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
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|_| Preliminary Proxy Statement |_| Confidential, for Use of the
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|_| Definitive Additional Materials
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DynTek, Inc.
-------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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DYNTEK, INC.
18881 Von Karman Avenue, Suite 250
Irvine, California 92612
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on June 27, 2003
The Annual Meeting of Stockholders of DynTek, Inc. ("DynTek") will be
held at our executive offices, 18881 Von Karman Avenue, Suite 250, Irvine, CA on
Friday, June 27, 2003, at 10:00 a.m. Pacific Standard Time, for the purpose of
considering and acting upon the following Proposals:
(1) The election of five directors for terms expiring at DynTek's
2003 Annual Meeting of Stockholders;
(2) The ratification of the appointment by the Audit Committee and
the full Board of Directors of Marcum & Kliegman LLP as
DynTek's independent accountants for the year ended June 30,
2003; and
(3) The transaction of such other business as may properly come
before the Annual Meeting and any adjournments thereof.
Pursuant to the provisions of the By-laws of DynTek, the Board of
Directors has fixed the close of business on May 14, 2003 as the record date for
determining the stockholders of DynTek entitled to notice of and to vote at the
meeting and any adjournments thereof.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND PROMPTLY MAIL IT TO DYNTEK IN THE ACCOMPANYING POSTAGE PAID ENVELOPE.
By Order of the Board of Directors,
James Linesch
Executive Vice President
and Secretary
June 2, 2003
Irvine, California
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LOGO DYNTEK
DYNTEK, INC.
18881 Von Karman Avenue
Suite 250
Irvine, California 92612
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 2003
This Proxy Statement is being mailed to stockholders of DynTek, Inc., a
Delaware corporation ("DynTek"), on or about June 2, 2003 in connection with the
solicitation of proxies by the Board of Directors of DynTek to be used at the
2002 Annual Meeting of Stockholders of DynTek to be held on June 27, 2003 and
any adjournments thereof (the "Annual Meeting" ). Accompanying this Proxy
Statement is a Notice of Annual Meeting of Stockholders and a form of proxy for
the Annual Meeting. This proxy statement is also accompanied by DynTek's 2002
Annual Report to Stockholders, which consists of DynTek's Form 10-K, as amended,
for the fiscal year ended June 30, 2002 that sets forth important business and
financial information concerning DynTek.
The Board of Directors has fixed the close of business on May 14, 2003
as the record date for the determination of stockholders who are entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof. As of
the record date, DynTek had outstanding approximately 35,475,943 shares of its
Class A common stock, $.0001 par value (the "Common Stock"), and 1,497,737
shares of its Series A Preferred Stock, $.0001 par value (the "Preferred
Stock"). Holders of DynTek's Common Stock are entitled to one vote per share,
and holders of DynTek's Preferred Stock are entitled to 2.5 votes per share.
All proxies which are properly completed, signed and returned to DynTek
in a timely manner will be voted in accordance with the instructions thereon.
Proxies may be revoked by any stockholder through written notice to the
Secretary of DynTek prior to the exercise thereof, and stockholders who are
present at the Annual Meeting may withdraw their proxies and vote in person if
they so desire. Unless otherwise directed by the grantor of the proxy, the
persons acting under the accompanying proxy, if properly executed, will vote the
shares represented thereby For the following Proposals: (1) the election of the
five (5) persons named herein as nominees for Directors of DynTek; (2) the
proposal to ratify the appointment of Marcum & Kliegman LLP as DynTek's
independent accountants for the year ended June 30, 2003; and (3) the
transaction of such other business that may be brought before the Annual
Meeting, in accordance with the judgment of the persons voting the proxy;
provided, that such discretionary authority granted to the person named in the
enclosed proxy card, if it is properly executed, shall specifically include the
right to vote in favor of adjournment of the Annual Meeting for the purpose of
postponing the Annual Meeting until such time as sufficient votes necessary to
take either or both of the actions called for under Proposal 1 and Proposal 2
have been received and cast therefore.
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Any combination of outstanding shares of Common Stock and Preferred
Stock which shares entitle the holders thereof to cast a majority of the votes
which can be cast by all of the outstanding Common Stock and Preferred Stock,
taken together, is required to establish a quorum at the Annual Meeting. The
Directors will be elected by a plurality of the votes cast at the Annual Meeting
by the holders of the shares of the Common Stock and Preferred Stock entitled to
vote. A majority of the votes cast at the Annual Meeting by the holders of
DynTek's Common Stock and Preferred Stock entitled to vote is required for the
ratification of the appointment of independent accountants.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes withheld from any director will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting, but will not affect the outcome of the voting in such
election. With regard to other proposals, abstentions may be specified. DynTek
believes that abstentions are shares present and entitled to vote, but do not
constitute votes cast in respect of a particular matter. DynTek, therefore,
intends to count abstentions and votes withheld in respect of the proposal to
ratify the appointment of independent accountants for purposes of determining
the presence or absence of a quorum for the transaction of business at the
Annual Meeting, but not as votes having been cast in respect of such proposal.
Accordingly, such abstentions and votes withheld will not affect the outcome of
the voting on that proposal. Broker non-votes (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares on a particular
matter as to which the brokers or nominees do not have discretionary power) may
be counted as present or represented for purposes of determining the presence or
absence of a quorum for the transaction of business, but not for the purpose of
determining the voting power present with respect to proposals in respect of
which brokers do not have discretion (non-discretionary proposals) because
although they will count towards the quorum necessary to hold the Annual Meeting
they do not represent part of the voting power present for any particular matter
to come before the Annual Meeting. DynTek believes that all proposals being
presented to stockholders at the Annual Meeting are discretionary proposals and,
unless one or more beneficial owners of the Common Stock have withheld
discretionary authority from their brokers or nominees in respect of these
proposals, DynTek does not anticipate that there will be any broker non-votes in
respect of such proposals. If there are any broker non- votes in respect of
these proposals, however, DynTek intends to treat such broker non-votes as
stated above.
PROPOSAL 1--ELECTION OF DIRECTORS
All nominees for Director presently are members of DynTek's Board of
Directors. Management has no reason to believe that the named nominees will be
unable or unwilling to serve if elected to office. In such case, however, it is
intended that the individuals named in the enclosed proxy will vote for the
election of such substituted nominees as DynTek's Board of Directors may
recommend.
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Certain information concerning the nominees for director is set forth
in the following table.
Principal Occupation, Business
Name Age Experience and Directorships
---- --- ----------------------------
Steven J. Ross 45 Since February 2000, Mr. Ross has been DynTek's President,
Chief Executive Officer and Chairman of the Board. Mr. Ross
has an extensive industry background, most recently serving
as General Manager of Toshiba's Computer System Division,
responsible for sales, marketing, and operations in North and
South America from 1998 to 1999. Prior to that, Mr. Ross was
President and General Manager of the Reseller Division and
President of Corporate Marketing at Inacom Corporation from
1996 to 1998. Mr. Ross' other positions have included
responsibility for sales and marketing, operations, strategic
planning, and other senior executive activities.
James Linesch 48 Since August 14, 2000, Mr. Linesch has served as the Chief
Financial and Chief Accounting Officer, Executive Vice
President and Secretary, and since February 1997 Director, of
DynTek. Previously, Mr. Linesch was the President, Chief
Executive Officer and Chief Financial Officer of CompuMed, a
public computer company involved with computer assisted
diagnosis of medical conditions, which he joined in April
1996 as Vice President and Chief Financial Officer.
Mr. Linesch served as a Vice President and Chief Financial
Officer of DynTek from August 1991 to April 1996. From May
1998 to August 1991, Mr. Linesch served as the Chief
Financial Officer of Science Dynamics Corp., a corporation
involved in the development of computer software.
Mr. Linesch holds a CPA certification in the State of
California, where he practiced with Price Waterhouse from
1981 to 1984.
Brian D. Bookmeier 44 Mr. Bookmeier is an investor and Vice President of Seven
Sons, Inc., d/b/a Las Vegas Golf & Tennis. Seven Sons, Inc.
is in the business of franchised retailing of golf and tennis
products. Mr. Bookmeier has held this position since 1997.
Mr. Bookmeier has served as a Director of DynTek since July
1995, and was President and Chief Executive of DynTek from
July 1995 to February 2000. From September 1989 until its
merger into DynTek, Mr. Bookmeier served as Executive Vice
President and a Director of Patient Care Services, a home
medical equipment supply company that specialized in diabetes
management, and the sale of related equipment and supplies.
He was on the Board of Directors of Azurel, Ltd., a public
company that filed for protection under Chapter 11 of the
Federal Bankruptcy Code in 2001. He continues to serve as
Chairperson of the Audit and Compensation Committees of the
Reorganized Board of Azural, Ltd. In May 2003, be became COO
of ModeEleven, Inc., a privately held software development
and media broadcast company.
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Principal Occupation, Business
Name Age Experience and Directorships
---- --- ----------------------------
Dr. Michael W. Grieves 53 Dr. Grieves has been a director since August 14, 2000.
Previously, Dr. Grieves had served as Data Systems
Corporation's President, Chief Executive Officer and Chairman
of the Board since its inception in 1986. Prior to 1986, Dr.
Grieves served in executive, managerial and technical
capacities with Computer Alliance Corporation, a turnkey
system house; Quanex Management Sciences, a computer services
bureau; and Lear Siegler Corporation. He has more than 25
years of experience in the computer industry.
Marshall Toplansky 52 Mr. Toplansky has been a director since October 2002. Mr.
Toplansky founded the consulting firm Core Strategies in
1996, of which he remains CEO. The firm specializes in
evaluating marketing strategies and identifying growth
opportunities for technology-based companies. From 1994 to
1996, he served as Senior Vice President of Sales and
Marketing for enterprise software publisher Open
Environment. He was Vice President of Marketing for modem
manufacturer U.S. Robotics from 1989 to 1994.
Mr. Toplansky's other positions have involved advertising and
data base direct marketing management, primarily with Ogilvy
& Mather. Mr. Toplansky currently serves on the board of
directors of CompTIA, the country's largest technology trade
association, and the Harvard Business School Association of
Orange County.
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DynTek's Board of Directors met three (3) times (not including actions
by written consent) during the year ended June 30, 2002. Each of the directors
serving at the time attended all of the meetings held by the Board of Directors
and any Committees of the Board of Directors on which such person served during
the last fiscal year, except for Mr. Davies who did not attend one of the
meetings of the full Board of Directors. The Board of Directors has two standing
committees: the Audit Committee and the Compensation Committee. The Board does
not have a standing nominating committee.
The Audit Committee met two (2) times separately and two (2) times in
conjunction with the Board of Directors during the year ended June 30, 2002. The
Audit Committee, among other things, recommends the firm to be appointed as
independent accountants to audit DynTek's financial statements, reviews DynTek's
interim and year- end operating results, considers the adequacy of the internal
accounting controls and audit procedures of DynTek and reviews the non-audit
services to be performed by the independent accountants. In June 2000, the Board
of Directors formally adopted a charter for the Audit Committee. The Audit
Committee Charter, as amended and restated, is attached as Annex A to this Proxy
Statement. The members of the Audit Committee at the end of the 2002 fiscal year
were Messrs. Grieves, Bookmeier and Thomas R. Davies (who has since resigned
from the Board). Each of the Audit Committee members was independent, as defined
in Rule 4200(a) of the National Association of Securities Dealers' listing
standards, other than Mr. Bookmeier. Mr. Bookmeier was not independent for
purposes of that definition because he was employed by the Corporation at some
time within the prior three years, although he became an independent director as
so defined in February 2003. DynTek appointed Mr. Bookmeier to the Audit
Committee because it believed that his prior employment relationship with DynTek
would not interfere with his exercise of independent judgment in carrying out
the responsibilities of a director and member of the committee on behalf of
DynTek's stockholders.
The Compensation Committee has the authority to review and recommend
compensation arrangements for management of DynTek. The Compensation Committee's
responsibilities were carried out by the full Board of Directors during the
fiscal year ended June 30, 2002. The members of the Compensation Committee at
the end of the 2002 fiscal year were Messrs. Marshall Mandell and Thomas R.
Davies (both of whom have since resigned from the Board) and Mr. Ross.
Compensation of Directors
Directors are paid an annual Board Membership fee of $25,000 and are
reimbursed for certain reasonable expenses incurred in attending Board or
Committee meetings. The Chairman of the Audit Committee and the Chairman of the
Compensation Committee are each paid an additional fee of $25,000 for service in
those positions, effective April 2003 Currently, Mr. Grieves is Chairman of both
the Audit Committee and the Compensation Committee. Directors are eligible for
awards under DynTek's 1997 Non-employee Directors' Stock Option Plan. The
Non-employee Directors' Plan provides for option grants with respect to 10,000
shares of Common Stock to be made to each eligible director upon each July 1st
on which such director is a member of DynTek's Board of Directors. Options are
exercisable for 5 years after the date of grant. The exercise price for any
option under the plan shall be equal to the fair market value of the Common
Stock at the time such option is granted. The plan provides that grants
thereunder vest immediately. During the year ended June 30, 2002, each of
Messrs. Bookmeier and Grieves received grants in accordance with the
Non-employee Directors' Plan.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder require DynTek's officers and directors and persons who
own more than ten percent of a registered class of DynTek's equity securities to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and to furnish to DynTek copies of all such filings. DynTek
has determined, based solely upon a review of those reports and amendments
thereto furnished to DynTek during and with respect to the year ended June 30,
2002 and written representations from reporting persons, to the extent that
DynTek deemed it necessary, that all filing requirements were timely satisfied
by DynTek's officers and directors.
Recommendation
The Board of Directors recommends a vote FOR the election of Messrs.
Ross, Linesch, Bookmeier, Grieves and Toplansky as Directors of DynTek.
PROPOSAL 2--RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
Appointment of Independent Auditors
The Board of Directors, on the recommendation of the Audit Committee of
the Board, has appointed the firm of Marcum & Kliegman LLP as independent
accountants, to audit and report on the financial statements of DynTek for the
year ending June 30, 2003. Marcum & Kliegman LLP was appointed by the Audit
Committee and the full Board of Directors as the Company's independent
accountants on May 1, 2003, replacing Grassi & Co., P.C., DynTek's independent
accountant for the prior fiscal year. It is expected that a representative of
Marcum & Kliegman LLP will be available at the Annual Meeting to answer
questions of stockholders.
On May 1, 2003 DynTek dismissed Grassi & Co. CPAs, P.C. ("Grassi &
Co.") and appointed Marcum & Kliegman LLP as its certifying accountants for the
year ending June 30, 2003. This change was recommended and approved by the Audit
Committee of DynTek's Board of Directors.
Grassi & Co. was previously engaged as DynTek's certifying accountant
for the preparation of a report on DynTek's financial statements for the year
ended June 30, 2002, and was not engaged as DynTek's certifying accountant for
any prior years. For periods prior to the fiscal year ended June 30, 2002,
DynTek's certifying accountants were Feldman Sherb & Co., P.C., which firm
merged into Grassi & Co. with Grassi & Co. being the successor firm subsequent
to such firm's delivery of the audit report for DynTek's fiscal year ended June
30, 2001. DynTek does not regard the merger of Feldman Sherb & Co., P.C. with
Grassi &Co., as a change of accountants since Grassi & Co. was the successor
firm and the accountants and related staff that provided accounting services to
DynTek at Feldman Sherb & Co. P.C. continued to provide those same services for
DynTek following the merger into Grassi & Co. As a result, prior disclosure
under Item 304 of Regulation S-K was not required with respect to that merger.
Except as described in the following sentence, neither Feldman Sherb & Co.,
P.C.'s nor Grassi & Co.'s reports on DynTek's financial statements for the years
ended June 30, 2001 or June 30, 2002, respectively, contained an adverse opinion
or a disclaimer of opinion, or was qualified or modified as to uncertainty,
audit scope or accounting principles. The report of Grassi & Co. on the
financial statements of DynTek for the fiscal years ended June 30, 2002 and 2001
does, however, contain an expression of substantial doubt regarding DynTek's
ability to continue as a going concern. During the years ended June 30, 2001 and
2002 and the subsequent interim period through May 1, 2003, there were no
disagreements with Feldman Sherb & Co., P.C. or Grassi & Co. on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of Feldman Sherb & Co., P.C. or Grassi & Co., respectively, would have caused it
to make reference to the subject matter of the disagreement(s) in connection
with its report. In addition, there were no reportable events as described in
Item 304(a)(1)(v) of Regulation S-K.
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No statements are required to be made pursuant to Item 304(a)(2) of
regulation S-K with respect to the engagement of Marcum & Kliegman LLP as
DynTek's new certifying accountant for the year ending June 30, 2003.
Audit Fees
DynTek paid its former independent accounts, Grassi & Co., audit fees
of $130,000 for professional services rendered for the audit of DynTek's annual
financial statements for the year ended June 30, 2002 and for the review of the
financial statements included in DynTek's quarterly reports on Form 10-Q for
such year.
Financial Information Systems Design and Implementation Fees
DynTek did not engage Grassi & Co., to provide advice regarding its
financial information systems design and implementation during the fiscal year
ended June 30, 2002.
All Other Fees
Fees billed to DynTek by Grassi & Co., during DynTek's 2002 fiscal
year, for all other non-audit services rendered to DynTek totaled $36,335.
Required Vote
The ratification of the appointment of Marcum & Kliegman LLP requires a
majority of the votes cast by holders of DynTek's Common Stock and Preferred
Stock entitled to vote at the Annual Meeting. Abstentions and broker non-votes
will be counted as present for purposes of determining whether a quorum is
present, and abstentions and broker non-votes, if any, will not be treated as
votes cast on this matter at the Annual Meeting.
Recommendation
The Board of Directors recommends a vote FOR the ratification of the
appointment of Marcum & Kliegman LLP.
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SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of outstanding Common as of April 30, 2003 by (i) each of our
directors and executive officers, (ii) all directors and executive officers as a
group, and (iii) each owner of more than 5% of our Common Stock, referred to as
the 5% owners. For purposes of the following table, the number of shares of
Common Stock assumes the conversion to Common Stock of all outstanding shares of
Preferred Stock. No person holds 5% or more of the outstanding Preferred Stock
Number of Shares Percentage
Name and Address of of Common Stock Outstanding of
Beneficial Owner (2) Beneficially Owned (1) Common Stock Owned
-------------------- ---------------------- ------------------
DynCorp(3) 10,336,663 26.4%
11710 Plaza America Drive
Reston, VA 21090-6010
H. T. Ardinger(4) 4,244,160 10.5%
9040 Governors Row
P.O. Box 569360
Dallas, TX 75356
Estate of Fred Kassner(5) 3,045,610 7.7%
59 Spring Street
Ramsey, NJ 07446
Steven J. Ross (6) 898,845 2.2%
Dr. Michael W. Grieves(7) 697,729 1.8%
34705 West 12 Mile Road, Suite 300
Farmington Hills, MI 48009
James Linesch(8) 530,573 1.3%
Brian D. Bookmeier(9) 313,315 *
c/o Las Vegas River Avenue, Suite 20
Novi, MI 48152
Arion Kalpaxis(10) 302,500 *
Marshall Toplansky(11) 130,000 *
Wade Stevenson 62,250 *
ALL OFFICERS AND DIRECTORS 2,118,462 7.6%
as a group (7 persons) (3)(6)(7)(8)(9)
* Less than 1%
(1) As used herein, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of
1934, as amended, as consisting of sole or shared voting power
(including the power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the
disposition of) with respect to the security through any contract,
arrangement, understanding, relationship or otherwise, including a
right to acquire such power(s) during the next 60 days. Unless
otherwise noted, beneficial ownership consists of sole ownership,
voting and investment rights.
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(2) Except as set forth in the footnotes to this table, the business
address of each director and executive officer listed is c/o DynTek,
Inc., 18881 Von Karman Avenue, Irvine, California 92612.
(3) For DynCorp, includes 7,500,000 warrants to acquire Common Stock at
$4.00 per share.
(4) Includes 1,140,310 shares that Mr. Ardinger has the right to acquire
under an agreement with ViewCast, Inc. and 1,279,550 shares under
publicly-traded Class A warrants.
(5) For the Estate of Mr. Kassner, includes 40 shares of Common Stock
underlying the our publicly-traded Class A Warrants and 100,000 shares
of Common Stock underlying Warrants granted in connection with certain
financial accommodations granted by Mr. Kassner related to the release
of security interests in our assets.
(6) Includes options to purchase 895,000 shares of Common Stock exercisable
at prices ranging from $1.25 to $2.25 per share granted to Mr. Ross
under the DynTek 1992 and 2001 Employee Stock Option Plans, 10,000
shares of Common Stock underlying options granted at $2.81 per share
under the DynTek 1997 Non-Employee Director's Stock Option Plan, 19,845
shares of Common Stock which are issuable upon conversion of 7,938
shares of Preferred Stock, and 49,000 shares of Common Stock underlying
options to purchase 19,600 shares of Preferred Stock with strike prices
of $1.69 per share.
(7) Includes 141,883 shares of Common Stock which are issuable to Dr.
Grieves upon conversion of 56,753 shares of Preferred Stock held by
him. Also includes beneficial ownership of options to purchase 90,846
shares of Common Stock at prices between $0.957 to $13.52 per share,
upon exercise of options to purchase 36,642 shares of Preferred Stock.
Also includes 20,000 options exercisable for Common Stock (10,000
exercisable at $2.25 per share of Common Stock and 10,000 exercisable
at $1.75 per share of Common Stock) granted to Dr. Grieves under the
DynTek 1997 Non-Employee Director's Stock Option Plan.
(8) Includes 40,000 options granted to Mr. Linesch (10,000 exercisable at
$1.81 per share of Common Stock, 10,000 exercisable at $0.97 per share
of Common Stock, 10,000 exercisable at $3.78 per share of Common Stock,
10,000 exercisable at $2.81 per share of Common Stock) under the DynTek
1997 Non-Employee Director's Stock Option Plan, and includes 8,750
shares of Common Stock which are issuable to Mr. Linesch upon
conversion and 3,500 shares of Preferred Stock held by him, includes
options to purchase 390,000 shares of Common Stock granted to Mr.
Linesch at prices ranging from $1.25 to $3.00 under the DynTek 1992 and
2001 Employee Stock Option Plans.
(9) Includes 253,315 shares of Common Stock held by Mr. Bookmeier. Also
includes options to purchase 60,000 shares of Common Stock granted
under the DynTek 1997 Non-Employee Directors' Stock Option Plan (20,000
exercisable at $3.78 per share of Common Stock, 10,000 exercisable at
$0.97 per share of Common Stock, 10,000 exercisable at $2.81 per share
of Common Stock and 10,000 exercisable at $2.25 per share of Common
Stock, 10,000 exercisable at $0.07 per share of Common Stock).
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(10) Includes 15,000 options to purchase 15,000 shares of Common Stock
granted to Mr. Kalpaxis at $2.04 per share under the DynTek 2001
Employee Stock Option Plan.
(11) Includes 100,000 options to purchase shares of Common Stock at $3.00
per share issued to Mr. Toplansky for services rendered and 30,000
options to purchase shares of Common Stock granted at $1.00 per share
under the DynTek 2001 Employee Stock Option Plan
(12) Includes options to purchase 4,900 shares of Preferred Stock with
strike prices between $5.63 and $2.40 per share, and options to
purchase 50,000 shares of Common Stock granted prices between $2.04 and
$1.25 per share under the DynTek 1992 and 2001 Employee Stock Option
Plans.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the
three-year period ended June 30, 2002 to the chief executive officer of DynTek
and the other four most highly paid executive officers of DynTek whose annual
salary and bonus exceeded $100,000 for all services rendered to DynTek during
each such annual period.
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SUMMARY COMPENSATION
Annual
Compensation Long Term Compensation
------------ ----------------------
Other
Annual Restricted All Other
Fiscal Compen- Stock Options/ LTIP Compen-
Name and Position Year Salary($) Bonus($) sation Awards SARs (#) Payouts sation
----------------- ---- --------- -------- ------- ------ -------- ------- ------
Steven J. Ross 2002 $376,000 $205,000 $70,000 -- 75,000 -- $40,431(c)
President, Chief 2001 $175,000 -- $25,000 -- 810,000 -- --
Executive Officer and 2000(a) $143,000 -- -- -- -- -- --
Chairman of the Board
James Linesch 2002 $179,000 $ 75,000 -- -- 45,000 -- $ 6,321(c)
Chief Financial Officer, 2001(b) $138,000 $ 10,000 $25,000 -- 335,000 -- --
Executive Vice President 2000 -- -- -- -- -- --
and Director
Wade Stevenson 2002 $129,000 $ 20,000 -- -- 20,000 -- --
Vice President 2001 $ 98,990 $ 26,000 -- -- -- -- --
Finance 2000 $ 73,337 $ 13,500 -- -- -- -- --
Arion Kalpaxis 2002 $176,000 -- -- -- 15,000 -- --
Chief Technology 2001 $153,798 -- -- -- -- -- --
Officer 2000 $140,000 -- -- -- -- -- --
a) On May 15, 2000, we entered into a consulting agreement with Mr. Ross,
which replaced a previous agreement that he had with BugSolver.com,
Inc., a DynTek subsidiary. The agreement provided for a monthly
consulting fee of $23,000. Mr. Ross subsequently entered into an
Employment Agreement with us in January 2001 and his consulting
agreement was terminated. On December 10, 2001, we entered into a new
employment agreement with Mr. Ross which replaced the prior agreement.
For terms of this agreement se the section entitled "Employment
Agreements."
b) Mr. Linesch entered into an employment agreement with us on August 14,
2000, at a base salary of $157,500 per year, for an annually renewable
term of one year. Mr. Linesch's base salary under the agreement was
increased to $200,000 on August 14, 2001 and he also became eligible
for bonus payments of $25,000 per quarter on that date.
c) In accordance with the terms of their employment agreements, both Mr.
Ross and Mr. Linesch are reimbursed for medical claims that are not
payable under our health plan. Since we are currently operating under a
self-insurance health plan, such reimbursements are considered as a
component of compensation.
- 12 -
Option Grants
The following table sets forth certain information, as of June 30,
2002, concerning individual grants of stock options made during the fiscal year
ended June 30, 2002 to each of the persons named in the Summary Compensation
Table above.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED JUNE 30, 2002
Number of
Securities Potential Realizable Value at
Underlying Percent of Total Assumed Annual Rates of
Options/SARs Options/SARs Exercise or Base Stock Price Appreciation
Name Granted Granted in Fiscal Year Price ($/Sh) for Option Term
---- ------- ---------------------- ------------ ---------------
(a) (b) (c) (d) 5% 10%
Steven J. Ross 75,000 8% $2.07 $8,000 $16,000
James Linesch 45,000 5% $2.09 $5,000 $ 9,000
Wade Stevenson 20,000 2% $2.04 $2,000 $ 4,000
Arion Kalpaxis 15,000 2% $2.04 $2,000 $ 3,000
The following table sets forth information concerning exercises of
stock options by each of the executive officers named in the Summary
Compensation Table during the fiscal year ended June 30, 2002 and the fiscal
year-end value of options held by such named individuals.
AGGREGATED OPTION/SAR EXERCISED IN FISCAL YEAR ENDED
JUNE 30, 2002 AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities Underlying Value of Unexercised In-The-
Unexercised Options/SARs At Fiscal Money Options/SARs At Fiscal
Shares Acquired Value Year-End (#) Year-end ($)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- -------------------------
(a) (b) (c) (d) (e)
Steven J. Ross -- 0 869,000/65,000 $497,000/$497,000
James Linesch -- 0 375,000/35,000 $124,000/$124,000
Wade Stevenson -- 0 22,000/40,000 $10,000/$11,000
Arion Kalpaxis -- 0 0/15,000 $0/$0
Employment Agreements
On December 10, 2001, we entered into an employment agreement with
Steven J. Ross, our President, Chief Executive Officer, and Chairman of the
Board, which replaced the prior employment agreement dated January 2, 2001. The
agreement is for one year and automatically renews for subsequent one-year
periods unless we provide written notice of our intention not to renew at least
six months prior to the anniversary date. The agreement includes a base salary
of $400,000 per year and quarterly bonus payments of $50,000, based on certain
criteria. The criteria for the fiscal year ended June 30, 2002 was as
established in the agreement, and in subsequent quarters the criteria is to be
established by mutual consent between Mr. Ross and the compensation committee.
Mr. Ross is also entitled to company-paid life insurance, long-term disability
and supplemental medical insurance coverage. In the event Mr. Ross is terminated
without cause, he is entitled to receive payments equal to one year's salary
plus bonus, payable one half in a lump sum at termination and one half in equal
monthly installments over 24 months. In addition, Mr. Ross is entitled to the
same compensation and stock option benefits afforded non-employee directors.
- 13 -
On August 14, 2000, we entered into an employment agreement with James
Linesch, our Chief Financial Officer and Executive Vice President. The agreement
is for one year and automatically renews for subsequent one-year periods unless
we provide written notice of our intention not to renew at least six months
prior to the anniversary date. The initial base compensation is $157,500 per
year, subject to annual increases. Mr. Linesch is also entitled to company-paid
life insurance, long-term disability and supplemental medical insurance
coverage. The base compensation was increased on August 14, 2001 to $200,000,
and Mr. Linesch became eligible for quarterly bonus payments in the amount of
$25,000, subject to the same process for establishing criteria as that for the
CEO. In the event Mr. Linesch is terminated without cause, he is entitled to
receive a payment equal 18 months salary plus potential bonus. In addition, Mr.
Linesch is entitled to the same compensation and stock option benefits afforded
non-employee directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
As of June 30, 2002, DynTek's Compensation Committee consisted of
Messrs. Mandell, Davies and Ross, with only Mr. Ross being an employee of
DynTek. For information concerning Mr. Ross' Employment Agreement, see
"Employment Agreements", above. Mr. Mandell was an executive officer and
director of DynCorp. DynCorp is DynTek's largest shareholder, owning of record
and beneficially approximately 39% of DynTek's outstanding Common Stock, on an
"as converted" basis (assuming conversion of all then outstanding shares of
Class B Common Stock and Preferred Stock) at that time. In August 2003, Messrs.
Mandell and Davies resigned from the Audit Committee and Messrs. Grieves, and
Toplansky were later appointed to the Committee.
In March 2001, the Company purchased 25% of the equity in LaborSoft
Corporation ("LaborSoft"), a company providing labor relations software to labor
unions and commercial customers. As a result of its investment, the Company
assigned Dr. Grieves to become the Chairman of the Board of Directors of
LaborSoft. The Company provides infrastructure services to LaborSoft, on a
fee-for-service basis, with monthly charges of approximately $25,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for reviewing DynTek's
compensation program. The Compensation Committee did not meet separately during
the fiscal year ended June 30, 2002 for the purpose of reviewing employee salary
issues, but its members did participate in all full Board meetings at which
employee compensation issues were discussed.
- 14 -
Compensation Philosophy
Our compensation program generally is designed to motivate and reward
DynTek's executive officers and employees for promoting financial, operational
and strategic objectives while reinforcing the overall goal of enhancing
shareholder value. Our compensation program generally provides incentives to
achieve short and long term objectives. The major components of compensation for
executive officers are base salary, bonus incentives (on an individual basis in
DynTek's discretion), and stock option grants. Each component of the total
executive officer compensation package emphasizes a different aspect of DynTek's
compensation philosophy. These elements generally are blended to provide
compensation packages which provide competitive pay, reward the achievement of
financial, operational and strategic objectives, and align the interests of our
executive officers and employees with those of DynTek shareholders.
Components of Executive Compensation
Base Salary. Base salaries for DynTek's executive officers are
determined by evaluating the responsibilities required for the position held,
individual experience and breadth of knowledge, and by reference to the
competitive marketplace for management talent.
Stock Awards. To promote our long-term objectives, all directors,
officers and employees of DynTek are eligible for grants of stock options. The
stock option awards are made to directors, officers and employees pursuant to
our 1992 Employee Stock Option Plan, as amended, and our 2001 Employee Stock
Option Plan, in the form of incentive stock options for employees and
non-qualified stock options for non-employees, and to non-employee directors
pursuant to the 1997 Non-employee Directors Stock Option Plan, in the form of
non-qualified stock options.
Stock options represent rights to purchase shares of Common Stock in
varying amounts pursuant to a vesting schedule determined by the Compensation
Committee or the full Board at a price per share specified in the option grant,
which may be less than the fair market value on the date of the grant under
certain circumstances when non-qualified options are awarded. Stock options
expire at the conclusion of a fixed term (generally 5 years).
Since the stock options may grow in value over time, these components
of our compensation plan are designed to reward performance over a sustained
period and to enhance shareholder value through the achievement of corporate
objectives. We intend that these awards will strengthen the focus of our
directors, officers and employees on managing DynTek from the perspective of a
person with an equity stake in DynTek. The number of options granted to a
particular employee is based on the position, level, competitive market data and
annual performance assessment of each employee.
Tax Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code of 1986, as amended, imposes limitations upon the federal
income tax deductibility of compensation paid to our chief executive officer and
to each of the other four most highly compensated executive officers of DynTek.
Under these limitations, we may deduct such compensation only to the extent that
during any fiscal year the compensation paid to any such officer does not exceed
$1,000,000 or meets certain specified conditions (such as certain
performance-based compensation that has been approved by our shareholders).
Based on our current compensation plans and policies and proposed regulations
interpreting the Internal Revenue Code, DynTek and the Compensation Committee
believe that, for the near future, there is not a significant risk that DynTek
will lose any significant tax deduction for executive compensation. Our
compensation plans and policies will be modified to ensure full deductibility of
executive compensation if DynTek and the Compensation Committee determine that
such an action is in the best interests of DynTek.
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COMPENSATION COMMITTEE
Michael W. Grieves
Marshall Toplansky
Steven J. Ross
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the cumulative total
shareholder return on Common Stock, based upon the market price of Common Stock
as reported by The Nasdaq Stock Market, with the cumulative total return of
companies in the Nasdaq Composite Index and the Nasdaq Computer Index for the
period from June 30, 1997 through June 30, 2002.
[Graph Omitted]
- 16 -
- ---------------------------------------------------------------------------------------------------------
6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98
- ---------------------------------------------------------------------------------------------------------
DynTek 91.67 83.33 57.30 54.17 32.30 47.93
- ---------------------------------------------------------------------------------------------------------
NASDAQ Composite Index 154.49 180.59 168.23 196.66 202.98 181.46
- ---------------------------------------------------------------------------------------------------------
NASDAQ Computer Index 176.55 209.11 184.04 229.95 252.58 253.89
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
12/31/98 3/31/99 6/30/99 9/30/99 12/31/99 3/31/00
- ---------------------------------------------------------------------------------------------------------
DynTek 33.33 33.33 130.20 83.33 94.80 132.30
- ---------------------------------------------------------------------------------------------------------
NASDAQ Composite Index 234.90 263.69 287.76 294.19 432.47 489.88
- ---------------------------------------------------------------------------------------------------------
NASDAQ Computer Index 337.40 388.21 412.40 447.34 688.91 803.57
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
6/30/01 9/30/01 12/31/01 3/31/02 6/30/02
- ---------------------------------------------------------------------------------------------------------
DynTek 93.77 68.77 29.17 37.73 78.00
- ---------------------------------------------------------------------------------------------------------
NASDAQ Composite Index 424.89 393.47 264.67 197.15 226.91
- ---------------------------------------------------------------------------------------------------------
NASDAQ Computer Index 697.28 631.69 371.84 264.16 319.60
- ---------------------------------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
In connection with the preparation and filing of DynTek's Annual Report
on Form 10-K for the year ended June 30, 2002:
The Audit Committee of the Board of Directors reviewed and discussed
the audited financial statements of DynTek with DynTek's management.
o The Audit Committee discussed with Grassi & Co., DynTek's
independent auditors, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards, AU (S) 380).
o The Audit Committee also received the written disclosures and
the letter from Grassi & Co. required by the Independence
Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees) and discussed with Grassi & Co. the independence
of that firm as DynTek's independent auditors. All audit and
non-audit services provided by Grassi & Co. were reviewed by
the Audit Committee, which considered whether the provision of
non-audit services was compatible with maintaining the
independent auditors' independence.
o Based on the Audit Committee's review and discussions referred
to above, the Audit Committee as then constituted (whose names
appear below) recommended to the Board that DynTek's audited
financial statements be included in DynTek's Annual Report on
Form 10-K for the fiscal year ended June 30, 2002 for filing
with the Securities and Exchange Commission.
- 17 -
AUDIT COMMITTEE
Michael W. Grieves
Brian Bookmeier
Marshall Toplansky
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information with respect to Certain Relationships and Related
Transactions, please see "Compensation Committee Interlocks and Insider
Participation in Compensation Decisions", above.
STOCKHOLDER PROPOSALS
Based upon the regulations of the Securities and Exchange Commission,
any stockholder who wishes to bring any proposal before a regularly scheduled
annual meeting of DynTek stockholders or to nominate a person to serve as a
director to be elected at such annual meeting shall give written notice thereof
and certain related information to DynTek at least 120 calendar days prior to
the date of DynTek's proxy statement released to stockholders in connection with
the previous year's annual meeting.
Management does not know of any matters which are likely to be brought
before the Annual Meeting other than those referred to in this Proxy Statement.
However, in the event that any other matters properly come before the Annual
Meeting, including the decision to postpone the Annual Meeting until such time
as sufficient votes necessary to take action have been received and cast, the
persons named in the enclosed proxy will vote in accordance with their judgment
on such matters.
The presiding officer at the Annual Meeting may determine that any
stockholder proposal was not permissible under or was not made in accordance
with applicable procedures or is otherwise not in accordance with law and, if he
so determines, he may refuse to allow the stockholder proposal or nomination to
be considered at the Annual Meeting.
Under the rules of the SEC, stockholder proposals intended to be
presented at the next annual meeting (to be held in 2004) must be received by
DynTek on or before January 16, 2004 to be included in the proxy statement and
proxy for that meeting. Proposals should be directed to the Corporate Secretary,
DynTek, Inc., 18881 Von Karman Avenue, Suite 250, Irvine, California 92612.
ADDITIONAL INFORMATION
The expense of preparing, assembling, printing and mailing the form of
proxy and the material used in the solicitation of proxies will be borne by
DynTek. In addition to the solicitation of proxies by use of the mails, DynTek
may utilize the services of some of its officers and regular employees to
solicit proxies personally and by telephone, telegram, letter, facsimile or
other means of communications. DynTek has requested banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy materials to
their principals and to request authority for the execution of proxies and will
reimburse such persons for their services in doing so.
- 18 -
According to SEC rules, the information presented in this Proxy
Statement under the captions "Compensation Committee Report on Executive
Compensation", "Audit Committee Report" and "Stock Price Performance" shall not
be deemed to be "soliciting material" or to be filed with the SEC under the
Securities Act of 1933 or the Securities Exchange Act of 1934 and nothing
contained in any previous filings made by DynTek under such acts shall be
interpreted as incorporating by reference the information presented under the
specified captions.
- 19 -
ANNEX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AMENDED AND RESTATED CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established: and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system
o Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal
auditing department, and the Board of Directors.
o The Audit Committee will primarily fulfill these
responsibilities by carrying out the activities enumerated in
Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, at least three of whom, subject to exceptions provided
under the Rules of the Nasdaq Stock Market, Inc., shall be independent
directors, and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
Committee shall have accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board, or at another meeting of the Board,
and shall hold office until they resign or are removed, or until their
successors shall be duly elected and qualified. Unless a Chair is elected by the
full Board, the members of the Committee may designate a Chair by majority vote
of the full Committee membership. Successors to Committee members, or vacancies
left in the Committee's composition, may be filled by vote of the Committee
members.
III. MEETINGS
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with management, the
director of the internal auditing department and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately. In addition, the Committee
or at least its Chair should meet with the independent accountants and
management quarterly to review the Corporation's financials consistent with
Section IV. 4 below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically as conditions
dictate.
2. Review the Corporation's quarterly and annual financial
statements and any reports or other financial information
submitted to any governmental body, or the public, including
any certification, report, opinion, or review rendered by the
independent accountants.
3. Review the regular internal reports to management prepared by
the internal auditing department and management's response.
4. Review with financial management and the independent
accountants the 10-Q and 10-K prior to its filing of the
quarterly (unaudited) or annual (audited) financials prior to
the release of earnings. The Chair of the Committee may
represent the entire Committee for purposes of this review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the
independent accountants, considering independence and
effectiveness, and approve the fees and other compensation to
be paid to the independent accountants. On an annual basis,
the committee should review and discuss with the accountants
all significant relationships the accountants have with the
Corporation to determine the accountants' independence.
6. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants
when circumstances warrant.
- 2 -
7. Periodically consult with the independent accountants out of
the presence of management about internal controls and the
fullness and accuracy of the organization's financial
statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the
internal auditors, review the integrity of the organization's
financial reporting processes, both internal and external.
9. Consider the independent accountants' judgments about the
quality and appropriateness of the Corporation's accounting
principles as applied in its financial reporting.
10. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices
as suggested by the independent accountants, management, or
the internal auditing department.
Process Improvement
11. Establish regular and separate systems of reporting to the
Audit Committee by each of management, the independent
accountants, and the internal auditors regarding any
significant judgments made in management's preparation of the
financial statements and the view of each as to
appropriateness of such judgments.
12. Following completion of the annual audit, review separately
with each of management, the independent accountants, and the
internal auditing department any significant difficulties
encountered during the course of the audit, including any
restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
14. Review with the independent accountants, the internal auditing
department and management the extent to which changes or
improvements in financial or accounting practices, as approved
by the Audit Committee, have been implemented. (This review
should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the
Committee.)
Ethical and Legal Compliance
15. Review management's monitoring of the Corporation's compliance
with appropriate auditing and ethical standards, and ensure
that management has the proper review system in place to
ensure that the Corporation's financial statements, reports
and other financial information disseminated to governmental
organizations and the public satisfy legal requirements.
- 3 -
16. Review activities, organizational structure, and
qualifications of the internal audit department.
17. Review, with the Corporation's counsel, legal compliance
matters (including corporate securities trading policies by
employees/management).
18. Review, with the Corporation's counsel, any legal matter that
could have a significant impact on the organization's
financial statements.
19. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or
the Board deems necessary or appropriate.
- 4 -
PROXY
DYNTEK, INC. ANNUAL MEETING OF
STOCKHOLDERS - JUNE 27, 2003
This Proxy is solicited by the Board of Directors in connection with
the Annual Meeting of Stockholders of DynTek, Inc., to be held on June 27, 2003.
Any Stockholder has the right to appoint as his proxy a person (who need not be
a stockholder) other than any person designated below, by inserting the name of
such other person in another proper form of proxy.
The undersigned, a stockholder of DynTek, Inc. (the "Corporation"),
hereby revoking any proxy hereinbefore given, does hereby appoint Steven J. Ross
and James Linesch, or either of them, as his proxy with full power of
substitution, for and in the name of the under-signed to attend the Annual
Meeting of Stockholders to be held on June 27, 2003 at the Corporation's
executive offices, 18881 Von Karman Avenue, Suite 250, Irvine, CA, at 10:00
A.M., Pacific Standard Time and at any adjournments thereof, and to vote upon
all matters specified in the notice of said meeting, as set forth herein, and
upon such other business as may properly come before the meeting, all shares of
stock of said Corporation which the undersigned would be entitled to vote if
personally present at the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES
WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR IDENTIFIED BELOW AND FOR ALL
PROPOSALS.
(Continued and to be signed on the reverse side)
- 5 -
| |
v Please detach and mail in the envelope provided. v
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL DIRECTORS AND "FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
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FOR AGAINST ABSTAIN
1. ELECTION DIRECTORS: Election of the following proposed 2. Ratify the Appointment of Marcum & Kliegman [ ] [ ] [ ]
directors to hold office until the next Annual Meeting LLP as independent auditors for the
of Stockholders or until their successors shall be Corporation for the fiscal year ending
elected and shall qualify: June 30, 2003.
NOMINEES:
|_| FOR ALL NOMINEES ( ) Brian D. Bookmeier 3. In their discretion, the proxies are [ ] [ ] [ ]
( ) Michael Grieves authorized to vote upon such other business
|_| WITHHOLD AUTHORITY ( ) Marshall Toplansky as may properly come before the Annual
FOR ALL NOMINEES ( ) Steven J. Ross Meeting or any adjournment thereof. Such
( ) James Linesch. discretionary authority granted to the
|_| FOR ALL EXCEPT proxies shall specifically include the right
(See Instruction Below) to vote in favor of adjournment of the Annual
Meeting until such time as sufficient votes
necessary to take either or both of the
actions called for under Proposal 1 and
Proposal 2 have been received and cast
therefor.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, SUCH
SHARES WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR IDENTIFIED ABOVE
AND FOR ALL PROPOSALS.
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL EXCEPT" The Board of Directors requests that you fill in the date and sign the
and fill in the circle next to each nominee Proxy and return it in the enclosed envelope.
you wish to withhold, as shown here: o
- ------------------------------------------------------------ IF THE PROXY IS NOT DATED IN THE SPACE BELOW, IT IS DEEMED TO BE DATED
ON THE DAY WHICH IT WAS MAILED BY THE CORPORATION.
- ------------------------------------------------------------
To change the address on your account, please check
the box at right and indicate your new address in
the address space above. Please note that changes |_|
to the registered name(s) on the account may not be
submitted via this method
- ------------------------------------------------------------
------------------------ ----------- ------------------------ -----------
Signature of Stockholder Date: Signature of Stockholder Date:
------------------------ ----------- ------------------------ -----------
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Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee, or guardian, please give full title as such. If the signer is a
corporation, please sign in full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person(s).
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- 6 -