SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
COTELLIGENT, INC.
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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COTELLIGENT, INC.
100 THEORY, SUITE 200
IRVINE, CALIFORNIA 92612
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held ______________, 2003
To the Stockholders:
The Annual Meeting of Stockholders of Cotelligent, Inc. ("Cotelligent" or
the "Company") will be held at __________________ in Irvine, California on the
____ day of _____________ at ________, Pacific Daylight Saving Time, for the
following purposes:
1. To elect one director to serve for the term specified in the attached
proxy statement and until his or her successor is elected and
qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record as of the close of business on ______________,
2003 are entitled to receive notice of and to vote at the meeting. A list of
such stockholders shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
ten days prior to the meeting, at the principal executive offices of the
Company, located at 100 Theory, Suite 200, Irvine, CA 92612.
By Order of the Board of Directors
Curtis J. Parker
Executive Vice President, Chief Financial Officer,
Treasurer & Assistant Secretary
Irvine, California
______________, 2003
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE. YOU MAY ALSO GRANT YOUR PROXY BY TELEPHONE OR VIA THE INTERNET
BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE YOUR SHARES OF COMMON STOCK PERSONALLY EVEN IF YOU HAVE
PREVIOUSLY SUBMITTED A PROXY.
COTELLIGENT, INC.
100 THEORY, SUITE 200
IRVINE, CALIFORNIA 92612
PROXY STATEMENT
INTRODUCTION
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Cotelligent, Inc., a Delaware corporation (the "Company" or
"Cotelligent"), for use only at the 2003 Annual Meeting of Stockholders (the
"Annual Meeting") to be held at __________________________ in Irvine, California
on the ____ day of _____________, 2003 at _____, Pacific Daylight Saving Time,
and at any adjournment thereof. The approximate date on which this Proxy
Statement and accompanying Proxy will first be given or sent to stockholders is
______________, 2003.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter by written notice to that effect to the Company, attention of
the Assistant Secretary, before the Annual Meeting, or to the Assistant
Secretary or the Inspector of Election at the Annual Meeting, or by execution
and return of a later-dated Proxy, except as to any matter voted upon before
such revocation.
A proxy card is enclosed for your use. The proxy card contains instructions
for responding either by telephone, by Internet or by mail. Any Proxy, if
received in time, properly signed and not revoked, will be voted in accordance
with the specifications made and, where no specifications are given, in the
discretion of the proxy holders, such Proxies will be voted:
o For the election of one director to serve for the term specified in
the attached Proxy Statement or until his or her successor is duly
elected or qualified.
In the discretion of the proxy holders, the Proxies will also be voted FOR or
AGAINST such other matters as may properly come before the meeting. Management
of the Company is not aware of any other matters to be presented for action at
the meeting.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on ______________,
2003 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting. The outstanding stock of
the Company on ______________, 2003 consisted of 15,068,855 shares of Common
Stock, each of which is entitled to one vote. Shares of Common Stock held by the
Company are not voted.
The presence, in person or by Proxy, of the holders of a majority of the
shares of Common Stock of the Company entitled to vote at the Annual Meeting
will constitute a quorum for the transaction of business at such meeting.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum. Assuming a quorum, the nominees receiving a
plurality of the votes of the shares of the Common Stock present in person or by
Proxy at the Annual Meeting and entitled to vote on the election of directors
will be elected as directors.
With regard to the election of the directors, only shares that are voted in
favor of the director nominee will be counted towards the achievement of a
plurality. Votes that are withheld and broker non-votes, if any, will have no
effect on the outcome of the election of the directors.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of ______________, 2003 information
regarding the beneficial ownership of the Common Stock of the Company by (i)
each person known to beneficially own more than 5% of the outstanding shares of
Common Stock, (ii) each of the Company's directors, (iii) each named executive
officer and each officer named in the Summary Compensation Table and (iv) all
executive officers and directors as a group. All persons listed have an address
c/o the Company' s principal executive offices and have sole voting and
investment power with respect to their shares unless otherwise indicated.
Shares Beneficially Owned
-------------------------
Name Number Percent
------------------------------------------------------------------------------------ --------------
James R. Lavelle (1) 1,305,308 8.4%
Daniel E. Jackson (2) 1,099,473 7.2%
Anthony M. Frank (3) 182,156 1.2%
Curtis J. Parker (4) 142,242 *
Debra J. Richardson (5) 10,000 *
Skiritai Capital LLC (6) 807,000 5.4%
All executive officers and directors as a group (5 persons) (7) 2,739,179 17.1%
*Less than 1%
(1) Includes 400,000 shares issuable upon exercise of options exercisable
within 60 days of ______________, 2003.
(2) Includes 250,000 shares issuable upon exercise of options exercisable
within 60 days of ____________, 2003.
(3) Includes 110,000 shares issuable upon exercise of options exercisable
within 60 days of ____________, 2003.
(4) Includes 136,250 shares issuable upon exercise of options exercisable
within 60 days of ____________, 2003.
(5) Includes 10,000 shares issuable upon exercise of options exercisable within
60 days of _____________, 2003.
(6) The address of the stockholder is 655 Montgomery Street, Suite 1438, San
Francisco, California, 94111. Data obtained from the stockholder's Schedule
13D filed with the Securities and Exchange Commission on June 24, 2002.
(7) Includes 906,250 shares issuable upon exercise of options exercisable
within 60 days of ____________, 2003.
2
ELECTION OF DIRECTORS
The number of directors on the Board of Directors is currently fixed at
three. Pursuant to the Company's Certificate of Incorporation and By-laws, the
Board of Directors is divided into three classes, Class I, Class II and Class
III, serving staggered three-year terms. One class of directors is elected at
each annual meeting of stockholders to serve for the following three years.
Currently there is one Class I director whose term expires in 2005, one Class
III director whose term expires in 2004, and one Class II director whose term
will expire at the Annual Meeting. James R. Lavelle was elected as a Class II
director and Mr. Lavelle has been nominated for election to the Board of
Directors to serve for a term expiring at the Annual Meeting in 2006 and until
his successor has been duly elected and qualified.
The persons named as proxies in the accompanying proxy, or their
substitutes, will vote for such nominee at the Annual Meeting. If, for any
reason not currently known, the nominee is not available for election, another
person or persons who may be nominated will be voted for in the discretion of
the proxy holders.
The following sets forth information concerning the nominee for election to
the Board of Directors, including his name, age, principal occupation or
employment during at least the past five years and the period during which such
person has served as a director of the Company.
NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS
For a Three-Year Term Expiring at the Annual Meeting in 2006:
James R. Lavelle is 52 years old and is the founder, Chairman of the Board
and Chief Executive Officer of the Company. Mr. Lavelle has served as Chief
Executive Officer since he founded the Company in 1993. From inception of the
Company until August 1995, Mr. Lavelle was also Chairman of the Board of the
Company, a position that he reassumed in April 1996. From 1985 to 1993, he was a
business consultant specializing in strategic marketing and organization
development. From 1983 to 1985, Mr. Lavelle was Senior Manager and Director of
Management Consulting Services for the San Francisco office of KPMG Main
Hurdman, an international accounting firm. Prior to that, he was Manager of
Management Consulting Services in the San Francisco office of Price Waterhouse
LLP, an international accounting firm. Mr. Lavelle has a bachelor's degree from
University of California at Santa Barbara and a Master of Business
Administration degree from Santa Clara University.
The Board of Directors unanimously recommends that you vote FOR the election of
James R. Lavelle as a director of the Company.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Member whose term expires at the Annual Meeting in 2004:
Anthony M. Frank is 72 years old and is a director of the Company. He
joined the Company in that capacity in March 1993. In September 1994, Mr. Frank
became co-founding General Partner and Chairman of Belvedere Capital Partners,
the general partner of the California Community Financial Institutions Fund, the
primary purpose of which is investing in California community banks. From 1992
to 1994, Mr. Frank was an independent financial consultant and venture
capitalist. From March 1988 to March 1992, Mr. Frank served as the Postmaster
General of the United States. From 1971 until 1988, he served as Chairman and
Chief Executive Officer of First Nationwide Bank. Mr. Frank is a graduate of
Dartmouth College and the Tuck School of Business and was an overseer of the
Tuck School of Business. He is also a director of several companies, including
The Charles Schwab Corporation, Crescent Real Estate Equities Ltd., Temple
Inland Corporation and Bedford Properties Investors.
Member whose term expires at the Annual Meeting in 2005:
Debra J. Richardson is 48 years old, and joined the Company as a director
in August 2001. Dr. Richardson joined the faculty at UC Irvine in 1987, where
she researches formal quality analysis and testing methods, has developed
leading edge tools, and worked with several companies in adopting technology to
improve the quality of critical software systems. She is currently director of
the Microelectronics Innovation and Computer Research Opportunities (MICRO), one
of the
3
University of California's Industry-Cooperative Research Programs, and is a
founding member of the UC Institute for Software Research. Dr. Richardson holds
the Ted and Janice Smith Family Foundation Endowed Chair. Dr. Richardson earned
a Doctorate of Philosophy and a Master of Science in Computer and Information
Science from the University of Massachusetts, Amherst, and received a Bachelor
of Arts degree in mathematics from Revelle College of the University of
California, San Diego.
OTHER EXECUTIVE OFFICERS OF THE COMPANY
Name Age Position
---- --- --------
Daniel E. Jackson 42 President and Chief Operating Officer
Curtis J. Parker 48 Executive Vice President, Chief Financial
Officer, Treasurer & Assistant Secretary
Daniel E. Jackson is 42 years old and is President and Chief Operating
Officer of the Company. Mr. Jackson served as a director of the Company from
September 1999 until May 2002. Mr. Jackson was promoted to the position of
President and Chief Operating Officer in July 2000. Mr. Jackson served as
Executive Vice President, Chief Financial Officer and Treasurer from June 1999
until July 2000. From September 1995 until June 1999, Mr. Jackson served in the
capacities of Executive Vice President, Corporate Development and General
Counsel. Mr. Jackson served as Secretary from September 1996 until September
1997 and as Chief Financial Officer from November 1996 until January 1998. From
1994 to 1995, Mr. Jackson served as Vice President and General Counsel of an
affiliate of Notre Venture Capital, Ltd., a partnership specializing in industry
consolidation transactions. Prior to that, he was Corporate Counsel and
Secretary of Sanifill, Inc., an environmental services company, from its
founding in 1990 through 1994. From 1986 until 1990, Mr. Jackson was an
associate at Morgan, Lewis & Bockius LLP in New York, where he practiced law in
the areas of securities and mergers and acquisitions. Mr. Jackson received a
Bachelor of Science degree in business administration from The Ohio State
University and a Juris Doctor degree from the University of Pennsylvania.
Curtis J. Parker is 48 years old and is Executive Vice President, Chief
Financial Officer, Treasurer & Assistant Secretary of the Company. From November
1996 until December 2000, Mr. Parker served as Vice President and Chief
Accounting Officer. From January 1996 until March 1996, he served as a
consultant to the Company and was appointed Corporate Controller in March 1996.
From 1988 through 1995, Mr. Parker was employed by Burns Philp Food Inc., a
manufacturer of food products, where he rose to the position of Vice President -
Finance for the Industrial Products Division. Mr. Parker has a Bachelor of
Commerce degree from the University of British Columbia and is a Certified
Public Accountant licensed in Washington State.
4
BOARD ORGANIZATION AND COMMITTEES
During the fiscal year ended December 31, 2002, the Board held fourteen
meetings. Each of the directors attended at least 93% of the meetings of the
Board and the committees on which he or she served during the fiscal year ended
December 31, 2002.
The Board of Directors has established committees to perform certain of its
functions, including the Audit Committee, the Compensation Committee and the
Executive Committee. The functions of each of these committees, and its members,
are set forth below.
Audit Committee
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted accounting practices and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes. The Board of Directors adopted a written charter for
the Audit Committee on May 3, 1999, which was revised on October 6, 2000. During
the fiscal year ended December 31, 2002, the Audit Committee met five times. The
Audit Committee currently consists of Anthony M. Frank and Debra J. Richardson.
Edward E. Faber was a member of the Audit Committee until his resignation from
the Board of Directors on May 8, 2002. The Board of Directors has determined
that all current members of the Audit Committee are independent, in accordance
with the listing standards of the New York Stock Exchange.
Compensation Committee
The Compensation Committee advises and makes recommendations to the Board
with respect to salaries and bonuses to be paid to officers and other employees
of the Company. The Compensation Committee also administers the Company' s 1998
Long-Term Incentive Plan, the 2000 Long Term Incentive Plan and the 1999
Leveraged Stock Purchase Plan. During the fiscal year ended December 31, 2002,
the Compensation Committee met seven times. The Compensation Committee currently
consists of Anthony M. Frank and Debra J. Richardson.
Executive Committee
The Executive Committee serves as the nominating committee of the Board and
generally handles other matters that are time critical and cannot be handled in
a reasonable manner by the entire Board. The Executive Committee reviews the
size and composition of the Board of Directors, apportions the directors into
classes and makes recommendations with respect to nominations for election of
directors. The Executive Committee will consider recommendations from
stockholders for nominees to serve as directors if such proposals are submitted
in writing in accordance with the advance notice provisions of our By-laws to
the Company, 100 Theory, Suite 200, Irvine, California, 92612, Attention:
Executive Committee. During the year ended December 31, 2002, this committee did
not meet. With the exception of the nomination of James R. Lavelle for election
to the Board of Directors which was acted upon by Anthony M. Frank and Debra J.
Richardson, the full Board acted upon all actions within the authority of the
Executive Committee.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives an annual
retainer fee of $20,000. Directors serving on a committee receive an annual fee
of $2,000 per committee membership, while directors serving on a committee as
chairperson receive an annual fee of $2,500 per committee chaired.
Each non-employee director receives an automatic annual option grant under
the 1998 Long-Term Incentive Plan to acquire 5,000 shares of Common Stock on the
date of each of the Company's annual meetings held after September 9, 1998. All
of such options have or will have an exercise price equal to the fair market
value of the Common Stock on the date of grant, are or will be exercisable
immediately except as limited by the rules and regulations of the Securities Act
of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and will expire ten years from the date
of grant. Directors are also reimbursed for out-of-pocket expenses incurred for
attending meetings of the Board of Directors or committees thereof, or for other
expenses incurred in their capacity as directors.
5
AUDIT COMMITTEE REPORT
The following is the Audit Committee's report submitted to the Board of
Directors for the fiscal year ended December 31, 2002.
The Audit Committee has:
o Approved the appointment of KPMG LLP as the Company's independent
auditors;
o Agreed with management's recommendation to have KPMG LLP re-audit the
financial statements for the nine months ended December 31, 2000 and
the year ended December 31, 2001 and to, consequently, amend and
restate its Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2001 as well as amend and restate its Quarterly Report on
Form 10Q/A for the three months ended March 31, 2002;
o Reviewed and discussed the Company's audited financial statements for
the year ended December 31, 2002 with management;
o Discussed with KPMG LLP, the Company's independent auditors, the
matters required to be discussed by Statement on Auditing Standards
No. 61, as may be modified or supplemented; and
o Received from KPMG LLP the written disclosures and the letter
regarding its independence as required by Independence Standards Board
Standard No. 1, as may be modified or supplemented, and discussed the
auditors' independence with them.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 for filing with the Securities and Exchange Commission. The
Audit Committee also recommended to the Board of Directors the selection of KPMG
LLP as the Company's independent auditors.
Audit Fees: The aggregate fees billed for services rendered for the audit
of the Company' s annual financial statements (including all the Company's
subsidiaries) for the year ended December 31, 2002 and the reviews of the
financial statements included in the Company's Forms 10-Q for that fiscal year
were $272,800. The aggregate fees billed for services rendered for the audit and
restatement of the Company's annual financial statements (including all the
Company's subsidiaries) for the nine months ended December 31, 2000 and the year
ended December 31, 2001 as included on Form 10-K/A were $720,536. KPMG did not
render any non-audit services to the Company for the year ended December 31,
2002.
Audit Committee
Anthony M. Frank (Chair)
Debra J. Richardson
6
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee of the Board of
Directors of Cotelligent shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement by reference into any
filing under the Securities Act, or under the Exchange Act, and shall not be
deemed filed under either the Securities Act or the Exchange Act except to the
extent that Cotelligent specifically incorporates this information by reference.
Overview
The key components of executive officer compensation are salary, bonus and
equity-based awards.
The members of the Compensation Committee hold primary responsibility for
determining executive officer compensation levels, subject to the terms of
executive employment agreements. The Compensation Committee is composed entirely
of independent outside directors of Cotelligent, none of whom are or have been
officers or employees of Cotelligent. The Compensation Committee has adopted a
compensation philosophy intended to align compensation with Cotelligent's
overall business strategy. The philosophy guiding the executive compensation
program is designed to link executive compensation and stockholder value. The
goals of the program are to:
o Compensate executive employees in a manner that aligns the employees'
interests with the interests of the stockholders;
o Encourage continuation of Cotelligent's entrepreneurial spirit;
o Reward executives for successful long-term strategic management;
o Recognize outstanding performance; and
o Attract and retain highly qualified and motivated executives.
The Compensation Committee believes that Cotelligent's executive
compensation program should consist primarily of base salaries, performance
bonuses and equity-based awards. The Compensation Committee has structured these
compensation elements to motivate and reward executive management for
performance that builds long-term stockholder value. In particular, base
salaries and discretionary bonuses have been designed to give Cotelligent's
executives the potential to earn in excess of competitive industry compensation
if certain subjective and objective operating and performance goals for
Cotelligent are achieved. Moreover, the Compensation Committee will continue
granting Cotelligent's executives and other key employees stock options and/or
other equity-based awards at current market value. Such options have no monetary
value to the executives unless and until the market price of Cotelligent's
Common Stock increases. In this manner, Cotelligent's executives will be
compensated as stockholder value increases. The Compensation Committee
anticipates that discretionary bonus payments and option grants made during the
fiscal year ended December 31, 2002 and thereafter were and will be based on
multiple subjective and objective measurements and criteria linked to building
long-term stockholder value.
The cash compensation paid to Cotelligent's executive officers during the
fiscal year ended December 31, 2002 was in accordance with arms-length
negotiations between Cotelligent and such executive officers. Stock option
grants were based on arms-length negotiations with the respective grantees and
were approved by the Compensation Committee.
Chief Executive Officer's Compensation
Mr. James R. Lavelle, the Company's Chairman and Chief Executive Officer,
is a party to a three-year employment agreement which was negotiated at
arms-length and became effective on January 5, 2000. This employment agreement
supercedes prior employment agreements that the Company had entered into with
Mr. Lavelle. Mr. Lavelle's employment agreement provides for a minimum base
salary of $450,000 (subject to increase by the Compensation Committee) and the
right to receive annually discretionary incentive bonuses provided by the
Compensation Committee and to receive stock option grants at the discretion of
the Compensation Committee. Mr. Lavelle may also participate in Cotelligent's
Long-Range Incentive Bonus Plan.
7
Mr. Lavelle was eligible for, but did not receive, a bonus during the
fiscal year ended December 31, 2002 of up to 100% of his base salary based upon
the achievement of performance objectives measured by certain quantitative and
qualitative criteria. Quantitative criteria consisted of: the stock price
performance; the earnings per share for the fiscal year; the operating profits
for the fiscal year; the market capitalization of the Company; and the number of
stock analysts covering the Company. Qualitative criteria consisted of: the
progress of the Company's branding program; Company restructuring; the
integration of acquired companies; management of executive personnel; and
investor relations.
This report is submitted by the members of the Compensation Committee.
Compensation Committee
Anthony M. Frank (Chair)
Debra J. Richardson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the members of the Compensation Committee are non-employee directors
of the Company and are not former officers of the Company or its subsidiaries.
No executive officer of the Company serves as a member of the board of directors
or on the compensation committee of a corporation for which any of the Company's
directors serving on the Compensation Committee or on the Board of Directors of
the Company is an executive officer.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding the
compensation earned by or awarded to the Chief Executive Officer and remaining
executive officers of the Company for the fiscal year ended December 31, 2002,
the fiscal year ended December 31, 2001, and the twelve month period ended
December 31, 2000.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
--------------------------------------------------------------------------
Fiscal Options/
Name and Principal Position Year Salary($) (1) Bonus($) Other($) SARs(#)
-------------------------------------------------------------------------------------------------------------
James R. Lavelle 2002 353,207 0 1,700(2) 0
Chairman and Chief Executive 2001 379,166 0 1,700(2) 400,000
Officer 2000 450,000 0 1,700(2) 0
18,000(3)
Daniel E. Jackson 2002 298,405 0 1,700(2) 0
President and Chief Operating 2001 320,120 0 5,470(4)
Officer 2000 375,000 0 1,700(2) 250,000
5,470(4)
1,700(2) 0
18,000(3)
5,470(4)
Curtis J. Parker 2002 142,489 0 1,425(2) 0
Executive Vice President, Chief 2001 166,500 0 1,665(2) 275,000
Financial Officer, Treasurer and 2000 175,000 100,000 1,600(2) 25,000
Assistant Secretary
(1) Base salary earned.
(2) Represents matching contributions by the Company under the Company's 401(k)
Plan.
(3) Represents payments made as an automobile allowance.
(4) Imputed interest on below market loans. See "Certain Transactions."
9
Stock Option Grants Table
The following table sets forth, as to the executive officers named in the
Summary Compensation Table, information related to the grant of stock options
pursuant to the Company's 1998 Long-Term Incentive Plan during the fiscal year
ended December 31, 2002.
OPTIONS GRANTED IN THE FISCAL YEAR ENDED DECEMBER 31, 2002
Individual Grants
----------------------------------------------------------
Number of Percentage of Exercise or Potential Realizable Value At
Securities Total Options Base Price Per Assumed Annual Rates of Stock
Underlying Granted to Share ($/Share) Price Appreciation For Option
Name Options Granted Employees in the Term ($)
fiscal year ended
December 31, 2002
----------------------------------------------------------------------------------------------------------------------
5% 10%
------------- ------------
James R. Lavelle 0 0 $0 0 0
Daniel E. Jackson 0 0 $0 0 0
Curtis J. Parker 0 0 $0 0 0
Stock Option Exercises and Year End Values Table
The following table shows, as to the executive officers named in the Summary
Compensation Table, information with respect to the unexercised options to
purchase Common Stock granted under the 1995 and 1998 Long-Term Incentive Plans
and held as of December 31, 2002.
VALUE OF OPTIONS AT DECEMBER 31, 2002
Number of
Shares Value Number of Securities Underlying Value of Unexercised
Acquired Realized Unexercised Options Held In-the-Money Options
On Exercise ($) at December 31, 2002 at December 31, 2002 ($) (1)
--------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
-------------------------- -----------------------------------------------------------------
James R. Lavelle 0 0 400,000 0 48,000 0
Daniel E. Jackson 0 0 250,000 0 30,000 0
Curtis J. Parker 0 0 129,375 170,625 15,700 30,000
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options. The value of the
unexercised options represents the difference between the exercise price of
such options and the closing market price ($0.37) of the Company's Common
Stock on the OTC Bulletin Board on December 31, 2002.
10
Equity Compensation
The following table sets forth, as of December 31, 2002, outstanding awards and
shares remaining available for future issuance under the Company's compensation
plans under which equity securities are authorized for issuance (excluding
401(k) plans and similar tax-qualified plans).
(a) (b) (c)
Number of securities Weighted-average Number of securities
to be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance under
warrants and right warrants and rights equity compensation plans
-------------------------- -------------------- -------------------------
Plan Category
Equity compensation plans approved
by security holders 1,201,028 $0.37 1,816,473 (1)
Equity compensation plans not
approved by security holders (2) 3,257,498 $0.32 not determinable
---------
Total 4,458,526 $0.33 not determinable
=========
-------------------------
(1) Includes 1,453,315 shares of Common Stock remaining available for future
issuance under the Company's 1998 Long-Term Incentive Plan. Under the 1998
Long-Term Incentive Plan, an aggregate of 18% of the then outstanding
shares of Common Stock are available for awards under such plan. The number
of securities remaining available for future issuance also includes 363,158
shares of Common Stock remaining available for future issuance under the
Company's 1999 Leveraged Stock Purchase Plan.
(2) The 2000 Long-Term Incentive Plan (the "2000 Plan") was adopted by the
Company's Board of Directors on August 11, 2000, but was not approved by
stockholders. Awards under the 2000 Plan may be granted by the Compensation
Committee of the Board of Directors (or such other committee designated by
the Board of Directors to administer the 2000 Plan) and may include: (i)
non-qualified options to purchase shares of Common Stock; (ii) stock
appreciation rights ("SARs"), whether in conjunction with the grant of
stock options or independent of such grant, or stock appreciation rights
that are only exercisable in the event of a change in control of the
Company or upon other events; (iii) restricted stock, consisting of shares
that are subject to forfeiture based on the failure to satisfy
employment-related restrictions; (iv) deferred stock, representing the
right to receive shares of stock in the future; (v) bonus stock and awards
in lieu of cash compensation; (vi) dividend equivalents, consisting of a
right to receive cash, other awards, or other property equal in value to
dividends paid with respect to a specified number of shares of Common
Stock, or other periodic payments; or (vii) other awards not otherwise
provided for, the value of which are based in whole or in part upon the
value of the Common Stock. Unless otherwise determined by the Compensation
Committee, all outstanding awards under the 2000 Plan will generally become
fully exercisable or vested upon a "change in control" of the Company. The
Compensation Committee has the discretion to establish all of the terms and
conditions of awards under the 2000 Plan and to interpret the terms of the
2000 Plan. There is no limit on the maximum number of shares of Common
Stock that may be awarded under the 2000 Plan. The 2000 Plan may be
amended, altered, suspended, discontinued, or terminated by the Board of
Directors at any time.
11
EMPLOYMENT AGREEMENTS; COVENANTS-NOT-TO-COMPETE
Mr. James R. Lavelle, Cotelligent's Chairman and Chief Executive Officer,
is a party to a three-year employment agreement effective January 5, 2000 which,
unless terminated or not renewed by him, continues thereafter on a year-to-year
basis on the same terms and conditions. Mr. Lavelle's employment agreement
provides that, in the event of termination of employment by the Company without
cause, he shall be entitled to receive from the Company an amount equal to (i)
three times the minimum base salary, as defined in the employment agreement,
plus (ii) three times his most recent annual bonus (not including any payments
made under Cotelligent's Long-Range Bonus Incentive Plan), without regard to
whether he obtains subsequent employment. Mr. Lavelle shall be deemed to have
been terminated without cause by Cotelligent, if, among other things,
Cotelligent fails to elect and continue Mr. Lavelle as Chief Executive Officer
or Chairman or to nominate him for re-election as a member of the board of
directors unless Mr. Lavelle is terminated for good cause. In addition, his
employment agreement provides that, in the event of a change in control of the
Company where he has not received at least five days' notice of such change in
control, he will be deemed to have been terminated without cause and shall be
entitled to compensation as described in the preceding sentence. Additionally,
in such event he will not be bound by any non-compete terms in his employment
agreement, as discussed below. If given at least five days notice of such change
in control, he may elect to terminate his employment agreement and collect the
respective compensation provided above.
Mr. Daniel E. Jackson, Cotelligent's President and Chief Operating Officer,
is a party to a two-year employment agreement effective January 25, 2000 which,
unless terminated or not renewed by him, continues thereafter on a year-to-year
basis on the same terms and conditions. Mr. Jackson's employment agreement
provides that, in the event of termination of employment by the Company without
cause, he shall be entitled to receive from the Company an amount equal to (i)
two times the minimum base salary, as defined in the employment agreement, plus
(ii) two times his most recent annual bonus (not including any payments made
under Cotelligent's Long-Range Bonus Incentive Plan), without regard to whether
he obtains subsequent employment. On October 2, 2002, the Compensation Committee
approved an increase in the amount of severance Mr. Jackson would be entitled to
receive under his employment agreement in the event of termination of employment
by the Company without cause to an amount equal to (i) three times the minimum
base salary, as defined in the employment agreement, plus (ii) three times his
most recent annual bonus (not including any payments made under Cotelligent's
Long-Range Bonus Incentive Plan), without regard to whether he obtains
subsequent employment. His employment agreement provides that, in the event of a
change in control of the Company where he has not received at least five days'
notice of such change in control, he will be deemed to have been terminated
without cause and shall be entitled to compensation as described in the
preceding sentence. Additionally, in such event he will not be bound by any
non-compete terms in his employment agreement, as discussed below. If given at
least five days notice of such change in control, he may elect to terminate his
employment agreement and collect the respective compensation provided above.
In the event of a change in control, Mr. Lavelle and Mr. Jackson are
entitled to reimbursement for any excise taxes the employee incurs under Section
4999 of the Internal Revenue Code, as well as any interest or penalties related
to the excise tax and any entitlements outside of the employment agreement that
are described in Section 280G(b)(2)(A)(i) of the Internal Revenue Code. In the
employment agreements of both, a "Change in Control" is deemed to occur if: (1)
any person or entity, other than the Company, a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the Common Stock of the Company, or an
employee benefit plan of Company or a subsidiary of Company, acquires directly
or indirectly Beneficial Ownership (as defined in Rule 13d-3 of the Exchange
Act) of any voting security of the Company and immediately after such
acquisition such person or entity is, directly or indirectly, the Beneficial
Owner of voting securities representing 30% or more of the total voting power of
all of the then-outstanding voting securities of the Company; (2) a change in
the composition of the individuals on the Board of Directors as a result of
which fewer than one-half of the incumbent directors are directors who either
(a) had been directors of Company on the date 24 months prior to the date of the
event that constitutes a change in control (the "original directors") or (b)
were elected, or nominated with the affirmative votes of at least a majority of
the aggregate of the original directors who were still in office at the time of
the election or nomination and the directors whose election or nomination was
previously so approved; (3) the consummation of a merger or consolidation of
Company with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of Company
immediately prior to such merger, consolidation or other reorganization; or (4)
the sale, transfer or other disposition of all or substantially all of the
Company's assets.
12
The employment agreements of Mr. Lavelle and Mr. Jackson contain a
covenant-not-to-compete with the Company for a period of two years immediately
following the termination of employment; or, in the case of a termination
without cause, for a period of one year following the termination of his
employment; or, in the case of a Change in Control in which he is not given at
least five days' notice of such Change in Control, the covenant not-to-compete
does not apply for any period of time. If any court of competent jurisdiction
determines that the scope, time or territorial restrictions contained in the
covenant are unreasonable, the covenant-not-to-compete shall be reduced to the
maximum period permitted by such court. The compensation to which Mr. Lavelle or
Mr. Jackson is entitled, as the case may be, shall nonetheless be paid to him.
Mr. Lavelle's employment agreement calls for a minimum base salary of
$450,000. With Mr. Lavelle's consent, annual base salary paid for the fiscal
year ended December 31, 2002 was $353,207. For the fiscal year ended December
31, 2002, he was eligible for, but did not receive, a bonus based upon achieving
certain performance objectives and upon the operating results of the Company,
which objectives and results had been established by the Compensation Committee.
Pursuant to the Long-Range Bonus Incentive Plan, Mr. Lavelle is eligible for
bonuses in fiscal years 2003 and 2006 based upon the operating results of the
Company.
Mr. Jackson's employment agreement calls for a minimum base salary of
$375,000. With Mr. Jackson's consent, annual base salary paid for the fiscal
year ended December 31, 2002 was $298,405. For the fiscal year ended December
31, 2002, he was eligible for, but did not receive, a bonus based upon achieving
certain performance objectives and upon the operating results of the Company,
which objectives and results had been established by the Compensation Committee.
Pursuant to the Long-Range Bonus Incentive Plan, Mr. Jackson is eligible for
bonuses in fiscal years 2003 and 2006 based upon the operating results of the
Company.
Mr. Curtis J. Parker, as Cotelligent's Executive Vice President, Chief
Financial Officer, Treasurer and Assistant Secretary, is a party to a one-year
employment agreement effective December 19, 2000 which was extended for a
two-year period as of December 19, 2001 and then, unless terminated by either
party or not renewed by him, continues thereafter on a year-to-year basis, in
each case on the same terms and conditions. Mr. Parker's employment agreement
provides that, in the event of termination of employment by the Company without
cause, he shall be entitled to receive from the Company an amount equal to (i)
one times the Market Based Salary, as defined in the employment agreement, plus
(ii) one times his most recent annual bonus, without regard to whether he
obtains subsequent employment. His employment agreement provides that, in the
event of a Change in Control of the Company where he has not received at least
five days' notice of such change in control, he will be deemed to have been
terminated without cause and shall be entitled to compensation as described in
the preceding sentence. Additionally, in such event he will not be bound by any
non-compete terms in his employment agreement, as discussed below. If given at
least five days' notice of such change in control, he may elect to terminate his
employment agreement and collect the respective compensation provided above.
The employment agreement of Mr. Parker contains a covenant-not-to-compete
with the Company for a period of one year immediately following the termination
of employment; or, in the case of a termination without cause, for a period of
six months following the termination of his employment; or, in the case of a
Change in Control in which the he is not given at least five days' notice of
such Change in Control, the covenant not-to-compete does not apply for any
period of time. If any court of competent jurisdiction determines that the
scope, time or territorial restrictions contained in the covenant are
unreasonable, the covenant-not-to-compete shall be reduced to the maximum period
permitted by such court. The compensation to which Mr. Parker is entitled shall
nonetheless be paid to him.
Mr. Parker's employment agreement provides for a minimum base salary of
$180,000 per year. With Mr. Parker's consent, annual base salary paid for the
fiscal year ended December 31, 2002 was $142,489. For the fiscal year ended
December 31, 2002, he was eligible for, but did not receive, a discretionary
bonus of up to fifty percent (50%) of the amount of his base salary provided by
the Compensation Committee.
13
PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock from March 31, 1998
through December 31, 2002, with the cumulative total return on the Russell 2000
Index and the NASDAQ Composite Index. The comparison assumes $100, as of
February 14, 1996, the date of the Company's initial public offering (the
"Offering") was invested in the Company' s Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends, as applicable.
Cotelligent's Offering price of $9.00 was used as the beginning price of the
Common Stock. Dates on the following chart represent the last day of the
indicated fiscal year. Cotelligent has paid no dividends during the periods
shown.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
March 31, March 31, March 31, December 31, December 31, December 31,
Company/Index 1998 1999 2000 2000 2001 2002
------------- ---- ---- ---- ---- ---- ----
Cotelligent, Inc. $329.17 $98.61 $64.59 $10.42 $2.89 $4.11
Russell 2000 Index $149.47 $123.65 $167.63 $150.36 $151.90 $119.12
NASDAQ Composite $168.30 $225.67 $419.26 $226.51 $178.82 $122.45
Index
14
CERTAIN TRANSACTIONS
From May 1996 through early July 1996, the Company advanced to Daniel E.
Jackson, President and Chief Operating Officer, $250,000 to facilitate
relocation of his residence to Northern California. Of the amount due, there is
a remaining balance of $82,500. The remaining balance is evidenced by a demand
note. The note is non-interest bearing and the principal balance was originally
due July 15, 2001 or upon termination of employment if prior to the due date.
The note to cover relocation was extended by a vote of the Compensation
Committee of the Board of Directors on October 29, 2000 for three years to July
15, 2004. Since the beginning of the 2000 fiscal year, the Company has also
advanced to Mr. Jackson an aggregate amount of approximately $480,000, evidenced
by five separate unsecured demand promissory notes, three dated August 11, 1999,
one dated September 30, 1999, and one dated November 23, 1999. The purpose of
such advances was to cover margin calls made on brokerage accounts held by Mr.
Jackson. On May 5, 2000, Mr. Jackson repaid $68,270 of principal and $31,730 of
interest. The notes, although due on demand, were issued with original due dates
in 2001. These notes were also extended by a vote of the Compensation Committee
of the Board of Directors on October 29, 2001 for three years to October 29,
2004. The interest rates on these notes remained unchanged at rates between
7.75% and 8.75%. Payment of the notes is accelerated if the Company's Common
Stock reaches certain sustained target levels.
On March 31, 1996, the Company advanced to James R. Lavelle, Chairman of
the Board and Chief Executive Officer of the Company, $37,902, evidenced by an
unsecured demand promissory note bearing interest annually at a rate of 6%. The
entire amount of such advance remains outstanding. Since the beginning of the
2000 fiscal year, the Company has also advanced to Mr. Lavelle an aggregate
amount of $619,000, evidenced by seven separate unsecured demand promissory
notes. The purpose of such advances was to cover margin calls made on brokerage
accounts held by Mr. Lavelle. On May 1, 2000, Mr. Lavelle repaid $15,330 of
principal and $34,670 of interest. The notes, although due on demand, were
issued with original due dates in 2001. The notes were extended by a vote of the
Compensation Committee of the Board of Directors on October 29, 2001 for three
years to October 29, 2004. The interest rates on these notes remain unchanged at
rates between 7.75% and 8.25%. Payment of the notes is accelerated if the
Company's Common Stock reaches certain sustained target levels.
On September 8, 1999, the stockholders approved the Cotelligent, Inc. 1999
Leveraged Stock Purchase Plan (the "LSPP") which authorizes the purchase of
shares of Common Stock by eligible employees who are selected by the
Compensation Committee of the Board to participate in the LSPP on terms and
conditions determined by the Compensation Committee. Since the LSPP's inception
through March 31, 2000, Mr. Lavelle has been issued 750,000 shares of Common
Stock and Mr. Jackson has been issued 736,842 shares of Common Stock. Shares
issued under the LSPP resulted in notes receivable from Mr. Lavelle for
$2,671,875 at 5.93% interest, and from Mr. Jackson for $2,625,000 at 5.93%
interest. The total principal amount of the notes remains outstanding. The notes
(1) are secured by the pledge of Common Stock issued; (2) are full recourse as
to the employee, except that in the case of death, disability, termination by
the Company without cause or a change of control of the Company, recourse
against the employees is limited to the pledged stock; and (3) have a term of
five years from date of issuance, provided that if the stock is sold, the loan
shall be prepaid, and if the stock is not sold, the loan may not be prepaid. The
Common Stock issued under the LSPP is restricted from sale in the open market
for a period of two years from the date of issuance, provided, however, that in
the case of death, disability, termination by the Company without cause or
change of control of the Company, the Common Stock may be sold and the proceeds
used to repay the loan.
15
APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of KPMG LLP, independent
certified public accountants, as auditors of the Company for the year ending
December 31, 2003. Representatives of KPMG are expected to be present at the
2003 Annual Meeting. They will have an opportunity to make a statement if they
so desire, and are expected to be available to respond to appropriate questions
from stockholders.
On July 10, 2002, the Company dismissed its independent auditors, Arthur
Andersen LLP, and engaged the services of KPMG, as its new independent auditors
for its fiscal year ended December 31, 2002. The Audit Committee of the Board of
Directors authorized the dismissal of Arthur Andersen and the immediate
engagement of KPMG. Arthur Andersen's report on the Company's consolidated
financial statements for the year ended December 31, 2001 did not contain an
adverse opinion or disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope or accounting principles. During the year ended
December 31, 2001, and the subsequent interim period through July 10, 2002,
there were no disagreements with Arthur Andersen on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which disagreement, if not resolved to Arthur Andersen's satisfaction,
would have caused it to make reference to the subject matter of the disagreement
in connection with its report on the Company's consolidated financial statements
for such years; and there were no reportable events as defined in item
304(a)(1)(v) of Regulation S-K. During the years ended December 31, 2001 and
December 31, 2002, the Company did not consult with KPMG regarding any of the
matters or events set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Such persons are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by the
Company with respect to the fiscal year ended December 31, 2002, James R.
Lavelle and Daniel E. Jackson each filed a late Form 5 reporting a single
transaction under a Company stock option exchange program. Curtis J. Parker also
filed late a Form 5 reporting six transactions: one related to the grant of
common stock, four related to the grant of stock options and one related to the
exchange of stock options. Edward E. Faber, formerly a director of the Company,
filed late a Form 5 reporting three transactions: two related to the grant of
stock options and one related to the exchange of stock options. Anthony M. Frank
filed late a Form 5 reporting four transactions: three related to the grant of
stock options and one related to the exchange of stock options. Debra J.
Richardson also filed late a Form 3 and a Form 5 reporting two transactions
related to the grant of stock options. Except for these late filings, to the
best of the Company's knowledge, all other Section 16(a) filing requirements
have been satisfied.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the 2004 Annual Meeting
under SEC Rule 14a-8 must insure that such proposals are received by the
Secretary of the Company not later than ______________, 2004. Such proposals
must meet the requirements of the SEC to be eligible for inclusion in the
Company's 2004 proxy materials. In order for a proposal submitted outside of
Rule 14a-8 to be considered "timely" within the meaning of SEC Rule 14a-4 (c),
such proposal must comply with the advance notice provisions of our By-laws.
The advance notice provisions of our By-laws require that, in order to be
properly brought before the 2004 Annual Meeting, a stockholder's notice of the
matter the shareholder wishes to present must be delivered to the Secretary of
the Company not less than 90 nor more than 120 days prior to the first
anniversary of the date of this year's Annual Meeting. As a result, any notice
given by or on behalf of a stockholder pursuant to these provisions of our
By-laws must be received no earlier than ______________, 2004 nor later than
______________, 2004.
On March 11, 2003, we received written notice in accordance with the
advance notice provisions of our By-laws, that a stockholder of the Company
intends to nominate a director for election at the upcoming 2003 Annual Meeting.
In the event there is a solicitation in opposition of our nomination for
director, the Company intends to disseminate additional materials.
16
GENERAL
Management does not intend to bring any business before the meeting other
than the matters referred to in the accompanying notice. If, however, any other
matters properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote pursuant to the proxy in accordance with
their best judgment on such matters.
A copy of the Company's most recent Annual Report on Form 10-K is available
on the Company's web site at www.cotelligent.com or can be made available
without charge upon written request to: Cotelligent, Inc., 100 Theory, Suite
200, Irvine, California, 92612, Attention: Investor Relations Administrator.
OTHER INFORMATION
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person, by
telephone, telecopy or other means, or by Directors, officers and regular
employees of the Company who will not receive additional compensation for such
solicitations. The Company has retained MacKenzie Partners, Inc. to assist in
the solicitation of proxies. Proxy cards and materials will also be distributed
to beneficial owners of Common Stock through brokers, custodians, nominees and
other like parties, and the Company expects to reimburse such parties for their
charges and expenses.
Curtis J. Parker
Executive Vice President, Chief Financial Officer,
Treasurer & Assistant Secretary
Irvine, California
_______________, 2003
17
DETACH HERE
COTELLIGENT, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF COTELLIGENT, INC.
100 THEORY, SUITE 200
IRVINE, CALIFORNIA 92612
The undersigned hereby appoints Daniel E. Jackson, Curtis J. Parker and Steven
C. Machiorlette and each of them, proxies, with full power of substitution in
each of them, for and on behalf of the undersigned to vote as proxies, as
directed and permitted herein to vote your shares of Cotelligent, Inc. Common
Stock at the Annual Meeting of Stockholders of Cotelligent, Inc. to be held on
______________, ______________, 2003, at [______], Pacific Daylight Saving Time
at [______________], California, and at any adjournments thereof upon matters
set forth in the Proxy Statement and, in their judgment and discretion, upon
such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed on the
reverse hereof by the Stockholder. IF NO DIRECTION IS MADE ON THIS MATTER, THIS
PROXY WILL BE VOTED FOR THE NOMINEE LISTED.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE. YOU MAY ALSO GRANT YOUR PROXY BY TELEPHONE OR VIA THE INTERNET
BY FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE OF THIS PROXY CARD. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES OF COMMON STOCK PERSONALLY
EVEN IF YOU HAVE PREVIOUSLY SUBMITTED A PROXY.
CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE
SEE REVERSE SEE REVERSE
SIDE SIDE
Vote by Telephone
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683)
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number 1-877-PRX-VOTE (1-877-779-8683).
3. Enter your Voter Control Number located on your Proxy Card above your name.
4. Follow the recorded instructions.
Your vote is important!
Call 1-877-PRX-VOTE anytime!
Vote by Internet
It's fast, convenient, and your vote is immediately confirmed and posted.
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/cgzt
3. Enter your Voter Control Number located on your Proxy Card above your name.
4. Follow the instructions provided.
Your vote is important!
Go to http://www.eproxyvote.com/cgzt anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
DETACH HERE
Please mark
[X] votes as in
this example.
The Board of Directors recommends a vote for the Director.
1. Election of Directors.
Nominee: (01) James R. Lavelle (three-year term)
FOR WITHHELD
NOMINEE FROM NOMINEE
[ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign this Proxy exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney, administrator, trustee or guardian,
please give full title as such.
Signature: ____________________________ Date: ______________
Signature: ____________________________ Date: ______________