SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 Under Rule 14a-12
Display Technologies, Inc.
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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[X] No fee required
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(1) Title of each class of securities to which transaction applies:
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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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(4) Date Filed:
DISPLAY TECHNOLOGIES, INC.
6225 Old Concord Road
Charlotte, North Carolina 28213
(800) 929-3521
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS FOR FISCAL YEAR 2000
Our annual meeting of shareholders for fiscal year 2000 will be held at
10:00 a.m, Thursday, May 17, 2001, at the offices of Kilpatrick Stockton LLP,
3500 One First Union Center, 301 South College Street, Charlotte, North Carolina
28202.
The following items will be considered and acted upon:
(1) The election of the following persons to the Board of Directors to
serve until the 2003 annual meeting of shareholders:
James C. Taylor
Gary D. Bell
(2) An amendment to the Company's 1999 Stock Incentive Plan increasing
the total number of shares of Common Stock of the Company reserved for issuance
under the Plan and the maximum number of shares that may be issued under the
Plan as Stock Awards.
(3) Such other business as may properly come before the meeting and any
adjournments thereof.
Holders of record of the Company's Common Stock and Series A-1
Convertible Preferred Stock at the close of business on April 11, 2001 are
entitled to vote.
The attached proxy statement contains more information about the
agenda.
By order of the Board of Directors,
/s/ Bill Lunsford
Charlotte, North Carolina BILL LUNSFORD
April 17, 2001 Secretary
WE URGE YOU TO GRANT A PROXY.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD. IF YOU DECIDE TO ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
DISPLAY TECHNOLOGIES, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
We are furnishing this proxy statement (this "Statement") to our
shareholders in connection with our annual meeting of shareholders for fiscal
year 2000, to be held at 10:00 a.m., Thursday, May 17, 2001, at the offices of
Kilpatrick Stockton LLP, 3500 One First Union Center, 301 South College Street,
Charlotte, North Carolina 28202.
Our Board of Directors is soliciting your proxy to vote your shares of
the Company's common stock (the "Common Stock") or Series A-1 Convertible
Preferred Stock (the "Preferred Stock", collectively with the Common Stock, the
"Company Stock") at the annual meeting. These proxy materials, which have been
prepared by our management for the Board, are first being sent to our
shareholders on or about April 17, 2001.
"We," "our" and the "Company" each refers to Display Technologies, Inc.
The Company's Orlando headquarters was closed February 28, 2001. The mailing
address of our principal executive office is now 6225 Old Concord Road,
Charlotte, North Carolina 28213.
VOTING
You are entitled to vote your Company Stock at the annual meeting if
our records show that you held your shares as of the close of business on April
11, 2001, the date our Board has selected as the record date for this meeting.
At that time, a total of 8,935,397 shares of Common Stock and 50,000 shares of
Preferred Stock were outstanding and entitled to vote. Each share of Common
Stock has one vote. The Preferred Stock is convertible into Common Stock at the
present conversion price of $2.00 per share. Holders of Preferred Stock have the
right to vote with holders of Common Stock on an "as converted" basis, i.e.,
each share of Preferred Stock represents 50 votes. The accompanying proxy card
shows the number of shares you are entitled to vote.
Shareholders at the annual meeting will consider the election of
directors and the other items listed on the preceding page. You can vote in
favor of all nominees for director or you can withhold your vote from some or
all of the nominees. For all other proposals, you may vote for or against, or
you may abstain from voting.
You can vote in person at the annual meeting, or you can grant a proxy
by signing, dating and returning the proxy card in the postage-paid envelope
provided. Check your proxy card or the information forwarded by your bank,
broker or other holder of record for instructions. (A shareholder of record is
one whose stock is registered in the name of that shareholder.)
Your shares will be voted as you instruct. The persons named as proxies
on the proxy card will vote as recommended by our Board of Directors on any
matter for which you have not given instructions. The Board's recommendations
appear below.
We are not aware of any other matters to be presented at the annual
meeting except for those described in this proxy statement. If any other matters
properly come before the annual meeting, your shares will be voted in the
discretion of the persons named as proxies on the proxy card. If the annual
meeting is adjourned, your shares will be voted when the meeting is reconvened
as well, unless you have revoked your proxy.
REVOKING YOUR PROXY
You have a right to revoke your proxy and change your votes at any time
before your proxy is voted. There are three ways to do this:
(1) Give written notice of revocation to the Secretary of the
Company prior to the annual meeting;
(2) Change your vote by granting a later-dated proxy (you can
sign, date and deliver a later-dated proxy card prior to the
meeting); or
(3) Come to the annual meeting and vote your shares in person.
QUORUMS AND VOTE COUNTING
The annual meeting requires the presence of a quorum, which for this
meeting means a majority of the shares issued and outstanding at the record
date. If you grant a proxy or attend the meeting in person, your shares will be
counted to determine whether a quorum is present, even if you abstain from
voting on some or all matters introduced at the meeting. "Broker nonvotes" also
count for quorum purposes. If you hold your shares through a broker, bank or
other nominee, generally the nominee may vote the shares it holds for you in
accordance with your instructions. However, if the nominee has not received your
instructions within 10 days of the meeting, the nominee may vote in its
discretion only on matters that are considered routine. If a nominee cannot vote
on a particular matter because it is not routine, there is a "broker nonvote" on
that matter.
The two nominees for director who receive the highest vote totals will
be elected as directors at the 2000 annual meeting. All other matters must be
approved by a majority of the votes cast by the holders of Company Stock who are
present or represented and entitled to vote at the annual meeting. Abstentions
and broker nonvotes are counted as present and entitled to vote, but they are
not counted as votes for or against any proposal.
COSTS OF PROXY SOLICITATION
We are paying the costs of the proxy solicitation. Proxy solicitation
costs will include charges of brokers, banks, fiduciaries and custodians for
forwarding proxy materials. Additionally, some of our directors, officers or
employees may solicit proxies by mail, telephone or personal contact. None of
these solicitors will receive any additional or special compensation for doing
this. We may also use a paid proxy solicitor, Morrow & Co., whose fees and
expenses would be approximately $8,000.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the shareholders vote:
FOR the election of the following persons to the Board of Directors to
serve until the 2003 annual meeting of shareholders:
James C. Taylor
Gary D. Bell
FOR the amendment to the Company's 1999 Stock Incentive Plan increasing
the total number of shares of Common Stock of the Company reserved for issuance
under the Plan and the maximum number of shares that may be issued under the
Plan as Stock Awards.
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PROPOSAL 1: ELECTION OF CLASS A DIRECTORS
NOMINEES
Our Amended and Restated Bylaws provide for directors to be elected in
three classes, with the classes being as equal in number as practicable, for
staggered terms of three years each. The terms of office of the directors first
elected as Class A Directors expire at the time of the annual meeting of
stockholders for fiscal year 2000. The terms of office of the directors first
elected as Class B Directors expire at the time of the annual meeting of
stockholders for fiscal year 2001. The terms of office of the directors first
elected as Class C Directors expire at the time of the annual meeting of
stockholders for fiscal year 2002. Accordingly, the stockholders are being asked
to elect two individuals as Class A Directors at the annual meeting for fiscal
year 2000. The Board has nominated James C. Taylor and Gary D. Bell as Class A
Directors for terms expiring at the annual meeting of stockholders for fiscal
year 2003. Each of the nominees has consented to serve if elected.
If before the annual meeting either or both of the nominees become
unable to serve or choose not to serve, the Board may nominate a substitute or
substitutes, and if that happens, the persons named as proxies in the proxy card
will vote for the substitute or substitutes. Alternatively, the Board could
either choose to let a vacancy stay unfilled until an appropriate candidate is
located or reduce the size of the Board to eliminate an unfilled seat.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
election of James C. Taylor and Gary D. Bell as Class A Directors to hold office
until the annual meeting of stockholders for fiscal year 2003 or until their
respective successors are elected and qualified.
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE 1999 STOCK INCENTIVE PLAN
An amendment (the "Amendment") to the Display Technologies, Inc. 1999
Stock Incentive Plan (the "Plan") increasing the total number of shares of
Common Stock of the Company reserved for issuance under the Plan by 1,500,000
and the maximum number of shares that may be issued under the Plan as Stock
Awards by 500,000 is being proposed by the Board of Directors for approval by
the shareholders. The Board of Directors believes that it is in the best
interests of the Company and its shareholders that a greater number of shares of
Common Stock be available for grants of stock or option awards to employees.
The following summary describes certain provisions of the Plan:
Under the Plan, the Compensation Committee, which will administer the
Plan, may grant options to purchase Common Stock or direct awards of Common
Stock to employees, directors or other persons providing services to the Company
or any of its subsidiaries. Participants in the Plan will be those key
employees, directors, officers and other individuals providing services to the
Company or its subsidiaries who, in the opinion of the Compensation Committee,
are in a position to make a significant contribution to the success of the
Company.
Currently, a total of 1,500,000 shares of Common Stock have been
reserved for issuance under the Plan, and the maximum number of shares of Common
Stock that may be issued under the Plan as Stock Awards is 500,000 plus up to 33
1/3% of shares reacquired by the Company in the open market or in private
transactions after the effective date of the Plan.
If the Amendment (Proposal 2) is approved by the shareholders, the
total number of shares of Common Stock reserved for issuance under the Plan will
be 3,000,000, and the maximum number of shares of Common Stock that may be
issued under the Plan as Stock Awards will be 1,000,000 plus up to 33 1/3% of
shares reacquired by the Company in the open market or in private transactions
after the effective date of the Plan.
Also, the Plan currently provides that the following shares will be
available for future grants:
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o Shares remaining under an option grant that terminates without
having been fully exercised
o Shares included in an award where cash is delivered to the
participant in lieu of such shares
o Restricted shares that are forfeited to the Company
o Shares tendered by a participant as payment of the exercise
price
o Shares held back, or tendered by a participant in satisfaction
of tax withholding requirements
o Up to 500,000 shares, to the extent authorized by the Board of
Directors, that are reacquired by the Company in the open
market or in private transactions after the Plan becomes
effective.
Not more than 50,000 shares may be issued as direct awards to any one
individual during any fiscal year if such shares are intended to be
"performance-based compensation" as that term is used in Section 162(m) of the
Internal Revenue Code.
The Plan permits the granting of options intended to qualify as
"incentive stock options" ("ISOs") for federal income tax purposes. The benefit
of ISOs to an employee is that payment of federal income tax by the employee on
the difference between the exercise price and the value of the Common Stock at
the time of exercise is deferred until the later date when the employee sells
the shares. Further, depending on when the shares are sold, the employee may pay
tax at the capital gain rate rather than the ordinary income rate. When an
employee exercises an option that is not entitled to ISO treatment, i.e., a
"nonqualified option," the employee is taxed on the gain at the ordinary income
rate at the time of exercise. This tax burden often has the effect of causing
the employee to have to immediately sell a portion of the shares acquired upon
exercise to provide funds to pay the tax liability. The Company believes that
its ability under the Plan to grant ISOs to employees will encourage them to
retain ownership of more of their shares and for a longer period of time than is
the case with nonqualified options.
At least two persons who are both "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code and "nonemployee
directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 will serve on the Compensation Committee. The committee will determine the
officers and employees to whom grants are made, the number of shares subject to
each option, and the terms of each grant. The committee may, however, delegate
the authority to make option grants to one or more of its members or other
persons unless such delegation would jeopardize the benefits of complying with
Rule 16b-3 under the Securities Exchange Act of 1934 or Section 162(m) of the
Internal Revenue Code.
Options granted under the Plan must have an exercise price of at least
100% of the fair market value of the Common Stock on the date of grant. Options
granted under the Plan will become exercisable upon satisfaction of conditions
established by the committee and will expire not more than 10 years from the
date of grant. The committee also has the authority to impose vesting
conditions, financial performance conditions and other conditions on options and
shares of Common Stock issued as direct awards under the Plan. The committee may
permit an optionee to surrender and exercise options for cancellation, receiving
in exchange either shares of Common Stock, a new option, or both. The Plan does
not permit the "repricing" of previously granted options. The Plan specifically
prohibits the Committee from canceling and reissuing previously granted options.
The committee also has the authority to provide that options granted
under the Plan may be transferred by will, by the laws of descent and
distribution, or in compliance with a domestic relations order issued by court,
to an immediate family member which includes only the optionee's spouse, child,
grandchild, parent or a trust established for the benefit of such family member.
The Compensation Committee will establish, from time to time, the conditions
under which optionees may transfer options to immediate family members.
The Board of Directors or the Compensation Committee may terminate,
suspend, or amend the Plan at any time without the approval of shareholders
unless such approval would be required to retain the benefits of Section 162(m)
or Section 422 of the Internal Revenue Code. No such amendment, suspension or
termination will affect a
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participant's right under outstanding awards unless the committee determines
that the change is in the best interest of all participants.
The foregoing summary does not purport to be complete and is qualified
in its entirety by reference to the actual terms of the Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
amendment to the Plan increasing the total number of shares of Common Stock of
the Company reserved for issuance under the Plan and the maximum number of
shares that may be issued under the Plan as Stock Awards.
INFORMATION CONCERNING DIRECTORS
Our Board of Directors currently has four members: Gary D. Bell, Thomas
N. Grant, Gary A. Downing and William A. Pecora. Two other individuals, James C.
Taylor and Robert C. Pearson, have been elected by the Board to serve as
directors effective 10 days following the filing of an Information Statement
with the Securities and Exchange Commission (the "Commission") pursuant to
Section 14(f) of the Securities and Exchange Act of 1934 and Rule 14f-1
thereunder, and its delivery to the Company's shareholders. The Information
Statement was filed with the Commission on April 11, 2001 and was sent to the
shareholders on or about April 11, 2001.
Information regarding the principal occupations (which have continued
for at least the past five years unless otherwise noted) of the directors and
nominees for directors, as well as certain other information, is set forth
below. The information is given as of the date of this proxy statement.
NOMINEES FOR ELECTION AS CLASS A DIRECTORS
(WITH TERMS EXPIRING AT 2003 ANNUAL MEETING)
James C. Taylor 59, was elected President and Chief Executive Officer
of the Company by the Board of Directors on January
26, 2001. His initial term as a director of the
Company, pursuant to his election as a director by
the Board of Directors, will commence on or about
April 21, 2001 and will expire on May 17, 2001 at the
annual meeting of the Company's stockholders for
fiscal year 2000. He has been a principal of The
Anderson Group, Inc., a private investment firm
engaged in the acquisition and management of
businesses in a variety of industries. He also
currently serves on the board of Ennis Business
Forms, an NYSE listed company.
Gary D. Bell 51, has served as a director since October 1995. He
also serves as President and Chief Executive Officer
of our subsidiary Don Bell Industries, Inc. His term
expires on May 17, 2001 at the annual meeting of the
Company's stockholders for fiscal year 2000.
CLASS B DIRECTORS
(WITH TERMS EXPIRING AT 2001 ANNUAL MEETING)
Thomas N. Grant 54, has served as a director since October 1995.
Since January 1997, Mr. Grant has been First Vice
President, Financial Institutions, SunTrust Bank,
Central Florida, N.A. From 1993 to 1996, he served as
Senior Vice President and Senior Lending Officer of
The Bank of Winter Park, Winter Park, Florida. His
term expires at the annual meeting of the Company's
stockholders for fiscal year 2001.
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Robert C. Pearson 65, will commence serving as a director of the
Company on or about April 21, 2001 and his term will
expire at the annual meeting of the Company's
stockholders for fiscal year 2001. He also serves as
Senior Vice President and Director of Corporate
Finance for Renaissance Capital Group, an affiliate
of Renaissance Capital Growth & Income Fund III, Inc.
("Renaissance III") and Renaissance U.S. Growth &
Income Trust PLC ("Renaissance PLC"). Mr. Pearson is
also a member of the boards of the following public
companies: Poor Brothers, Inc., Camino Soft, Inc. and
Advance Power Technology, Inc.
CLASS C DIRECTORS
(WITH TERMS EXPIRING AT 2002 ANNUAL MEETING)
Gary A. Downing 42, has served as a director since January 18, 2001
and was elected Chairman of the Board on January 26,
2001. His term expires at the annual meeting of the
Company's stockholders for fiscal year 2002. He is a
Managing Director of Raymond James Capital, Inc. and
President of RJC Partners, Inc., the General Partner
of Raymond James Capital Partners, L.P. Prior to
founding Raymond James Capital, Inc. in 1997, Mr.
Downing spent 13 years in the Investment Banking
Department of Raymond James & Associates, Inc. From
1992 to 1997, Mr. Downing served as Managing Director
and Head of the Consumer Group within the Investment
Banking Department of Raymond James & Associates,
Inc.
William A. Pecora 56, has served as a director since January 18, 2001.
His term expires at the annual meeting of the
Company's stockholders for fiscal year 2002. He is
also Senior Vice President and Chief Financial
Officer of Raymond James Capital. Prior to joining
Raymond James Capital in 2000, Mr. Pecora spent 16
years as Vice President and Chief Financial Officer
of small to middle market companies. From 1998 to
2000, Mr. Pecora was Vice President and Chief
Financial Officer of Vivra Asthma and Allergy, Inc.,
a physician practice management company. During the
period from 1992 to 1998 he served as the Vice
President and Chief Financial Officer of Noven
Pharmaceuticals, Inc., a publicly traded
pharmaceutical manufacturer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has established three standing
committees, an Executive Committee, an Audit Committee, and a Compensation
Committee.
The Executive Committee, between meetings of the Board of Directors,
may exercise the powers of the Board of Directors, except with respect to a
limited number of matters, such as amending the articles of incorporation or the
bylaws of the Company and recommending to the shareholders of the Company a
merger of the Company, the sale of all or substantially all of the assets of the
Company, or the dissolution of the Company. The Executive Committee met six
times and took action by written consent on one occasion in fiscal 2000.
The Audit Committee provides independent, objective oversight of the
Company's accounting functions and internal controls, and ensures the
objectivity of our financial statements. The Audit Committee met twice in fiscal
2000. The Audit Committee reviews and discusses the Company's audited financial
statements with management. The Audit Committee has discussed with the
independent auditors the matter required to be discussed by SAS 61 (Codification
of Statements on Auditing Standards, AU Section 380). The Audit Committee has
received the written disclosures and the letter from the independent accountants
required by Independents Standards Board Standard No. 1 and has discussed with
the independent accountant the independent accountant's independence. Based on
the review and discussions referred to above, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in the
Company's annual report on Form 10-K for the last fiscal year for filing with
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the Commission. The Board of Directors has adopted a written charter for the
Audit Committee, a copy of which is set forth on Appendix A attached hereto.
The Compensation Committee reviews and approves all salary
arrangements, including annual and long-term incentive awards and other
remuneration, for officers of the Company and certain officers of subsidiaries.
It also is responsible for administration of the Company's stock option and
other compensation plans. The Compensation Committee met two times and took
action by written consent once in fiscal 2000.
In fiscal 2000, the Board of Directors held six meetings and took
action by written consent on one occasion. Each director attended at least 75%
of the total of all meetings of the Board and each committee on which he served,
except Mr. Lester Jacobs, who attended 62.5% of such meetings.
Following the consummation of the Transactions described below under
"Change of Control," the members of the Executive Committee, Audit Committee,
and Compensation Committee were replaced at a special meeting of the Board of
Directors, held January 26, 2001. The new members of the Executive Committee are
Gary A. Downing and William A. Pecora. Robert C. Pearson and James C. Taylor
have been elected to the Executive Committee effective upon their taking office
as directors. The current members of the Audit Committee are Gary A. Downing,
William A. Pecora and Thomas N. Grant. Each of the current members of the Audit
Committee is an "independent director" as defined in NASD Rule 4200(a)(14). The
current members of the Compensation Committee are Gary A. Downing and William A.
Pecora. Robert C. Pearson has been elected to the Compensation Committee
effective upon his taking office as director.
COMPENSATION OF DIRECTORS
The following report on director compensation is made with respect to
fiscal year 2000. During fiscal year 2001, Mr. Downing, Mr. Pecora and Mr.
Pearson agreed to serve as outside directors without compensation from the
Company. The Company's policy was to pay outside directors (directors who were
not officers, employees or consultants), the following fees for attending or
participating in meetings of the Board of Directors and its committees:
Event Fee
----- ---
ATTENDED BOARD MEETING $1,250
TELEPHONIC BOARD MEETING $500
ATTENDED COMMITTEE MEETING $500 ($600 FOR CHAIRMAN)
TELEPHONIC COMMITTEE MEETING $250 ($300 FOR CHAIRMAN)
During fiscal 2000, we paid our outside directors a total of $29,950 in
fees. Each director was entitled to be reimbursed for reasonable expenses of
attending a meeting of the Board or a Board committee. Our compensation policy
for outside directors also included annual option grants. On November 18, 1999,
each of our then outside directors was granted options under our 1999 stock
incentive plan to purchase up to 10,500 shares of Company Stock at the exercise
price of $4.10 per share, the fair market value of our stock on the grant date.
The options vest one-third on each anniversary of the grant date, expire on
November 18, 2008 and are subject to certain other conditions on exercisability
as provided in the agreements evidencing the option grants.
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table shows the securities of the Company owned
beneficially as of April 11, 2001 by each director (including each individual
elected by the Board who will commence serving as a director on or about April
21, 2001), nominee and executive officer of the Company. All persons shown in
the table have sole voting and investment power with regard to the shares shown,
unless otherwise indicated.
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- -------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
TITLE OF CLASS NAME AND POSITION OF AMOUNT AND NATURE OF PERCENT OF CLASS (2)
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP
- -------------------------------------------------------------------------------------------------------------
Common Stock Gary D. Bell 192,777 shares (3), (4), (5) 2.1%
Director,
Director Nominee
- -------------------------------------------------------------------------------------------------------------
Common Stock Gary A. Downing 0 0
Director
- -------------------------------------------------------------------------------------------------------------
Common Stock Thomas N. Grant 29,778 shares (3), (5) *
Director
- -------------------------------------------------------------------------------------------------------------
Common Stock Robert C. Pearson (6) 0 0
Director
- ---------------------------- -------------------------- ------------------------------ ----------------------
Common Stock William A. Pecora 0 0
Director
- ---------------------------- -------------------------- ------------------------------ ----------------------
Common Stock James C. Taylor (6) 0 0
Director,
Director Nominee,
President
- ---------------------------- -------------------------- ------------------------------ ----------------------
Common Stock Todd D. Thrasher 42,662 shares (3), (4), (5) *
Vice President and Chief
Accounting Officer
- ---------------------------- -------------------------- ------------------------------ ----------------------
Common Stock Bill Lunsford 0 0
Vice President,
Secretary, Treasurer,
and Chief Financial
Officer
- ---------------------------- -------------------------- ------------------------------ ----------------------
Common Stock All Directors, Nominees 265,217 shares (4), (5) 2.9%
and Executive Officers
as a Group (8 persons)
- ---------------------------- -------------------------- ------------------------------ ----------------------
*Represents less than 1% of the outstanding shares of Common Stock.
1 Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), includes as beneficial owners of securities, among
others, any person who directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares
voting power and/or investment power with respect to such securities,
and any person who has the right to acquire beneficial ownership of
securities within 60 days, including without limitation, the exercise
of any option, warrant or conversion of a security.
8
2 Based upon 8,935,397 shares of Common Stock issued and outstanding.
3 Includes the following number of shares purchasable within 60 days of
the record date upon exercise of employee stock options: Gary D. Bell
179,640 shares; Thomas N. Grant 27,347 shares; and Todd D. Thrasher
34,728 shares.
4 Does not include the following shares allocated to the following
persons' accounts under the Company's 401(k) plan: Gary D. Bell 1,279
shares; and Todd D. Thrasher 1,898 shares.
5 Does not include the following shares purchasable upon exercise of
options that, by their terms, are not presently exercisable: Gary D.
Bell 25,200 shares; Thomas N. Grant 10,500 shares; and Todd D. Thrasher
15,750 shares.
6 Will commence serving as a director on or about April 21, 2001.
All persons shown in the table above have sole voting and investment power with
regard to the shares shown, unless otherwise indicated.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and regulations thereunder require
our executive officers and directors and persons who beneficially own more than
10% of any class of equity securities of the Company to file with the SEC
initial reports of ownership and reports of changes in ownership of Company
stock. They are also required to furnish the Company with copies of all such
forms they file. During fiscal 2000, Mr. Gary D. Bell inadvertently filed one
late Form 4 report, and Messrs. Lou A. Papais and J. Melvin Stewart each
inadvertently filed two late Form 4 reports. In making this disclosure, we have
relied solely on our review of copies of Section 16(a) reports furnished to us
during and with respect to the most recent fiscal year and on the written
representations of our directors and executive officers.
PRINCIPAL SHAREHOLDERS
The following information is provided with respect to every individual,
entity or group known to the Company to beneficially own more than five percent
(5%) of any class of the Company's voting securities as of April 11, 2001.
- ---------------------------- ------------------------------- ------------------------- ----------------------
(1) (2) (3) (4)
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS 2
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP
- ---------------------------- ------------------------------- ------------------------- ----------------------
Series A-1 Convertible Investor Group (Raymond James 50,000 shares 100%
Preferred Stock Capital Partners, L.P.,
Renaissance Capital Growth &
Income Fund III, Inc., and
Renaissance U.S. Growth &
Income Trust PLC)
880 Carillon Parkway
St. Petersburg, FL 33716
- ---------------------------- ------------------------------- ------------------------- ----------------------
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- ---------------------------- ------------------------------- ------------------------- ----------------------
Series A-1 Convertible Raymond James Capital 40,000 shares 80%
Preferred Stock Partners, L.P.
880 Carillon Parkway
St. Petersburg, FL 33716
- ---------------------------- ------------------------------- ------------------------- ----------------------
Series A-1 Convertible Renaissance Capital Growth & 5,000 shares 10%
Preferred Stock Income Fund III, Inc.
808 North Central Expressway
Suite 210-LB59
Dallas, TX 75206
- ---------------------------- ------------------------------- ------------------------- ----------------------
Series A-1 Convertible Renaissance U.S. Growth & 5,000 shares 10%
Preferred Stock Income Trust PLC
808 North Central Expressway
Suite 210-LB59
Dallas, TX 75206
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock Investor Group (Raymond James 8,212,524 shares (7) 49.4%
Capital Partners, L.P.,
Renaissance Capital Growth &
Income Fund III, Inc., and
Renaissance U.S. Growth &
Income Trust PLC)
880 Carillon Parkway
St. Petersburg, FL 33716
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock Raymond James Capital 4,310,945 shares (3), (7) 32.5%
Partners, L.P.
880 Carillon Parkway
St. Petersburg, FL 33716
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock Renaissance U.S. Growth & 2,378,922 shares (4), (7) 21.5%
Income Trust PLC
808 North Central Expressway
Suite 210-LB59
Dallas, TX 75206
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock Renaissance Capital Growth & 1,522,657 shares (4), (7) 14.9%
Income Fund III, Inc.
808 North Central Expressway
Suite 210-LB59
Dallas, TX 75206
10
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock Lou A. Papais
3133 N. Ad Art Rd. 786,979 shares 8.8%
Stockton, CA 95215
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock J. Melvin Stewart
2201 Cantu Court Suite 217 615,388 shares (5) 6.9%
Sarasota, FL 34232
- ---------------------------- ------------------------------- ------------------------- ----------------------
Common Stock Larry L. Johnson
Suite L, 527,667 shares (6) 5.8%
9125 Whiskey Bottom Rd.
Laurel, MD 20707
- ---------------------------- ------------------------------- ------------------------- ----------------------
1 Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), includes as beneficial owners of securities, among
others, any person who directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares
voting power and/or investment power with respect to such securities,
and any person who has the right to acquire beneficial ownership of
securities within 60 days, including without limitation, through the
exercise of any option, warrant or conversion of a security.
2 Based upon 50,000 shares of Series A-1 Convertible Preferred Stock and
8,935,397 shares of Common Stock issued and outstanding as of April 11,
2001.
3 Includes beneficial ownership as a result of right to acquire
beneficial ownership within 60 days of: (a) 2,000,000 shares of Common
Stock issuable upon conversion of 40,000 shares of Series A-1 Preferred
Stock prior to July 30, 2004 at the present conversion price of $2.00
per share; (b) 167,945 shares of Common Stock issuable upon exercise of
Common Stock purchase warrants prior to July 30, 2004 at the present
exercise price of $2.50 per share; and (c) 2,143,000 shares of Common
Stock issuable upon exercise of warrants prior to January 17, 2006 at
the present exercise price of $.125 per share. Company Stock
beneficially owned by Raymond James Capital Partners, L.P. is
indirectly beneficially owned by its affiliates, RJC Partners, L.P.,
RJC Partners, Inc. and Raymond James Financial, Inc.
4 With respect to each of Renaissance III and Renaissance PLC, includes
beneficial ownership as a result of right to acquire beneficial
ownership within 60 days of: (a) 250,000 shares of Common Stock
issuable upon conversion of 5,000 shares of Series A-1 Preferred Stock
prior to July 30, 2004 at the present conversion price of $2.00 per
share; (b) 20,993 shares of Common Stock issuable upon exercise of
Common Stock purchase warrants prior to July 30, 2004 at the present
exercise price of $2.50 per share; (c) 875,000 shares of Common Stock
issuable upon conversion of 8.75% convertible debentures due March 2,
2005 at the present conversion price of $2.00; and (d) 110,250 shares
of Company Stock issuable upon exercise of common stock purchase
warrants prior to March 2, 2003 at the present exercise price of $3.92
per share. With respect to Renaissance PLC only, includes beneficial
ownership as a result of right to acquire beneficial ownership within
60 days of 857,000 shares of Common Stock issuable upon exercise of
warrants prior to January 17, 2006 at the present exercise price of
$.125 per share. Renaissance III and Renaissance PLC hold 266,414 and
265,679 shares of issued and outstanding Common Stock respectively.
5 Includes: (a) 305,000 shares held in a voting trust among Mr. Stewart,
his six children and a trust for the benefit of a grandchild which has
a term of 10 years commencing May 19, 1998 and under which Mr. Stewart
serves as sole trustee and has full voting power with respect to such
shares; (b) 145,666 shares held in a trust of which Mr. Stewart is the
sole trustee and beneficiary; and (c) 30,892 shares held in a trust of
which he is the sole trustee and the sole beneficiary is his spouse,
Nancy W. Stewart.
6 Includes 99,436 shares of Common Stock issuable at the conversion price
of $4.31 per share on a convertible note of Lockwood Sign Group, Inc.
to Mr. Johnson in the principal amount of $428,572 with a maturity date
of July 30, 2006.
7 On December 21, 2000, Raymond James Capital, Renaissance III and
Renaissance PLC filed a Schedule 13D with the Commission disclosing
that Raymond James Capital, Renaissance III and Renaissance PLC had
11
formed a group within the meaning of the definition contained in the
Exchange Act for the purpose of acquiring control of the Company in a
series of transactions, described below under "Change of Control",
which were consummated on January 18, 2001. Prior to the consummation
of such transactions, these investors as a group were the beneficial
owners of 3,222,457 shares of Common Stock, or 28.6% of the Common
Stock. Following the completion of such transactions, Raymond James
Capital was the beneficial owner of 4,310,945 shares of Common Stock,
or 33.5% of the Common Stock, Renaissance III was the beneficial owner
of 1,522,657 shares of Common Stock, or 15.5% of the Common Stock,
Renaissance PLC was the beneficial owner of 2,378,922 shares of Common
Stock, or 22.3% of the Common Stock, and the group was the beneficial
owner of 8,212,524 shares of Common Stock, or 50.6% of the Common
Stock.
PENSION PLANS
The Display Technologies, Inc. 401(k) profit sharing plan covers all
employees with more than six months of service and allows employees to defer up
to 15% of their income and contribute to the plan. The Company contributes to
the plan at a discretionary matching rate of 50% of the first 6% contributed by
the employee. Company contributions are in the form of the Company's Common
Stock.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid by the Company to or on behalf of certain of our executive
officers during the fiscal year ending June 30, 2000 and the two preceding
fiscal years. The officer group, referred to as the named executive officers, is
composed of J. William Brandner, the President and Chief Executive Officer
during such period, and the four other most highly compensated executive
officers, determined as of June 30, 2000:
SUMMARY COMPENSATION TABLE
Annual Compensation(1) Long-Term Compensation
----------------------------------- ------------------------------------ All
Other Awards Payout Other
Annual Restricted Options LTIP Com-
NAME AND Compen- Stock /SARs Pay- pensa-
PRINCIPAL SALARY Bonus(2) sation Awards(s) (#) outs tion
POSITION YEAR ($) ($) ($) ($) ($) ($)(3)
- ------------------- ------ ------ -------- -------- ----------- ------- -------- --------
J. William 2000 233,120 -0- -0- -0- 78,750 -0- 6,994
Brandner,
President and Chief 1999 209,950 46,360 -0- -0- -0- -0- 6,994
Executive Officer
1998 189,535 40,830 -0- -0- -0- -0- 6,298
- -----------------------------------------------------------------------------------------------------------------------------
Marshall S. Harris, 2000 190,000 -0- -0- -0- 15,750 -0- 5,700
Vice President,
General Counsel & 1999 141,346 -0- -0- -0- 78,750 -0- 1,750
Secretary
1998 -0- -0- -0- -0- -0- -0- -0-
- -----------------------------------------------------------------------------------------------------------------------------
Terry J. Long, 2000 205,000 -0- -0- -0- 47,250 -0- 3,469
President of Ad Art
Electronic Sign 1999 175,000 -0- -0- -0- -0- -0- 5,205
Corporation
1998 63,288 -0- -0- -0- 105,000 -0- 1,899
- -----------------------------------------------------------------------------------------------------------------------------
Larry L. Johnson, 2000 190,000 -0- -0- -0- 120,750 -0- -0-
Senior Vice
President and 1999 -0- -0- -0- -0- -0- -0- -0-
Chief Operating
Officer 1998 -0- -0- -0- -0- -0- -0- -0-
- -----------------------------------------------------------------------------------------------------------------------------
J. Melvin Stewart, 2000 212,543 -0- -0- -0- 25,200 -0- 6,376
Chairman of the
Board 1999 197,919 29,248 -0- -0- -0- -0- 6,376
1998 183,384 28,976 -0- -0- -0- -0- 5,936
=============================================================================================================================
12
1 Excludes (a) benefits generally available to all employees on a
nondiscriminatory basis and (b), except as described in Note (3) below, the
following (which did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus earned by the named individuals for the 2000 Fiscal Year): (i)
automobile maintenance expenses paid to or on behalf of the named individual by
the Company; and (ii) the cost to the Company of personal use by the named
individuals of automobiles owned or leased by the Company. Also does not include
income required to be recognized for income tax purposes as the result of
personal use of Company automobiles or the exercise of stock options.
2 Includes as awards under the senior management incentive plan: (a)
with respect to Mr. Brandner, 5,887 shares of Common Stock having a per share
value of $3.94 as of the June 30, 1999 award date and for 1998 6,049 shares of
Common Stock having a per share fair market value of $3.38 as of the June 30,
1998 award date; and (b) with respect to Mr. Stewart, for 1999 3,714 shares of
Common Stock having a per share value of $3.94 as of the June 30, 1999 award
date and for 1998 4,293 shares of Common Stock having a per share fair market
value of $3.38 as of the June 30, 1998 award date.
3 Represents Company contributions to the 401(k) accounts of the named
executive officers.
STOCK OPTIONS GRANTED
The following table contains information concerning the grant of stock
options during fiscal 2000 to the named executive officer.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NAME NUMBER OF % OF TOTAL EXERCISE OR EXPIRATION GRANT
SECURITIES OPTIONS BASE PRICE DATE DATE
UNDERLYING GRANTED ($/SH) PRESENT
OPTIONS GRANTED TO EMPLOYEES VALUE
IN FISCAL YEAR ($)(3)
========================== ===================== =================== =============== =================== ==============
J. William Brandner 78,750(1) 22.8 $4.10 11/18/08 $104,250
- -------------------------- --------------------- ------------------- --------------- ------------------- --------------
Marshall S. Harris 15,750(2) 4.6 $4.10 11/18/08 $ 20,850
- -------------------------- --------------------- ------------------- --------------- ------------------- --------------
Larry L. Johnson 15,750(1) 35.1 $4.10 11/18/08 $ 20,850
105,000(2) $3.53 08/27/09 $ 99,000
- -------------------------- --------------------- ------------------- --------------- ------------------- --------------
Terry J. Long 47,250(1) 13.7 $4.10 11/18/08 $ 62,550
- -------------------------- --------------------- ------------------- --------------- ------------------- --------------
J. Melvin Stewart 25,200(1) 7.3 $4.10 11/18/08 $ 33,360
========================== ===================== =================== =============== =================== ==============
1 These options vest at the rate of 33 1/3% per year from the November
18, 1999 grant date. All unvested options fully vest in the event of a
change in control as defined in the option agreements. Also, vested
options may not be exercised for so long as certain of our convertible
debentures are outstanding or unless and until the terms of such
debentures are amended to permit exercise. The number of options and
exercise price are subject to ratable adjustments for stock dividends
and other distributions.
2 These options may not be exercised so long as certain of our
convertible debentures are outstanding or unless and until the terms of
such debentures are amended to permit such exercise.
3 The "grant date present value" is based upon the Black-Scholes option
pricing model adapted for use in valuing executive stock options. The
actual value, if any, the executive may realize upon exercise of the
option will depend on the excess of the stock price over the exercise
price on the date the option is exercised, so there is no assurance the
value realized by the executive will be at or near the value estimated
by the Black-Scholes model. The principal assumptions incorporated into
the valuation model by the Company are as follows: (i) dividend yield
of 5%, (ii) expected volatility of 40%, (iii) risk-free interest rate
of 6%, and (iv) expected life of 7 years. No assumptions were made
regarding nontransferability or risk of forfeiture. The assumptions
chosen materially impact the resulting valuations.
13
OPTION/SAR EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the exercise of options and/or stock appreciation
rights ("SARs") during the last fiscal year and the number of unexercised
options and SARs held as of the end of the fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2000,
AND FISCAL YEAR-END OPTION AND SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Number Options/SARs Options/SARs
Of Shares Value At FY-End At FY-End
Acquired on Realized
Name Exercise ($) Exercisable/ Exercisable/
Unexercisable Unexercisable
=========================================================================================================
J. William Brandner,
President and 79,707 $183,725 66,154/ $160,754/
Chief Executive Officer 78,750 $0.00
- ---------------------------------------------------------------------------------------------------------
J. Melvin Stewart 133,706 $433,207 0/ $0.00/
Chairman of the Board 25,200 $ 56,750 26,250 $0.00
=========================================================================================================
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company is party to an employment agreement with Mr. James C.
Taylor, under which he serves as President of the Company. The agreement is
extended automatically for one-year periods unless the Company or Mr. Taylor
provides written notice to the contrary not less than sixty days prior to the
extension date. Mr. Taylor presently receives $225,000 base salary per year. The
agreement also provides for the payment of severance in the event the Company
elects to terminate the agreement without cause or Mr. Taylor elects to
terminate the agreement with cause. The agreement with Mr. Taylor contains
confidentiality and noncompetition provisions effective during the term of the
agreement and for a period following termination of employment.
Don Bell Industries, Inc. ("Don Bell Industries") , a wholly-owned
subsidiary of the Company, entered into a new employment agreement with Gary D.
Bell on February 17, 1998 to replace the agreement which was to expire on April
14, 1998. The new agreement expires July 1, 2001. Under the terms of the new
agreement, Mr. Bell is to receive a base salary of $170,000 and is to
participate in the Senior Management Incentive Plan beginning with the year
ending June 30, 1998. The agreement also provides for the payment of severance,
in the event that Don Bell Industries terminates the employment agreement
without cause, of the lesser of 200% of base salary or the amount that would
otherwise have been payable over the remaining term of the agreement. In the
event that Don Bell Industries does not renew or extend the agreement at the
expiration of its term, a severance payment of $50,000 is payable to Mr. Bell.
14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report on executive compensation is made with respect to
fiscal year 2000.
COMPENSATION PHILOSOPHY
The Compensation Committee establishes and reviews the salaries and
other compensation paid to the Company's executive officers. The Company's
executive compensation policy as implemented by the committee is designed to
provide a competitive compensation program that will enable the Company to
attract, motivate, reward and retain executives who have the skills, experience
and talents required to promote the short- and long-term financial performance
and growth of the Company. The compensation policy is based on the principle
that the financial rewards to the executives must be aligned with the financial
interests of the shareholders of the Company. In this manner, the Company seeks
to meet its ultimate responsibility to its shareholders.
The Company's executive compensation for fiscal 2000 had three
elements: base salary, annual incentive compensation and long-term incentive
compensation. The following is a summary of the considerations underlying each
element.
BASE SALARY
The committee determined the salary ranges for each of the executive
officer positions of the Company, based upon the level and scope of the
responsibilities of the office and the pay levels of similarly-positioned
executive officers in comparable companies. The evaluation of the chief
executive officer was of paramount importance in setting base salaries of other
executive officers. The comparison of compensation levels was based on surveys
of various companies both within and outside the sign manufacturing industry.
Certain of these companies were included in the peer group represented in the
index used for stock performance comparisons elsewhere in this Statement under
the caption "Comparison of Five-Year Cumulative Returns." The committee was
satisfied that it had reasonably accurate information with respect to salary
ranges for the surveyed companies.
The committee considered (i) the Company's performance as evidenced in
changes in the price of the Common Stock as compared to changes in its industry
and the broader economic environment, (ii) the chief executive officer's
recommendations with respect to a particular officer, (iii) the officer's
individual performance, (iv) any significant changes in the officer's level of
responsibility, and (v) each officer's then-current salary within the range of
salaries for such position. The committee included significant qualitative
components in evaluating the individual performance of each executive officer.
These components included the officer's leadership, accomplishment of goals,
team building and motivational skills. They also included adaptability to rapid
change and assimilation of new technical knowledge to meet the demands of the
industry's customers. In this qualitative evaluation, the committee exercised
its collective judgment as to the officer's contributions to the growth and
success of the Company during the prior year and the expected contributions of
such officer in the future. Generally, salary increases were made retroactive to
the start of the fiscal year.
ANNUAL INCENTIVE COMPENSATION
The senior management incentive plan called for the establishment
annually of an incentive pool to be distributed if four out of the following
seven corporate goals were achieved: (1) consolidated operating income must
increase a minimum of 15% over the prior fiscal year; (2) consolidated pre-tax
income must increase a minimum of 15% over the prior fiscal year; (3)
consolidated net income from continuing operations must increase a minimum of
15% over the prior fiscal year; (4) consolidated net income must increase a
minimum of 15% over the prior fiscal year; (5) diluted earnings per share from
continuing operations must increase a minimum of 15% over the prior fiscal year;
(6) diluted earnings per share must increase a minimum of 15% over the prior
fiscal year; and (7) the quoted closing price per share of the Common Stock at
fiscal year-end must be 15% higher than the quoted closing price at the end of
the previous fiscal year.
15
The criteria for establishing the amount of the incentive pool was
determined by the Compensation Committee at the beginning of the fiscal year.
Each participant had specific individual goals based on his direct
responsibilities and his contributions to the attainment of the corporate goals.
These objectives were established at the beginning of the fiscal year by the
chief executive officer and submitted to the Compensation Committee for
approval. The goals were communicated to the participants as the basis for
making awards. Awards to participants were to be one-third in cash, one-third in
newly issued shares of Company Stock and one-third as an adjustment of annual
base salary. In fiscal 2000, the Company failed to achieve a sufficient number
of performance goals under the senior management plan for the creation of an
incentive pool. Accordingly, no incentive compensation was paid to the named
executive officers under the plan for fiscal 2000.
LONG-TERM INCENTIVE COMPENSATION
The Compensation Committee believed that long-term incentive
compensation in the form of stock options was the most direct way of making
executive compensation dependent upon increases in shareholder value. The
Company's stock option plans provided the means through which executive officers
could build an investment in Company stock which would align the officers'
economic interest with the interest of shareholders. The value of stock options
historically had increased as the result of increases in the price of an
issuer's stock, and such options were highly valued by employees. The committee
believed that the granting of stock options was a particularly important
component of its success in retaining talented management employees.
The exercise price of each option was generally the market price of the
Common Stock on the date of grant. The committee believed that stock options
gave the Company's executive officers greater incentives throughout the term of
the options to strive to operate the Company in a manner that directly effects
the financial interest of the shareholders both on a long-term, as well as a
short-term, basis.
In determining the number of options to grant to executive officers,
the committee considered on a subjective basis the same factors as it did in
determining the other components of compensation, with no single factor accorded
special weight. The recommendation of the chief executive officer was of
paramount importance in determining awards to persons other than himself.
COMPENSATION OF THE FORMER CHIEF EXECUTIVE OFFICER
In setting the compensation of Mr. Brandner, the Company's former
President and Chief Executive Officer, the Compensation Committee applied the
quantitative, performance-based criteria of the senior management incentive plan
described above. In determining the portion of the bonus pool under the plan to
be allocated to Mr. Brandner, the committee considered such qualitative criteria
as his management responsibilities, his efforts in aiding the Company in
achieving the performance goals contained in the senior management incentive
plan, and the results of his efforts in helping the Company increase profitable
growth generally. The total compensation package of Mr. Brandner was designed to
be competitive while creating awards for performance in line with the financial
interests of our shareholders. The committee believes that the 2000 compensation
package for Mr. Brandner was entirely consistent with this policy.
FREEZE OF EXECUTIVE SALARIES
On September 29, 2000, our Board of Directors approved an indefinite
freeze of compensation levels of executive officers of the Company and its
subsidiaries.
THE COMPENSATION COMMITTEE
Thomas N. Grant, Chairman
Lester Jacobs
Kevin L. Jackson
William A. Retz
16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
A line graph presentation appears below, showing a five-year comparison
of the cumulative total return on the Company's Common Stock to the S&P 500
index, the Nasdaq Stock Market index and an index of peer group companies
selected by the Company. The peer group consists of Daktronics, Inc., Trans-Lux
Corporation, Mikohn Gaming Corporation, Trans-Industries, Inc. and Federal Sign
Corp. The graph assumes $100 invested on June 30, 1995, in the Company's Common
Stock and in each index, with the subsequent reinvestment of dividends on a
quarterly basis.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURNS AMONG
THE COMPANY, S&P 500 INDEX, NASDAQ INDEX AND PEER GROUP INDEX
[Graphic of five-year Comparison appears here]
DATE DTEK STOCK S&P 500 INDEX NASDAQ INDEX PEER GROUP
---- ---------- ------------- ------------ ----------
06/30/95 100.00 100.00 100.00 100.00
06/30/96 159.62 126.18 128.39 156.48
06/30/97 339.23 170.12 156.14 136.97
06/30/98 457.96 222.02 205.59 218.94
06/30/99 561.07 272.23 294.06 150.73
06/30/00 439.53 292.18 437.18 161.57
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Each transaction involving over $60,000 (other than the Transactions,
described below under "Change of Control") which have occurred since the
beginning of the Company's last fiscal year (July 1, 1999) or which are
currently proposed and with respect to which a director (or nominee for
director), executive officer, security holder owning of record or beneficially
more than 5% of any class of the Company's securities or any member of the
immediate families of the foregoing persons had or will have a direct or
indirect material interest is described below.
17
ACQUISITION OF LOCKWOOD SIGN GROUP, INC.
Effective July 1, 1999, the Company acquired Lockwood Sign Group, Inc.,
a commercial sign manufacturer with facilities located in Marietta, Georgia,
Charlotte, North Carolina and the Washington D.C. area. Larry L. Johnson
received $1,387,000 cash and 428,231 shares of Company Stock for his 73%
interest in Lockwood.
Following the Lockwood acquisition, the Company and Lockwood entered
into an employment agreement with Mr. Johnson to serve as President and Chief
Executive Officer of Lockwood. This agreement was superseded by the employment
agreement between the Company and Mr. Johnson which terminated upon his
resignation as a director, officer and employee in August 2000.
The Company also granted Mr. Johnson options to purchase up to 105,000
shares of Common Stock at the exercise price of $3.54, the fair market value per
share of Common Stock on the August 27, 1999 grant date. The agreement under
which the options were granted provides that certain conditions must be
satisfied before the options become exercisable.
LOCKWOOD CONVERTIBLE NOTE
On July 30, 1999, in consideration of a loan from Mr. Johnson to
Lockwood Sign Group, Inc., Lockwood issued to Mr. Johnson a promissory note in
the principal amount of $500,000. Principal on the note is payable in six equal
annual installments of $71,428 and a seventh installment of $71,432. Present
outstanding principal on the note is $428,572. The note is also convertible into
shares of Common Stock at the present conversion price of $4.31 per share.
1999 PREFERRED STOCK OFFERING
On July 30, 1999, the Company completed a private sale of 50,000 shares
of its authorized preferred stock designated as Series A Convertible Preferred
Stock (the "Series A Preferred") for gross proceeds of $5,000,000. The Series A
Preferred was convertible into shares of Common Stock at the conversion price of
$3.333 per share, subject to certain anti-dilution and other adjustments. 40,000
shares of Series A Preferred were purchased by Raymond James Capital Partners
L.P., and the remaining 10,000 shares were purchased 5,000 each by Renaissance
Capital Growth & Income Fund III, Inc. and Renaissance U.S. Growth & Income
Trust PLC. The Company also issued Raymond James Capital and the two Renaissance
entities warrants (the "1999 Warrants") to purchase 126,000 shares, 15,750
shares and 15,750 shares, respectively (adjusted for a 5% stock dividend in
December 1999), of Common Stock at any time prior to July 30, 2004 at the
exercise price of $3.333 per share. The exercise price is subject to certain
anti-dilution and other adjustments. The Series A Preferred was entitled to
dividends at the rate of 5.25% per year on the last day of March, June,
September and December in each year and was required to be redeemed by the
Company on July 30, 2004. The Series A Preferred was entitled to a preference
over Common Stock at liquidation at the liquidation price of $100 per share plus
any accrued but unpaid dividends. Part of the proceeds from the sale of the
Series A Preferred was used by the Company to finance part of the purchase price
for Lockwood Sign Group, Inc.
Holders of the Series A Preferred were entitled to vote with holders of
Common Stock as a single class on all matters on which holders of Common Stock
are entitled to vote. Each share of Series A Preferred stock was entitled to the
number of votes equal to the number of shares of Common Stock into which it was
convertible.
In the Transactions described below under "Change of Control", each
share of Series A Preferred issued and outstanding was exchanged by the Company
for one share of Series A-1 Convertible Preferred Stock convertible into 50
shares of Common Stock. The Series A-1 Convertible Preferred Stock entitles its
holders to the same dividends and liquidation preference as the Series A
Preferred. Also as a result of the Transactions, the exercise price of the 1999
Warrants adjusted to $2.50, and the number of shares of Common Stock subject to
the 1999 Warrants held by Raymond James Capital and the two Renaissance entities
increased to 167,945 shares, 20,993 shares and 20,993 shares, respectively.
18
AMERIVISION
Pursuant to an agreement dated June 28, 1999, the Company purchased
8,000 newly issued shares of Series A Convertible Preferred Stock from
AmeriVision Outdoor, Inc., a Florida corporation ("AmeriVision") for $500,000.
Part of the proceeds of the preferred stock was used by AmeriVision to purchase
the assets of AmeriVision Outdoor, LLC, a Nevada limited liability company. The
Nevada company used $106,000 of such proceeds to partially repay loans of
$182,000 from Terry L. Long, a director and executive officer of the Company at
such time.
Effective December 5, 2000, the Company converted its 8,000 shares of
Series A Convertible Preferred Stock of AmeriVision into 8,000 shares, or 80%,
of the outstanding common stock of AmeriVision. On the same date, the Company
also exercised options to purchase the remaining 20% of the common stock of
AmeriVision for a nominal sum, which exercise price was calculated pursuant to
certain provisions in the agreement granting such options based on the financial
performance of AmeriVision. As the result of the foregoing transactions,
AmeriVision became a wholly-owned subsidiary of the Company.
In February 2001, AmeriVision filed a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code (the bankruptcy code).
OHIO PARTNERSHIP
In June 1999, Ad Art Electronic Sign Corporation entered into a
lease-purchase transaction with an Ohio partnership (the "Ohio Partnership"),
pursuant to which the Ohio Partnership leases from Ad Art an LED outdoor display
board over a 60-month term for total lease payments of approximately $1 million.
Mr. Terry J. Long, a former director and executive officer of the Company, is a
50% non-managing partner of the Ohio Partnership. The Ohio Partnership intended
to move the LED display to various entertainment venues throughout the United
States and either secure weekly rentals of the display, or sell advertising on
the display. After several months of operation, it was unable to secure
sufficient revenue to make its lease payments to us. The Ohio Partnership, with
our assistance, was able to sell a portion of the display and make a substantial
payment to us against the original $1,000,000 receivable. We continued to assist
the Ohio Partnership in its efforts to sell the remaining portion of the display
so that it would be in a position to pay the remaining balance due us. However,
to date, the Ohio Partnership has been unable to secure a buyer for the
remaining portion of the display and, accordingly, collection of our receivable
is in doubt. During 2000, we recorded a charge of $463,000 to essentially reduce
the carrying value of our receivable to the net realizable value.
ISSUANCE OF ADDITIONAL COMPANY STOCK FOR AD ART
On February 18, 1998, the Company acquired Ad Art Electronic Sign
Corporation ("Ad Art"), a commercial sign manufacturer located in Stockton,
California. In September 1999, Mr. Lou A. Papais received an additional 453,600
shares of Common Stock and Mr. Terry J. Long received an additional 113,400
shares of Common Stock, as the result of Ad Art's attainment of certain earnings
levels for the 1999 fiscal year. Mr. Papais and Mr. Long are former Directors.
The Company is currently in the process of liquidating Ad Art, which has sold
nearly all its electronic and LED inventory and technology to Don Bell
Industries, Inc., another wholly-owned subsidiary of the Company.
CHANGE OF CONTROL
On December 21, 2000, Raymond James Capital Partners, L.P. ("Raymond
James Capital"), Renaissance Capital Growth & Income Fund III, Inc.
("Renaissance III"), and Renaissance U.S. Growth & Income Trust PLC
("Renaissance PLC") filed a Schedule 13D with the Securities and Exchange
Commission (the "Commission") disclosing that they had formed a group (the
"Investor Group") within the meaning of the definition contained in the Exchange
Act for the purpose of acquiring control of the Company in a series of
transactions, described below (the "Transactions"), which were consummated on
January 18, 2001. Prior to the consummation of the Transactions, the Investor
Group was the beneficial owner of 3,222,457 shares of Common Stock, or 28.6% of
19
the Common Stock. Immediately following the completion of the Transactions,
Raymond James Capital was the beneficial owner of 4,310,945 shares of Common
Stock, or 33.5% of the Common Stock, Renaissance III was the beneficial owner of
1,522,657 shares of Common Stock, or 15.5% of the Common Stock, Renaissance PLC
was the beneficial owner of 2,378,922 shares of Common Stock, or 22.3% of the
Common Stock, and the Investor Group was the beneficial owner of 8,212,524
shares of Common Stock, or 50.6% of the Common Stock.
As indicated below, one of the conditions of the Transactions was the
resignation of all members of the Board of Directors of the Company except for
Messrs. Gary D. Bell and Thomas N. Grant and the appointment by such remaining
directors of Gary A. Downing and William A. Pecora, representatives of Raymond
James Capital, as directors effective the closing of the Transactions, and the
appointment to the Board of Robert C. Pearson, representing the Renaissance
entities, effective 10 days following the filing with the Commission of an
Information Statement pursuant to Section 14(f) of the Securities Exchange Act
of 1934 and Rule 14f-1 thereunder and its delivery to the Company's
shareholders. The Information Statement was filed with the Commission and sent
to the shareholders on April 11, 2001. Another condition was the resignation of
J. William Brandner, President of the Company, and certain other officers.
Effective January 26, 2001, the Board of Directors elected Mr. James C. Taylor
as a director, for a term commencing on the same date as Mr. Pearson's term, and
as President of the Company. Mr. Todd D. Thrasher was also elected Secretary and
Treasurer for a term which ended upon the employment of Bill Lunsford by the
Company.
On January 18, 2001, the Company completed a restructuring of its
credit facilities with SouthTrust Bank ("SouthTrust"). The revolving loan
facility available to the Company and certain of its subsidiaries from
SouthTrust was separated into two new loans. First, a new revolving loan
facility (the "Company Revolving Loan") was provided to the Company and all of
its subsidiaries except Ad Art Electronic Sign Corporation ("Ad Art") and
Hamilton Digital Designs, Ltd. ("Hamilton"). The balance of the Company
Revolving Loan on the day of closing was $5,000,000. Second, an $8,122,489.56
term loan (the "Ad Art Loan") was made to Ad Art and Hamilton.
Under the terms of the new loan agreements, the Company and all of its
subsidiaries except for Ad Art and Hamilton were released from liability for the
Ad Art Loan and certain other obligations related to its Ad Art subsidiary. Ad
Art and Hamilton were released from liability under the Company Revolving Loan
and certain other obligations related to the Company's other subsidiaries. A new
term loan of up to $1,000,000 was made to Ad Art for the purpose of funding its
orderly liquidation if a sale of that subsidiary was not accomplished in the
near future. The maturity dates for all loans were extended to June 30, 2001.
Raymond James Capital, a preferred shareholder of the Company, agreed
to guarantee up to $1,750,000 of the Company Revolving Loan. Another preferred
shareholder, Renaissance PLC agreed to indemnify Raymond James Capital with
respect to a portion of any liability under the guarantee.
In consideration for this guarantee, the Company (1) granted warrants
to purchase a total of 3,000,000 shares of Common Stock at a price of $.125 per
share to Raymond James Capital and Renaissance PLC, (2) issued a total of 50,000
shares of Series A-1 Convertible Preferred Stock convertible into 2,500,000
shares of Common Stock to Raymond James Capital, Renaissance PLC and Renaissance
III in exchange for their 50,000 shares of Series A Convertible Preferred Stock
which were convertible into 1,500,300 shares of Common Stock, and (3) reduced
the conversion price of two $1,750,000 convertible notes of the Company held by
Renaissance III and Renaissance PLC from $4.31 per share of Common Stock to
$2.00 per share.
Effective upon the restructuring of the credit facility, all the
directors of the Company, except for Gary D. Bell and Thomas M. Grant, resigned.
Two directors designated by Raymond James Capital, Gary A. Downing and William
A. Pecora, were appointed to the Board of Directors. A representative of
Renaissance PLC and Renaissance III, Robert C. Pearson, and Mr. James C. Taylor
were also added to the Board effective on or about April 21, 2001. Also
effective upon restructuring of the credit facility, J. William Brandner,
President of the Company, retired as an officer of the Company and James C.
Taylor was subsequently appointed President and Chief Executive Officer of the
Company.
No action is required by the shareholders of the Company in connection
with the Transactions.
20
INDEPENDENT PUBLIC ACCOUNTANTS
CHANGE OF ACCOUNTANTS
On January 26, 2001, the Board of Directors of the Company approved the
engagement of Grant Thornton, LLP ("Grant Thornton") to audit the Company's
financial statements for the fiscal year ending June 30, 2001, and dismissed BDO
Seidman, LLP ("BDO Seidman"), which previously served as the Company's
independent certified public accountants. This decision to change accountants,
which resulted from new management's desire to work with Grant Thornton, was
approved by the Company's Audit Committee.
The reports of BDO Seidman on the Company's financial statements as of
and for the year ended June 30 1999, did not contain an adverse opinion or a
disclaimer of opinion nor was such report qualified as to audit scope or
accounting principles. The report of BDO Seidman on the Company's financial
statements as presented in their Annual Report on Form 10-K for the year ended
June 30, 2000, contained a qualification based on an uncertainty as to the
Company's ability to continue as a going concern.
During the two fiscal years ended June 30, 2000 and June 30, 1999, and
in the subsequent interim period, there were no disagreements with BDO Seidman
on any matters of accounting principles or practices, financial statement
disclosure or auditing scope and procedures which, if not resolved to the
satisfaction of BDO Seidman would have caused BDO Seidman to make reference to
the subject matter of the disagreement in its reports. However, a material
weakness in the internal accounting control structure of the Company was
identified. The material weakness relates to the Company's accounting for
inventory.
AUDIT FEES
The aggregate fees billed by BDO Seidman for professional services
rendered for the audit of the Company's annual financial statements for the most
recent fiscal year and the reviews of the financial statements included in the
Company's Forms 10-Q for that fiscal year were $173,796 (the "Audit Fees").
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed to the Company for professional services
rendered by BDO Seidman for Financial Information Systems Design and
Implementation during the most recent fiscal year.
ALL OTHER FEES
The were no fees other than the Audit Fees billed to the Company for
professional services rendered by BDO Seidman during the most recent fiscal
year.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you intend to submit either a nomination to the Board of Directors
or a shareholder proposal and request its inclusion in the 2001 proxy statement
and form of proxy, those submissions must be in writing and received by the
Company no later than June 30, 2001.
If we have not received your submissions by that date, the nominations
and shareholder proposals that are otherwise appropriate for consideration by
the shareholders may nevertheless be presented to the shareholders at the 2001
annual meeting even if they do not appear in the proxy statement, but only if
they have been submitted to the Company in writing in accordance with Article 1,
Section 11 of the Company's bylaws. Subject to certain exceptions in the case of
a change in the meeting date or delayed notice to shareholders, the bylaws
require submissions to be made in writing and received by us not less than 120
days prior to the anniversary of the prior annual meeting. Submissions should be
sent by certified mail, return receipt requested, to 6225 Old Concord Road,
Charlotte, North Carolina 28213.
21
OTHER MATTERS
We do not know of anything else that will come before the annual
meeting, including any adjournments of it, that has not been discussed in this
proxy statement. If other matters properly come before the meeting, the persons
named in the proxy card will vote your Company Stock in their discretion.
By order of the Board of Directors,
/s/ Bill Lunsford
Charlotte, North Carolina Bill Lunsford, Secretary
April 17, 2001
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER, UPON WRITTEN
REQUEST, A COPY OF THE COMPANY' S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13A-1 UNDER THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE COMPANY'S MOST RECENT FISCAL YEAR.
WRITTEN REQUESTS SHOULD BE MAILED TO BILL LUNSFORD, SECRETARY, DISPLAY
TECHNOLOGIES, INC., 6225 OLD CONCORD ROAD, CHARLOTTE, NORTH CAROLINA 28213.
22
APPENDIX A
DISPLAY TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee of the Board of Directors shall conduct continuing oversight
of the financial affairs of Display Technologies, Inc.
SCOPE OF REVIEW
The Audit Committee shall conduct an ongoing review of the Corporation's:
o Financial reports and other financial information prior to their being
filed with the U.S. Securities and Exchange Commission or otherwise
provided to the public.
o Systems, methods and procedures of internal controls in the areas of:
financial reporting, audits, treasury operations, corporate finance,
managerial, financial and SEC accounting, compliance with law, and
ethical conduct.
GENERAL TASKS
The Audit Committee shall:
o Be independent (as defined by Nasdaq rules) and objective.
o Recommend and encourage improvements in the Corporation's financial
affairs.
o Review and assess the work of the Corporation's independent accountant.
o Solicit and encourage comments from the Corporation's independent
accountant, financial and senior management and the Board of Directors.
AUDIT COMMITTEE MEMBERS
The Audit Committee shall consist of three or more Members (the "Members") who
are independent Directors. The Board of Directors shall elect the Members
annually. Members shall serve until their successors are duly elected and
qualified. Unless an Audit Committee Chairperson is elected by the full Board,
the Members of the Committee may designate a Chairperson by majority vote of the
all Members.
Each member shall be free from any relationship that could conflict with a
member's independent judgment. All Members must be able to read and understand
fundamental financial statements, including a balance sheet, income statement,
and cash flow statement. At least one member must have past employment
experience in finance or accounting, requisite professional certification in
accounting or other comparable experience or background, including a current or
past position as a chief executive or financial officer or other senior officer
with financial oversight responsibilities.
INDEPENDENCE
An independent director is defined as a director who has:
A-1
o Not been employed by the Corporation or its affiliates in the current
or past three years.
o Not accepted any compensation from the Corporation or its affiliates in
excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non-discretionary compensation).
o No immediate family member who is, or has been in the past three years,
employed by the Corporation or its affiliates as an executive officer.
o Not been a partner, controlling shareholder or an executive officer of
any other for-profit entity to which the Corporation made, or from
which it received, payments (other than those which arise solely from
investments in the Corporation's securities) that exceeded five percent
of the other entity's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years.
o Not been employed as an executive of another entity where the
Corporation's executives serve on the other entity's compensation
committee.
MEETINGS
The Audit Committee shall meet at least four times per year, and may meet as
frequently as deemed necessary. The Audit Committee shall meet separately in
closed meetings at least once each year with management and the independent
accountant to discuss any matter that any of them believes should be discussed
privately. The Audit Committee shall select one of its Members each quarter to
meet with management and the independent accountant for purposes set forth
below.
SPECIFIC TASKS
The Audit Committee shall:
o Assess and, if necessary, update this Charter at least annually;
o Review the Corporation's annual, quarterly and other financial
statements and any other reports, financial information or other
material filed with any governmental body (except for litigation
matters in the ordinary course of business) or announced to the public,
including the independent accountant's certifications, reports,
opinions, or reviews;
o Have a predetermined arrangement with the independent accountant that
it will advise the Committee through its Chair and management of the
Corporation of any matters identified through procedures followed for
interim quarterly financial statements, and that such notification as
required under standards for communication with audit committees is to
be made prior to the related press release or, if not practicable,
prior to filing Forms 10-Q; also receive a written confirmation
provided by the independent accountant at the end of each of the first
three quarters of the year that it has nothing to report to the
Committee, if that is the case, or the written enumeration of required
reporting issues;
o Recommend to the Board of Directors the selection of the independent
accountant for each fiscal year, considering independence and
effectiveness, and approve the fees and other compensation to be paid
to the independent accountant; on an annual basis, the Audit Committee
shall review and discuss with the independent accountant all
significant relationships the independent accountant has with the
Corporation to determine the accountant's independence;
o Review the performance of the independent accountant and approve any
proposed discharge of the independent accountant when circumstances
warrant;
o Periodically consult with the independent accountant, out of the
presence of management, about internal controls and the completeness
and accuracy of the Corporation's financial statements;
A-2
o Continually review the integrity of the Corporation's internal and
external financial reporting processes; the Audit Committee shall
consult with the independent accountant for this review;
o Consider the independent accountant's judgments about the quality and
appropriateness of the Corporation's accounting principles in relation
to the Corporation's internal and external financial reporting;
o Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices;
o Establish regular and separate systems of reporting to the Audit
Committee by management and the independent accountant in connection
with the appropriateness and application of accounting principles made
in management's preparation of the financial statements;
o Following completion of the annual audit, review separately with
management and the independent accountant whether any difficulties were
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information;
o Review any disagreement between management and the independent
accountant in connection with the preparation of the financial
statements or appropriateness and application of accounting principles
made in management's preparation of the financial statements;
o Review with the independent accountant and management whether and how
changes or improvements in the Corporation's financial or accounting
practices, as approved by the Audit Committee, have been implemented;
the Audit Committee shall conduct this review promptly after the
implementation of the changes or improvements; and
o Perform any other activities consistent with this Charter, the
Corporation's Articles of Incorporation, Bylaws and governing law, as
the Audit Committee or the Board of Directors deems necessary or
appropriate.
A-3
DISPLAY TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS, MAY 17, 2001 AT 10:00 A.M.
The undersigned hereby constitutes and appoints Gary A. Downing and Bill
Lunsford (the "Proxies"), or any one of them, (with full power to act alone),
with full power of substitution, to vote all of the common stock of Display
Technologies, Inc. (the "Company") which the undersigned has the full power to
vote at the Annual Meeting of Shareholders of the Company to be held at the
offices of Kilpatrick Stockton LLP, 3500 One First Union Center, 301 South
College Street, Charlotte, North Carolina 28202, and at any adjournments
thereof, in the transaction of any business which may come before said meeting,
with all the powers the undersigned would possess if personally present and
particularly to vote each matter set forth, all as in accordance with the Notice
of Annual Meeting and Proxy Statement furnished with this Proxy.
ANNUAL MEETING OF SHAREHOLDERS OF DISPLAY TECHNOLOGIES,
INC., MAY 17, 2001 /X/ PLEASE MARK YOUR VOTES AS
IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS
FOR WITHHELD
James C. Taylor [ ] [ ]
Gary D. Bell [ ] [ ]
2. AMENDMENT OF 1999 STOCK INCENTIVE PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please date, sign and mail your proxy card back as soon as possible.
(Continued on other side)
- --------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof. This proxy
when properly executed will be voted in the manner directed herein by the
shareholder. If no direction is made, this proxy will be voted FOR Proposals 1
and 2 and in accordance with the instructions of the Board of Directors on all
other matters which may properly come before the meeting. Please date, sign and
return this proxy in the enclosed envelope.
(NOTE: SHAREHOLDER'S SIGNATURE SHOULD BE EXACTLY AS NAME APPEARS HEREON. ALL
JOINT OWNERS MUST SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE, AND, IF MORE THAN ONE, ALL SHOULD
SIGN.)
--------------------------
Signature
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Date