSIGNABILITY. The purchase right shall be exercisable only by
-------------
the Participant and shall not be assignable or transferable by the Participant.
J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder
------------------
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans
5
(within the meaning of Code Section 423) of the Corporation or any Corporate
Affiliate, would otherwise permit such Participant to purchase more than Twenty-
Five Thousand Dollars ($25,000) worth of stock of the Corporation or any
Corporate Affiliate (determined on the basis of the Fair Market Value of such
stock on the date or dates such rights are granted) for each calendar year such
rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the following
provisions shall be in effect:
(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue on the Purchase Date in effect for
the purchase period for which such right is granted.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis
of the Fair Market Value per share on the date or dates of grant) for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular purchase period, then the payroll
deductions which the Participant made during that purchase period with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on March 11, 1997 and shall
become effective on the Effective Date, provided the implementation of the Plan
--------
is approved by the Corporation's stockholders at the 1997 Annual Meeting. No
purchase rights granted under the Plan shall be exercised, and no shares of
Common Stock shall be issued hereunder, until the Corporation shall have
complied with all applicable requirements of the 1933 Act (including the
registration of the shares of Common Stock issuable under the Plan on a Form S-8
registration statement filed with the Securities and Exchange Commission), all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock is listed for trading and all
other applicable requirements established by law or regulation.
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest to occur of (i) the last business day in July 2007, (ii) the
--------
date on which all shares available
6
for issuance under the Plan shall have been sold pursuant to purchase rights
exercised under the Plan or (iii) the date on which all purchase rights are
exercised in connection with a Corporate Transaction. No further purchase rights
shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any
time to become effective immediately following the close of any purchase period.
However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan or the maximum number of shares purchasable per
Participant on any one Purchase Date, except for permissible adjustments in the
event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under the Plan, or (iii) modify the requirements for
eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
7
SCHEDULE A
----------
CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF MARCH 11, 1997
--------------------
View Tech, Inc., a Delaware corporation
USTeleCenters, Inc., a Delaware corporation
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
-----
B. CASH EARNINGS shall mean the (i) regular base salary paid to a
-------------
Participant by one or more Participating Companies during such individual's
period of participation in one or more purchase periods under the Plan plus (ii)
any pre-tax contributions made by the Participant to any Code Section 401(k)
salary deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate plus (iii)
all overtime payments, bonuses, commissions, current profit-sharing
distributions and other incentive-type payments. However, Cash Earnings shall
NOT include any contributions (other than Code Section 401(k) or Code Section
125 contributions) made on the Participant's behalf by the Corporation or any
Corporate Affiliate under any employee benefit or welfare plan now or hereafter
established.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE AFFILIATE shall mean any parent or subsidiary
-------------------
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
F. CORPORATE TRANSACTION shall mean either of the following
---------------------
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing seventy-five percent (75%) or more of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation.
G. CORPORATION shall mean View Tech, Inc., a Delaware corporation
-----------
and any corporate successor to all or substantially all of the assets or voting
stock of View Tech, Inc. which shall by appropriate action adopt the Plan.
A-1
H. EFFECTIVE DATE shall mean the August 1, 1997 effective date of
--------------
the Plan, provided the implementation of the Plan is approved by the
Corporation's stockholders at the 1997 Annual Meeting.
I. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
-----------------
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. FAIR MARKET VALUE per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as such
price is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator 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 closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
K. 1933 ACT shall mean the Securities Act of 1933, as amended.
--------
L. PARTICIPANT shall mean any Eligible Employee of a Participating
-----------
Corporation who is actively participating in the Plan.
M. PARTICIPATING CORPORATION shall mean the Corporation and such
-------------------------
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the Effective Date are listed in
attached Schedule A.
N. PLAN shall mean the Corporation's Employee Stock Purchase Plan,
----
as set forth in this document.
A-2
O. PLAN ADMINISTRATOR shall mean the committee of two (2) or more
------------------
non-employee Board members appointed by the Board to administer the Plan.
P. PURCHASE DATE shall mean the last business day of each purchase
-------------
period. The initial Purchase Date shall be January 30, 1998.
Q. STOCK EXCHANGE shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
A-3
APPENDIX C
VIEW TECH, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
---------------------------------------------(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 18, 1998)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1997 Non-Employee Directors Stock Option Plan is intended to
promote the interests of View Tech, Inc., a Delaware corporation, by
providing the non-employee members of the Board with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the
service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The terms of each option grant (including the timing and pricing of
the option grant) shall be determined by the express terms of the Plan, and
neither the Board nor any committee of the Board shall exercise any
discretionary functions with respect to option grants made pursuant to the
Plan.
III. ELIGIBILITY
A. The individuals eligible to receive option grants under the
Plan shall be limited to (i) those individuals who are serving as non-employee Board members on
the Plan Effective Date, (ii) those individuals who are first elected or
appointed as non-employee Board members on or after suchthe Plan Effective Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (iii)(ii) those individuals who continue to serve as
non-employee Board members at one or more Annual Stockholders Meetings
beginning with the 1997 Annual Meeting. A non-employee Board member who has
previously been in the employ of the Corporation (or any Parentof its parent or
Subsidiary)subsidiary corporations) shall not be eligible to receive an option grant
under the Plan at the time he or she first becomes a non-employee Board
member, but shall be eligible to receive periodic option grants over his or
her continued service as a non-employee Board member.
2
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares
repurchased by the Corporation on the open market. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall
initially not exceed 50,000150,000 shares.
B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent the options
expire or terminate for any reason prior to exercise in full. Unvested
shares issued under the Plan and subsequently repurchased by the Corporation
at the original exercise price paid per share pursuant to the Corporation's
repurchase rights under the Plan shall be added back to the number of shares
of Common Stock reserved for issuance under the Plan and shall accordingly be
available for reissuance through one or more subsequent option grants under
the Plan. However, shares subject to any option or portion thereof surrendered in
accordance with Article Two shall reduce on a share-for-share basis the number
of shares of Common Stock available for subsequent issuance under the Plan. In
addition, should the exercise price of an option under the Plan be
paid with shares of Common Stock, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares
of Common Stock issued to the holder of such option.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as
a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of
securities for which option grants are to be subsequently made to
newly-elected or continuing non-employee Board members and (iii) the number
and/or class of securities and the exercise price per share in effect under
each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder.
32.
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
A. GRANT DATES. Option grants shall be made on the dates
specified
----------- below:
1. Each Eligible Director who is first elected or appointed
as a non-employee Board member on or after the Plan Effective Date shall
automatically be granted, on the Plan Effective Date or on the date of such
initial election or appointment (as the case may be), a Non-Statutory Option
to purchase 10,000 shares of Common Stock.
2. On the date of each Annual Stockholders Meeting,
beginning with the 1997 Annual Meeting, each individual who is to continue to
serve as an Eligible Director after such meeting shall automatically be
granted, whether or not such individual is standing for re-election as a
Board member at that Annual Meeting, a Non-Statutory Option to purchase 2,000
shares of Common Stock, provided such individual has served as a non-employee
Board member for at least ninety (90) days prior to the date of such Annual Meeting.days. There shall be no limit on the
number of such 2,000-share option grants any one Eligible Director may
receive over his or her period of Board service.
Stockholder approval of the Plan shall constitute pre-approval
of each option granted pursuant to the express terms of the Plan and the
subsequent exercise of that option in accordance with such terms.
B. EXERCISE PRICE.
--------------
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the forms
specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
4
(iii) to the extent the option is exercised for vested
shares,
3.
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required
to be withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.
C. OPTION TERM. Each option shall have a term of ten (10) years
-----------
measured from the option grant date.
D. EXERCISE AND VESTING. Each initial 10,000-share option grant
--------------------
shall be immediately exercisable for any or all of those option shares.
However, any shares purchased under such option shall be subject to
repurchase by the Corporation, at the exercise price paid per share, upon the
Optionee's cessation of Board service prior to vesting in those shares. The
shares subject to each initial 10,000-share grant shall vest, and the
Corporation's repurchase right shall lapse, upon the Optionee's completion of
six (6) months of Board service measured from the option grant date. Each
annual 2,000-share grant shall be immediately exercisable for fully-vested
shares upon grant.
E. EFFECT OF TERMINATION OF BOARD SERVICE. The following
provisions
-------------------------------------- shall govern the exercise of any options held by the Optionee at
the time the Optionee ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's
death, the personal representative of the Optionee's estate or the
person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution) shall have a twelve (12)-month period following the date
of such cessation of Board service in which to exercise each such
option.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable at the time of
the Optionee's cessation of Board service.
5
(iii) Should the Optionee cease to serve as a Board
4.
member by reason of death or Permanent Disability, then all shares at
the time subject to the option shall immediately vest so that such
option may, during the twelve (12)-month exercise period following
such cessation of Board service, be exercised for all or any portion
of such shares as fully-
vestedfully-vested shares.
(iv) In no event shall the option remain exercisable
after the expiration of the option term. Upon the expiration of the
twelve (12)-
month-month exercise period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's
cessation of Board service, terminate and cease to be outstanding, to
the extent it is not exercisable for vested shares on the date of such
cessation of Board service.
F. STOCKHOLDER RIGHTS. The holder of an option shall have no
------------------
stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.
G. LIMITED TRANSFERABILITY OF OPTIONS. The option may be
----------------------------------
transferred or assigned by the Optionee, in connection with the Optionee's
estate plan, to one or more members of the Optionee's immediate family or to
a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for
the option immediately prior to such assignment. Should the Optionee die
while holding the option, then the option shall be transferred in accordance
with the Optionee's will or the laws of decent and distribution.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the specified effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock
at the time subject to such option and may be exercised for all or any
portion of such shares as fully-
vestedfully-vested shares of Common Stock. Immediately
following the consummation of the Corporate Transaction, each option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).
B. In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common 6Stock.
5.
Stock.
Each such option shall remain exercisable for such fully-vested option shares
until the expiration or sooner termination of the option term.
C. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, providedPROVIDED the aggregate
exercise price
-------- payable for such securities shall remain the same.
D. The grant of options under the Plan shall in no way affect the
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.
76.
ARTICLE THREE
MISCELLANEOUS
-------------
IIIIII. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately on the Plan
Effective Date, and options may be granted under the Plan from and after such
date.
B. On February 18, 1998, the Board approved an amendment to
increase the maximum number of shares of Common Stock reserved for issuance
under the Plan by 100,000 shares to 150,000 shares, subject to stockholder
approval at the 1998 Annual Meeting.
C. The Plan shall terminate upon the earliestEARLIEST of (i) March 31,
2007,
-------- (ii) the date on which all shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise or cash-out of the
options under the Planas vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such
Plan termination, all option grants and unvested stock issuances outstanding
on such date shall thereafter continue to have force and effect in accordance
with the provisions of the documents evidencing such grants or issuances.
IV. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with
respect to optionsany option at the time outstanding under the Plan unless the
Optionee consents to such amendment or modification. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of any shares of Common Stock upon the
exercise of any option shall be subject to the Corporation's procurement of
all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it and the shares of
Common Stock issued pursuant to it.
7.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws,
including the filing and effectiveness of the Form S-8 8
registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICEIMPAIRMENT OF RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to
continue in service for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation and the Corporation's stockholders to
remove the Optionee from the Board at any time.
9time in accordance with the
provisions of applicable law.
8.
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
-----
B. CHANGE IN CONTROL shall mean a change in ownership or control of
the
----------------- Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person
or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation), of beneficial ownership (within
the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
seventy-five percent (75%) or more of the total combined voting power
of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more contested elections
for Board membership, to be comprised of individuals who either (A)
have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such
election or nomination was approved by the Board.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-
---------------------
approvedstockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing seventy-five percent (75%) or more of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
A-1A-1.
F. CORPORATION shall mean View Tech, Inc., a Delaware corporation.
-----------
G. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible
to
----------------- participate in the Plan.
H. EXERCISE DATE shall mean the date on which the Corporation shall
have
------------- received written notice of the option exercise.
I. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall
----------------- be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange which serves as 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 closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such
quotation exists.
J. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
--------
K. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the
-------------------- requirements of Code Section 422.
L. OPTIONEE shall mean any person to whom an option is granted under
the --------
Plan.
M. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) 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 in one of the other corporations
in such chain.
N. PERMANENT DISABILITY shall mean the inability of the Optionee to
--------------------
perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental A-2
impairment expected to result in death or to
be of continuous duration of twelve (12) months or more.
O.N. PLAN shall mean the Corporation's 1997 Non-Employee Directors Stock
----
Option Plan, as set forth in this document.
P.A-2.
O. PLAN EFFECTIVE DATE shall mean the date of the 1997 Annual
-------------------
Stockholders Meeting, provided the stockholders approve the Plan at such
Annual Meeting.
Q. SECTION 16 INSIDERS shall mean an officer or director of the
-------------------
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
R.P. STOCK EXCHANGE shall mean either the American Stock Exchange or the
--------------
New York Stock Exchange.
S. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain 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 in one of the other
corporations in such chain.
A-3A-3.
VIEW TECH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 1997JUNE 3, 1998
The undersigned shareholder of View Tech, Inc., a Delaware corporation
("View
Tech"VIEW TECH"), hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement, each dated April 21, 1997,30, 1998, the undersigned
revokes all other proxies and appoints Paul C. O'Brien, Robert G.
HatfieldWilliam J. Shea and
William M. McKay,David Kaplan, and each of them, the attorney's and proxies for the undersigned,
each with the power of substitution, to attend and act for the undersigned at
View Tech's Annual Meeting of Shareholders to be held at the Hyatt Westlake Plaza, locatedCompany's corporate
office at 880 South Westlake Boulevard, Westlake
Village,3760 Calle Tecate, Suite A, Camarillo, California 91361,93012, on May 19, 1997,June 3,
1998, at 10:00 a.m., and at any and all adjournments thereof in connection
therewith to vote and represent all of the shares of View Tech Common Stock
which the undersigned would be entitled to vote, as follows:
1. Proposal to elect three Class III Directors to the Board of Directors.
Management's nominees for election at the Annual Meeting as Class III
directors are Calvin M. Carrera, Robert F. Leduc and Paul C. O'Brien. If
elected, the nominees will serve as directors until the Company's annual
meeting of stockholders in the year 2000,
1. Proposal to elect two (2) Class II Directors to the Board of Directors.
Management's nominees for election at the Annual Meeting as Class II
directors are David F. Millet and William J. Shea. If elected, the
nominees will serve as directors until the Company's annual meeting of
stockholders in the year 2001, and until their successors are elected and
qualified:
[_]
FOR all nominees listed below [_] WITHHOLD AUTHORITY
(with votes cast equally among nominees(WITH VOTES CAST EQUALLY AMONG TO VOTE FOR ALL
NOMINEES EXCEPT AS MARKED TO NOMINEES LISTED
THE CONTRARY BELOW) / / BELOW / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME BELOW:
David F. Millet and William J. Shea.
2. Proposal to vote for all nominees listed below
except as markedapprove amendments to the contrary below)
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME BELOW:
Calvin M. Carrera, Robert F. Leduc and Paul C. O'Brien.
2. Proposal to approve amendments to the 1997 Stock Incentive Plan to (i)
increase the shares of Common Stock of the Company reserved for issuance
over the term of the plan from 300,000 to 600,000 shares, and (ii) increase
the maximum number of shares for which any one person may receive option
grants from 150,000 shares to 200,000 shares in the aggregate per calendar
year:
[_] FOR [_] AGAINST [_]1997 Non-Employee Directors Stock
Option Plan to (i) increase the shares of Common Stock of the Company
reserved for issuance over the term of the plan from 50,000 to 150,000
shares:
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31, 1998:
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve and adopt the Employee Stock Purchase Plan, pursuant to
which 100,000 shares of Common Stock will be reserved for issuance. The
Purchase Plan was adopted by the Board on March 11, 1997 and will become
effective on August 1, 1997, if the stockholders approve this Proposal:
[_] FOR [_] AGAINST [_] ABSTAIN
(continued on reverse side)
(continued from reverse side)
4. Proposal to approve and adopt the 1997 Non-Employee Directors Stock Option
Plan, pursuant to which 50,000 shares of Common Stock will be reserved for
issuance. The Directors Plan was adopted by the Board on March 11, 1997 and
will become effective on the date of the Annual Meeting, if the stockholders
approve this Proposal:
[_] FOR [_] AGAINST [_] ABSTAIN
5. To ratify the selection of Arthur Andersen LLP as the Company's independent
accountants for the year ending December 31, 1997:
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
(CONTINUED FROM REVERSE SIDE)
Each of the above-named proxies present at said meeting, either in person or
by substitute, shall have and exercise all the powers of said proxies hereunder.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES HEREON, THIS PROXY WILL
BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE ELECTION OF THREE CLASS THREE
DIRECTORS TO THE BOARD OF DIRECTORS, FOR THE APPROVAL OF THE AMENDMENTS TO THE
1997 STOCK OPTION PLAN, FOR THE APPROVAL AND ADOPTION OF THE EMPLOYEE
STOCK PURCHASE PLAN, FOR THE APPROVAL AND ADOPTION OF THE 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN AND FOR THE RATIFICATION OF THE
ELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS.
Dated this ___________ day of ______________, 1997
----------------------------_______ , 1998
______________________________________
Signature of Shareholder
----------------------------______________________________________
Signature of Shareholder
Please sign exactly as your name or
names appear hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If shares
are held jointly, each
holder should
sign.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PREPAID ENVELOPE
PROVIDED.