PROXY STATEMENT
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ALLSTAR SYSTEMS, INC.
(Name of Registrant as specified in its Charter)
ALLSTAR SYSTEMS, INC.
(Name of Person(s) Filing Proxy Statement)
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing:
(1) Amount previously paid: _________________________________________
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ALLSTAR SYSTEMS, INC.
6401 Southwest Freeway
Houston, Texas 77074
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 10, 2000
June 26, 2000
Dear Stockholder:
We cordially invite you to attend the 2000 Annual Meeting of Stockholders
of Allstar Systems, Inc. The meeting will be held on Wednesday, July 10, 2000 at
10:00 a.m. (Houston time), at our offices at 6401 Southwest Freeway, Houston,
Texas 77074. At the meeting we will:
1. Elect five nominees to the board of directors;
2. Vote on an amendment to our Certificate of Incorporation to
change our name to "I-Sector Corporation"; and
3. Transact any other business as may properly come before the
meeting.
Stockholders who owned our common stock at the close of business on June 9,
2000 may attend and vote at the meeting. A stockholders' list will be available
at our offices listed above for a period of ten days prior to the meeting. If
you cannot attend the meeting, you may vote by mailing the proxy card in the
enclosed postage-prepaid envelope. Any stockholder attending the meeting may
vote in person, even though he or she has already returned a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
Donald R. Chadwick
Secretary
June 26, 2000
PLEASE COMPLETE, SIGN AND DATE THE PROXY CARD AS PROMPTLY
AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE
ALLSTAR SYSTEMS, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
Our board of directors is soliciting proxies for the 2000 Annual Meeting of
Stockholders to be held on Wednesday, July 10, 2000 at 10:00 a.m. (Houston time)
at our principal executive offices located at 6401 Southwest Freeway, Houston,
Texas 77074, and at any adjournments or postponements of the meeting. This proxy
statement contains important information for you to consider when deciding how
to vote on the matters brought before the meeting. Please read it carefully.
Allstar will pay the costs of soliciting proxies from stockholders.
Directors, officers and regular employees may solicit proxies on behalf of
Allstar, without additional compensation, personally or by telephone. Voting
materials, which include the proxy statement, proxy card and 2000 Annual Report,
was first mailed to stockholders on or about June 26, 2000.
QUESTIONS AND ANSWERS
Q: Who can attend and vote at the meeting?
A: You can attend and vote at the meeting if you were a stockholder at the
close of business on the record date, June 9, 2000. On that date, there
were 4,060,525 shares outstanding and entitled to vote at the annual
meeting.
Q: What am I voting on?
A: You are voting on:
o The election of directors; and
o The approval of an amendment to the Certificate of Incorporation.
The five nominees receiving the highest number of "FOR" votes will be
elected to the board of directors. The approval of the amendment to the
Certificate of Incorporation requires the affirmative "FOR" vote of a
majority of the shares outstanding at the close of business on the record
date.
Q: How will the proxies vote on any other business brought up at the meeting?
A: By submitting your proxy card, you authorize the proxies to use their
judgment to determine how to vote on any other matter properly brought
before the meeting. We do not know of any other business to be considered
at the meeting.
The proxies' authority to vote according to their judgment applies only to
shares you own as a stockholder of record.
Q: How do I cast my vote?
A: If you hold your shares as a stockholder of record, you can vote in person
at the annual meeting or you can vote by mail. If you are a street-name
stockholder, you will receive instructions from your bank, broker or other
nominee describing how to vote your shares.
The enclosed proxy card contains instructions for mail voting. The proxies
identified on the back of the proxy card will vote the shares of which you
are the stockholder of record in accordance with your instructions. If you
submit a proxy card without giving specific voting instructions, the
proxies will vote those shares "FOR" the nominees and "FOR" the amendment
to the Certificate of Incorporation.
12
Q: How does the board recommend I vote on the proposals?
A: The board recommends you vote "FOR" each of the nominees to the board of
directors and "FOR" the amendment to the Certificate of Incorporation.
Q: Can I revoke my proxy?
A: Yes. You can revoke your proxy by:
o Submitting a new proxy card;
o Giving written notice before the meeting to our Secretary stating that
you are revoking your proxy; or o Attending the meeting and voting
your shares in person.
Q: What is a "quorum"?
A: A quorum is the number of shares that must be present to hold the meeting.
The quorum requirement for the meeting is one-half of the outstanding
shares as of the record date, present in person or represented by proxy. If
you submit a valid proxy card or attend the meeting, your shares will be
counted to determine whether there is a quorum. Abstentions and broker
non-votes count toward the quorum. "Broker non-votes" occur when nominees
(such as banks and brokers) that hold shares on behalf of beneficial owners
do not receive voting instructions from the beneficial owners by ten days
before the meeting and do not have discretionary voting authority to vote
those shares.
Q: Will broker non-votes or abstentions affect the voting results?
A: With respect to the election of directors, abstentions and broker non-votes
will not count as votes "FOR" or "AGAINST" any director. With respect to
amending the Certificate of Incorporation, abstentions and broker non-votes
will have the same effect as a vote "Against" changing the name to
"I-Sector Corporation."
Q: What does it mean if I get more than one proxy card?
A: Your shares are probably registered in more than one account. You should
vote each proxy card you receive. We encourage you to consolidate all your
accounts by registering them in the same name, social security number and
address.
Q: How many votes can I cast?
A: On all matters you are entitled to one vote per share.
Q: When are stockholder proposals due for the 2001 Annual Meeting of
Stockholders?
A: If you want to present a proposal from the floor at the 2001 Annual
Meeting, you must give us written notice of your proposal no later than May
11, 2001 and no earlier than January 11, 2001. If the date of the 2001
Annual Meeting is more than 30 calendar days before or after the date of
our 2000 Annual Meeting, your written notice will be timely if we receive
it by the close of business on the tenth day following the date that we
publicly announce the date of the 2001 Annual Meeting. Your notice should
be sent to the Secretary, Allstar Systems, Inc., 6401 Southwest Freeway,
Houston, Texas 77074.
If instead of presenting your proposal at the meeting you want your
proposal to be considered for inclusion in next year's proxy statement, you
must submit the proposal in writing to the Secretary so that it is received
at the above address by February 26, 2001.
Q: Where can I find the voting results of the meeting?
A: The preliminary voting results will be announced at the meeting. The final
results will be published in our quarterly report on Form 10-Q for the
third quarter of fiscal 2000.
Proposal 1
ELECTION OF DIRECTORS
At the meeting, five directors are to be elected. Each director is to hold
office until the next annual meeting of stockholders or until his successor is
elected and qualified. The persons named in the accompanying proxy have been
designated by the board of directors, and unless authority is withheld, they
intend to vote for the election of the nominees named below to the board of
directors. If any nominee should become unavailable for election, the proxy may
be voted for a substitute nominee selected by the persons named in the proxy or
the board may be reduced accordingly; however, the board of directors is not
aware of any circumstances likely to render any nominee unavailable.
Nominees
Certain information regarding the nominees is set forth below:
Name Age Position Director
Since
James H. Long 41 President, Chief Executive Officer 1983
and Director
Donald R. Chadwick 56 Secretary and Director 1996
Richard D. Darrell (1)(2) 45 Director 1997
Jack M. Johnson, Jr. (1)(2) 61 Director 1997
Mark T. Hilz (1)(2) 42 Director 1999
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(1) Member, Compensation Committee of the board of directors
(2) Member, Audit Committee of the board of directors
James H. Long, age 41, is the Founder of Allstar and has served as Chairman
of the Board, Chief Executive Officer and President since our inception in 1983.
Prior to founding Allstar, Mr. Long served with the United States Navy in a
technical position and was then employed by IBM in a technical position.
Donald R. Chadwick, age 56, served as Secretary since February 1992 and
served as our Chief Financial Officer from February 1992 until December 1999. As
Chief Financial Officer, his duties included supervision of finance, accounting
and controller functions within Allstar.
Richard D. Darrell, age 45, has been President of American Technology
Acquisition Corporation, a company specializing in mergers, acquisitions, and
divestitures of technology related companies since 1995. Prior to that, Mr.
Darrell served as President and Chief Executive Officer of Direct Computer
Corporation, a computer reseller and distribution company based in Dallas,
Texas.
Jack M. Johnson, Jr., age 61, has been Managing General Partner of
Winterman & Company, a general partnership that owns approximately 25,000 acres
of real estate in Texas, which is used in farming, ranching, and oil and gas
exploration activities since 1996. Mr. Johnson is also President of Winco
Agriproducts, an agricultural products company that primarily processes rice for
seed and commercial sale. Mr. Johnson was previously the Chairman of the Board
of the Lower Colorado River Authority, the sixth largest electrical utility in
Texas, with approximately 1,700 employees and an annual budget of over $400
million. Mr. Johnson was previously Chairman of North Houston Bank, a commercial
bank with assets of approximately $75 million. Mr. Johnson currently serves on
the board of directors of Houston National Bank, a commercial bank located in
Houston, Texas with assets of approximately $100 million; Security State Bank, a
commercial bank in Anahuac, Texas with assets of approximately $60 million; and
Team, Inc. a publicly traded company which provides environmental services for
industrial operations.
Mark T. Hilz, age 42, is Chief Executive Officer of Nichecast, Inc., a
privately held internet services company. From 1990 to 1998, Mr. Hilz was
founder, President and Chief Executive Officer of PC Service Source, Inc., a
publicly-held distributor of personal computer hardware for the repair industry.
The board of directors recommends a vote "FOR" all five nominees to our
board of directors.
Board and Committee Activity, Structure and Compensation
In accordance with Delaware corporate law, our business is managed under
the direction of our board of directors. There are currently two standing
committees of the board of directors, the audit committee and the compensation
committee. The board of directors does not currently have a nominating
committee. Committee membership and the functions of those committees are
described below.
During 1999, the board of directors held four meetings. All directors,
attended at least 75% of the total meetings of the board and all of the meetings
of the committees on which they served.
Audit Committee. The current members of the Audit Committee are Messrs.
Darrell, Hilz and Johnson. The committee met two times during 1999. The
committee is responsible for recommending to the entire board of directors
engagement and discharge of independent auditors of our financial statements,
reviewing the professional service provided by the independent auditors,
reviewing the independence of independent auditors, reviewing with the auditors
the plan and results of the auditing engagement, and reviewing our accounting
principles and practices.
Compensation Committee. The current members of the Compensation Committee
are Messrs. Darrell, Hilz and Johnson. In November 1998, the committee met on
matters dealing with 1999. In November 1999, the committee met on matters
specifically with respect to a key employee. The committee reviews and
recommends to the board of directors the compensation to be paid to our officers
and key employees. Except as otherwise provided in any specific plan adopted by
the board of directors, the committee is responsible for administration of
executive compensation plans, stock option plans and other forms of direct or
indirect compensation of officers and key employees, and the committee has the
power and authority to authorize any of our officers to execute and bind Allstar
to such documents, agreements and instruments related to such plans and
compensation as are approved by the committee.
Director Compensation. During the year ended December 31, 1999, our
non-employee directors received $1,000 for each board meeting attended and $500
for each committee meeting attended. In addition, each non-employee director is
entitled to receive stock options pursuant to our Non-Employee Director Stock
Option Plan. Upon his first election to the board each such director receives
options to purchase 5,000 shares and upon each time a director is reelected such
director receives options to purchase 2,000 shares. All options granted vest
immediately. All options granted under the plan will have an exercise price
equal to the fair market value of a share of common stock on the date of grant
and will expire ten years after the date of grant (subject to earlier
termination under the plan). Options granted under the plan are subject to early
termination on the occurrence of certain events, including ceasing to be a
member of the Board (other than by death). During 1999, options to acquire 9,000
shares of common stock were granted under the plan. Our employee directors
received no compensation for their services as directors.
Proposal 2
AMENDMENT OF OUR CERTIFICATE OF INCORPORATION
General
We are asking stockholders to approve an amendment to our Certificate of
Incorporation to change the name of the company from Allstar Systems, Inc. to
"I-Sector Corporation." The board of directors approved this amendment on March
16, 2000, subject to ratification by the stockholders.
On May 19, 2000 we sold our computer products division and El Paso
information technology services business, which represented approximately 90% of
our revenues to Amherst Technologies. We had determined that one of our
strengths was in our ability to take advantage of and capitalize on
entrepreneurial opportunities. We determined that the interests of our
stockholders would be better served by changing our direction and investing our
capital, both financial and managerial, in a high growth industry sector rather
than pursuing a growth strategy in a maturing market. The objective of the
amendment to our certificate of incorporation is to more accurately communicate
the direction and focus of our business. In connection with the name change, our
trading symbol will be changed to "ISEC."
Required Vote
Amendment of the Company's Certificate of Incorporation to effect the
corporate name change must be approved by stockholders owning a majority of one
Common Stock as of the record date. Broker non-votes and other abstentions will
have the same effect as a vote "against" the approval of the amendment to the
Certificate of Incorporation.
The board of directors recommends a vote "FOR" approval of the amendment to
the Certificate of Incorporation.
OTHER INFORMATION
Ownership by Management and Certain Stockholders
The following table presents certain information as of June 12, 2000, as
to:
o each stockholder known by us to be the beneficial owner of more than
five percent of our outstanding shares of common stock,
o each officer named in the Summary Compensation Table, and
o all directors and executive officers as a group.
Shares Beneficially Owned (1)
Name and Address of Beneficial Owner (2) Number Percent of
Class
Jack B. Corey............................... 267,500 6.6%
37102 FM 149, P.O. Box 525
Pinehurst, TX 77362
James H. Long (3)........................... 2,049,080 50.5%
Donald R. Chadwick (4)...................... 105,863 2.6%
Richard D. Darrell (5)...................... 9,000 *
Jack M. Johnson, Jr. (6).................... 9,000 *
Mark T. Hilz (7)............................ 5000 *
Frank Cano (8).............................. 46,180 1.1%
William R. Hennessey (9).................... 7,200 *
All directors and executive officers
as a group (7 persons) (3)(4)(5) 2,193,523 54%
(6)(7)(9)(10)...............................
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* Less than 1%
(1) Except as otherwise indicated, all shares are beneficially owned, and the
sole investment and voting power is held, by the person named. This table
is based on information supplied by officers, directors and principal
stockholders and reporting forms, if any, filed with the Securities and
Exchange Commission on behalf of such persons. Beneficial owner of a
security includes any person who shares voting or investment power with
respect to or has the right to acquire beneficial ownership of such
security within 60 days.
(2) Unless otherwise indicated, the address of all beneficial owners of more
than five percent of our shares of common stock set forth above is 6401
Southwest Freeway, Houston, Texas 77074.
(3) Includes 480 shares which may be acquired upon exercise of currently
exercisable options.
(4) Includes 64,686 shares which may be acquired upon exercise of currently
exercisable options , 517 shares owned by his spouse for which Mr. Chadwick
disclaims beneficial ownership, 360 shares which may be acquired upon
exercise of currently exercisable options owned by his spouse for which Mr.
Chadwick disclaims beneficial ownership and 300 shares owned by his minor
children for which Mr. Chadwick disclaims beneficial ownership. Mr.
Chadwick retired from his position as Chief Financial Officer in December
1999.
(5) Includes 9,000 shares which may be acquired upon exercise of currently
exercisable options.
(6) Includes 9,000 shares which may be acquired upon exercise of currently
exercisable options.
(7) Includes 5,000 shares which may be acquired upon exercise of currently
exercisable options.
(8) Includes 15,520 shares which may be acquired upon exercise of currently
exercisable options, 300 shares owned by Mr. Cano's Spouse for which Mr.
Cano disclaims beneficial ownership, 20,000 shares owned by his minor
children for which Mr. Cano disclaims beneficial ownership and 360 shares
which may be acquired upon exercise of currently exercisable options owned
by his spouse for which Mr. Cano disclaims beneficial ownership. Effective
May 19, 2000, Mr. Cano resigned from his position with us in connection
with the sale of the computer products division.
(9) Includes 7,200 shares which may be acquired upon exercise of currently
exercisable options.
(10) Mr. Cano, who ceased to be our employee on May 19, 2000, is not included in
the calculation of shares beneficially owned by all directors and executive
officers as a group.
Executive Officers
Our executive officers serve at the pleasure of the board of directors and
are subject to annual appointment by the board at its first meeting following
the annual meeting of stockholders. All of our executive officers as of June 12,
2000 are listed in the following table:
Name Age Position
James H. Long 41 President, Chief Executive Officer and Director
William R. Hennessy 41 President of Stratasoft, Inc.
Thomas N. McCulley 53 Vice President of Information Systems
Set forth below is certain information about our executive officers, other
than James H. Long.
William R. Hennessy has served as the President of Stratasoft, Inc., our
wholly-owned subsidiary that was formed in 1995 to develop and market CTI
Software, since joining us in January 1996. Mr. Hennessy's responsibilities
include the general management of Stratasoft, Inc. From July 1991 to January
1996, Mr. Hennessy was employed by Inter-Tel, Incorporated, a telephone systems
manufacturer and sales service company, where he served as the Director of MIS
and the Director of Voice and Data Integration for the central region.
Thomas N. McCulley has served as the Vice President, Information Systems
since July 1996. From January 1992 to June 1996, Mr. McCulley served as our
Information Systems Director. He is responsible for the management and
supervision of our management information system.
Executive Compensation
Summary Compensation Table. The following table provides information
concerning compensation paid or accrued during the fiscal years ended December
31, 1999, 1998 and 1997 to our chief executive officer and each of our other
executive officers determined at the end of the last fiscal year:
Annual Compensation Long-Term
Compensation
Name and Year Salary Bonus Other Annual Restricted Number of
Principal Position Compensation(1) Stock Awards Securities
Underlying
Options(10)(11)
James H. Long (2) 1999 $150,000 - - - -
President and 1998 150,000 $80,200 - - 2,400
Chief Executive Officer 1997 150,000 - - -
Donald R. Chadwick(3)(4)(5) 1999 110,000 - - - 63,572
Chief Financial Officer and 1998 108,853 - - $15,000 2,400
Secretary 1997 98,458 1,500 - 85,716 13,000
Frank Cano (4)(6)(7)(8) 1999 100,000 564 - - 20,000
President, 1998 96,875 13,051 $10,000 15,000 5,600
Information Technology 1997 78,125 22,297 - - 16,000
William R. Hennessy (9) 1999 85,000 55,856 - - 10,000
President Stratasoft, Inc. 1998 84,637 3,000 - 7,500 -
1997 81,400 73,880 - - 8,000
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<FN>
(1) Amounts exclude the value of perquisites and personal benefits because the
aggregate amount thereof did not exceed the lesser of $50,000 or 10% of the
executive officer's total annual salary and bonus.
(2) Company has made personal loans to Mr. Long from time to time. See "Certain
Relationships and Related Transactions."
(3) During the year ended December 31, 1999, Mr. Chadwick received 48,572 stock
options in exchange for 24,286 shares of restricted stock. The Options have
an exercise price of $1.06.
(4) Includes $1.500 as consideration for execution of employment agreements.
(5) Retired as Chief Financial Officer effective December 31, 1999. Retains
position as Secretary.
(6) During the year ended December 31, 1999, Mr. Cano received 20,000 stock
options in exchange for 10,000 shares of restricted stock. The options have
an exercise price of $1.06.
(7) Includes compensation based upon attainment of certain performance goals.
(8) Effective May 19, 2000, Mr. Cano resigned from his position with us in
connection with sale of the computer products division.
(9) Includes compensation based upon gross profit realized.
(10) Number of securities underlying options shown for 1998 includes options
originally issued in 1997 and repriced during 1998 and options newly issued
in 1998.
(11) The number of securities underlying options shown for 1999 includes options
received in exchange for restricted stock originally issued in 1997 and
1998.
</FN>
Stock Options
Under the our 1996 Incentive Stock Option Plan options to purchase shares
of the common stock may be granted to executive officers and other employees. As
of December 31, 1999, 438,232 shares were reserved for issuance upon exercise of
outstanding options and 4,268 were reserved and remained available for future
grants pursuant to the plan. During 1999, options to purchase 93,572 shares of
common stock were granted to the executive officers under the plan including
78,572 options which were granted at an exercise price of $1.06 in exchange for
39,286 shares of restricted stock.
Options Granted in Last Fiscal Year. The following table provides information
concerning stock options granted to the executive officers during the year ended
December 31, 1999.
Number of Percent Exercise Expiration Potential Potential
Shares of of Total or Base Date Realizable Realizable
Common Options Price Value at Value at
Stock Granted ($/share) Assumed Assumed
Underlying to Annual Rate Annual Rate
Options Employees of Stock of Stock
Granted(1) in Fiscal Price Price
year Appreciations Appreciations
for Option for Option
Term 5%(1) Term 10%(2)
Donald R. Chadwick 63,572 35.9% 1.06 4/01/09 $24,544 $54,236
Frank Cano 20,000 8.6% 1.06 4/01/09 $ 5,874 $12,979
William R. Hennessy 10,000 4.3% 1.06 4/01/09 $ 2,937 $ 6,490
<FN>
(1) Mr. Long was not granted any options during the last fiscal year.
(2) Actual gains, if any, on stock option exercises are dependent on future
performance of the common stock. No appreciation in the price of the common
stock will result in no gain.
</FN>
Aggregated Option Exercises and Year-End Option Values
Shares Value Number of Securities Value of Unexercised In-the
Acquired Realized Underlying Unexercise Money Options at
on Options at December 31, 1999
Exercise December 31, 1999
Exercisable Unexercisable Exercisable Unexercisable
James H. Long 0 0 480 1,920 $514 $2,056
Donald R. Chadwick 0 0 64,686 0 $69,266 $0
Frank Cano 0 0 15,520 26,080 $19,784 $33,876
William R. Hennessy 0 0 7,200 10,800 $9,052 $13,578
The executive officers held 126,686 options that were exercisable at December
31, 1999, none were exercised during 1999 and there were 93, 572 in-the-money
unexercised options at December 31, 1999.
Compensation Committee Report
The compensation committee of the Board of Directors has furnished the
following report on executive compensation for the fiscal 1999:
The Committee met on November 2, 1999. The compensation of
executive officers during 1999 was continued under
compensation arrangements existing prior to the formation of
the Committee except that equity based compensation would be
enhanced to further align the interests of the officers of
the officers of the Company with those of the stockholders.
Those compensation arrangements are described below:
Base compensation for the executive officers of the company is intended to
afford a reasonable payment for the services rendered to the Company and the
responsibilities assumed by the executive officer relative to the expected
performance of the areas managed by the officers. With the exception of the
Chief Executive Officer and Chief Financial officer, bonuses, which are
generally paid monthly, and stock-based awards are contingent upon attaining or
exceeding predetermined financial performance goals established at the beginning
of each fiscal year. The Committee authorized a cash bonus to a key executive
officer which was subsequently paid in 2000.
The stock options issued to officers in 1999 were issued in exchange for
shares of restricted Common Stock issued in 1998 and prior years.
The committee will be reformed after the annual meeting of the stockholders
with all non-employee directors as members of the committee. The committee
intends to meet during 2000 and review established policies with respect to
executive officer compensation.
THE COMPENSATION COMMITTEE
Richard D. Darrell
Mark T. Hilz
Jack M. Johnson, Jr.
Employment Agreements
Each of our executive officers have entered into an employment agreement
with us. Under the terms of their respective agreements, Messrs. Long and
Hennessy are entitled to an annual base salary of $150,000 and $85,000,
respectively, plus other bonuses, the amounts and payment of which are within
the discretion of the compensation committee. The agreements may be terminated
by us or by the executive officer at any time by giving proper notice. The
Executive Employment agreements generally provide that the executive officer
will not, for the term of his employment and for the period ranging from twelve
to eighteen months following the end of such executive officer's employment with
us, solicit any of our employees or customers or otherwise interfere with our
business.
Mr. Chadwick has an oral agreement with us that provides for, among other
things, Mr. Chadwick providing consulting services for us from time to time for
a 21-month period which began in December 1999. As compensation for these
services, Mr. Chadwick's previous salary of $110,000 has been and will continue
to be decreased on an incremental basis over the 21-month period.
Performance Graph. The following graph illustrates the yearly percentage
change in the cumulative stockholder return on our common stock, compared with
the cumulative total return on the Nasdaq Stock Market (U.S. Companies) Index
and the Russell 2000 Index, for the 30 month period ended December 31, 1999.
[Performance Graph]
Certain Relationships and Related Transactions
We have from time to time made payments on behalf of Allstar Equities, Inc.
a Texas corporation, which is wholly-owned by James H. Long, our President and
Chief Executive Officer, and on behalf of Mr. Long, personally for taxes,
property and equipment. Effective on December 1, 1999 a note payable by Equities
was signed for $335,551 for 60 monthly installments of $6,965. The note bears
interest at 9% per year. At December 31, 1999, our receivables from Equities
amounted to approximately $277,663. Equities has prepaid interest on the note in
the amount of $27,941.
We lease office space from Equities. In 1998, we extended an existing
office sublease through December 13, 1998. Thereafter, and until December 1,
1999, we occupied the space on a month-to-month basis. On December 1, 1999
Equities purchased, with the proceeds of the note described above, the building
and executed a direct lease with us with an expiration date of December 31,
2004. The new lease has rental rates of $37,692 per month.
Mr. Richard Darrell who is a member of our board of directors, received
approximately $350,000 from us as a fee for introducing us to Amherst
Technologies, the purchaser of our computer products division. Additionally, Mr.
Darrell also received a fee of $250,000 from Amherst Technologies in connection
with the sale of our computer products division.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than 10% of our
equity securities to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of our common stock.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were required,
during the fiscal year ended December 31, 1999, none of our officers, directors
and greater than 10% beneficial owners timely filed their required Section 16(a)
reports.
Other Matters
The annual report to stockholders on Form 10-K covering the fiscal year
ended December 31, 1999 has been mailed to each stockholder entitled to vote at
the annual meeting. Individual investors may request the Company's Form 10-K and
other information by calling James H. Long at (713) 795-2000 or write to the
address below:
Allstar Systems, Inc.
6401 Southwest Freeway
Houston, Texas 77074
The persons designated to vote shares covered by the board of directors'
proxies intend to exercise their judgment in voting such shares on other matters
that may properly come before the meeting. Management does not expect that any
matters other than those referred to in this proxy statement will be presented
for action at the meeting.
Sincerely,
Donald R. Chadwick,
Secretary
June 26, 2000
ALLSTAR SYSTEMS, INC.
Proxy for Annual Meeting of Stockholders July 10, 2000
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING ON JULY 10, 2000
The undersigned stockholder of Allstar Systems, Inc. (the "Company") hereby
appoints James H. Long and Donald R. Chadwick, or either of them, the true and
lawful attorneys, agents and proxies of the undersigned, each with full power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the offices of the Company, located at
6401 Southwest Freeway, Houston, Texas 77074, on July 10, 2000, at 10:00 a.m.,
Houston time, and at any adjournments of said meeting, all of the shares of the
Company's common stock in the name of the undersigned or which the undersigned
may be entitled to vote.
1. THE ELECTION OF DIRECTORS
Nominees for directors are as follows:
___ James H. Long
___ Donald R. Chadwick
___ Richard D. Darrell
___ Jack M. Johnson, Jr.
___ Mark T. Hilz
Instruction: If you wish to withhold authority to vote for any individual
nominee or nominees, write the name or names of the nominee(s) on the line
provided below:
___To withhold authority to vote on all nominees for directors listed.
2. APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
___ For ___ Against ___ Abstain
3. ___ In their discretion, upon such other matters as may properly come
before the meeting; hereby revoking any proxy or proxies heretofore given
by the undersigned.
(This Proxy must be dated and signed on the reverse side.)
(Continued From Other Side)
Proxy For Annual Meeting Of Stockholders July 10, 2000
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted (i) FOR the election of the nominees above, (ii) FOR the amendment of
the Certificate of Incorporation, and (iii) in accordance with the discretion of
the persons designated above with respect to any other business properly before
the meeting.
The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and the Proxy
Statement furnished herewith.
Dated ____________________, 2000
______________________________
Stockholder's Signature
______________________________
Signature if held jointly
Signature should agree with
name printed hereon. If Stock
is held in the name of more
than one person, EACH joint
owner should sign. Executors,
administrators, trustees,
guardians and attorneys should
indicate the capacity in which
they sign. Attorneys should
submit powers of attorney.
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENVELOPE ENCLOSED