CABELTEL INTERNATIONAL CORPORATION
1755 Wittington Place, Suite 340
Dallas, Texas 75234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 16, 2005
Notice is hereby given that the Annual Meeting of stockholders (the "Annual
Meeting") of CabelTel International Corporation (the "Company"), a Nevada
corporation, will be held at 10:00 AM, local time on December 16, 2005 at One
Hickory Centre, 1800 Valley View Lane, Third Floor, Dallas, TX 75234, to
consider and vote upon the following matters:
1) Election of six directors.
2) The ratification of the selection of Farmer, Fuqua & Huff, PC as
the independent registered public accounting firm.
3) Such other matters as may properly be presented at the Annual
Meeting.
Only stockholders of record at the close of business on November 11, 2005 may
vote at the meeting. The forgoing items of business are more fully described in
the Proxy Statement accompanying this notice. A copy of our Annual Report on
Form 10-K for 2004 accompanies this Notice of Annual Meeting Statement.
Even if you plan to attend the meeting, you are still requested to sign, date
and return the accompanying proxy in the enclosed addressed envelope. If you
attend, you may vote in person if you wish, even though you have sent your
proxy.
By Order of the Board of Directors
/s/ Oscar Smith
Oscar Smith, Secretary
November 29, 2005
CABELTEL INTERNATIONAL CORPORATION
1755 Wittington Place, Suite 340
Dallas, Texas 75234
(972)407-8400
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 16, 2005
CabelTel International Corporation is sending this proxy statement and the
accompanying proxy card to the holders of common stock, Series B Preferred Stock
and Series J 2% Preferred Stock of the Company in connection with a solicitation
of proxies by the board of directors of the Company from the stockholders for
use at the annual meeting of stockholders of the Company. We are mailing this
proxy statement and the enclosed form of proxy beginning on or about November
29, 2005.
VOTING AND PROXY INFORMATION
Who May Vote
Holders of record of common stock, Series B Preferred Stock and Series J 2%
Preferred Stock at the close of business on November 11, 2005 are entitled to
receive notice of and to vote at the annual meeting. At the close of business on
the record date there were outstanding 976,961 shares of common stock and 615
shares of Series B preferred Stock and 33,500 shares of Series J 2% Preferred
Stock, the only outstanding securities of the Company entitled to vote at the
annual meeting. The common stock is held by approximately 400 stockholders of
record. The Series B Preferred Stock is held by six stockholders of record and
the Series J 2% Preferred Stock is held by five stockholders of record.
Required Votes
Each common stockholder is entitled to one vote per share and each holder of
Series J 2% Preferred Stock is entitled to five votes per share on all matters
properly brought before the stockholders at the annual meeting. Such votes may
be cast in person or by proxy. Under the rules of the American Stock Exchange,
brokers holding shares for customers have authority to vote on certain matters
when they have not received instructions from the beneficial owners and do not
have such authority as to certain other matters. The Exchange rules allow member
firms of the Exchange to vote on the Proposal without specific instructions from
beneficial owners.
The directors will be elected by a plurality of the votes cast in person or by
proxy. Therefore, in the election of directors stockholders may vote for the
nominees or withhold authority of the proxy to vote for the nominees.
How to Vote
Votes may be cast in person at the annual meeting or by proxy using the enclosed
proxy card. A facsimile of the proxy will be accepted. All shares of common
stock and preferred stock that are represented at the annual meeting by properly
executed proxies received by the Company prior to or at the annual meeting and
not revoked will be voted at the annual meeting in accordance with the
instructions indicated in their proxies. Unless instructions to the contrary are
specified in the proxy, each such proxy will be voted FOR the election as a
director of the nominees listed herein.
Signed Proxies Can Be Revoked
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by filing with
the Secretary of the Company, before the vote is taken at the annual meeting, a
written notice of revocation bearing a date later than the date of the proxy,
duly executing and delivering a subsequent proxy relating to the same shares or
attending the annual meeting and voting in person (although attendance at the
annual meeting will not in and of itself constitute a revocation of a proxy).
Any written notice of revocation should be sent to: Corporate Secretary,
CabelTel International Corporation, 1755 Wittington Place, Suite 340, Dallas,
Texas 75234.
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Expenses of Solicitation
The Company will bear the expense of this solicitation, including the reasonable
costs incurred by custodians, nominees, fiduciaries and other agents in
forwarding the proxy material to you. The Company will also reimburse brokerage
firms and other custodians and nominees for their expenses in distributing proxy
material to you. In addition to the solicitation made by this proxy statement,
certain directors, officers and employees of the Company may solicit proxies by
telephone and personal contact.
ELECTION OF DIRECTORS
Nominees
At the annual meeting, six directors will be elected to hold office until the
next annual meeting of stockholders. The Company's bylaws, as amended, provide
that directors are elected annually and that the number of directors
constituting the board of directors will from time to time be fixed and
determined by a vote of a majority of the Company's directors serving at the
time of such vote. The board of directors is currently comprised of six members.
It is intended that the accompanying proxy, unless contrary instructions are set
forth therein, will be voted for the election of the nominees for election as
directors. If any nominee becomes unavailable for election to the board of
directors, the persons named in the proxy may act with discretionary authority
to vote the proxy for such other persons as may be designated by the board of
directors. However, the board is not aware of any circumstances likely to render
any nominee unavailable for election. Under Nevada law directors are elected by
a plurality of the votes cast at the annual meeting, assuming a quorum is
present. The presence of a majority of the outstanding shares of common stock,
Series B preferred stock and Series J Preferred Stock, voting as one class, will
constitute a quorum. The shares held by each holder of common stock, Series B
preferred Stock and Series J Preferred Stock who signs and returns the enclosed
form of proxy will be counted for purposes of determining the presence of a
quorum at the meeting.
The following information is available with respect to the persons who are the
nominees for election at the annual meeting and the other incumbent directors
and executive officers of the Company. Included within the information below is
information concerning the business experience of each such person during the
past five years. The number of shares of common stock beneficially owned by each
of the directors who own stock as of November 11, 2005 is set forth in "Stock
Ownership."
Roz Campisi Beadle, age 48, (Independent) Director since December 2003
Ms. Beadle is Executive Vice President of Unified Housing Foundation
and a licensed realtor. She has a background in public relations and marketing.
Ms. Beadle is also extremely active in various civic and community services and
is currently working with the Congressional Medal of Honor Society and on the
Medal of Honor Host City Committee in Gainesville, Texas.
Gene S. Bertcher, age 56 (Affiliated) Director November 1989 to
September 1996 and since June 1999
Mr. Bertcher was elected President and Chief Financial Officer
effective November 1, 2004. From January 3, 2003 until that date he was also
Chief Executive Officer. Mr. Bertcher has been Executive Vice President, Chief
Financial Officer and Treasurer of the Company since November 1989. He has been
a certified public accountant since 1973.
Ronald C. Finley, age 55, (Affiliated) Director since November 1, 2004
Mr. Finley became a Director, Chairman and Chief Executive Officer of
the Company effective November 1, 2004. He is also President and Chief Executive
Officer of CableTEL AD, the Company's largest subsidiary. Mr. Finley is also
Chairman or Managing Partner with the following entities: Global Communication
Technologies, Inc., a company specializing in switch system integration, sales
and maintenance of switching systems; Global Communication Group, Inc., a
company that maintains a fiber optic network that provides a private
international long distance service for the hotel/resort industry in Bulgaria;
World Trade Company, LTD, specializing in investment privatization opportunities
in Bulgaria and Eastern Europe; and The Pinnacle Property, Inc. and Ellis
Development Company, Inc. which are vertically integrated, full-service real
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estate companies specializing in the ownership, management and leasing of retail
shopping centers located throughout the Southwestern United States. Mr. Finley
is a graduate of the University of Shippensburg where he graduated with a degree
in business administration.
James E. Huffstickler, age 62, (Independent) Director since December
2003
Mr. Huffstickler has been Chief Financial Officer of Sunchase America,
Ltd., a multi-state property management company for more than the past five
years. He is a graduate of the University of South Carolina and was formerly
employed by Southmark Management, Inc., a nationwide real estate management
company. Mr. Huffstickler has been a certified public accountant since 1976.
Dan Locklear, age 52 (Independent) Director since December 2003
Mr. Locklear has been chief financial officer of Sunridge Management
Group, a real estate management company, for more than the past five years. Mr.
Locklear was formerly employed by Johnstown Management Company, Inc. and Trammel
Crow Company. Mr. Locklear has been a certified public accountant since 1981 and
a licensed real estate broker in the State of Texas since 1978.
Victor L. Lund, age 76 (Independent) Director since March 1996
Mr. Lund founded Wedgwood Retirement Inns, Inc. in 1977, which became a
wholly owned subsidiary of the Company in 1996. For most of Wedgwood's existence
Mr. Lund was Chairman of the Board, President and Chief Executive Officer,
positions he held until Wedgwood was acquired by the Company. Mr. Lund is
President and Chief Executive Officer of Wedgwood Services, Inc., a construction
services company not affiliated with the Company.
STOCK OWNERSHIP
The following table sets forth as of November 11, 2005 certain information with
respect to all stockholders known by the Company to own beneficially more than
5% of the outstanding common stock. (the Series J 2% Cumulative Preferred Stock
votes with the common stock on all matters with five votes per share) as well as
information with respect to the Company's common stock owned beneficially by
each director, director nominee, and current executive officer whose
compensation from the Company in 2004 exceeded $100,000, and by all directors
and executive officers as a group. Unless otherwise indicated, each of these
stockholders has sole voting and investment power with respect to the shares
beneficially owned.
The following table also sets forth as of November 11, 2005, certain information
with respect to all stockholders known by the company to own beneficially more
than 5% of the outstanding common stock, which is the only outstanding class of
securities of the company, except for Series J 2% Preferred Stock and Series B
preferred stock (the ownership of which is immaterial), as well as information
with respect to the company's common stock owned beneficially by each director,
director nominee, and current executive officer whose compensation from the
company in 2004 exceeded $100,000, and by all directors and executive officers
as a group. Unless otherwise indicated, each of these stockholders has sole
voting and investment power with respect to the shares beneficially owned.
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Common Stock
-------------------------------------
Name of Beneficial Owner No. of Shares Percent of Class*
------------------------------------------ ---------------- --------------------
Victor L. Lund(1) 108,994 11.16%
Gene S. Bertcher(2) 71,811 7.35%
Roz Campisi Beadle 100 **
Ronald C. Finley(8) - -
James E. Huffstickler - -
Dan Locklear - -
JRG Investments, Inc.(3)(5) 156,884 16.06%
TacCo Financial, Inc.(3)(4)(6) 228,726 23.41%
International Health Products, Inc.(3)(7) 9,770 1.02%
All executive officers and directors
as a group (six persons) 180,905 18.52%
-----------------------
* Based on 977,004 shares of common stock outstanding at November 11,
2005.
** less than 1%
1) Consists of 108,994 shares of common stock owned by Mr. Lund.
2) Consists of 71,811 shares of common stock owned by Mr. Bertcher.
3) Based on a Schedule 13D, amended December 14, 2004, filed by each of
these entities and by Gene E. Phillips, an individual, each of these
entities owns of record the number of shares set forth for such entity
in the table. The Form 13D indicates that these entities, Mr. Phillips
and Basic Capital Management, Inc., collectively, may be deemed a
"Person" within the meaning of Section 13D of the Securities Exchange
Act of 1934.
4) Consists of 228,726 shares of common stock (which does not include
156,884 shares held by JRG Investments, Inc. or an option to 40,000
shares of common stock at an exercise price of $2.60 per share). TacCo
Financial, Inc. also holds a Warrant to purchase 170,000 shares at
$3.58 per share exercisable only after stockholder approval to exchange
the Company's Series J 2% Preferred Stock for common stock before
October 1, 2005 and not exercisable if such approval does not occur.
5) Officers and Directors of JRG Investment Co., Inc. ("JRG") are J. T.
Tackett, Director, President and Treasurer and E. Wayne Starr,
Director, Chairman and CEO. JRG is a wholly owned subsidiary of Tacco
Financial, Inc.
6) Officers and Directors of Tacco Financial, Inc. ("TFI") are J.T.
Tackett, Director, Chairman and CEO; J.T. Tackett, Director, President
and Treasurer and Mary K. Willett, Vice president and Secretary. TFI;s
stock is owned by Electrical Networks, Inc. (75%) and Starr Investments
(25%).
7) Officers and Directors of International Health Products, Inc. ("IHPI")
are Ken L. Joines, Director, President and Treasurer; Bradford A.
Phillips, Vice President and Jamie Cobb, Secretary. IHPI is wholly
owned by a trust for the benefit of the wife and children of Gene E.
Phillips.
8) It is anticipated that approval will occur for the owners of the Series
J 2% Preferred stock to exchange their preferred shares for shares of
common stock. Mr. Finley owns 14,175 shares of Series J 2% Preferred
Stock which if, as anticipated by the Company, exchanged for Common
Stock would be 3,954,825 shares, or approximately 40.5% of the then
outstanding common stock.
EXECUTIVE COMPENSATION
The following tables set forth the compensation paid by the Company for services
rendered during the fiscal years ended December 31, 2004, 2003, and 2002 to the
Chief Executive Officer of the Company and to the other executive officers of
the Company whose total annual salary in 2004 exceeded $100,000, the number of
options granted to any of such persons during 2004 and the value of the
unexercised options held by any of such persons on December 31, 2004.
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Summary Compensation Table
Long Term
Compensation-
Number of
Shares of
Common Stock
Name and Annual Underlying All
Principal Compensation- Options Other
Position Year Salary Compensation(1)
---------------------------- ------------------------ ----------------- -------------------
Gene S. Bertcher, 2004 $137,000
President, Chief Financial 2003 134,000 -- $ 0
Officer and until 11/1/04, 2002 14,000 -- 6,500
Chairman and Chief 6,500
Executive Officer
Ronald C. Finley, 2004
Chairman and Chief
Executive Officer since
11/1/04
(1) Constitutes directors' fees paid by the Company to the named individuals.
Option Grants Table
(Option Grants in Last Fiscal Year)
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year Per Share Date
--------- ------------- ------------------- ------------- ------------
NONE
Aggregated Option Exercises in Last Fiscal
Year and FY-End Option Values
Value of Unexercised
Number of Securities In-the-Money
Shares Underlying Unexercised Options at 2002
Acquired Value Options at 2002 FY-End FY-End
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------- -------------- ---------- --------------------------- ---------------------------
NONE
Stock Option Plan.
The Board of Directors administers the Company's 1997 Stock Option Plan (the
"1997 Plan") and the 2000 Stock Option Plan (the "2000 Plan") each of which
provides for grants of incentive and non-qualified stock options to the
Company's executive officers, as well as its directors and other key employees,
5
and consultants. Under the two Plans, options are granted to provide incentives
to participants to promote long-term performance of the Company and
specifically, to retain and motivate senior management in achieving a sustained
increase in stockholder value. Currently, none of the Plans has a pre-set
formula or criteria for determining the number of options that may be granted.
The exercise price for an option granted is determined by the compensation
committee, in an amount not less than 100 percent of the fair market value of
the Company's common stock on the date of grant. The compensation committee
reviews and evaluates the overall compensation package of the executive officers
and determines the awards based on the overall performance of the Company and
the individual performance of the executive officers. The Company's stock plans
total 50,000 shares of common stock under the 1997 Plan and 50,000 shares of
common stock under the 2000 Plan. Options have been granted for all shares
reserved under the 1997 Plan and 10,000 shares for the 2000 Plan.
Compensation of Directors
The Company pays each non-employee director a fee of $2,500 per year, plus a
meeting fee of $2,000 for each board meeting attended. Company employee
directors serve with no fees being paid. CableTEL AD pays each of its three
directors $6,200 per month.
REPORT OF INDEPENDENT DIRECTORS ON COMPENSATION
The compensation paid to the Company's executive officers is reviewed and
approved annually by the independent members of the board of directors acting as
the Company's Compensation Committee. In addition to approving annual
compensation for the Company's executive officers, the independent directors
approve any incentive awards for executive officers and other key employees, any
stock option grants and additional benefits.
The Company's compensation philosophy is to attract, retain and reward
executives who have shown they are capable of leading the Company in achieving
its business objectives and performance goals. These objectives include
preserving and increasing the Company's asset value; positioning the Company's
operations in geographic markets offering long term, profitable growth
opportunities; preserving and enhancing shareholder value and keeping the
Company competitive in its marketing and operations. The accomplishment of these
objectives is measured against conditions prevalent in the assisted living
industry. In recent years the industry has grown to be a highly competitive
industry for residents, real estate and services in a rapidly changing regional
and national environment.
The board of directors determined that the primary forms of executive
compensation should be the incentive system discussed above. The Company's
performance is a key consideration (to the extent that such performance can be
fairly attributed or related to an executive's performance) and each executive's
responsibilities and capabilities are key considerations. The independent
directors strive to keep executive compensation competitive for comparable
positions in other corporations where possible. In addition, the Compensation
Committee believes in equity compensation wherein executives will be
additionally rewarded based on increasing the Company's shareholder value. Base
salaries are predicated on a number of factors, including:
o recommendation of the Chief Executive Officer;
o knowledge of similarly situated executives at other companies;
o the executive's position and responsibilities within the Company;
o the board of directors' subjective evaluation of the executive's
contribution to the Company's performance;
o the executive's experience and
o the term of the executive's tenure with the Company.
Chief Executive Officer Compensation
The Chief Executive Officer of the Company received no compensation from
CabelTel International Corporation in 2004, but receives a salary of (euro)5,000
per month as a director of CableTEL AD.
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Independent Directors
Roz Campisi Beadle
James Huffstickler
Dan Locklear
Victor L. Lund
AUDIT COMMITTEE REPORT
The Audit Committee's duties and "charter," adopted by the board of directors on
December 9, 1991are to make recommendations for the accounting firm to serve as
the Company's independent auditors, consult with the Company's independent
auditors with regard to any audit plan adopted by the Company, review the
Company's financial statements with the management and the independent auditors
prior to publication, determine that no restrictions are placed by management on
the scope of implementation of the independent auditors' function and performing
such other functions as shall be appropriate to the effective discharge of all
such duties and responsibilities.
In accordance with the charter of the Audit Committee, all of the members of the
Audit Committee are independent pursuant to the American Stock Exchange listing
standards and are financially literate and at least one member of the Audit
Committee has accounting or related financial management expertise. The Audit
Committee, on behalf of the Board, oversees the Company's financial reporting
process. In fulfilling its oversight responsibilities, the Audit Committee
reviewed with the Company the audited financial statements and the footnotes
thereto in the Annual Report on Form 10-K and discussed with the Company the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the
financial statements. The Audit Committee reviewed and discussed with the
outside auditor its judgments as to the quality, not just the acceptability of
the Company's accounting principles and such other matters as are required to be
discussed by the Audit Committee with the Company's outside auditor under
generally accepted auditing standards. The Audit Committee discussed with the
outside auditor the outside auditor's independence required by the Independence
Standards Board to be made by the outside auditor to the Company. In reliance on
the reviews and discussions referred to above, the Audit Committee recommended
to the Board that the audited financial statements be included in the Annual
Report on Form 10-K, as filed with the Securities and Exchange Commission.
FINANCIAL INFORMATION
Financial Statement
The consolidated financial statements and auditor's report, the management
discussion and analysis of financial condition and results of operations,
information concerning the quarterly financial data for the fiscal year ended
December 31, 2004 and other information are included in the Company's Annual
Report which accompanies this proxy statement.
7
Independent Auditors
The board, in accordance with the recommendation of its Audit Committee, chose
the firm of Farmer, Fuqua & Huff, P.C. ("FF&H") as independent auditors for the
Company on February 9, 2004. FF&H conducted the 2004 annual audit at a cost to
the Company of $30,000.
Representatives of FF&H are expected to be present and to be available to
respond to appropriate questions at the annual meeting. They have the
opportunity to make a statement if they desire to do so; they have indicated
that, as of this date, they do not.
Prior to engaging FF&H the Company's auditor was Grant Thornton & Company
("Grant Thornton"). The review of the interim financial statements during 2003
and audits prior to 2003 were conducted by Grant Thornton. The audit fee for the
2003 audit was $50,000.
Audit Fees
The following table sets forth the aggregate fees for professional services
rendered to the Company for the years 2004 and 2003 by the Company's principal
accounting firms, Grant Thornton (January 2003 through January 2004) and Farmer,
Fuqua & Huff, P.C. (February 9, 2004 through December 31, 2004):
Type of Fees 2004 (a) 2003 (b)
Audit Fees $166,110 $ 94,259
Audit Related Fees 4,701
Tax Fees 3,000 42,524
All Other Fees -- --
Total Fees $173,811 $136,783
(a) The amount of audit fees paid to Farmer, Fuqua & Huff, P.C.
for January 2004 through December 2004 was $30,000; the amount
of audit fees paid to Grant Thornton in 2004 was $4,701. The
amount of tax fees paid to Farmer, Fuqua & Huff, P.C. for
January 2004 through December 2004 was $8,625; the amount of
tax fees paid to Grant Thornton for January 2004 through
December 2004 was $3,000.
(b) The amount of audit fees paid to Grant Thornton for January
2003 through December 2003 was $50,620.
All services rendered by the principal auditors are permissible under applicable
laws and regulations and were pre-approved by either of the Board of Directors
or the Audit Committee, as required by law. The fees paid to principal auditors
for services described in the above table fall under the categories listed
below:
Audit Fees. These are fees for professional services performed by the
principal auditor for the audit of the Company's annual financial
statements and review of financial statements included in the Company's
Form 10-Q filings and services that are normally provided in connection
with statutory and regulatory filings or engagements.
Audit-Related Fees. These are fees for assurance and related services
performed by the principal auditor that are reasonably related to the
performance of the audit or review of the Company's financial
statements. These services include attestation by the principal auditor
that are not required by statute or regulation and consulting on
financial accounting/reporting standards.
Tax Fees. These are fees for professional services performed by the
principal auditor with respect to tax compliance, tax planning, tax
consultation, returns preparation and reviews of returns. The review of
tax returns includes the Company and its consolidated subsidiaries.
All Other Fees. These are fees for other permissible work performed by
the principal auditor that does not meet the above-category
descriptions.
These services are actively monitored (as to both spending level and work
content) by the Audit Committee to maintain the appropriate objectivity and
independence in the principal auditor's core work, which is the audit of the
Company's consolidated financial statements.
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Financial Information Systems Design and Implementation Fees
Neither FF&H nor Grant Thornton rendered any professional services to the
Company in 2004 or 2003 with respect to financial information systems design and
implementation.
The Audit Committee considers that the services rendered by FF&H are compatible
with maintaining FF&H's independence in conducting the Company's audit.
Audit Committee
Dan Locklear
Jim Huffstickler
Victor Lund
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a $100 investment in
the company's common stock on December 31, 2000 through December 31, 2004, based
on the company's closing stock price on December 31, for each of those years.
The same information is provided using the Standard & Poor 500 index and the Dow
Jones Total Market Index.
[GRAPHIC OMITTED]
Certain Relationships and Related Transactions
The following paragraphs describe certain transactions between the Company and
any stockholder beneficially owning more than 5% of the outstanding Common Stock
of the Company, the executive officers and directors of the Company, director
nominees and members of the immediate family or affiliates of any of them, which
occurred since the beginning of the 2004 fiscal year.
In March 1996 the Company purchased Wedgwood Retirement Inns, Inc. ("WRI"). The
primary shareholder of WRI was Victor L. Lund who is currently a director and
shareholder of the Company. As part of an indemnification agreement between the
Company and Mr. Lund regarding any legal matters arising from the WRI
properties, the Company settled two legal matters in 2004 for $25,000 and
$229,819 respectively.
Gene S. Bertcher, President and Chief Financial Officer of the Company, was
indebted to the Company for an aggregate of $92,500 for notes issued in payment
for shares of Common Stock. Mr. Bertcher's notes were secured by a pledge of 520
9
shares of common stock. Interest on the notes accumulate at a rate equal to any
cash or stock dividends declared on the purchased stock and was due in a single
installment for each such note on or before October 1, 2003. On October 1, 2003
the collateral was returned to the Company and the debt was cancelled.
Until October 18, 2001, the Company had an employment agreement with Gene S.
Bertcher, who was then Executive Vice President and Chief Financial Officer. The
agreement, originally dated January 1, 1997, provided for a two year term that
recommenced each day. The agreement provided for compensation of $180,000 per
year and discretionary bonus.
On October 3, 2001 the Company settled a dispute with a significant preferred
shareholder. As part of the settlement the Company transferred eleven assisted
living communities to that shareholder. While the Company and its senior
executives believe the settlement was very favorable to the Company they also
recognized that, due to the reduced size of the Company, it would be necessary
to reduce expenses.
On October 18, 2001 the employment contract of Mr. Bertcher was amended to
reduce the cash drain to the Company. The original employment contract provided
that any reduction in compensation would trigger a required payment of $360,000
within five days. Mr. Bertcher agreed to accept a note from the Company for the
amounts if paid on a timely basis. These notes were non-interest bearing and
were not due until December 31, 2004. The amended employment contract provided
that Mr. Bertcher would receive a salary of $14,000 per year. The amended
employment contract also provide for incentive compensation for Mr. Bertcher.
The Company had agreed to conduct its future business through the use of limited
partnerships. Mr. Bertcher would receive a partnership interest in each of these
partnerships. Depending on the circumstances Mr. Bertcher would receive a
limited partnership interest of between 4% and 10.5%. The Company had agreed
that during the term of the employment contract, which expired on December 31,
2004, all property acquisitions would be made using a partnership structure.
In 2003 the Board of Directors decided to return to salary based compensation
for Mr. Bertcher. Mr. Bertcher received a base salary of $130,000 for 2003.
In December 2002, a partnership in which the Company had an interest owed monies
to the Company who, in turn, owed $360,000 to Mr. Bertcher. The Company offset
$132,500 of it's obligation to Mr. Bertcher against its receivable from the
partnership. In December 2003 Mr. Bertcher agreed to convert the $227,500 he was
still owed into 71,161 newly issued shares of Company Common Stock at the market
value of the stock at the time of issuance.
The Company has a consulting agreement for $180,000 per year with Tara
Management, Inc. whereby Tara will assist the Company in identifying, financing
and closing acquisitions and dispositions of properties and other business
interests. Richard D. Morgan is President of Tara Management, Inc, Mr. Morgan is
also President of Warwick Summit Square, Inc.
The Company leases its 3,465 square feet of office space at a market rate of $24
per square foot from Art Four Hickory Corporation, a wholly owned subsidiary of
TacCo Financial, Inc. TFI is a shareholder in the Company.
It is the policy of the Company that all transactions between the Company and
any officer or director, or any of their affiliates, must be approved by a
majority of independent members of the board of directors of the Company. All of
the transactions described above were so approved.
Board Committees
The Board of Directors held two meetings during 2004 and acted by unanimous
consent one time. For such year, no incumbent director attended fewer than 75%
of the aggregate of (i) the total number of meetings held by the Board during
the period for which he or she had been a director, and (ii) the total number of
meetings held by all Committees of the Board on which he or she served during
the period that he or she served.
The Board of Directors has standing Audit, Compensation and Governance and
Nominating Committees. The charters of these committees are available on the
Company's web site, www.cabeltel.us, and are also available in hard copy form
through a written request to the Company's Investor Relations Department at the
address on page one of this proxy.
The current Audit Committee was formed on December 12, 2003, and its function is
to review the Company's operating and accounting procedures. A Charter of the
Audit Committee has been adopted by the Board. The current members of the Audit
Committee, all of whom are independent within the SEC regulations, the listing
standards of the AMEX, and the Company's Corporate Governance Guidelines are
Messrs. Locklear (Chairman), Huffstickler and Lund. Mr. Dan Locklear, a member
of the Committee is qualified as an Audit Committee financial expert within the
meaning of SEC regulations, and the Board has determined that he has the
accounting and related financial management expertise within the meaning of the
listing standards of the AMEX.
10
The Governance and Nominating Committee is responsible for developing and
implementing policies and practices relating to the corporate governance,
including reviewing and monitoring implementation of the Company's Corporate
Governance Guidelines. In addition, the Committee develops and reviews
background information on candidates for the Board and makes recommendations to
the Board regarding such candidates. The Committee also prepares and supervises
the Board's annual review of director independence and the Board's performance
and self-evaluation. The Charter of the Governance and Nominating Committee was
adopted on October 20, 2004. The members of the Committee are Messrs.
Huffstickler (Chairman) and Lund and Ms. Beadle.
The Board has also formed a Compensation Committee of the Board of Directors,
adopted a Charter for the Compensation Committee on October 20, 2004, and
selected Ms. Beadle (Chairman) and Messrs. Huffstickler and Locklear as members
of such Committee.
The members of the Board of Directors on the date of this Report and the
Committees of the Board on which they serve are identified below:
----------------------- ---------------- ----------------- ---------------------
Governance and
Audit Nominating Compensation
Director Committee Committee Committee
Roz Campisi Beadle |X| Chairman
Gene S. Bertcher
Ronald C. Finley
James E. Huffstickler |X| Chairman |X|
Dan Locklear Chairman |X|
Victor L. Lund |X| |X|
----------------------- ---------------- ----------------- ---------------------
During October 2004, the Board adopted its Corporate Governance Guidelines. The
Guidelines adopted by the Board meet or exceed the new listing standards adopted
during the year by the AMEX. Pursuant to the Guidelines, the Board undertook its
annual review of director independence, and during this review, the Board
considered transactions and relationships between each director or any member of
his or her immediate family and the Company and its subsidiaries and affiliates,
including those reported under Certain Relationships and Related Transactions
below. The Board also examined transactions and relationships between directors
or their affiliates and members of the Company's senior management or their
affiliates. As provided in the Guidelines, the purpose of such review was to
determine whether such relationships or transactions were inconsistent with the
determination that the director is independent.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company pursuant
to Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), or upon written representations received by the Company, the
Company is not aware of any failure by any director, officer or beneficial owner
of more than 10% of the Company's common stock to file with the Securities and
Exchange Commission, on a timely basis, any Form 3, 4 or 5 relating to 2004.
ANNUAL REPORT
The annual report to stockholders, including consolidated financial statements,
for the year ended December 31, 2004, accompanies the proxy material being
mailed to all stockholders. The annual report is not a part of the proxy
solicitation material. The annual report is the Company's Form 10-K for 2004, as
amended, including the financial statements and schedules, as filed with the
Securities Exchange Commission. A stockholder may also request copies of any
exhibit to the Form 10-K, and the Company will charge a fee to cover expenses to
prepare and send any exhibits. You may request these from: Corporate Secretary,
CabelTel International Corporation, 1755 Wittington Place, Suite 340, Dallas,
Texas 75234.
OTHER MATTERS
The board of directors does not intend to bring any other matters before the
annual meeting and has not been informed that any other matters are to be
presented to the annual meeting by others. In the event that other matters
properly come before the annual meeting or any adjournments thereof it is
intended that the persons named in the accompanying proxy and acting there under
will vote in accordance with their best judgment.
11
DEADLINE FOR SUBMISSION
OF PROPOSALS TO BE PRESENTED
AT THE 2005 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who intends to present a proposal at the 2006 annual meeting of
stockholders must file such proposal with the Company by January 1, 2006 for
possible inclusion in the Company's proxy statement and form of proxy relating
to the meeting.
By Order of the Board of Directors
/s/ Oscar Smith
Oscar Smith, Secretary
12
CabelTel International Corporation
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby acknowledges receipt of the notice of annual meeting of
stockholders of CabelTel International Corporation, to be held at One Hickory
Centre, 1800 Valley View Lane, Third Floor, Dallas, Texas 75234, on October 20,
2004, beginning at 10:00 a.m., Dallas Time, and the proxy statement in
connection therewith and appoints Gene S. Bertcher and Oscar Smith, and each of
them, the undersigned's proxies with full power of substitution for and in the
name, place and stead of the undersigned, to vote upon and act with respect to
all of the shares of common stock and Series B preferred stock of the Company
standing in the name of the undersigned, or with respect to which the
undersigned is entitled to vote and act, at the meeting and at any adjournment
thereof.
The undersigned directs that the undersigned's proxy be voted as follows:
1. ELECTION OF [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
DIRECTORS listed below (except as marked to vote for the
to the contrary below) nominees listed below
Nominees: Roz Campisi Beadle, Gene S. Bertcher, Ronald C. Finley, James E.
Huffstickler, Dan Locklear, Victor L. Lund
(Instruction: To withhold authority to vote any individual nominee, write that
nominee's name on the line provided below.)
________________________________________________________________________________
2. RATIFICATION OF THE SELECTION OF FARMER, FUQUA & HUFF, PC AS THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTER WHICH MAY PROPERLY
COME BEFORE THE MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified above. If no specification is made, this
proxy will be voted for the election of the director nominees in item 1 above.
The undersigned hereby revokes any proxy heretofore given to vote or act with
respect to the common stock or Series B preferred stock of the Company and
hereby ratifies and confirms all that the proxies, their substitutes, or any of
them may lawfully do by virtue hereof.
If more than one of the proxies named shall be present in person or by
substitute at the meeting or at any adjournment thereof, the majority of the
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.
Please date, sign and mail this proxy in the enclosed envelope. No postage is
required.
Date _______________________, 2005
____________________________________________
Signature of Stockholder
____________________________________________
Signature of Stockholder
Please date this proxy and sign your name
exactly as it appears hereon. Where there is
more than one owner, each should sign. When
signing as an attorney, administrator,
executor, guardian or trustee, please add
your title as such. If executed by a
corporation, the proxy should be signed by a
duly authorized officer.