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 (AMENDMENT NO. )
Filed by the Registrant [x]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ECHOSTAR COMMUNICATIONS CORPORATION
---------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ECHOSTAR COMMUNICATIONS CORPORATION
---------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
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______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
(5) Total fee paid:
______________________________________________________________________
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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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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_____________________________________________________________________
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_____________________________________________________________________
(4) Date Filed:
_____________________________________________________________________
- --------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
ECHOSTAR COMMUNICATIONS CORPORATION LETTERHEAD
August 13, 1997
DEAR SHAREHOLDER:
It is a pleasure for me to extend to you an invitation to attend the 1997
Annual Meeting of Shareholders of EchoStar Communications Corporation
("EchoStar" or the "Corporation"). The Annual Meeting will be held on Friday,
September 12, 1997, at 10:00 a.m. at the Corporation's headquarters located at
90 Inverness Circle East, Englewood, Colorado 80112.
The enclosed Notice of Meeting and Proxy Statement describes the proposals
to be considered and voted upon at the Annual Meeting. During the Annual
Meeting, we will also review EchoStar's operations and other items of general
interest regarding the Corporation.
We hope that all shareholders will be able to attend the Annual Meeting. If
you plan to attend, please check the appropriate box on your proxy card. Whether
or not you plan to attend the Annual Meeting personally, it is important that
you be represented. To ensure that your vote will be received and counted,
please promptly complete, date and return your proxy card in the enclosed return
envelope.
On behalf of the Board of Directors and Management, I would like to express
our appreciation for your support and interest in EchoStar Communications
Corporation. I look forward to seeing you at the Annual Meeting.
/s/ CHARLES W. ERGEN
--------------------
CHARLES W. ERGEN
President and Chief
Executive Officer
ECHOSTAR COMMUNICATIONS CORPORATION LETTERHEAD
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ECHOSTAR COMMUNICATIONS CORPORATION:
Please take notice that the Annual Meeting of Shareholders of EchoStar
Communications Corporation ("EchoStar" or the "Corporation") will be held on
Friday, September 12, 1997, at 10:00 a.m. at the Corporation's headquarters
located at 90 Inverness Circle East, Englewood, Colorado 80112, to consider and
vote upon the following proposals:
1. Election of five directors of the Corporation;
2. Approval of the 1997 Employee Stock Purchase Plan (as defined herein)
and the reservation for issuance of 100,000 shares of EchoStar's Class
A Common Stock, $0.01 par value ("Class A Shares") thereunder;
3. Ratification of the appointment of Arthur Andersen LLP as the
independent accountants of the Corporation for the fiscal year ending
December 31, 1997; and
4. Transaction of such other business as may properly come before the
Annual Meeting.
Only shareholders of record at the close of business on August 6, 1997 will
be entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors
/s/ DAVID K. MOSKOWITZ
----------------------
DAVID K. MOSKOWITZ,
Senior Vice President, General Counsel
and Corporate Secretary
August 13, 1997
PROXY STATEMENT
OF
ECHOSTAR COMMUNICATIONS CORPORATION
General
This Proxy Statement is being furnished to the shareholders of EchoStar
Communications Corporation ("EchoStar" or the "Corporation") in connection with
the Annual Meeting of Shareholders of the Corporation (the "Annual Meeting") to
be held on Friday, September 12, 1997, at 10:00 a.m. at the Corporation's
headquarters located at 90 Inverness Circle East, Englewood, Colorado 80112.
The mailing address of the Corporation is 90 Inverness Circle East,
Englewood, Colorado 80112. This Proxy Statement and the accompanying proxy are
first being sent or given to shareholders on or about August 13, 1997, to
shareholders of record on August 6, 1997 of the Corporation's Class A Common
Stock, $0.01 par value ("Class A Shares"), Class B Common Stock, $0.01 par value
("Class B Shares"), and 8% Series A Cumulative Preferred Stock, $0.01 par value
("Preferred Shares").
The accompanying proxy is being solicited by the Board of Directors of the
Corporation. It may be revoked by written notice given to the Corporate
Secretary at any time before being voted. Proxies in this form, properly
executed, duly sent to the Corporation and not revoked will be voted for the
election of Directors and on the other proposals described in this Proxy
Statement, in accordance with the instructions set forth in the proxy. The Board
of Directors is not aware of any matters proposed to be presented at the Annual
Meeting other than the election of Directors, the approval of the Corporation's
1997 Employee Stock Purchase Plan ("Employee Stock Purchase Plan"), and the
ratification of the appointment of Arthur Andersen LLP as the independent
accountants of the Corporation for the fiscal year ending December 31, 1997. If
any other proposal is properly presented, the persons named in the accompanying
form of proxy will have discretionary authority to vote thereon in accordance
with their best judgment. Presence at the Annual Meeting does not of itself
revoke the proxy.
Securities Entitled to Vote
Shareholders of record on August 6, 1997 are entitled to notice of the
Annual Meeting and to vote their shares at the Annual Meeting. On that date,
11,821,563 Class A Shares, 29,804,401 Class B Shares, and 1,616,681 Preferred
Shares were issued and outstanding. Each Class A Share is entitled to one vote
per share on each proposal to be considered by shareholders and each Class B
Share and Preferred Share is entitled to ten votes per share on each proposal to
be considered by shareholders.
Vote Required
The presence at the Annual Meeting of the holders of a majority of the
total voting power of the Corporation shall constitute a quorum for the
transaction of business at the Annual Meeting. The affirmative votes of a
majority of the total voting power of the Corporation present or represented by
proxy and entitled to vote at the Annual Meeting is required to approve the
Employee Stock Purchase Plan, and to ratify the appointment of Arthur Andersen
LLP as the independent accountants of the Corporation for the fiscal year ending
December 31, 1997. The affirmative vote of a plurality of the total votes cast
is necessary to elect a Director. No cumulative voting is permitted.
With respect to proposals other than the election of Directors, the
aggregate number of votes cast, i.e., those votes "for" or "against" the
proposal, but not abstentions, will be counted for purposes of determining the
minimum number of affirmative votes required for approval of the proposal, and
the total number of votes cast "for" will be counted for purposes of determining
whether sufficient affirmative votes have been cast to approve the proposal. An
abstention from voting on the proposal by a shareholder at the Annual Meeting,
as well as broker non-votes, will be considered for purposes of determining the
number of total votes present at the Annual Meeting; however, such abstentions
and broker non-votes will not be considered as votes "for" or "against" the
proposal, and will therefore not be considered in determining whether the
proposal passed.
1
Through his ownership of Class B Shares and Preferred Shares, Charles W.
Ergen, the President and Chief Executive Officer of the Corporation, possesses
more than 96% of the total voting power of the Corporation. Mr. Ergen has stated
that he will vote in favor of each proposal to be considered at the Annual
Meeting and for the election of each of the incumbent nominee Directors.
Accordingly, approval of the proposals and the election of each of the Directors
is assured notwithstanding a negative vote by shareholders other than Mr. Ergen.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, shareholders of the Corporation will elect five (5)
Directors, in each case to hold office until the next annual meeting of
shareholders of the Corporation or until their respective successors shall be
duly elected and qualified. The affirmative vote of a plurality of the total
votes cast is necessary to elect a Director. All of the nominees for Director
are now Directors of the Corporation. Each nominee has consented to his
nomination and has advised the Corporation that he intends to serve the entire
term if elected.
The Board of Directors unanimously recommends a vote FOR the
election of the nominees named herein.
(Item No. 1 on the enclosed proxy card).
The nominees for Director of the Corporation are as follows:
Name Age Position with the Corporation
- ----------------- --- ---------------------------------------------------
Charles W. Ergen 44 Chairman of the Board of Directors, Chief Executive
Officer and President
James DeFranco 44 Director and Executive Vice President
R. Scott Zimmer 40 Vice Chairman, Director and Vice President
Alan M. Angelich 53 Director
Raymond L. Friedlob 52 Director
The following sets forth the business experience of each of the nominees
over the last five years:
Charles W. Ergen. Mr. Ergen has been Chairman of the Board of Directors and
Chief Executive Officer of the Corporation since its formation. Mr. Ergen also
has been President of the Corporation since its formation with exception of the
period between February 1996 and March 1997. During the past five years, Mr.
Ergen has held various positions with the Corporation's subsidiaries including,
President and Chief Executive Officer of Echosphere Corporation ("Echosphere"),
Echonet Business Network, Inc. ("EBN") and EchoStar Satellite Corporation
("ESC"), and Director of Echosphere, Houston Tracker Systems, Inc. ("HTS"),
EchoStar International Corporation ("EIC"), ESC and EBN. Mr. Ergen, along with
his spouse and James DeFranco, was a co-founder of Echosphere in 1980.
Commencing in March 1995, Mr. Ergen also became a Director of SSE Telecom, Inc.
("SSET"), a public company principally engaged in the manufacture and sale of
satellite telecommunications equipment.
James DeFranco. Mr. DeFranco is an Executive Vice President of the
Corporation and has been a Vice President and a Director of the Corporation
since its formation and, during the past five years, has held various positions
with the Corporation's subsidiaries, including President of HTS, Echo Acceptance
Corporation ("EAC") and HT Ventures, Inc. ("HTV"), Executive Vice President of
ESC, Senior Vice President of Echosphere and EBN, and Director of Satellite
Source Inc., Echosphere, HTS, EAC, EBN and HTV. Mr. DeFranco, along with Mr.
Ergen and Mr. Ergen's spouse, was a co-founder of Echosphere in 1980.
R. Scott Zimmer. Mr. Zimmer has been a Vice Chairman of the Corporation
since November 1996 and has been a Vice President and a Director of the
Corporation since its formation. For more than the past five years, Mr. Zimmer
has managed the international operations of the Corporation and its
subsidiaries.
2
Alan M. Angelich. Mr. Angelich has been a Director of the Corporation and a
member of its Audit and Executive Compensation Committees since October 1995.
Mr. Angelich is presently a principal of Janco Partners, Inc., an investment
banking firm specializing in the telecommunications industry. From May 1982 to
October 1993, Mr. Angelich served in various executive capacities with Jones
Intercable, Inc., including Vice Chairman of its Board of Directors from
December 1988 to October 1993. From August 1990 to October 1993, Mr. Angelich
was also the Chief Executive Officer of Jones Capital Markets, Inc.
Raymond L. Friedlob. Mr. Friedlob has been a Director of the Corporation
and a member of its Audit and Executive Compensation Committees since October
1995. Mr. Friedlob is presently a member of the law firm of Friedlob Sanderson
Raskin Paulson & Tourttillott, LLC. Prior to 1995, Mr. Friedlob was a partner of
Raskin & Friedlob, P.C. where he had practiced since 1970. Mr. Friedlob
specializes in federal securities law, corporate law, leveraged acquisitions,
mergers and taxation.
Board of Directors and Committees
The Board of Directors currently has an Executive Compensation Committee
and an Audit Committee, both of which were established in October 1995. The
present members of the Audit and Executive Compensation Committee are Messrs.
Angelich and Friedlob. The principal functions of the Audit Committee are to:
(i) recommend to the Board of Directors the selection of independent public
accountants; (ii) review management's plan for engaging the Corporation's
independent public accountants during the year to perform non-audit services and
consider what effect these services will have on the independence of the
accountants; (iii) review the annual financial statements and other financial
reports which require approval by the Board of Directors; (iv) review the
adequacy of the Corporation's system of internal accounting controls; and (v)
review the scope of the independent public accountants' audit plans and the
results of the audit. The principal functions of the Executive Compensation
Committee are to approve compensation of Executive Officers of the Corporation
and to award grants under and administer the Corporation's 1995 Stock Incentive
Plan (the "Incentive Plan").
The Board of Directors held eight meetings during the fiscal year ended
December 31, 1996. The Compensation Committee held three meetings during 1996
and the Audit Committee met twice during 1996. Each Director attended at least
seventy-five percent of the aggregate of: (i) the total number of meetings of
the Board of Directors held during the period in which he has been a Director,
and; (ii) the total number of meetings held by all committees of the Board of
Directors on which he served during the periods that he served.
Directors are elected annually and serve until their successors are duly
elected and qualified. Officers serve at the discretion of the Board of
Directors.
Equity Security Ownership
The following table sets forth, to the best knowledge of the Corporation,
the beneficial ownership of the Corporation's equity securities as of June 30,
1997 by: (i) each person known by the Corporation to be the beneficial owner of
more than five percent of any class of the Corporation's capital stock; (ii)
each Director or nominee of the Corporation; (iii) each executive officer named
in the Summary Compensation Table (collectively, the "Named Executive
Officers"); and (iv) all Directors and Executive Officers as a group. Unless
otherwise indicated, each person listed in the following table (alone or with
family members) has sole voting and dispositive power over the shares listed
opposite such person's name.
3
Number of Percentage of
Name (1) Shares Class
- ------------------------------------------------------ --------- -------------
8% Series A Cumulative Preferred Stock:
Charles W. Ergen (2) ................................. 1,535,847 95.0%
James DeFranco ....................................... 80,834 5.0%
All Directors and Executive Officers as a ............ 1,616,681 100.0%
Group (ten persons)
Class A Common Stock:
Charles W. Ergen (3), (4), (5) ....................... 31,387,620 72.0%
James DeFranco (6), (4) .............................. 1,525,320 3.5%
FMR Corp. (7) ........................................ 1,186,459 2.7%
R. Scott Zimmer (8), (4) ............................. 819,836 1.9%
T. Rowe Price Associates, Inc. (9) ................... 755,000 1.7%
SSE Telecom, Inc. (10) ............................... 709,780 1.6%
Chancellor LGT Asset Management, Inc.(11) ........ 609,200 1.4%
David K. Moskowitz (12), (4) ......................... 49,521 *
Carl E. Vogel (13), (4) .............................. 35,761 *
Steven B. Schaver (14), (4) .......................... 12,781 *
All Directors and Executive Officers as a ............ 33,867,041 77.7%
Group (nine persons) (4), (14)
Class B Common Stock:
Charles W. Ergen ..................................... 29,804,401 100.0%
All Directors and Executive Officers as a ............ 29,804,401 100.0%
Group (nine persons)
- ----------
* Less than 1%.
(1) Except as otherwise noted, the address of each such person is 90
Inverness Circle East, Englewood, Colorado 80112-5300.
(2) Includes 1,125,000 Preferred Shares held in trust for the benefit of
Mr. Ergen's minor children and other members of his family. Mr.
Ergen's spouse is the trustee for that trust.
(3) Includes: (i) the right to acquire 41,428 Class A Shares within 60
days upon the exercise of employee stock options; (ii) 29,804,401
Class A Shares issuable upon conversion of Mr. Ergen's Class B Shares;
(iii) 410,847 Class A Shares issuable upon conversion of Mr. Ergen's
Preferred Shares; and (iv) 1,125,000 Class A Shares issuable upon
conversion of Preferred Shares held in trust for the benefit of Mr.
Ergen's minor children and other members of his family.
(4) Beneficial ownership percentage was calculated assuming exercise or
conversion of all Class B Shares, Preferred Shares, Warrants and
employee stock options exercisable within 60 days (collectively, the
"Derivative Securities") into Class A Shares by all holders of such
Derivative Securities. Assuming exercise or conversion of Derivative
Securities by such person, and only by such person, the beneficial
ownership of Class A Shares would be as follows: Mr. Ergen, 72.7%; Mr.
DeFranco, 12.8%, Mr. Zimmer, 6.9%; less than one percent for Mr.
Moskowitz, Mr. Vogel and Mr. Schaver, and all Officers and Directors
as a group, 78.0%.
(5) The percentage of total voting power held by Mr. Ergen is 95.8%, after
giving effect to the exercise of the Warrants and employee stock
options.
(6) Includes: (i) the right to acquire 30,417 Class A Shares within 60
days upon the exercise of employee stock options; (ii) 80,834 Class A
Shares issuable upon conversion of Mr. DeFranco's Preferred Shares;
(iii) 751 Class A Shares held as custodian for his minor children; and
(iv) 375,000 Class A Shares controlled by Mr. DeFranco as general
partner of a partnership.
(7) Based on information available to the Corporation, FMR Corp. owned
10.0% of the Class A Shares. The address of FMR Corp. is 82 Devonshire
Street, Boston, Massachusetts 02109.
(8) Includes: (i) the right to acquire 14,593 Class A Shares within 60
days upon the exercise of employee stock options; (ii) 700 Class A
Shares owned jointly with members of his family; and (iii) 100,000
Class A Shares held in trust for the benefit of Mr. Zimmer's children
and other members of his family. Mr. Zimmer's spouse is the trustee
for that trust.
4
(9) Based on information available to the Corporation, T. Rowe Price
Associates, Inc. owned 6.4% of the Class A Shares. The address of T.
Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore,
Maryland 21202.
(10) Based on information available to the Corporation, SSET owns 6.0% of
the Class A Shares. The address of SSET is 8230 Leesburg Pike, Suite
710, Vienna, Virginia 22182.
(11) Based on information available to the Corporation, Chancellor LGT
Asset Management, Inc. owned 5.2% of the Class A Shares. The address
of Chancellor LGT Asset Management, Inc. is 1166 Avenue of the
Americas, New York, New York 10036.
(12) Includes: (i) the right to acquire 41,893 Class A Shares within 60
days upon the exercise of employee stock options; (ii) 166 Class A
Shares held as custodian for his minor children; (iii) 3,000 Class A
Shares owned jointly with Mr. Moskowitz's spouse; and (iv) 1,023 Class
A Shares held as trustee for Mr. Ergen's children.
(13) Includes 247 Class A Shares owned jointly with Mr. Vogel's spouse.
(14) Includes the right to acquire 12,761 Class A Shares within 60 days
upon the exercise of employee stock options.
(15) Includes: (i) the right to acquire 177,274 Class A Shares within 60
days upon the exercise of employee stock options; (ii) 375,000 Class A
Shares held in a partnership; (iii) 1,616,681 Class A Shares issuable
upon conversion of Preferred Shares; (iv) 29,804,401 Class A Shares
issuable upon conversion of Class B Shares; (v) 101,023 Class A Shares
held in the name of, or in trust for, minor children and other family
members; and (vi) 3,947 Class A Shares owned by or jointly with family
members.
Compliance With Section 16(a) of The Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Executive Officers, Directors and persons who own more than ten
percent of a registered class of the Corporation's equity securities
(collectively, "Reporting Persons") to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of Class A Shares and other equity securities of the Corporation.
Reporting Persons are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms that are filed with the SEC. Based solely on a
review of the copies of such forms furnished to the Corporation for the 1996
fiscal year and written representations that no other reports were required,
with the exception of Mr. Angelich, Mr. Zimmer and Mr. Moskowitz, all Reporting
Persons made all required filings. Mr. Angelich filed one late Form 4 report
with the SEC in April 1997 with respect to a single transaction which occurred
in August 1996. Mr. Zimmer filed one amended Form 3 report with the SEC with
respect to a single transaction which occurred in June 1995. Mr. Zimmer also
filed one amended Form 4 report with the SEC with respect to a single
transaction which occurred in December 1996. Mr. Moskowitz filed one amended
Form 3 report with the SEC in June 1997 with respect to a single transaction
which occurred in June 1995.
5
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation Summary
Executive Officers are compensated by certain subsidiaries of the
Corporation. The following table sets forth the cash and non-cash compensation
for the fiscal years ended December 31, 1996, 1995 and 1994 for the Named
Executive Officers.
Summary Compensation Table
Long
Term
Compensation
Awards
------
Securities
Other Underlying
Name and Principal Annual Options All Other
Position Year Salary Bonus Compensation(1) (#) Compensation(2)
- --------------------------------------------------------------------------------------
Charles W. Ergen . 1996 $190,000 $ -- $ -- 17,030 $140,680
Chairman and Chief 1995 190,000 -- -- 14,705 15,158
Executive Officer 1994 177,578 -- -- 53,568 888
Carl E. Vogel (3) 1996 $166,923 $ -- $ -- $ -- 12,798
President ........ 1995 150,000 -- -- 21,641 11,346
1994 107,308 -- -- 375,776 500
R. Scott Zimmer .. 1996 $160,000 $ -- $ 36,265 -- $ 22,461
Vice Chairman and 1995 160,000 -- 88,229 14,705 32,390
Vice President ... 1994 148,006 -- 74,396 42,855 18,990
James De Franco .. 1996 $160,000 $ -- $ -- $ -- 48,990
Executive Vice ... 1995 156,923 -- -- 11,764 15,158
President and .... 1994 154,461 -- -- 42,855 1,000
Director
Steven B. Schaver 1996 $142,498 $ 11,787 $ 14,340 -- $ 12,516
Chief Operating .. 1995 116,755 21,012 4,777 23,240 10,597
Officer and Chief 1994 85,602 -- -- 10,713 --
Financial Officer
David K. Moskowitz 1996 $142,692 $ 10,000 $ -- 7,495 $ 12,994
Senior Vice ...... 1995 130,000 10,000 -- 28,048 13,270
President and .... 1994 125,384 -- -- 53,568 1,000
General Counsel
- ----------
(1) With respect to Mr. Zimmer and Mr. Schaver, "Other Annual Compensation"
includes housing and car allowances related to their overseas assignments.
While each Named Executive Officer enjoys certain other perquisites, such
perquisites do not exceed the lesser of $50,000 or 10% of each Officer's
salary and bonus.
(2) "All Other Compensation" includes amounts contributed to the Corporation's
401(k) plan and health insurance premiums paid on behalf of the Named
Executive Officers. With respect to Mr. Ergen, Mr. DeFranco and Mr. Zimmer,
"All Other Compensation" also includes payments made in connection with a
tax indemnification agreement between the Corporation and such individuals.
With respect to Mr. Zimmer, "All Other Compensation" also includes home
leave and education allowances related to his overseas assignment.
(3) Mr. Vogel tendered his resignation in March 1997.
6
The following table provides information concerning grants of options to
purchase Class A Shares of the Corporation made in 1996 to the Named Executive
Officers:
Option Grants in Last Fiscal Year
Number of Percent of
Securities Total Options Exercise
Underlying Granted to Price Per
Options Employees in Share Grant Date
Name Granted (#) 1996 ($/Sh) Expiration Date Present Value
- ---------------------------------------------------------------------------------------
Charles W. Ergen 17,030(1) 12.3% $29.36 August 1, 2006 $280,804(2)
David K. Moskowitz 7,495(1) 5.4% 26.69 August 1, 2006 127,601(2)
- ----------
(1) In August 1996, the Corporation granted options to Mr. Ergen and other
executive officers and key employees to purchase Class A Shares. The
options vest 20% on August 1, 1997, and 20% thereafter on August 1, 1998,
1999, 2000 and 2001. See "-- Stock Incentive Plan." The options expire five
years from the date on which each portion of the option first becomes
exercisable, subject to early termination in certain circumstances.
(2) Option values reflect Black-Scholes model output for options. The
assumptions used in the model were expected volatility of 62%, risk free
rate of return of 6.8%, dividend yield of 0%, and time to exercise of six
years.
The following table provides information as of December 31, 1996,
concerning unexercised options to purchase Class A Shares:
Fiscal Year End Option Values
Number of Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options at In-the-Money Options at
on Exercise Realized December 31, 1996 December 31, 1996($)(1)
-------------------------- ---------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
Charles W.Ergen .. -- $ -- 24,367 60,936 $ 268,108 $ 465,963
R. Scott Zimmer .. 17,000 300,589 3,082 37,478 16,499 384,532
Carl E.Vogel ..... 322,208 8,566,272 25,753 49,456 286,619 468,031
James DeFranco .. -- -- 19,494 35,125 228,898 372,767
Steven B. Schaver -- -- 8,931 25,022 76,524 170,486
David K. Moskowitz -- -- 27,034 62,077 289,817 480,824
- ----------
(1) The dollar value of each exercisable and unexercisable option was
calculated by multiplying the number of Class A Shares underlying the
option by the difference between the exercise price of the option and the
closing price (as quoted in the Nasdaq National Market) of a Class A Share
on December 31, 1996.
Executive Compensation Committee Interlocks and Insider Participation.
Prior to October 1995, the Corporation did not have an Executive Compensation
Committee, and its Board of Directors determined all matters concerning
executive compensation.
Director Compensation. Directors of the Corporation who are not also
employees of the Corporation receive $500 for each meeting of the Board of
Directors attended and are reimbursed for reasonable travel expenses related to
attendance at Board meetings. Directors of the Corporation who are employees are
not compensated for their services as Directors. Directors of the Corporation
are elected annually by the shareholders of the Corporation. Directors who are
not also employees of the Corporation are granted options under the 1995
7
Nonemployee Director Stock Option Plan (the "Director Plan") to acquire 1,000
Class A Shares of the Corporation upon election to the Board. Each of Messrs.
Angelich and Friedlob was granted an option to acquire 1,000 Class A Shares of
the Corporation on December 22, 1995 pursuant to the Director Plan. These
options were 100% vested upon issuance and have an exercise price of $20.25 per
share and a term of five years. Additionally, in February 1997, each of Messrs.
Angelich and Friedlob was granted an option to acquire 5,000 Class A Shares of
the Corporation. These options were 100% vested upon issuance and have an
exercise price of $17.00 and a term of five years.
Stock Incentive Plan. The Corporation adopted the Incentive Plan to provide
incentives to attract and retain Executive Officers and other key employees. The
Corporation's Executive Compensation Committee administers the Incentive Plan.
Key employees are eligible to receive awards under the Incentive Plan, in the
Committee's discretion.
Awards available under the Incentive Plan include: (i) common stock
purchase options; (ii) stock appreciation rights; (iii) restricted stock and
restricted stock units; (iv) performance awards; (v) dividend equivalents; and
(vi) other stock-based awards. The Corporation has reserved up to 10.0 million
Class A Shares for granting awards under the Incentive Plan. Under the terms of
the Incentive Plan, the Executive Compensation Committee retains discretion,
subject to plan limits, to modify the terms of outstanding awards and to reprice
awards.
Pursuant to the Incentive Plan, the Corporation has granted options to its
Executive Officers and other key employees for the purchase of a total of
1,303,147 Class A Shares. These options generally vest at the rate of 20% per
year, commencing one year from the date of grant and 20% thereafter on each
anniversary of the date of grant. The exercise prices of these options, which
have always been equal to or greater than the fair market value at the date of
grant, have ranged from $9.33 to $29.36 per Class A Share. Effective July 1,
1997, the Executive Compensation Committee voted to reprice all outstanding
options with an exercise price greater than $17.00 per Class A Share to $17.00
per Class A Share. The price to which the options were repriced exceeded the
fair market value of a Class A Share as of the date of repricing. Options to
purchase approximately 288,000 Class A Shares were affected by this repricing.
The Executive Compensation Committee and the Board of Directors indicated that
they would not typically consider reducing the exercise price of previously
granted options. However, the Executive Compensation Committee and the Board of
Directors recognized that certain recent events beyond the reasonable control of
the employees of the Company (including particularly the failed transaction with
The News Corporation Limited) had significantly reduced the incentive those
options were intended to create. It is the expectation of the Executive
Compensation Committee and the Board of Directors that by reducing the exercise
price of these options, the intended incentive will be restored.
Launch Bonus Plan. In connection with the launch of EchoStar I, effective
December 15, 1995, the Corporation granted a performance award of ten Class A
Shares to all full-time employees with more than 90 days of service. The total
number of shares granted relative to the performance award approximated 4,900
shares. In connection with the launch of EchoStar II, effective September 9,
1996, the Corporation granted a performance award of ten Class A Shares to all
full-time employees with more than 90 days of service. The total number of
shares granted relative to the performance award approximated 7,390 shares. The
Corporation expects to grant a performance award of ten Class A Shares to all
full-time employees with more than 90 days of service in connection with the
launch of EchoStar III. The total number of shares to be issued will not be
determinable until immediately prior to the launch of EchoStar III. EchoStar III
is expected to be launched in September 1997.
401(k) Plan. In 1983, the Corporation adopted a defined- contribution
tax-qualified 401(k) plan. The Corporation's employees become eligible for
participation in the 401(k) plan upon completing six months of service with the
Corporation and reaching age 21. 401(k) plan participants may contribute an
amount equal to not less than 1% and not more than 15% of their compensation in
each contribution period. The Corporation may make a 50% matching contribution
up to a maximum of $1,000 per participant per calendar year. The Corporation may
also make an annual discretionary profit sharing or employer stock contribution
to the 401(k) plan with the approval of the Board of Directors.
401(k) plan participants are immediately vested in their voluntary
contributions, plus actual earnings thereon. The balance of the vesting in
401(k) plan participants' accounts is based on years of service. A participant
becomes 10% vested after one year of service, 20% vested after two years of
service, 30% vested after three years of service, 40% vested after four years of
service, 60% vested after five years of service, 80% vested after six years of
service, and 100% vested after seven years of service.
8
In March 1997, the Corporation contributed an additional 55,000 Class A
Shares to the 401(k) plan as a discretionary employer stock contribution. A
total of 60,000 Class A Shares (including 5,000 Class A Shares which were
contributed for plan year 1995 but not allocated) were allocated to individual
participant 401(k) accounts in proportion to their 1996 eligible compensation.
These shares are subject to the seven-year vesting schedule previously
described. Class A Shares allocated to the 401(k) accounts of the Named
Executive Officers pursuant to the 1996 discretionary employer stock
contribution were as follows: (i) Charles W. Ergen, 677 shares; (ii) Carl E.
Vogel; 677 shares (iii) R. Scott Zimmer, 677 shares; (iv) James DeFranco 677
shares; (v) Steven B. Schaver 676 shares ; (vi) David K. Moskowitz, 677 shares
and (vi) all Officers and Directors as a group, 4,736 shares.
Performance Graph
The graph on the following page sets forth the cumulative total shareholder
return (assuming reinvestment of dividends) to the Corporation's shareholders
during the period from June 21, 1995 to December 31, 1996. The graph appearing
below assumes the investment on June 21, 1995 (the date of the Corporation's
initial public offering) of $100 in Class A Shares of the Corporation, the
Nasdaq Stock Market Index, and two industry peer groups. The peer group used in
the Company's 1995 Proxy Statement consisted of Adelphia Communications
Corporation, American Telecasting, Inc., Century Communications Corporation,
Falcon Cable Systems Company, People's Choice TV Corporation and Tee-Comm
Electronics, Inc. ("Old Industry Peer Group"). Stock price performance data for
the Old Industry Peer Group for 1996 is presented below for comparative
purposes. In 1996, the Company broadened its industry peer group to include, in
addition to the companies included in the Old Industry Peer Group, additional
subscription television service companies. Such additional companies include
Cablevision Systems Corporation, CAI Wireless Systems, Inc., Heartland Wireless
Communications, Inc., Jones Intercable, Inc., Tele-Communications, Inc., US WEST
Media Group, United States Satellite Broadcasting Company, Inc., Wireless Cable
of Atlanta, Inc., and Wireless One, Inc. ("New Industry Peer Group"). Falcon
Cable Systems Company is not included in the New Industry Peer Group as that
entity was delisted during 1996. Although the companies included in the industry
peer groups were selected because of similar industry characteristics, they are
not entirely representative of the Corporation's business.
9
STOCK PRICE PERFORMANCE GRAPH
WHICH REFLECTS THE VALUES OF THE FOLLOWING TABLE
IS OMITTED HERE
Total Return Analysis 6/21/95 12/29/95 6/28/96 12/31/96
--------------------- ------- -------- ------- --------
EchoStar Communications ........ $ 100.00 $ 142.65 $ 166.18 $ 129.41
Corporation
Old Industry Peer Group ........ 100.00 95.69 97.55 56.63
New Industry Peer Group ........ 100.00 86.62 86.27 65.37
Nasdaq Composite (US) .......... 100.00 113.63 128.19 139.80
The graph appearing on the preceding page shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Corporation
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
10
REPORT ON EXECUTIVE COMPENSATION
General. The foundation of the Corporation's compensation policy is to
offer compensation packages to attract, retain and motivate Executive Officers
over the long term. Prior to 1996, the compensation of Executive Officers was
reviewed and approved annually by the President and Chief Executive Officer of
the Corporation, Charles W. Ergen. Beginning in 1996, executive compensation is
reviewed by the Executive Compensation Committee (the "Committee"). The two
general elements in the Corporation's executive compensation program consist of
base salary and long- term incentive compensation in the form of stock options
and other awards offered under the Corporation's Incentive Plan.
Base Salaries. Annual base salaries paid to the Corporation's Executive
Officers have historically been fixed at levels below amounts paid to Executive
Officers with comparable experience and responsibilities at other companies
engaged in the same or similar business as the Corporation and with other
companies of similar size. Changes in annual base salaries paid to Executive
Officers are reviewed annually by the Committee and determined based on
recommendations from the President and Chief Executive Officer. Prior to
formation of the Committee in October 1995, changes in the base salaries of
Executive Officers were reviewed by Mr. Ergen annually. Factors considered by
Mr. Ergen in making his recommendation to the Committee are typically based on
his perception of the individuals performance, success in achieving personal and
company goals, and planned changes in responsibilities. Changes in the
profitability of the Corporation and the market value of its securities are
typically not considered in setting Executive Officer base compensation;
however, an individual's extraordinary efforts resulting in tangible increases
in corporate, division or department profitability are considered by Mr. Ergen
in determining increases in base salary.
Stock Option Awards. Stock option grants under the Incentive Plan are
designed to provide an additional incentive to attract and retain Executive
Officers. In addition, stock options provide an incentive to Executive Officers
to increase shareholder value on a sustained basis. Management believes that
Executive Officers and other key employees, who are in a position to make a
substantial contribution to the long-term success of the Corporation and to
build shareholder value, should have a stake in the Corporation's ongoing
success. This focuses attention on managing the Corporation as an owner with an
equity position in the Corporation's business and seeks to align the key
employee's interest with the long-term interests of shareholders. Stock options
represent an important part of the Corporation's compensation program for
Executive Officers, and, similar to other growing technology companies,
represents a significant component of overall compensation.
Awards under the Incentive Plan follow a review of the individual
employee's performance, tenure and position in the Corporation, and long-term
potential contribution to the Corporation. Generally, the number of options
granted to an employee is based on a dollar value divided by the fair market
value per Class A Share as reported in the Nasdaq's National Market System on
the date of grant. For example, a key employee may be granted $25,000 worth of
stock options, which at $20.00 per Class A Share results in the grant of options
to purchase 1,250 Class A Shares of stock.
The dollar value awarded to key employees has typically ranged from $25,000
to $500,000 and is generally determined based on the key employee's level of
responsibility, position in the Corporation, potential to contribute to the
long-term success of the Corporation or otherwise achieve significant corporate
goals and the number of options previously granted to the employee. Neither
Management nor the Board assign specific weights to these factors, although the
employee's position and a subjective evaluation of his performance are
considered most important. Awards are generally made to Director level and above
employees, although in certain circumstances grants are made to certain other
employees based on length of service or contribution to the Corporation.
To encourage key employees to remain in the employ of the Corporation or
its subsidiaries, options granted under the Incentive Plan to date generally
vest and become exercisable over a five-year period. Options granted under the
Incentive Plan generally are not exercisable until one year after the date of
grant.
Stock options were awarded under the Incentive Plan to key employees on
August 1, 1996. In connection with these grants, the Corporation's President and
Chief Executive Officer, in consultation with members of the Board of Directors,
determined the recipients of stock options taking into account the respective
scope of accountability, strategic and operational goals and contribution of
each recipient.
11
Compensation of Chief Executive Officer. The compensation payable to
Charles W. Ergen, the Corporation's President and Chief Executive Officer, is
generally fixed at a level which the Committee believes is substantially below
amounts paid to Chief Executive Officers at other companies engaged in the same
or similar business as the Corporation.
Mr. Ergen's base salary for each of fiscal 1996 and fiscal 1995 was
$190,000. Prior to 1996, changes in Mr. Ergen's base salary were determined by
Mr. Ergen in consultation with members of the Board of Directors, taking into
consideration subjective factors generally unrelated to the Corporation's level
of profitability or the market value of the Corporation's securities. Beginning
in 1996, changes in the base salary of Mr. Ergen are reviewed annually by the
Committee based on recommendations from the Board of Directors.
Mr. Ergen was granted an option to purchase 17,030 Class A Shares in August
1996, representing approximately 39.4% of the total options granted to Executive
Officers on that occasion, and approximately 12.3% of the total stock options
granted to key employees during all of fiscal 1996. The number of options
granted to Mr. Ergen in 1996 reflected his length of service and contribution to
the Corporation, among other factors.
The report of the Committee shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that the Corporation specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
Respectfully submitted,
The Committee
Alan M. Angelich
Raymond L. Friedlob
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain subsidiaries of the Corporation have agreed to indemnify Charles W.
Ergen, Chairman, Chief Executive Officer and President of the Corporation, James
DeFranco, Executive Vice President of the Corporation, R. Scott Zimmer, Vice
Chairman and Vice President of the Corporation, and Cantey M. Ergen, a former
Director of HTS and the spouse of Charles W. Ergen, for any adjustments to such
individuals' federal, state or local income taxes resulting from adjustments to
the Corporation's subsidiaries' taxable income or loss, tax credits or tax
credit recapture for years during which such individuals were shareholders of
such subsidiaries and such subsidiaries elected to be taxed as Subchapter S
corporations. This indemnity agreement also covers interest, penalties and
additions to tax, as well as fees and expenses, including attorneys' and
accountants' fees, if any. This indemnity agreement resulted in 1996 taxable
income to Messrs. Ergen, DeFranco, and Zimmer of approximately $128,000, $36,000
and $10,000, respectively. See Executive Compensation and Other Information.
As of December 31, 1996, accrued dividends on the Preferred Shares of the
Corporation payable to Messrs. Ergen and DeFranco aggregated $3.1 million and
$167,000, respectively.
Since March 1995, Mr. Ergen has served on the Board of Directors of SSET.
In 1994, the Corporation purchased $8.75 million of SSET's seven-year, 6.5%
subordinated convertible non- recourse debentures. In December 1994, DirectSat
Corporation, a subsidiary of SSET, was merged with a wholly-owned subsidiary of
the Corporation. As a result of this merger, SSET acquired 800,780 Class A
Shares of the Corporation. On September 6, 1996, SSET repurchased $3.5 million
of the outstanding convertible debentures and paid all outstanding accrued
interest through that date. As of December 31, 1996, the SSET debentures, if
converted, would have represented approximately 5% of SSET's outstanding common
stock. The total amount owed by SSET to the Corporation as of December 31, 1996
related to the convertible debentures was approximately $3.6 million, including
accrued interest.
13
PROPOSAL NO. 2 APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors believes it is in the interests of the Corporation
to encourage stock ownership by employees of the Corporation. Accordingly, the
Board of Directors has approved the establishment of an employee stock purchase
plan (the "Plan"). On August 11, 1997, the Board of Directors adopted, subject
to shareholder approval, the Plan and reserved a total of 100,000 Class A Shares
for issuance thereunder. Set forth below is a summary of the essential features
of the Plan. This summary does not purport to be complete and is subject to, and
qualified by, reference to all provisions of the Plan, a copy of which may be
obtained from the Corporation at no charge upon written request.
Subject to adjustment by the Board of Directors, the purchase price of each
Class A Share purchased by employees under the Plan will be eighty-five percent
(85%) of the closing price of the Class A Shares on the last business day of
each calendar quarter in which such Class A Shares are deemed sold to an
employee under the Plan. In the event that such day is not a date on which
trading occurred on the Nasdaq Stock Market, then the day for calculation of the
purchase price shall be the nearest prior business day on which trading occurred
on the Nasdaq Stock Market. The shares will be issued from the shares authorized
for issuance under the Plan or treasury stock, and the Corporation will pay all
transaction costs.
Administration and Eligibility. The Plan will be administered by a
Committee appointed by the Corporation's Board of Directors, by an individual
appointed by the Corporation's Board of Directors, or by the Board of Directors
itself (the "Committee"). The Committee has the plenary authority to interpret
and construe all provisions of the Plan. The Plan shall begin on October 1,
1997, or as otherwise decided by the Committee. All employees who have been
employed by the Corporation for at least one calendar quarter are eligible to
participate in the Plan, except for employees whose customary employment is
twenty hours or fewer per week. As of July 1, 1997, approximately 1,100
employees were eligible to participate in the Plan.
Participation Terms. An eligible employee may elect to participate in the
Plan by completing and submitting an authorization for payroll deduction form.
No interest shall be paid on payroll deductions under the Plan and no withdrawal
is permitted from the Plan prior to the end of a calendar quarter. An employee
cannot have deducted an amount which would (a) result in the employee owning,
after the purchase of Class A Shares in any calendar quarter under the Plan,
five percent or more of the total combined voting power of all outstanding
capital stock of the Corporation, or (b) permit such employee to purchase
capital stock of the Corporation under all stock purchase plans of the
Corporation at a rate which would exceed $25,000 in fair market value of capital
stock in any one year.
At the end of each calendar quarter, each employee shall be deemed to have
purchased the number of Class A Shares equal to the total amount of such
employee's payroll deductions during such calendar quarter, divided by the per
share purchase price. Employees may purchase Class A Shares only through payroll
deductions under the Plan.
Amendment and Termination. The Board of Directors of the Corporation may
amend the Plan at any time. However, no amendments shall be made without the
prior approval of the shareholders of the Corporation if such amendment would
(a) increase the number of Class A Shares available under the Plan, or (b)
change the classification of employees eligible to participate in the Plan.
The Plan shall terminate upon the first to occur of (i) ten years from the
date the Plan is initially approval by the shareholders of the Company; or (ii)
the date on which the Plan is terminated by the Board of Directors.
Federal Income Tax Consequences. The Plan is intended to be an "employee
stock purchase plan" as defined in Section 423 of the Internal Revenue Code of
1986, as amended, which provides that an employee does not have to pay any
federal income tax upon joining the Plan or upon receiving Class A Shares
therefrom. The employee is, however, required to pay federal income tax on the
difference, if any, between the price at which he or she sells shares received
under the Plan and the price he or she paid for them.
Plan Benefits. The Corporation cannot now determine the exact number of
shares to be issued under the Plan to the Named Executive Officers, all current
executive officers as a group or all employees (including executive officers) as
a group.
14
Vote Required. The affirmative vote of the holders of a majority of the
outstanding Class A Shares entitled to vote at the Annual Meeting and present in
person or represented by proxy at the Annual Meeting is required to approve the
Plan.
In the opinion of the management of the Corporation, adoption of the Plan
will benefit the Corporation and the shareholders.
The Board of Directors unanimously recommends a vote FOR approval
of the 1997 Employee Stock Purchase Plan and the reservation of
100,000 Class A Shares thereunder.
(Item No. 2 on the enclosed proxy card).
15
PROPOSAL NO. 3 - RATIFICATION OF INDEPENDENT ACCOUNTANTS
Since 1988, the firm of Arthur Andersen LLP, independent accountants, has
examined and reported on the financial statements of the Corporation. The Board
of Directors of the Corporation has appointed, subject to the approval of its
shareholders, Arthur Andersen LLP as the independent accountants of the
Corporation for the fiscal year ending December 31, 1997. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting and will
have the opportunity to make any statements they may desire. They also will be
available to respond to appropriate questions of the shareholders.
If a quorum is present, the affirmative vote of a majority of the total
voting power of the Corporation present or represented by proxy and entitled to
vote at the Annual Meeting is required to approve the appointment of Arthur
Andersen LLP as independents accountants.
The Board of Directors unanimously recommends a vote FOR ratification
of this appointment.
(Item No. 3 on the enclosed proxy card).
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of shareholders intended to be submitted at the 1998 Annual
Meeting of Shareholders must be received by the Corporation at the above address
no later than January 6, 1998 to be eligible for inclusion in the Corporation's
proxy statement and the accompanying proxy for such meeting.
MISCELLANEOUS
Cost of Proxy Statement. The cost of the solicitation of proxies will be
borne by the Corporation. In addition to the use of the mails, proxies may be
solicited personally, by telephone or by a few regular employees of the
Corporation without additional compensation. The Corporation does not expect to
pay any compensation for the solicitation of proxies but will reimburse
brokerage firms, custodians, nominees, fiduciaries and other persons holding
stock in their names, or in the names of nominees, at approved rates, for their
expenses in forwarding proxy materials to beneficial owners of securities held
of record by such persons and obtaining their proxies.
Additional Information and Information Incorporated by Reference. The
Corporation's Annual Report on Form 10-K for its fiscal year ended December 31,
1996 ("Form 10-K"), filed with the Commission on March 31, 1997, is incorporated
herein by reference and attached hereto. Shareholders should carefully review
the Form 10-K prior to deciding how to vote their shares in connection with the
matters set forth in this Proxy Statement.
OTHER BUSINESS
Management knows of no other business that will be presented to the Annual
Meeting of Shareholders other than that which is set forth in this Proxy
Statement.
By Order of the Board of Directors
/s/ DAVID K. MOSKOWITZ
----------------------
DAVID K. MOSKOWITZ,
Senior Vice President, General
Counsel and Corporate Secretary
16
PROXY ECHOSTAR COMMUNICATIONS CORPORATION PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David K. Moskowitz and Steven B. Schaver,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote as designated below, all the shares of Class A Shares of
EchoStar Communications Corporation, held of record by the undersigned on August
6, 1997, at the Annual Meeting of Shareholders to be held on September 12, 1997,
or any adjournment thereof.
1. ELECTION OF FIVE DIRECTORS.
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all the nominees listed below
Charles W. Ergen James DeFranco R. Scott Zimmer
Raymond L.Friedlob Alan M. Angelich
(INSTRUCTION: To withhold authority to vote for an individual nominee, cross
out that nominee's name above.)
2. PROPOSAL TO APPROVE THE 1997 EMPLOYEE STOCK PURCHASE PLAN
AND RESERVE FOR ISSUANCE 100,000 CLASS A SHARES THEREUNDER.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL
BE VOTED FOR THE ELECTION OF EACH OF THE FIVE (5) DIRECTORS SET FORTH ABOVE, FOR
THE APPROVAL OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN AND FOR THE RATIFICATION
OF ARTHUR ANDERSEN AS THE CORPORATION'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1997. THIS PROXY CONFERS DISCRETIONARY AUTHORITY WITH
RESPECT TO PROPOSALS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement furnished herewith.
Dated ______________________ ,1997
__________________________________
Signature
__________________________________
Signature if held jointly
Signatures should agree with the name(s)
stenciled hereon. Executors, administrators,
trustees, guardians and attorneys should
indicate when signing. Attorneys should
submit powers of attorney.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. THE
TENDER OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING OR TO SUBMIT A LATER DATED REVOCATION OR AMENDMENT TO THIS PROXY ON ANY
OF THE ISSUES SET FORTH ABOVE.
