UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GTC TELECOM CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
-1-
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 3, 2002
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders of
GTC Telecom Corp., to be held on Tuesday, December 3, 2002 at 9:30 A.M., Pacific
Time, at the Irvine Marriott John Wayne Airport, 18000 Von Karman Ave., Irvine,
California 92612, to consider and act upon the following proposals, as described
in the accompanying Proxy Statement:
1. To elect four (4) directors to serve until the next Annual Meeting of
Stockholders and thereafter until their successors are elected and qualified;
2. To ratify the appointment of Squar, Milner, Reehl & Williamson LLP as
independent auditors of the Company for the fiscal year ending June 30, 2003;
and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. The Board of Directors has fixed the close of
business on October 7, 2002, as the record date for Stockholders entitled to
notice of and to vote at this meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ Eric A. Clemons
Eric A. Clemons, Secretary
October 24, 2002
Costa Mesa, California
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOUR PROXY
WILL NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE
YOUR SHARES PERSONALLY AT THAT TIME.
-2-
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
-----------------------------
PROXY STATEMENT
-----------------------------
GENERAL INFORMATION
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The enclosed Proxy is solicited by the Board of Directors of GTC Telecom Corp.
(the "Company" or "GTC") for use in connection with the Annual Meeting of
Stockholders to be held at the Irvine Marriott John Wayne Airport, 18000 Von
Karman Ave., Irvine, California 92612 on Tuesday, December 3, 2002, at 9:30
a.m., and at any and all adjournments thereof for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders.
The persons named as proxies were designated by the Board of Directors (the
"Board") and are officers or directors of the Company. Any Proxy may be revoked
or superseded by executing a later Proxy or by giving notice of revocation in
writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting
and voting in person. Attendance at the meeting will not in and of itself
constitute revocation of the Proxy. All Proxies that are properly completed,
signed and returned to the Company prior to the meeting, and not revoked, will
be voted in accordance with the instructions given in the Proxy. If a choice is
not specified in the Proxy, the Proxy will be voted:
1. FOR election of the director nominees listed below (Proposal 1);
2. FOR the ratification of the appointment of Squar, Milner, Reehl &
Williamson LLP as independent auditors of the Company for the fiscal year
ending June 30, 2003 (Proposal 2).
Officers of the Company or their designees will tabulate votes cast at the
Annual Meeting. A majority of shares entitled to vote, represented in person or
by proxy, will constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes are each included in the determination of the number of shares
present and voting for the purpose of determining whether a quorum is present,
and each is tabulated separately. In determining whether a proposal has been
approved, abstentions are counted as votes against a proposal and broker
non-votes are not counted.
If any other matters are properly presented at the Annual Meeting for action,
the persons named in the enclosed form of proxy will have discretion to vote on
such matters in accordance with their best judgment. The Company does not know
of any matters other than those set forth above that will be presented at the
Annual Meeting.
This Proxy Statement and the accompanying Proxy are being mailed to stockholders
on or about November 4, 2002. The entire cost of the solicitation of Proxies
will be borne by the Company. It is contemplated that this solicitation will be
primarily by mail. In addition, some of the officers, directors and employees
of the Company may solicit Proxies personally or by telephone, fax, telegraph or
cable. Officers and employees soliciting proxies will not receive any additional
compensation for their services. The Company will reimburse brokers and other
nominees for their reasonable out-of-pocket expenses incurred in forwarding
solicitation material to beneficial owners of shares held of record by such
brokers or nominees.
OUTSTANDING SHARES AND VOTING RIGHTS
The only class of the Company's equity securities currently outstanding is its
Common Stock. Stockholders of record at the close of business on October 7,
2002 are entitled to one vote for each share of Common Stock held by them. As
of October 7, 2002, there were 20,606,622 shares of Common Stock outstanding. A
majority of the shares of the Company's Common Stock present or represented and
entitled to vote at the meeting is required to approve each proposal presented
at the meeting.
-3-
PROPOSAL ONE
ELECTION OF DIRECTORS
Directors are elected by the stockholders at each annual meeting to hold office
until their respective successors are elected and qualified. Pursuant to the
Bylaws of the Company, the Board of Directors consists of not less than one (1)
nor more than five (5) directors, and the number is presently fixed at four (4)
members. Assuming a quorum is present, the four persons receiving the highest
number of affirmative votes of shares entitled to vote will be elected as
directors of the Company. Stockholders are not entitled to cumulate votes in
the election of directors. Each of the following nominees were members of the
Company's Board of Directors during the previous term. Each share of Common
Stock is entitled to one vote and, therefore, has a number of votes equal to the
number of authorized directors. Proxies may not be voted for more than four (4)
directors.
Although management of the Company expects that each of the following nominees
will be available to serve as a director, in the event that any of them should
become unavailable prior to the Annual Meeting, management's proxies will be
voted for a nominee or nominees designated by management or will be voted for a
lesser number of directors. If there are other nominees, management's proxies
will be voted so as to elect the greatest number of the following nominees.
Management has no reason to believe that any of its nominees, if elected, will
be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
The nominees for election to the Board of Directors as selected by the Board of
Directors of the Company are set forth below:
S. Paul Sandhu
Eric Clemons
John M. Eger
Gerald A. DeCiccio
The biographies of nominees, including certain additional information, are set
forth below:
S. PAUL SANDHU, 41, has been a director of the Company since August 28, 1998 and
is a member of the Company's Nominaton & Compensation Commitee. Mr. Sandhu is
currently the Company's Chief Executive Officer and a director of the Company.
Mr. Sandhu has been with GTC since its inception. Mr. Sandhu has over twelve
(12) years experience with start-up and emerging growth companies. Mr. Sandhu
was Co-Founder, President and Co-Owner of Maximum Security ("Maximum"), a
Security and surveillance company he started in 1992. While at Maximum, Mr.
Sandhu actively managed a staff of over 200 employees. In 1997 Mr. Sandhu sold
the business to his partner. Mr. Sandhu graduated from the University of Punjab
in India with a degree in Engineering.
ERIC CLEMONS, 31, has been a director of the Company since August 28, 1998 and
is currently the Company's President and a director of the Company. Mr. Clemons
has been with GTC since its inception. Mr. Clemons has over ten (10) years
experience with sales and marketing organizations. Mr. Clemons most recently
was Vice President of Marketing for Intelligent Electronic Communications
managing a staff of 50 employees. Mr. Clemons has attended The Wharton School
of Business executive management programs.
JOHN M. EGER, 62, was appointed to the Board on October 20, 1999 and is a member
of both of the Company's Audit Committee and of the Nomination & Compensation
Committee. Mr. Eger is a telecommunications lawyer and former counsel to the
international law firm Morrison and Forester and is currently the holder of the
prestigious Lionel Van Deerlin Endowed Chair of Communications and Public Policy
at San Diego State University. He is also the President and CEO of the World
Foundation for Smart Communities, a non-profit, non-governmental educational
program dedicated to helping communities understand the importance of
information technology as a catalyst for transforming life and work in the 21st
Century. Mr. Eger formerly headed CBS Broadcast International, which he
established and was Senior Vice President of the CBS Broadcast Group. From
1971-1973, Mr. Eger was legal assistant to the chairman of the Federal
Communications Commission, and from 1974-1976 served as Telecommunications
Advisor to Presidents Nixon and Ford and was also the Head of the White House
Office of Telecommunications Policy (OTP). Earlier in his career, Mr. Eger
served as a data communications specialist and design director of information
systems for the Bell System. From 1976 through 1981, he was a Washington, DC
based telecommunications attorney. Other positions Mr. Eger has held include
serving as Chairman of the Board of the San Diego Processing Corporation,
Chairman of San Diego Mayor Susan Golding's City of the Future Advisory
Committee and Chairman of Governor Pete Wilson's California Commission on
Information Technology.
-4-
GERALD A. DECICCIO, 45, has been a director of the Company since November 3,
2000. Mr. DeCiccio first joined the Company in January 1999 as Chief Financial
Officer. Mr. DeCiccio has over twenty (20) years experience in the financial
and accounting field. Prior to joining GTC, Mr. DeCiccio was the Vice President
of Finance and Administration for National Telephone & Communications, Inc.,
("NT&C") a $150 million inter-exchange carrier and provider of communications
products and services. While at NT&C, Mr. DeCiccio managed NT&C's finance,
accounting, human resources and legal departments. Between 1995 and 1997, Mr.
DeCiccio was the Corporate Controller for Newport Corporation, a $140 million
multi-national manufacturer / distributor of laser and optics products. Prior
to that, Mr. DeCiccio was the Director of Audit and Quality Systems for Sunrise
Medical, Inc., a $750 million multi-national manufacturer / distributor of
health care products. From 1980 to 1984, Mr. DeCiccio was a Supervising Senior
Accountant for Ernst and Young. Mr. DeCiccio received his Bachelor of Science
in Accounting from Loma Linda University, and his Masters of Science in Finance
and Systems Technology from the University of Southern California. Mr. DeCiccio
is a Certified Public Accountant in the State of California.
The following directors presently serve as directors of the following public
corporations:
John M. Eger WaveExpress, a joint venture of Sarnoff Labs and Wave
Systems; Verance Corporation, an electronic watermarking and
information management company; and, E-Tel Corp., a
manufacturer of internet telephones.
COMPENSATION OF BOARD OF DIRECTORS
For the fiscal years ended 1996, 1997 and 1998, and the six months ended
December 31, 1998, Directors of the Company received no compensation. Beginning
with the third quarter of fiscal year 1999 through December 31, 2000, Directors
received $1,500 and 2,500 options to purchase the Company's common stock per
quarter. Beginning January 1, 2001, the outside directors each receive $4,000
per quarter, $1,000 per major committee meeting as contemplated in the
respective committee charter, $1,000 each for the Chairman of the Audit and
Compensation committees per year of service, 2,500 options per quarter priced at
fair market value on the date of grant, and 2,500 options each per quarter
priced at fair market value on the date of grant for the Chairman of the Audit
and Compensation committees. Beginning January 1, 2001, the inside directors no
longer receive compensation related to their duties as directors.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held three meetings during the year ended
June 30, 2002. Each director attended each of the meetings, except Mr. Eger who
missed one meeting. The Board does not meet on any pre-determined schedule but
meets on an as needed basis. The Board has an Audit Committee and a
Compensation & Nominating Committee. The Audit Committee held two meetings
during the year ended June 30, 2002. Following the passage of the
Sarbanes-Oxley Act of 2002 on July 30, 2002, the Audit Committee's charter was
revised to comply with the Audit Committee requirements of the Sarbanes-Oxley
Act. The Committee is now directly responsible for the appointment,
compensation, and oversight of the work of the Company's independent public
accounting firm. The Audit Committee currently consists of Mr. Eger. A copy of
the Audit Committee's revised charter is attached to this Proxy Statement as
Appendix - A.
The Compensation & Nominating Committee held one meeting during the fiscal year
ended June 30, 2002. The Compensation & Nominating Committee is responsible for
annually reviewing and fixing the salaries and other compensation of the
officers of the Corporation, and deciding upon the grant of stock options to the
officers and other employees of the Corporation. The Compensation & Nominating
Committee is also responsible for evaluating and recommending to the Board
qualified nominees for election as Directors of the Corporation and considering
other matters pertaining to the size and composition of the Board. The
Committee does not accept nominations from stockholders. The Compensation &
Nominating Committee of the Board currently consists of Messrs. Eger and Sandhu.
The Committee does not currently have a charter.
-5-
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee are set forth in the revised Audit
Committee Charter approved by the Board of Directors, a copy of which is
attached to this Proxy Statement as Appendix A.
Audit Committee Report:
I have reviewed and discussed the Company's audited consolidated financial
statements as of and for the fiscal year ended June 30, 2002 with the Company's
management and Squar, Milner, Reehl & Williamson LLP ("Squar Milner"), the
Company's independent certified public accountants.
I have received and reviewed the written disclosures and the letter from Squar
Milner required by Independence Standard No. 1, Independence Discussions with
Audit Committees, as amended, by the Independence Standards Board, and have
discussed with Squar Milner their objectivity and independence.
I have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standard No. 61, Communications with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
Based on the reviews and discussions referred to above, I recommend to the Board
of Directors that the audited consolidated financial statements referred to
above be included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2002 to be filed with the Securities and Exchange
Commission.
By /s/ John M. Eger
John M. Eger
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF ALL NOMINEES NAMED ABOVE.
-6-
PROPOSAL TWO
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Audit Committee has appointed Squar, Milner, Reehl & Williamson LLP ("Squar
Milner"), independent auditors, to audit the consolidated financial statements
of the Company for the fiscal year ending June 30, 2003 and seeks ratification
of such appointment. In the event of a negative vote on such ratification, the
Audit Committee will reconsider its appointment. Squar Milner was the Company's
independent auditor for the prior fiscal year ending June 30, 2002.
Representatives of Squar Milner are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
Effective March 1, 2002, the Board of Directors of the Company dismissed Corbin
& Wertz ("Corbin & Wertz") as its independent auditors and approved the
engagement of Squar Milner as its independent auditors for the fiscal year ended
June 30, 2002 to replace Corbin & Wertz. The decision to change auditors was
approved by the Company's audit committee as well as the full Board of
Directors. The Company did not consult with Squar Milner on any matters prior to
their retention.
The reports of Corbin & Wertz on the Company's financial statements for the
fiscal years ended June 30, 2001 and 2000, and the related statements of
operations, stockholder's equity and cash flows for the two years then ended did
not contain an adverse opinion or a disclaimer of opinion and was not qualified
or modified as to uncertainty, audit scope, or accounting principles, except as
relating to the Registrant's ability to continue as a going concern.
Since the date of Corbin & Wertz's engagement and during the two most recent
fiscal years and any subsequent interim period, there were no disagreements with
Corbin & Wertz on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the satisfaction of Corbin & Wertz would have caused Corbin & Wertz to make
reference to the matter in their report.
There have been no disagreements between either Corbin & Wertz or Squar Milner
and Management of the type required to be reported since the date of their
engagement.
For the fiscal year ended June 30, 2002, the Company's fees for professional
services rendered by its Independent Auditors were as follows:
(a) Audit Fees: Aggregate fees billed for professional services rendered for the
audit of the Company's fiscal year 2002 annual financial statements and review
of the financial statements in the Company's reports on Form 10-QSB: $55,000.
(b) Financial Information Systems Design and Implementation Fees: None.
(c) All Other Fees: The aggregate fees billed for all other professional
services provided to the Company (other than the services described above under
"Audit Fees") for the fiscal year ended June 30, 2002 were $31,689.
The Audit Committee has considered and determined that the services rendered by
the independent certified public accountants with respect to the foregoing fees
are compatible with maintaining their independence.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF
SQUAR, MILNER, REEHL & WILLIAMSON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING JUNE 30, 2003.
-7-
OTHER INFORMATION
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are set forth below, along
with their biographies. See "ELECTION OF DIRECTORS" for the biographies of the
Company's directors.
Name Positions
S. Paul Sandhu Chief Executive Officer, and Director
Eric Clemons President and Director
Gerald A. DeCiccio Chief Financial Officer and Director
Mark Fleming Chief Operating Officer
John M. Eger Director
MARK FLEMING, 44, joined the Company in October 1998 as Executive Vice
President. Mr. Fleming has twenty (20) years of business strategy, planning,
and analysis experience within the competitive consumer products / services
industries. For seven years, prior to joining GTC, Mr. Fleming worked in the
telecommunications industry, holding several finance and marketing management
positions at MCI. Some of the key business / operational issues that Mr.
Fleming managed while at MCI included pricing strategy, market positioning, new
product development, sales channel and customer service performance reviews,
capital investment decisions and overall business planning / analysis for
Residential Markets and Local Services divisions. Mr. Fleming received his
Bachelor of Arts degree in Business Administration from Principia College in
1980, and attained his Masters in Business Administration, with honors from the
University of Southern California in 1986.
-8-
EXECUTIVE COMPENSATION
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities for the fiscal years ended June 30, 2002,
2001 and 2000. Other than as set forth herein, no executive officer's salary
and bonus exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------- AWARDS PAYOUTS
-------------------------------
OTHER RESTRICTED SECURITIES ALL
NAME AND ANNUAL STOCK UNDERLYING LTIP OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPESATION
POSITION YEAR ($) ($) ($) ($) SARS (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
Paul Sandhu 2002
(CEO) (6/30) $ 186,450 16,800 12,000(1) -0- 280,000 -0- 27,139(4)
2001
(6/30) 105,000 -0- 10,000(1) -0- 132,500 -0- 13,000(2)
2000
(6/30) 126,000 -0- -0- -0- 217,500 -0- -0-
- ---------------------------------------------------------------------------------------------------------------------------
Eric Clemons 2002
(President) (6/30) 198,550(5) 1,520 12,000(1) -0- 270,000 -0- 24,554(4)
2001
(6/30) 145,667 13,680 10,000(1) -0- 132,500 -0- 100,000(2)
2000
(6/30) 133,000 -0- -0- -0- 167,500 -0- -0-
- ---------------------------------------------------------------------------------------------------------------------------
Gerald DeCiccio 2002
(CFO) (6/30) 155,100 14,400 12,000(1) -0- 260,000 -0- 17,169(4)
2001
(6/30) 138,000 -0- -0- -0- 177,500 -0- -0-
2000
(6/30) 139,708 -0- -0- -0- 75,000 -0- -0-
- ---------------------------------------------------------------------------------------------------------------------------
Mark Fleming 2002
(COO) (6/30) 141,483 13,000 -0- -0- 240,000 -0- 15,500(4)
2001
(6/30) 124,583 -0- -0- -0- 50,000 -0- -0-
2000
(6/30) 121,042 -0- -0- -0- 75,000 -0- -0-
- ---------------------------------------------------------------------------------------------------------------------------
Frank Naccarelli(3) 2002
(COO) (6/30) 147,500 -0- -0- -0- -0- -0- -0-
2001
(6/30) 111,686 -0- -0- -0- 35,000 -0- -0-
2000
(6/30) 90,208 -0- -0- -0- 35,000 -0- -0-
- ---------------------------------------------------------------------------------------------------------------------------
(1) Amounts paid for director's fees earned in fiscal year 2001 and paid in
fiscal year 2002
(2) Includes $13,000 for Mr. Sandhu and $31,820 for Mr. Clemons in
non-business expenses paid on behalf of the officers relating to travel and
entertainment expenses and $68,180 paid to Mr. Clemons for services
rendered on behalf of the Company relating to fund raising activities
(3) Mr. Naccarelli's employment was terminated on May 10, 2002
(4) Amounts paid for vacation
(5) Includes $24,383 of salary advances
-9-
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS BY THE COMPANY
The following table summarizes stock option grants by the Company during the
fiscal year ended June 30, 2002 to each of the executive officers identified in
the Summary Compensation Table above. These stock options relate to the options
to purchase the common stock of GTC Telecom Corp.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SAR'S GRANTED
OPTIONS/SAR'S GRANTED TO EMPLOYEES IN FISCAL EXERCISE OF BASE PRICE
NAME (#) YEAR ($/SH) EXPIRATION DATE
---------------------- ----------------------- ------------------------ ---------------
Paul Sandhu 180,000(1) 9.9% $ 0.19 4/23/12
100,000(1) 5.5% $ 0.19 4/23/07
---------------------- ----------------------- ------------------------ ---------------
Eric Clemons 170,000(1) 9.4% $ 0.19 4/23/12
100,000(1) 5.5% $ 0.19 4/23/07
---------------------- ----------------------- ------------------------ ---------------
Gerald DeCiccio 160,000(1) 8.8% $ 0.19 4/23/12
100,000(1) 5.5% $ 0.19 4/23/07
---------------------- ----------------------- ------------------------ ---------------
Mark Fleming 140,000(1) 7.7% $ 0.19 4/23/12
100,000(1) 5.5% $ 0.19 4/23/07
---------------------- ----------------------- ------------------------ ---------------
(1) Represents options issued on 4/23/02 in accordance with the 2001 Stock
Incentive Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table summarizes exercises of stock options during the fiscal year
ended June 30, 2002 by each of the executive officers and the fiscal year-end
value of unexercised options for such executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN
SECURITIES UNDERLYING THE-MONEY OPTION/SARS
SHARES ACQUIRED ON VALUE OPTIONS/SARS AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---------------------- ------------------------ -------------------------- --------------------------
Paul Sandhu 0 n/a 230,000 / 400,000 4,500 / 0
Eric Clemons 0 n/a 210,000 / 360,000 4,550 / 0
Gerald DeCiccio 0 n/a 392,500 / 245,000 450 / 0
Mark Fleming 10,000 1,463 230,000 / 225,000 0 / 0
-10-
EQUITY COMPENSATION PLANS
The following table summarizes equity compensation plans at June 30, 2002.
EQUITY COMPENSATION PLANS
(A) (B) (C)
-------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
NUMBER OF SECURITIES WEIGHTED-AVERAGE REMAINING AVAILABLE FOR FUTURE
TO BE ISSUED UPON EXERCISE EXERCISE PRICE OF ISSUANCE UNDER EQUITY COMPENSATION
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, PLANS (EXCLUDING SECURITIES REFLECTED
WARRANTS AND RIGHTS WARRANTS AND RIGHTS IN COLUMN (A))
PLAN CATEGORY (#) ($) (#)
- ------------------------- --------------------------- ---------------------- --------------------------------------
Equity compensation plans
approved by security
holders 3,028,200 $ 0.46 3,042,000(1)
- ------------------------- --------------------------- ---------------------- --------------------------------------
Equity compensation plans
not approved by security
holders 2,054,400 $ 1.10 0
- ------------------------- --------------------------- ---------------------- --------------------------------------
Total 5,082,600 $ 0.72 3,042,000
(1) does not include any ungranted options under the 1999 Omnibus Stock Option
Plan as this plan was terminated.
1999 STOCK OPTION PLAN
On September 20, 1999, the Company's Board of Directors ("Board") approved the
GTC Telecom Corp. Omnibus Stock Option Plan (the "Option Plan"), effective
October 1, 1999. The Option Plan was approved and ratified by the stockholders
on December 13, 1999 at the Company's 1999 annual stockholder's meeting. Under
the terms of the Option Plan, the Board has the sole authority to determine
which of the eligible persons shall receive options, the number of shares which
may be issued upon exercise of an option, and other terms and conditions of the
options granted under the Plan to the extent they don't conflict with the terms
of the Plan. An aggregate of 750,000 shares of common stock are reserved for
issuance under the Plan during the year October 1, 1999 to September 30, 2000.
For each subsequent year beginning October 1, 2000, there shall be reserved for
issuance under the Plan that number of shares equal to 10% of the outstanding
shares of common stock on July 1 of that year or 2,037,162 shares for the year
beginning October 1, 2001. The exercise price for all statutory options granted
under the Plan shall be 100% of the fair market value of the Company's common
stock on the date of grant, unless the recipient is the holder of more than 10%
of the already outstanding securities of the Company, in which case the exercise
price shall be 110% of the fair market value of the Company's common stock on
the date of grant. The exercise price for all non-statutory options granted
under the Plan shall be between 25% to 100% of the fair market value on the date
of grant. All options shall vest equally over a period of five years from the
date of issuance. The shares underlying the options issued pursuant to the plan
have been registered with the Securities and Exchange Commission. Upon the
approval and ratification of the Company's 2001 Stock Incentive Plan (see
below), the Company elected to terminate the 1999 Stock Option Plan.
2001 STOCK INCENTIVE PLAN
On October 17, 2001, the Company's Board approved the GTC Telecom Corp. 2001
Stock Incentive Plan (the "SIP Plan"), effective January 1, 2002. The SIP Plan
was approved and ratified by the stockholders on December 13, 2001 at the
Company's 2001 annual stockholder's meeting. The SIP Plan provides for the
grant of various types of equity-based incentives, including stock options,
stock appreciation rights ("SARs"), restricted stock, and cash and stock
bonuses, on a current or deferred basis, collectively "Awards." The Company may
settle Awards in cash or shares of the Company's Common Stock ("Shares").
-11-
Number of Shares Available. The maximum number of Shares that may be issued
under the SIP Plan is 5,000,000 shares of the Company's Common Stock. The
Internal Revenue Code requires a fixed limit on the number of Shares that may be
covered by options and SARs granted to any one individual in any one calendar
year and a fixed limit on the number of Shares that may be covered by all Awards
granted to any one individual in any one calendar year. These limits are each
1,000,000 shares.
Plan Administration. The SIP Plan may be administered by the Board or by a
committee appointed by the Board (the "Committee"). Currently, the Board has
appointed the Compensation Committee of the Board as the "Committee" or
administrator under the SIP Plan. Subject to the express terms of the SIP Plan,
the SIP Plan administrator will have broad power to administer, construe, and
interpret the SIP Plan.
Consideration for Awards and Shares. Awards may be issued for services rendered
or to be rendered. Shares also may be issued for any lawful consideration,
including cash, other securities or rights. The administrator may authorize
loans from the Company to participants in the amount necessary for participants
to pay the withholding taxes due in connection with the exercise or vesting of
Awards.
Eligibility. All directors, officers, consultants, and employees of the Company
and its subsidiaries are eligible for Award grants. Only persons actually
selected by the administrator will be granted Awards.
NON-PLAN ISSUANCES
During fiscal year 2002, the Company issued options to purchase an aggregate of
40,000 shares of the Company's common stock, at exercise prices between $0.20
and $0.30, valued at $9,400 to the members of the Board pursuant to their
agreement of director compensation. The options vested on the date of grant and
are exercisable through April 2005.
During fiscal year 2001, the Company issued options to purchase an aggregate of
52,500 shares of the Company's common stock, at exercise prices between $0.01
and $0.2969, valued at $7,800 to the members of the Board pursuant to their
agreement of director compensation. The options vested on the date of grant and
are exercisable through April 2004.
On November 3, 2000, the Company granted options to purchase 125,000 shares of
restricted common stock, at an exercise price of $0.50 per share, to a director
of the Company (the fair market value of the Company's common stock on the date
of grant). The options vested on the date of grant and are exercisable through
November 2003.
EMPLOYMENT AGREEMENTS
On December 1, 1998, the Company entered into an Employment Agreement with Paul
Sandhu, the Company's Chief Executive Officer, whereby the Company agreed to pay
Mr. Sandhu an annual salary of $84,000. On January 15, 1999 the Company
voluntarily agreed to increase his salary to $168,000. On September 6, 2001,
the Compensation Committee of the Board agreed to increase his salary to
$184,800. The Agreement and amendments were approved by the Board. The
Agreement is of indefinite term but may be canceled at any time by either the
Company or Mr. Sandhu. However, if the Company terminates the Agreement without
cause, as defined in the Agreement, the Company shall be obligated to pay Mr.
Sandhu 25% of his annual salary as severance. The Agreement does not contain
any non-compete arrangements.
On December 1, 1998, the Company entered into an Employment Agreement with Eric
Clemons, the Company's President, whereby the Company agreed to pay Mr. Clemons
an annual salary of $76,000. On January 15, 1999 the Company voluntarily
increased his salary to $152,000. On September 6, 2001, the Compensation
Committee of the Board agreed to increase his salary to $167,200. The Agreement
and amendments were approved by the Board. The Agreement is of indefinite term
but may be canceled at any time by either the Company or Mr. Clemons. However,
if the Company terminates the Agreement without cause, as defined in the
Agreement, the Company shall be obligated to pay Mr. Clemons 25% of his annual
salary as severance. The Agreement does not contain any non-compete
arrangements.
On December 1, 1998, the Company entered into an Employment Agreement with
Gerald DeCiccio, the Company's Chief Financial Officer, whereby the Company
agreed to pay Mr. DeCiccio an annual salary of $105,000. On December 23, 1999
the Company voluntarily increased his salary to $144,000. On September 6, 2001,
the Compensation Committee of the Board agreed to increase his salary to
$158,400. In addition to his annual salary, the Agreement grants Mr. DeCiccio
options to purchase 150,000 shares of the Company's common stock. Twenty-five
thousand (25,000) of the options vested six (6) months from the execution of the
Agreement at an exercise price of $.01, expiring three years from the date of
vesting if not exercised. The remaining 125,000 options are scheduled to vest
in 1/3 increments each following year provided that Mr. DeCiccio is employed
with the Company. The Agreement and amendments were approved by the Board. The
Agreement is of indefinite term but may be canceled at any time by either the
Company or Mr. DeCiccio. However, if the Company terminates the Agreement
without cause, as defined in the Agreement, the Company shall be obligated to
pay Mr. DeCiccio 25% of his annual salary as severance. The Agreement does not
contain any non-compete arrangements.
On October 14, 1998, the Company entered into an Employment Agreement with Mark
Fleming, the Company's Chief Operating Officer, whereby the Company agreed to
pay Mr. Fleming an annual salary of $70,000. On January 23, 2000 the Company
voluntarily increased his salary to $130,000. On September 6, 2001, the
Compensation Committee of the Board agreed to increase his salary to $143,000.
In addition to his annual salary, the Agreement grants Mr. Fleming options to
purchase 100,000 shares of the Company's common stock. Ten thousand (10,000) of
the options vested six (6) months from the execution of the Agreement at an
exercise price of $.01, expiring three years from the date of vesting if not
exercised. The remaining 90,000 options are scheduled to vest in 1/3 increments
each following year provided that Mr. Fleming is employed with the Company. The
Agreement and amendments were approved by the Board. The Agreement is of
indefinite term but may be canceled at any time by either the Company or Mr.
Fleming. However, if the Company terminates the Agreement without cause, as
defined in the Agreement, the Company shall be obligated to pay Mr. Fleming 25%
of his annual salary as severance. The Agreement does not contain any
non-compete arrangements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 3, 2000, the Company granted options to purchase 125,000 shares of
restricted common stock, at an exercise price of $0.50 per share, to Gerald A.
DeCiccio, a director of the Company (the fair market value of the Company's
common stock on the date of grant). The options are exercisable through
November 2003.
As of June 30, 2002, the Company has net advances to Eric Clemons, President of
the Company, of $60,306. The advances accrue interest at 10% (no interest income
has been recorded as of June 30, 2002) and are due on demand. The Company has
reclassified the note receivable as an increase to stockholders' deficit in the
accompanying consolidated balance sheet at June 30, 2002.
See above for transactions relating to issuances of options to Officers and
Directors from the Company's stock option plans.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 30, 2002, with
respect to each person who is known by the Company to own beneficially 5% or
more of the Company's outstanding Common Stock, the number of shares and the
percentage so owned, as well as the beneficial ownership of Common Stock of the
Company by the directors, the executive officers of the Company and all
directors and executive officers as a group.
COMMON STOCK PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OUTSTANDING OUTSTANDING
- ----------------------- ----------------------------- ---------- ------------
Paul Sandhu(1)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 4,162,215 20.20%
- ----------------------- ----------------------------- ---------- ------------
Eric Clemons(2)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 665,522 3.23%
- ----------------------- ----------------------------- ---------- ------------
Mark Fleming(3)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 260,000 1.26%
- ----------------------- ----------------------------- ---------- ------------
Gerald A. DeCiccio(4)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 432,500 2.10%
- ----------------------- ----------------------------- ---------- ------------
John M. Eger(5)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 688,500 3.34%
- ----------------------- ----------------------------- ---------- ------------
Clay T. Whitehead(6)(7)
3151 Airway Avenue, Suite P-3
Common Stock Costa Mesa, CA 92626. 686,816 3.33%
- ----------------------- ----------------------------- ---------- ------------
Reet Trust(8)
21520 Yorba Linda, Suite 6227
Common Stock Yorba Linda, CA 92887 2,000,000 9.71%
- ----------------------- ----------------------------- ---------- -------------
All Directors and
Officers as a
Group (6
Persons in total) 6,895,553 33.46%
- ----------------------- ----------------------------- ---------- -------------
(1) Includes 285,000 options to acquire shares of Company common stock in
accordance with Mr. Sandhu's director compensation agreement and the Company's
employee benefit plan. Does not include an aggregate of 345,000 unvested
options to acquire shares of Company common stock granted in accordance with the
Company's employee benefit plan.
(2) Includes 255,000 options to acquire shares of Company common stock in
accordance with Mr. Clemons' director compensation agreement and the Company's
employee benefit plan. Does not include an aggregate of 315,000 unvested
options to acquire shares of Company common stock in accordance with the
Company's employee benefit plan.
(3) Includes an aggregate of 250,000 options to acquire shares of Company
common stock in accordance with Mr. Fleming's employment agreement and the
Company's employee benefit plan. Does not include an aggregate of 205,000
unvested options to acquire shares of Company common stock in accordance with
the Company's employee benefit plan.
(4) Includes an aggregate of 412,500 options to acquire shares of Company
common stock in accordance with Mr. DeCiccio's employment and director
compensation agreements and the Company's employee benefit plan. Does not
include an aggregate of 225,000 unvested options to acquire shares of Company
common stock in accordance with the Company's employee benefit plan.
(5) Includes an aggregate of 688,500 options to acquire shares of Company
common stock in accordance with Mr. Eger's director compensation agreement and
the Company's employee benefit plan. Does not include an aggregate of 30,000
unvested options to acquire shares of Company common stock in accordance with
the Company's benefit plan.
(6) Includes an aggregate of 175,000 options to acquire shares of Company
common stock in accordance with Mr. Whitehead's director compensation agreement
and the Company's employee benefit plan. Does not include an aggregate of
30,000 unvested options to acquire shares of Company common stock in accordance
with the Company's benefit plan.
(7) Due to personal reasons, Mr. Whitehead has declined to stand for
reelection to the company's Board of Directors for the 2002 - 2003 term.
(8) The trustee of the Reet Trust is Teg Sandhu, father of Paul Sandhu.
However, Paul Sandhu disclaims any beneficial ownership to the shares held by
the Reet Trust.
-13-
The Company believes that the beneficial owners of securities listed above,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules of
the Commission and generally includes voting or investment power with respect to
securities. Shares of stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants, but
are not deemed outstanding for purposes of computing the percentage of any other
person.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
ten percent Stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on the review of copies of such reports furnished to the Company
and written representations that no other reports were required and to the best
of its knowledge, during the year ended June 30, 2002, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater than
ten percent stockholders were complied with.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be included in the Company's proxy
statement for the 2003 Annual Meeting of Stockholders must be received by GTC
Telecom Corp., Attn: General Counsel, at 3151 Airway Ave., Suite P-3, Costa
Mesa, CA 92626 no later than August 1, 2003. Matters pertaining to such
proposals, including the number and length thereof, eligibility of persons
entitled to have such proposals included and other aspects are regulated by the
Securities Exchange Act of 1934, Rules and Regulations of the Securities and
Exchange Commission and other laws and regulations to which interested persons
should refer. The Company anticipates that its next annual meeting will be held
in November 2003.
-14-
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the Company's
Annual Report on Form 10-KSB to Stockholders for the year ended June 30, 2002.
Management knows of no other matters to come before the meeting. If, however,
any other matter properly comes before the meeting, the persons named in the
enclosed Proxy form will vote in accordance with their judgment upon such
matter.
Stockholders who do not expect to attend in person are urged to promptly execute
and return the enclosed Proxy.
By order of the Board of Directors
/s/ Eric C. Clemons
Eric C. Clemons
Secretary
Costa Mesa, California
October 24, 2002
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APPENDIX - A
GTC TELECOM CORP.
AUDIT COMMITTEE CHARTER
(As Amended)
I. COMPOSITION. The Audit Committee (the "Committee") of GTC Telecom Corp.
(the "Company") is a standing committee of the Board of Directors (the "Board")
established to assist the Board in fulfilling its statutory, regulatory and
fiduciary responsibilities. The Committee shall consist of at least two
"independent" directors, as that term is defined by section 301 of the
Sarbanes-Oxley Act of 2002. At least one of the directors on the Committee
shall have past employment experience in finance or accounting, the requisite
professional certification in accounting or other comparable experience or
background such that that person meets the definition of "financial expert" as
provided for in Section 407 of the Sarbanes-Oxley Act of 2002. The Board shall
appoint the members of the Committee.
II. AUTHORITY. The Committee shall be directly responsible for the
appointment, compensation, and oversight of the work of the Company's registered
public accounting firm. The Committee shall have the authority to retain
special legal, accounting or other consultants to advise the Committee. The
Committee may request any officer or employee of the Company or the Company's
outside counsel or registered public accountants to attend a meeting of the
Committee or to meet with any members of, or consultants to, the Committee.
III. PURPOSE. The purpose of the Committee shall be to assist the Board in
fulfilling its oversight responsibilities. The Committee will review the
financial reporting process, systems of internal control, the audit process and
the Company's process for monitoring compliance with the laws, regulations and
the Company's code of conduct. In performing its duties, the Committee will
maintain effective working relationships with the Board, management, and the
internal and external auditors.
IV. MEETINGS. The Committee will have at least one scheduled meeting each
fiscal year. In addition, the Committee will meet at other times if deemed
necessary to completely discharge its duties and responsibilities as outlined in
this charter. As part of its job to foster open communication, the Committee
should meet at least annually with management, the internal auditors and the
registered public accountants, in separate executive sessions, to discuss any
matters that the Committee or each of these groups believe should be discussed
privately.
V. RESPONSIBILITIES AND DUTIES. The Board delegates to the Committee the
following specific duties and responsibilities in addition to those in the
preceding paragraphs:
DOCUMENTS/REPORTS REVIEW
1. Review and reassess the adequacy of the Audit Committee Charter annually
and submit the Charter to the Board for approval.
2. Review the Company's annual audited financial statements and any reports
or other financial information as the Committee may request, including, without
limitation, any material submitted to any governmental body, or the public,
including any certification, report, opinion or review rendered by the
registered public accountants. Discuss major issues and significant changes
regarding accounting and auditing principles and practices as well as the
adequacy of internal controls that could significantly affect the Company's
financial statements.
3. Review any reports to management prepared by the internal auditing
department, together with management's response. Review with management and the
registered public accountants significant financial reporting issues and
judgments made in connection with the preparation of the Company's financial
statements.
4. Review with management and the registered public accountants the
Company's annual report on Form 10-KSB and the Company's quarterly report on
Form10-QSB prior to its filing or prior to the release of earnings. The chair of
the Committee may represent the entire Committee for purposes of these reviews.
5. Review the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures.
6. Establish procedures for:
a. The receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or auditing matters;
and
b. The confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
REGISTERED PUBLIC ACCOUNTANTS
1. The Committee shall be directly responsible for the appointment,
compensation, and oversight of the work of the Company's registered public
accounting firm. The Committee shall monitor the independence and
effectiveness and approve the fees and other compensation to be paid to the
registered public accountants. On an annual basis, the Committee should review
and discuss with the accountants all significant relationships the accountants
have with the Company to confirm the accountants' independence.
2. Meet with the registered public accountants to review the scope,
accuracy, completeness and overall quality of the annual financial statements.
3. Receive from the registered public accountants the information they are
required to communicate to the Committee under generally accepted auditing
standards, including, without limitation:
a. A formal written statement delineating all relationships between the
registered public accountants and the Company, consistent with Independence
Standards Board Standard No. 1, and
b. Engage in a dialogue with the registered public accountants with respect
to any disclosed relationships or services that may impact the objectivity and
independence of the registered public accountants, and recommend that the Board
take appropriate action to enhance the independence of the registered public
accountants.
c. Preapprove all auditing services (which may entail providing comfort
letters in connection with securities underwritings) and all non-audit services
as provided for under Section 202 of Sarbanes-Oxley Act of 2002.
FINANCIAL REPORTING PROCESS
1. In consultation with the registered public accountants, review the
integrity of the Company's financial reporting processes, both internal and
external.
2. Meet with management and the registered public accountants to review the
planning and staffing of the audit.
3. Discuss with the registered public accountants the matters required to be
discussed by Statement on Auditing Standards No. 61, as modified or amended,
relating to the conduct of the audit.
4. Review with the registered public accountants any problems or
difficulties the accountants may have encountered and any management letter
provided by the accountants and the Company's response to that letter. Such
review should include:
a. Any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to required information.
b. Any changes required in the planned scope of the audit.
5. The Committee shall make regular reports to the Board of Directors. The
Committee shall also prepare the report required by the rules of the Securities
and Exchange Commission to be included in the Company's annual proxy statement.
VI. OTHER. While the Committee has the responsibility and powers set forth
in this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the registered public accountants.
PROXY
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3, Costa Mesa, California 92626
Proxy for Annual Meeting of Stockholders - December 3, 2002
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoint S. PAUL SANDHU and ERIC CLEMONS, and each of
them, as proxy or proxies for the undersigned, with full power of substitution,
who may act by unanimous vote of said proxies or their substitutes as shall be
present at the meeting, or, if only one be present, then the one shall have all
the powers hereunder, to represent and to vote, as designated herein (If no
direction is made, this Proxy will be voted FOR Proposals 1 and 2), all of the
shares of GTC Telecom Corp. (the "Company") standing in the name of the
undersigned, at the Annual Meeting of Stockholders of the Company to be held on
Tuesday, December 3, 2002, at 9:30 a.m. at the Irvine Marriott John Wayne
Airport, 18000 Von Karman Ave., Irvine, California 92612, and any adjournment
thereof. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE MARK YOUR VOTES AS INDICATED IN THIS PROXY
ITEM 1 - ELECTION OF DIRECTORS
NOMINEES:
The Board of Directors recommends a vote FOR the following Nominees:
ERIC C. CLEMONS [ ] For All Nominees
S. PAUL SANDHU
JOHN M. EGER [ ] Withhold All Nominees
GERALD A. DECICCIO
[ ] Withhold Authority to Vote For
Any Individual Nominee. Write Name(s)
of Nominee(s) Below.
WITHHELD AUTHORITY FOR: (Write that nominee's name in the space provided
below)._________________________________________
FOR AGAINST ABSTAIN
ITEM 2 - TO RATIFY THE SELECTION OF SQUAR,
MILNER, REEHL & WILLIAMSON LLP AS THE [ ] [ ] [ ]
COMPANY'S INDEPENDENT ACCOUNTANTS
Signature(s) ________________________________________ Date _____________
________________________________________
(Print Name)
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.