SEC Info - Bronson Steven N - ‘DEFC14A’ on 6/17/98 re: Safenet Inc

SEC Info℠

Home

Help

Please Sign In

Bronson Steven N – ‘DEFC14A’ on 6/17/98 re: Safenet Inc

As of: Wednesday, 6/17/98 · Accession #: 889812-98-1523 · File #: 0-20634

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/17/98  Bronson Steven N                  DEFC14A                1:68K  Safenet Inc                       Global Fin’l Press/NY/FA

Definitive Proxy Solicitation Material — Contested Solicitation — Schedule 14A
Filing Table of Contents

Document/Exhibit Description Pages Size

1: DEFC14A Schedule 14A 22 91K

DEFC14A 1st Page of 22 TOC ↑Top Previous Next ↓Bottom Just 1st
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant / /

Filed by a Party other than the Registrant /x/

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/x/ Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

INFORMATION RESOURCE ENGINEERING, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------------------------------------------------------------------

STEVEN N. BRONSON
(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:
--------------------------------------------------------------------------------

(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:
--------------------------------------------------------------------------------

(5) Total fee paid:
--------------------------------------------------------------------------------

/ / 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:
--------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------

(3) Filing Party:
--------------------------------------------------------------------------------

(4) Date Filed:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

DEFC14A 2nd Page of 22 TOC 1st Previous Next ↓Bottom Just 2nd
PROXY STATEMENT
IN OPPOSITION TO MANAGEMENT'S SOLICITATION FOR ELECTION
OF THE DIRECTORS OF INFORMATION RESOURCE ENGINEERING, INC.

ANNUAL MEETING OF STOCKHOLDERS OF
INFORMATION RESOURCE ENGINEERING, INC.

TO BE HELD ON JULY 10, 1998

This Proxy Statement and the accompanying BLUE Proxy Card are being
furnished by Steven N. Bronson ('Mr. Bronson'), to the stockholders of
Information Resource Engineering, Inc., a Delaware corporation (the 'Company'),
with its principal executive offices located at 8029 Corporate Drive, Baltimore,
Maryland 21236, to be used at the 1998 annual meeting of the stockholders of the
Company which Mr. Bronson understands will be held on July 10, 1998 (the 'Annual
Meeting').

Mr. Bronson is a stockholder of the Company. His holdings of 150,000 shares
of the Company's $.01 par value common stock (the 'Common Stock') have been
amassed through purchases made in the public market. Mr. Bronson has heretofore
been a long-term supporter of the Company and its management through his
efforts, as a controlling shareholder, officer and director of the investment
banking firm of Barber and Bronson Incorporated ('B&B'), to assist the Company
in its efforts to raise $7,380,000 of capital. See 'Certain Relationships and
Related Transactions.'

However, Mr. Bronson has become increasingly more concerned about the
continuing losses from operations sustained by the Company over the past five
years, the lack of proper focus by the Company's management that such a
sustained record of losses clearly indicates, and the seeming lack of concern
for the well-being of the Company and its owners which management has
demonstrated through the continual annual increases in compensation that it has
awarded to itself. Mr. Bronson understands that the Company (i) has selected May
22, 1998 as the record date (the 'Record Date') for determining the stockholders
of the Company entitled to notice of and to vote at the Annual Meeting and (ii)
plans to hold the Annual Meeting on July 10, 1998, at 10:30 a.m. local time at
the Company's offices located at 8029 Corporate Drive, Baltimore, Maryland
21236. In order to address and correct those concerns, Mr. Bronson has decided
to propose to the Company's owners an alternative slate of knowledgeable and
dedicated candidates for election to the Board of Directors at the Annual
Meeting (the 'Bronson Nominees').

THIS SOLICITATION IS BEING MADE BY MR. BRONSON IN OPPOSITION TO THE
INCUMBENT BOARD OF DIRECTORS AND MANAGEMENT OF THE COMPANY.

This Proxy Statement and the accompanying BLUE Proxy Card are first being
sent or given on or about June 17, 1998 to the holders of record of the
Company's Common Stock at the close of business on the Record Date. According to
the Company's Notice of Annual Meeting of Stockholders and Proxy Statement (the
'Company Proxy Statement') filed by the Company with the Securities and Exchange
Commission on April 30, 1998, as of the close of business on April 29, 1998,
there were 5,463,727 shares of the Company's Common Stock outstanding and
entitled to vote at the Annual Meeting. Each share of the Company's Common Stock
is entitled to one vote on all matters to come before the Annual Meeting. The
Company has no other class of voting securities outstanding.

On the Record Date, Mr. Bronson was the beneficial owner of 150,000 shares
of the Company's Common Stock. Mr. Bronson believes that he owns approximately
2.75% of the issued and outstanding shares of the Company's Common Stock. Mr.
Bronson intends to vote his shares FOR the election of the Bronson Nominees.

DEFC14A 3rd Page of 22 TOC 1st Previous Next ↓Bottom Just 3rd
IMPORTANT

Carefully review this Proxy Statement and the enclosed BLUE Proxy Card. No
matter how many or how few shares of the Company's Common Stock you own, please
vote FOR the election of the Bronson Nominees to the Board of Directors by so
indicating and by signing, dating and mailing the BLUE Proxy Card promptly to
Mr. Bronson.

ONLY STOCKHOLDERS OF RECORD ON THE RECORD DATE ARE ENTITLED TO EXECUTE
PROXIES.

REMEMBER, ONLY YOUR LATEST DATED, VALIDLY EXECUTED PROXY WILL COUNT.
THEREFORE, EVEN IF YOU HAVE ALREADY RETURNED A WHITE MANAGEMENT PROXY CARD, YOU
CAN SUPPORT THE BRONSON NOMINEES BY RETURNING A LATER DATED BLUE PROXY CARD. IF
YOU CHOOSE TO RETURN A BLUE PROXY CARD, PLEASE DO NOT RETURN ANY WHITE PROXIES,
EVEN TO VOTE AGAINST MANAGEMENT'S BOARD SLATE, AS THAT WHITE PROXY MAY REVOKE
THE BLUE PROXY YOU HAVE SUBMITTED.

If you own shares of the Company's Common Stock, but your stock certificate
is held for you by a brokerage firm, bank or other institution, it is very
likely that the stock certificate is actually in the name of such brokerage
firm, bank or other institution. If so, only such entity can execute a vote for
your shares of the Company's Common Stock. The brokerage firm, bank, or other
institution holding the shares of the Company's Common Stock for you is required
to forward proxy materials to you and to solicit your instructions with respect
to the granting of proxies; it cannot vote your shares of the Company's Common
Stock unless it receives your instructions. PLEASE INSTRUCT THE BROKERAGE FIRM,
BANK, OR OTHER INSTITUTION HOLDING THE SHARES OF THE COMPANY'S COMMON STOCK FOR
YOU TO VOTE SUCH SHARES FOR THE ELECTION OF THE BRONSON NOMINEES TO THE BOARD OF
DIRECTORS BY PROMPTLY SIGNING, DATING AND MAILING YOUR BLUE PROXY CARD IN THE
ENVELOPE PROVIDED.

Any stockholder giving a proxy may revoke it at any time before it is voted
by attending the Annual Meeting and voting his or her shares of the Company's
Common Stock in person, by giving written notice to the Secretary of the Company
at 8029 Corporate Drive, Baltimore, Maryland 21236 stating that the proxy has
been revoked, or by delivery of a proxy bearing a later date.

A VOTE FOR THE BRONSON NOMINEES WILL ENABLE YOU, AS THE OWNERS OF THE
COMPANY, TO SEND A MESSAGE THAT YOU ARE IN FAVOR OF A CHANGE IN THE WAY THAT
YOUR COMPANY IS BEING RUN.

If you have any questions about giving your proxy or require assistance in
voting your shares of Common Stock, please call:

THE ALTMAN GROUP, INC.
60 EAST 42ND STREET
NEW YORK, NY 10017
(212) 681-9600 (COLLECT)

DEFC14A 4th Page of 22 TOC 1st Previous Next ↓Bottom Just 4th
INTRODUCTION

In order to turn the Company around and move it a direction designed to
increase its value to its owners, Mr. Bronson determined that he would cause the
nomination of his designees for election to the Board of Directors at the Annual
Meeting. Accordingly, at the Annual Meeting, Mr. Bronson intends to nominate the
Bronson Nominees, and if afforded the opportunity, Mr. Bronson also intends to
address the stockholders attending the Annual Meeting, and provide answers to
any questions that they may wish to ask

THE SOLICITATION

The Company currently has five directors. The terms of each of those
directors will expire at the Annual Meeting. According to the Company Proxy
Statement, the Board of Directors is soliciting proxies in favor of the election
of four of its incumbent directors (Anthony A. Caputo, Ira A. Hunt, Jr., Douglas
E. Kozlav and Bruce R. Thaw) and one new candidate (Thomas A. Brooke) as
nominees for election as directors to serve until the 1999 annual meeting of the
stockholders of the Company and until their successors are duly elected and
qualified. Mr. Bronson is soliciting your proxy for the election of the nominees
identified below to serve as directors until the 1999 annual meeting of the
stockholders of the Company and until their successors are duly elected and
qualified.

WHY YOU SHOULD VOTE FOR THE BRONSON NOMINEES

The current board of directors and management of the company have
repeatedly failed to recognize and adequately address fundamental business
considerations which have led to a series of problems, including:

1. A loss of value of the Company's shares

Less than two years ago--on June 12, 1996--the Company's shares traded at
price of $29.50 per share. Today, those shares command a price of only about
$8.00. During the great bull market of the past two years, the value of the
Company's Common Stock has dropped by more than 70 percent.

Further, in the year just ended--fiscal 1997--stockholders' equity
decreased by nearly 18% from the previous year end figure. At the same time,
total assets fell by 13 per cent while liabilities rose by nearly 28 per cent.

2. Five years of losses

For the past five years, the Company has lost money each year.

[Enlarge/Download Table]

YEAR OPERATING LOSS NET LOSS* PER SHARE
----------------------------------------------------------- -------------- --------- -------------

1993....................................................... 73,171 68,998 5 cents loss
1994....................................................... 912,585 801,373 50 cents loss
1995....................................................... 409,397 695,251 20 cents loss
1996....................................................... 7,812,682 7,084,550 $1.34 loss
1997....................................................... 4,132,511 3,637,702 67 cents loss

------------------

* Reported as 'net loss attributable to common stock' (that is, after preferred
stock dividends were paid).

3. Loss of major customer

As of June 30, 1996, the Company had a backlog of $9,284,000 (77% of which,
i.e., $7,149,000) was attributable to Company products which MCI had agreed to
purchase pursuant to an agreement which it entered into with the Company in
September 1995. Less than six months later (during the fourth quarter of 1996),
MCI, which accounted for 27% of the Company's revenues in 1996 and 13% of its
revenues in 1995, canceled that contract, virtually wiping out that backlog, and
eliminating $7 million of revenue which the Company would have received during
the 12 month period ending September 30, 1997. The Company has never given its
stockholders any explanation for the loss of such an important customer (other
than to make reference to a new cooperative marketing initiative that did not
obligate MCI to purchase anything from the Company) and such a huge amount of
revenue. In 1997, MCI was no longer counted among the Company's significant
customers. What happened and why did it happen?

DEFC14A 5th Page of 22 TOC 1st Previous Next ↓Bottom Just 5th
4. Questionable Actions by Management

In August 1996, the Company announced the formation of a two year joint
product development and marketing agreement with CyberGuard Corporation
('CyberGuard'). In connection therewith, the Company prepaid a refundable
$1,000,000 license fee to CyberGuard which the Company supposedly would recover
through purchases of products from CyberGuard. As of March 31, 1998 (18 months
after the $1,000,000 investment in CyberGuard) the Company had purchased a grand
total of $42,000 of products from CyberGuard. Although the Company has the right
to recoup any unearned portion of its $1,000,000 investment upon termination of
the agreement on or about August 5, 1998, plus interest thereon at Chase
Manhattan Bank's prime rate on that date, CyberGuard may take up to one year to
repay it! Therefore, the questions to be answered are: WAS THIS A SMART USE OF
THE COMPANY'S CAPITAL, AND WHY HAS MANAGEMENT ALLOWED ALMOST $1,000,000 OF THE
COMPANY'S CAPITAL TO REMAIN TOTALLY UNPRODUCTIVE FOR MORE THAN A YEAR AND A
HALF?

In September 1996, the Company announced the availability of its new
SafeNet/Smartcard. Eight months later, in May 1997, the Company introduced the
same SafeNet/Smartcard. What happened here? Did it really have a product in
1996? WAS THIS THE RESULT OF A FAILURE OR INABILITY TO MEET PRODUCTION
COMMITMENTS?

In February 1997, the Company announced that it had successfully
demonstrated compliance with new internet standards for public key exchange.
Fifteen months later, the question to be answered is: How has the Company
capitalized on its announced success? Another way of asking the same question
is: WHERE'S THE PRODUCT?

In January 1997, the Company announced that it would deliver by mid-1997 a
low cost, standards-compliant secure communications chip that would provide
organizations with highly secure, inexpensive solutions to conducting business
over computer networks, such as the Internet. It is now mid-1998. WHERE'S THE
PRODUCT?

IS THERE A PATTERN HERE? Does management lack the necessary focus, or
otherwise lack the ability to martial its resources in a concentrated and
efficient manner?

5. Excessive compensation for the chief executive officer

The facts show that Mr. Anthony Caputo, chairman and chief executive
officer, has been extremely well paid despite his apparent continuing inability
to lead the Company to profitable operations.

In 1995, the same year the Company had an operating loss of more than
$409,000, Mr. Caputo was paid $150,486 and given a bonus of $135,000. Then, the
very next year when the Company's operating loss hit nearly $8 million, the
board raised his salary to $225,000 (at least he didn't get a bonus for
achieving a multi-million-dollar loss during the year).

In 1997, despite four consecutive years of losses under Mr. Caputo, the
board gave him another raise--to $250,000, and then added a bonus of $82,500.
The directors also approved a five-year contract guaranteeing Mr. Caputo will
get raises of 10 per cent each year, with yearly bonus payments of as much as
one-half of his annual salary. Here's what Mr. Caputo will get if he stays in
his current position, even if the Company does not earn a profit:

[Enlarge/Download Table]

GUARANTEED GUARANTEED
YEAR SALARY 10% INCREASE TOTAL POTENTIAL BONUS
----------------------------------------------- ------- ------------ ---------- ---------------

1998........................................... 250,000 25,000 275,000 up to $ 137,500
1999........................................... 275,000 27,500 302,500 up to $ 151,250
2000........................................... 302,000 30,200 332,200 up to $ 166,100
2001........................................... 332,200 33,220 365,420 up to $ 182,710

Plus options to buy 50,000 shares at a favorable price ($8.25 per share),
which he can exercise for five years even if he doesn't serve out the contract
term.

DEFC14A 6th Page of 22 TOC 1st Previous Next ↓Bottom Just 6th
How did the board's compensation committee arrive at the terms of this
generous contract? Could it have been that two of the three members of that
committee are Mr. Caputo and Bruce Thaw, Esq? Although he is not listed as an
officer of the Company, the Company Proxy Statement confirms that Mr. Thaw
serves as the Company's general counsel. By serving on the compensation
committee while also serving as a paid provider of services to the Company, it
would appear that Mr. Thaw has been placed in the position of deciding how much
compensation should be paid to someone who is directly responsible for doling
out hundreds of thousands of dollars of fee income to him. Mr. Thaw has
collected more than $300,000 in legal fees from the Company in just the last two
years, presumably with the approval of Mr. Caputo.

Mr. Bronson believes that Mr. Caputo's compensation is excessive,
especially in the light of the poor performance by the Company under Mr.
Caputo's leadership.

6. Management has lost the confidence of the investing public

Only one analyst is publishing earnings estimates regarding the Company,
and, trading volume in the Company's Common Stock has dropped significantly from
monthly volumes ranging between 1,000,000 shares to more than 2,700,000 shares
in 1996, to volumes of less than 400,000 shares per month in three out of the
first four months of 1998.

MR. BRONSON'S PROGRAM

Each of the Bronson Nominees is committed to making certain that the
Company operates in the most efficient manner possible and that all employees
constantly strive to restore the value of every stockholder's investment. Based
upon his extensive business background and prior experience working with the
Company's management, Mr. Bronson will try to bring a level of objectivity and
independence to the direction of the Company that he believes, for the reasons
stated above, have been missing under Mr. Caputo's leadership. Mr. Bronson, in
conjunction with the other Bronson Nominees he is proposing, intends to work
diligently to lead the Company to revenue and earnings growth. See 'Why You
Should Vote for the Bronson Nominees-- Questionable Actions by Management;' and
'--Excessive Compensation for the Chief Executive Officer.'

If the Bronson Nominees are elected by the stockholders, their first action
will be to remove Mr. Caputo as chief executive officer, and replace him with
Matthew E. Tutino, a member of Mr. Bronson's slate who has earned a solid
reputation as a turnaround and restructuring expert, and who has in-depth
knowledge of high technology industries as well as a strong background in
finance.(1)

While the Bronson Nominees have no specific plans at this point in time,
they intend to conduct a comprehensive review of all facets of the Company's
organization, products, markets, operations, policies and strategies, with a
view to developing a program to serve the economic interest of all stockholders
and reverse the precipitous fall in the value of the Company. It will be on the
basis of that review that the Bronson Nominees will determine future actions,
which could include reorganization, restructuring, adding capital in the form of
additional equity, joint ventures, mergers, acquisitions or the sale of some or
all of the company's assets. In the event that the Board determines to engage in
any of such transactions, all investment banking, legal, accounting and any
other services which the Company may require in order to negotiate and
consummate any of such transactions shall be rendered by persons and firms who
are neither affiliated nor associated with any of the members of the Board.
Accordingly, Mr. Bronson and all of the other Bronson Nominees, as well as B&B,
Catalyst and any other persons and firms affiliated and/or associated with any
of the Bronson Nominees shall be prohibited from participating in any capacity
in any of such transactions. See 'Certain Relationships and Related
Transactions.'

------------------

(1) No agreement has been made regarding the compensation or other terms which
would apply to Mr. Tutino's employment as the Company's chief executive. In
the event that the Bronson Nominees are elected, a compensation committee of
the board consisting solely of non-employee directors having no employment,
contractual or other compensation arrangements with the Company (other than
participation in an incentive stock option plan approved by a majority of
the Company's stockholders) will negotiate such an agreement at arm's length
with Mr. Tutino. See 'Certain Relationships and Related Transactions.'

DEFC14A 7th Page of 22 TOC 1st Previous Next ↓Bottom Just 7th
THE BRONSON NOMINEES

Biographical data on the Bronson Nominees is set forth below:

Jeffery Adduci, age 45, is president of Regional Investment Bankers
Association ('RIBA'), a national association of regional and independent
broker-dealers and investment banking firms seeking to improve conditions
in their industry, strengthen the free enterprise system and enhance a
business environment conducive to meeting the capital formation needs of
small, growth companies. Since 1994, when Mr. Adduci became RIBA's
president, member underwriters have completed some 650 financings totaling
more than $6.4 billion. Between 1990 and 1994, Mr. Adduci was Vice
President of Regional Investment Brokers Syndicate, Inc., a national
organization of small brokerage firms principally engaged in small business
capital formation. Mr. Adduci's business address, and the principal
business address of his employer, RIBA, is 171 Church Street, Charleston,
South Carolina.

Steven N. Bronson, age 32, has been the president of Barber and
Bronson Incorporated, a full-service brokerage firm, since 1984, the year
in which he co-founded said firm, and he has been the chairman of Catalyst
Financial Corporation ('Catalyst'), a financial services firm which he
co-founded in 1996. Catalyst, which changed its name from BC Capital Corp.,
engages in corporate and transactional financing, public offering, private
placement and workout transactions, as well as venture capital, mezzanine
and conventional financing. Mr. Bronson has more than 15 years' experience
in the financial services industry, with special emphasis on investment
banking. Mr. Bronson's business address, and the principal business address
of his employer, B&B, is 201 South Biscayne Boulevard, Suite 2950, Miami,
Florida.

James S. Cassel, age 42, has served as president of Catalyst since
1996, and as Executive Vice President of B&B since 1996. He has special
expertise and experience in mergers, acquisitions and corporate and
transactional financing. During the seven year period which preceded his
affiliation with B&B, Mr. Cassel was managing partner of the Miami office
of Broad and Cassel, a law firm with an extensive practice in business,
corporate, finance and securities areas of law. He also has served as
chairman of the board of several hospitals in Florida, and is active in
many community organizations. Mr. Cassel is admitted to the bar in Florida
and New York. Since 1990, Mr. Cassel has been Chairman of the Board of
Goldsel/Anclote, Inc., which served as a general partner of The Anclote
Psychiatric Hospital, Ltd., a Florida limited partnership. On August 26,
1997, the partnership and its general partners commenced proceedings under
Chapter XI of the U.S. Bankruptcy Code in the United States Bankruptcy
Court, Middle District of Florida. A plan of reorganization has been filed
with the Court, but no action has been taken with respect thereto as of the
date of this Proxy Statement. Mr. Cassel's business address, and the
principal business address of his employer, B&B, is 201 South Biscayne
Boulevard, Suite 2950, Miami, Florida.

Stanley L. Newman, age 53, has served since January 1998 as executive
vice president of JCM Capital Corporation, a firm specializing in equipment
leasing and financial consulting. Among the clients of JCM are a number of
Fortune 300 companies and medium-sized companies. During the ten year
period which preceded his employment by JCM, Mr. Newman was President of
Stanley L. Newman & Co., a closely held corporation which engaged in
consulting and other services for various public and privately held
companies. Mr. Newman has in-depth experience in corporate administration,
financial and management reporting, financings and public offerings, and
tax planning. Prior to 1987, Mr. Newman also served as chief operating
officer, chief financial officer and controller of Industrial Lease Corp.,
a public company specializing in equipment leasing and investment banking,
and as a senior auditor at a certified public accounting firm. Mr. Newman's
business address, and the principal business address of his employer, JCM
Capital Corporation, is 555 Broad Hollow Road, Melville, New York.

Matthew E. Tutino, age 63, has a record of success as a turnaround and
restructuring specialist who has also operated and financially restructured
several troubled major corporations.

An electrical engineer with a masters degree in business
administration, Mr. Tutino worked at General Dynamics and ITT before
undertaking his first restructuring assignment.

Between 1970-1975, while serving as Vice President of Lockheed's
electronics subsidiary, he undertook the transformation of that subsidiary
into a non-military oriented business through the development and
introduction of a mini-computer controlled radar terminal system (for which
he and four other Lockheed employees were awarded a US patent) and other
business computer systems.

DEFC14A 8th Page of 22 TOC 1st Previous Next ↓Bottom Just 8th
Mr. Tutino was appointed by President Gerald Ford to the position of
Executive Vice President and Chief Operating Officer of the Export-Import
Bank of the United States in 1975, and he continued to serve in that
capacity through approximately mid-1977.

From 1977-1980, he served as a Principal and Vice President of Allen &
Company, Inc., an investment banking firm. Between 1980 and approximately
1984, Mr. Tutino undertook a restructuring of Whiteman Enterprises
('Whiteman'), a privately owned Allen & Company affiliate which
manufactured concrete pumps. As Whiteman's Chairman and Chief Executive,
Mr. Tutino undertook to reorganize Whiteman through Chapter XI bankruptcy
proceedings. After placing the company into bankruptcy, Mr. Tutino
restructured Whiteman's debt, and directed the rebuilding and modernization
of its plant, as well as the diversification of its product line. Whiteman
successfully emerged from bankruptcy as a profitable company in
approximately 1984.

In the late 1970s, while still working at Allen & Company, Inc., Mr.
Tutino became a director of Symbol Technologies ('Symbol'), a company not
affiliated with Allen & Company, which had recently completed its initial
public offering. At the time of his appointment to the Board, Symbol, which
was then a Nasdaq listed company whose common stock was trading at
approximately $5.00 per share, was in the final stages of developing a new
hand-held laser-based bar code reader. Approximately one year after Mr.
Tutino joined Symbol's Board, Symbol was suffering from internal management
disputes and a lack of success in its efforts to complete the development
of, and to commence the marketing of, its product. The non-employee members
of the Board took control of the company, terminated the employment of one
of Symbol's two original founders, appointed Mr. Tutino to serve as
Chairman, and appointed the remaining founder to serve as President. Mr.
Tutino served as Symbol's Chairman for a period of approximately six-eight
months. During that period, significant additional investment capital was
infused into Symbol through the efforts of Symbol's President which enabled
it to complete the development of its bar-code reader and undertake a major
marketing campaign for that product which generated substantial revenues.
Also, during that period, full control of the company's operations was
returned to Symbol's President. Mr. Tutino left Symbol's Board in
approximately 1981. At or about that time, Symbol's common stock was
trading at approximately $8.00 per share.

Between 1985 and 1992, Mr. Tutino served as chief executive officer of
financially troubled Mohawk Data Sciences Corp. (which later changed its
name to Qantel Corp.) a one-half billion dollar computer company which had
recently reported $50 million of losses (subsequently increased by $180
million of additional write-offs) and a monthly negative cash flow of $2
million. At the time that Mr. Tutino took over control of Mohawk's
management, Mohawk's common stock was trading at $.50 per share on the New
York Stock Exchange, and it was in default of $175 million of senior
secured debt to the company's bank syndicate. Between 1985 and 1986, Mr.
Tutino negotiated a four year restructuring of Mohawk's indebtedness to its
banks, sold off various subsidiaries, paid down that bank debt to
$20,000,000, cut costs and put Mohawk back into a positive cash flow. With
the introduction of new product lines between 1985 and 1989, Mohawk's stock
price increased to approximately $4.00 per share. In 1990-1991, Qantel's
banks began insisting on full repayment of the remaining balance of
Qantel's senior secured indebtedness to them. Inasmuch as Qantel could not
pay off that bank debt in full and still have sufficient cash for
operations, Mr. Tutino authorized the commencement of Chapter XI
proceedings by Qantel in the Bankruptcy Court for the Northern District of
California. Such proceedings were converted to Chapter VII liquidation
proceedings. In 1992, after five years of settling litigation, tightening
financial controls, strengthening Qantel's dealer network, focusing product
development, and selling off units which could be separated, Qantel and its
new technology were sold. All of the net proceeds derived from that sale
were delivered to Qantel's banks in payment of approximately 85% of its
secured indebtedness.

Since 1992, Mr. Tutino has been president of his own firm specializing
in international financial services, helping Eastern European governments
and financial institutions with debt restructuring and other financial
projects. Mr. Tutino's business address, and the principal business address
of his employer, Tutino & Associates, is 555 Laurel Avenue, Suite 611, San
Mateo, California.

DEFC14A 9th Page of 22 TOC 1st Previous Next ↓Bottom Just 9th
Mr. Bronson believes this team of experienced and dedicated businessmen
have the leadership skills necessary to provide solid, long-term direction to
the Company, which he further believes will benefit all of the Company's
stockholders.

COMPENSATION OF THE BRONSON NOMINEES

In the event that the Bronson Nominees are elected as the Company's
directors at the Annual Meeting:

(a) neither Mr. Bronson nor any of the other Bronson Nominees (except
Mr. Tutino) will receive compensation in the future in a management
capacity with the Company;

(b) except for reimbursement of any travel or lodging expenses which
any of the Bronson Nominees may incur in attending meetings of the Board,
none of the Bronson Nominees will receive any compensation as directors;
and

(c) in the event that an incentive stock option plan providing for
automatic, non-discretionary grants of fixed amounts of options at exercise
prices that are no less than the highest price of the Common Stock on the
date of grant of such option, and permitting participation by non-employee
directors, is adopted after approval by a majority of all of the Company's
outstanding shares of Common Stock, the Bronson Nominees (except for Mr.
Tutino) will participate in such plan.

No incentive stock option plan like the one described above is presently in
effect at the Company. In order to provide the Company's stockholders with
sufficient time within which to determine whether they approve of the direction
being given to the Company by the Bronson Nominees, the Bronson Nominees, if
elected to the Board, will propose that the Company's stockholders adopt such a
plan at the annual meeting of stockholders to be held in 1999. As of the date of
this Proxy Statement, no determination has been made regarding the maximum
number of shares which would be issuable under such plan, the fixed amount of
options to be granted thereunder, the vesting provisions which would be
applicable to such grants and the other material terms which must be fixed
before such a proposal can be made to the stockholders.

SECURITY OWNERSHIP OF BRONSON NOMINEES

The following table sets forth as of the Record Date certain information
regarding the shares of Common Stock held by each of the Bronson Nominees, and
by all of the Bronson Nominees as a group.

[Enlarge/Download Table]

NUMBER OF SHARES
NAME BENEFICIALLY OWNED PERCENT(1)
---------------------------------------------------------------------- ------------------ ----------

Steven N. Bronson..................................................... 173,050(2)(3) 3.17%
James S. Cassel....................................................... 2,900(4) --
Jeffrey Adduci........................................................ -- --
Stanley L. Newman..................................................... -- --
Matthew E. Tutino..................................................... -- --
All Bronson Nominees as a group (of 5)................................ 175,950(3) 3.21%

------------------
(1) Based upon 5,463,727 shares of the Company's Common Stock outstanding on
April 29, 1998, as disclosed in the Company Proxy Statement.

(2) Except for 4,824 shares which were acquired as a year-end compensation
distribution from B&B's corporate parent in 1997, Mr. Bronson acquired all
of such shares in open market transactions. The following table sets forth
information with respect to all purchases and sales of shares of the
Company's Common Stock by

(Footnotes continued on next page)

DEFC14A 10th Page of 22 TOC 1st Previous Next ↓Bottom Just 10th
(Footnotes continued from previous page)
Mr. Bronson during the past two years. Unless otherwise noted, the price per
share excludes brokerage commissions and other charges.

[Enlarge/Download Table]

NUMBER OF SHARES PURCHASED/SOLD DATE PRICE PER SHARE
---------------------------------------------------------------------------- -------- ---------------

10,000 Purchased............................................................ 3/31/97 $7.00
10,000 Sold................................................................. 4/28/97 $8.50
5,000 Purchased............................................................ 12/26/97 $6.50
5,000 Purchased............................................................ 12/31/97 $6.01
4,824 Distribution......................................................... 12/31/97 $6.03
10,000 Purchased............................................................ 3/13/98 $6.38
18,500 Purchased............................................................ 3/17/98 $6.53
12,000 Purchased............................................................ 3/18/98 $6.69
5,000 Purchased............................................................ 3/18/98 $6.63
13,000 Purchased............................................................ 3/20/98 $6.72
7,000 Purchased............................................................ 3/20/98 $6.94
5,000 Purchased............................................................ 3/20/98 $7.13
12,000 Purchased............................................................ 3/24/98 $8.26
12,000 Purchased............................................................ 3/26/98 $8.28
6,000 Sold................................................................. 3/27/98 $8.75
15,000 Purchased............................................................ 4/15/98 $7.94
7,500 Purchased............................................................ 4/24/98 $8.13
24,176 Purchased............................................................ 5/14/98 $8.25

(3) Includes 23,050 shares of Common Stock which Mr. Bronson has the right to
purchase pursuant to warrants which are exercisable by him within 60 days of
the date of this Proxy Statement.

(4) Includes 2,000 shares of Common Stock held together by Mr. Cassel and his
wife, Mindy Cassel, as to which Mr. and Mrs. Cassel share voting power.
Except for 900 shares which were acquired as a year-end compensation
distribution from B&B's corporate parent in 1997, Mr. Cassel acquired all of
such shares in open market transactions. The following table sets forth
information with respect to all purchases and sales of shares of the
Company's Common Stock by Mr. Cassel during the past two years. Unless
otherwise noted, the price per share excludes brokerage commissions and
other charges.

[Enlarge/Download Table]

NUMBER OF SHARES PURCHASED DATE PRICE PER SHARE
---------------------------------------------------------------------------- -------- ---------------

2,000 Purchased............................................................. 11/19/97 $8.47
900 Distribution........................................................... 12/29/97 $6.13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1992, B&B served as the Company's underwriter in connection
with a firm commitment public offering of 363,000 shares of the Company's
convertible preferred stock at an offering price of $10.00 per share. In
connection with that offering, B&B received compensation in the form of
underwriting discounts in the aggregate amount of $363,000. B&B also received
payment of $108,900 pursuant to a non-accountable expense allowance, and $36,300
pursuant to a financial advisory agreement. As further compensation with respect
to that offering, the Company issued five year underwriter's warrants to B&B
entitling the holders thereof to purchase an aggregate of 33,000 shares of the
Company's Common Stock at an exercise price of $11.00 per share. B&B transferred
24,420 of such warrants to Mr. Bronson, and the balance thereof to the co-owner
of B&B. After timely exercising all of said 24,420 warrants, Mr. Bronson sold
the Common Stock issued in connection therewith.

In November 1995, B&B served as the Company's placement agent in connection
with a private placement of 300,000 shares of Common Stock which were issued at
an offering price of $12.50 per share. In connection with that offering, B&B
received compensation in the form of commissions in the aggregate amount of
$300,000. B&B also received payment of $35,000 pursuant to a fully accountable
expense allowance. As further

DEFC14A 11th Page of 22 TOC 1st Previous Next ↓Bottom Just 11th
compensation with respect to that offering, the Company issued five year
warrants to B&B entitling the holders thereof to purchase an aggregate of 30,000
shares of the Company's Common Stock at an exercise price of $11.00 per share.
B&B transferred 23,050 of such warrants to Mr. Bronson, none of which have been
exercised, and all of which are presently exercisable. See 'Security Ownership
of Bronson Nominees.'

B & B has not had any contract, arrangement or understanding with the
Company during the past 12 months.

No person or entity other than the Bronson Nominees, and no affiliate or
associate of Mr. Bronson or any of the Bronson Nominees is a participant with
Mr. Bronson in connection with the solicitation of proxies being made hereby by
him. Except for Mr. Tutino's anticipated employment as Chief Executive Officer
of the Company in the event that the Bronson Nominees are elected to the Board,
none of the Bronson Nominees has any arrangement or understanding with any
person with respect to any future employment by the Company, or any future
transactions to which the Company or any of its affiliates may be a party. See
'Why You Should Vote for the Bronson Nominees--Mr. Bronson's Program.'

Mr. Bronson is the President, a director and an indirect (through B&B's
corporate parent) controlling shareholder of B&B, a registered broker-dealer.
B&B does not own any shares of the Company's Common Stock. B&B does not have any
discretion to buy or sell any securities for its customers, and it will not vote
any of the Company's Common Stock held by its customers unless and until it
receives specific instructions from those customers as to how such shares should
be voted. B&B will not make any attempt to communicate with any customer or
potential customer for the purpose of influencing anyone to vote for or against
management's slate of directors at the Annual Meeting. Furthermore, B&B will
not, at least until the Annual Meeting has been concluded and the results of the
election of the Company's Board have been published: (a) solicit any orders to
buy or sell any of the Company's Common Stock from any of its customers or any
potential new customers; or (b) maintain or offer any recommendation as to
whether an investor should buy, sell or hold the Company's Common Stock. B&B has
issued specific written instructions to its registered representatives to
refrain from engaging in any of the foregoing activities with any customer or
potential customer. Although B&B was a market maker in the Company's Common
Stock, it ceased making such a market on May 14, 1998, and will not recommence
such activities, if at all, until the Annual Meeting has been concluded and the
results of the election of the Company's Board have been published.

On February 20, 1997, Catalyst (which was then known as BC Capital Corp.)
entered into a three year consulting agreement with the Company, pursuant to
which Catalyst agreed to provide, on a non-exclusive basis, shareholder and
institutional investor relations and communications services to the Company, and
such financial consulting services as the Company might reasonably request. In
consideration for Catalyst's agreement to render such services, the Company
issued two warrants to Mr. Bronson and two warrants to Mr. Cassel. Each of the
warrants issued to Mr. Bronson entitled him to purchase 14,086 shares of the
Company's Common Stock during the three year term ending on February 20, 2000 at
exercise prices of $9.00 per share and $20.00 per share, respectively. Each of
the warrants issued to Mr. Cassel entitled him to purchase 8,550 shares of the
Company's Common Stock during the three year term ending on February 20, 2000 at
exercise prices of $9.00 per share and $20.00 per share, respectively. In
response to the notice that Mr. Bronson sent to the Company on May 15, 1998
concerning his intention to solicit proxies from the Common Stockholders in
support of the election of the Bronson Nominees, the Company demanded that Mr.
Bronson consent to the cancellation of the consulting agreement and the warrants
issued to him. Mr. Bronson has consented to the cancellation of the consulting
agreement, and has returned to the Company for cancellation all of the warrants
issued by the Company pursuant to the consulting agreement.

Neither B&B, nor Catalyst, or any affiliate or associate of either of them,
had any contract, arrangement or understanding with the Company within the past
12 months, other than the above-described consulting agreement between Catalyst
and the Company.

Except for the possibility that B&B may re-commence its activities as a
market maker in the Company's Common Stock after the Annual Meeting has been
concluded and the results of the election of the Company's Board have been
published, in the event that the Bronson Nominees are elected to the Board, Mr.
Bronson and the other Bronson Nominees shall not, either directly, or indirectly
through B&B, Catalyst or any other affiliate or associate of Mr. Bronson, B&B or
Catalyst, assist the Company in any manner for compensation or otherwise.

DEFC14A 12th Page of 22 TOC 1st Previous Next ↓Bottom Just 12th
In the event that the Company seeks to undertake any transaction for which it
would customarily seek the services of an investment banking firm, such as a
public or private offering of securities, a transaction involving a
reorganization, restructuring, joint venture or merger of the Company, or an
acquisition or divestiture of assets, neither Mr. Bronson, nor any other Bronson
Nominee, or their respective affiliates or associates, shall seek to provide
such services to the Company.

If the Bronson Nominees are elected to the Company's Board, Mr. Bronson
will not, either directly, or indirectly through B&B, Catalyst or any other
affiliate or associate of Mr. Bronson, B&B or Catalyst, engage in any contract,
arrangement or understanding pursuant to which either of them may derive any
benefit from any third party with respect to any future transactions in which
the Company or its affiliates may engage.

IF YOU BELIEVE THAT YOU SHOULD HAVE THE OPPORTUNITY TO DECIDE THE FUTURE OF
YOUR COMPANY AND THAT YOU SHOULD HAVE THE CHANCE TO INSTALL A TEAM OF DIRECTORS
DEDICATED TO THE BEST INTERESTS OF THE COMPANY'S OWNERS, MR. BRONSON URGES YOU
TO VOTE YOUR BLUE PROXY CARD FOR EACH OF THE BRONSON NOMINEES.

OTHER MATTERS TO BE CONSIDERED
AT THE ANNUAL MEETING

Except as set forth above, Mr. Bronson is not aware of any proposals to be
brought before the Annual Meeting. Should other proposals be brought before the
Annual Meeting, the attorneys-in-fact named on the BLUE Proxy Card will abstain
from voting on such proposals unless such proposals adversely affect the
nomination or election of the Bronson Nominees, as determined by Mr. Bronson in
his sole discretion, in which event such persons will vote on such proposals in
their discretion.

The BLUE Proxy Card will be voted in accordance with your instructions on
such card. IF YOU SIGN THE BLUE PROXY CARD AND NO MARKING IS MADE, YOU WILL BE
DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES OF THE COMPANY'S COMMON
STOCK REPRESENTED BY THE BLUE PROXY CARD IN FAVOR OF THE ELECTION OF THE BRONSON
NOMINEES.

VOTING AND PROXY PROCEDURES

The presence in person or by proxy of a majority of the outstanding shares
of the Company's Common Stock will constitute a quorum at the Annual Meeting.
Each outstanding share of Common Stock is entitled to one vote on each matter
properly presented at that meeting and a majority vote of the shares of Common
Stock present in person or by proxy at that meeting will be required to approve
each matter.

Directors of the Company are elected by a plurality of the votes cast by
the stockholders entitled to vote at a meeting at which a quorum is present. A
plurality means that the nominees with the largest number of votes are elected
as directors. Consequently, election of the Bronson Nominees requires the
affirmative vote of a plurality of the votes cast in the election at the Annual
Meeting, assuming a quorum is present or otherwise represented at the Annual
Meeting. All other matters submitted at the Annual Meeting will be determined by
a majority of the votes cast.

Shares of Common Stock represented by proxies that withhold authority with
respect to the election of one or more nominees for election as director and
proxies which are marked 'abstain' on other proposals, will not be counted in
determining whether a plurality or majority vote was obtained as to the
nominee(s) for whom authority has been withheld and as to the proposal(s) to
which such abstention pertains. If no directions are given and the signed BLUE
Proxy Card is returned, the attorneys-in-fact appointed in the proxy will vote
the shares of Common Stock represented by that BLUE Proxy Card FOR the election
of the Bronson Nominees. In instances where brokers are prohibited from
exercising customary discretionary authority for beneficial owners who have not
returned proxies to the brokers, those shares of Common Stock will not be
counted in the vote total.

Stockholders of record as of the close of business on the Record Date will
be entitled to vote at the Annual Meeting. IF YOU WERE A STOCKHOLDER OF RECORD
ON THE RECORD DATE, YOU WILL RETAIN THE VOTING RIGHTS IN CONNECTION WITH THE
ANNUAL MEETING EVEN IF YOU SELL OR

DEFC14A 13th Page of 22 TOC 1st Previous Next ↓Bottom Just 13th
SOLD YOUR SHARES OF THE COMPANY'S COMMON STOCK AFTER THE RECORD DATE.
Accordingly, it is important that you vote the shares of Common Stock held by
you on the Record Date or grant a proxy to vote such shares whether or not you
still own such shares.

At the Annual Meeting, five directors are to be elected to hold office
until the 1999 annual meeting of the stockholders of the Company and until their
successors have been duly elected and qualified. Mr. Bronson is soliciting your
proxy in support of the election of the Bronson Nominees. If you wish to vote
for the Bronson Nominees by proxy, you must submit the BLUE Proxy Card furnished
to you by him and must NOT submit the Board of Directors' White Proxy Card. If a
stockholder submits both a BLUE Proxy Card and the Company's White Proxy Card,
only the latest dated proxy will be counted.

Remember, only your latest dated, validly executed proxy will count.
Therefore, even if you have already returned a WHITE management proxy card, YOU
CAN SUPPORT THE BRONSON NOMINEES BY RETURNING A LATER DATED BLUE PROXY CARD. If
you choose to return a BLUE proxy card, please do not return any WHITE proxies,
even to vote against management's Board slate, as that WHITE proxy may revoke
the BLUE proxy you have submitted.

An executed proxy card may be revoked at any time before its expiration by
marking, dating, signing and delivering a written revocation before the time
that the action authorized by the executed proxy becomes effective. A revocation
may be in any written form validly signed by the record holder as long as it
clearly states that the proxy card which is properly completed will constitute a
revocation of an earlier consent. Although a revocation is effective if
delivered to the Company, Mr. Bronson requests that either the original or
photostatic copies of all revocations of all WHITE proxies be mailed or
delivered to The Altman Group, Inc., at the address set forth below, so that it
will be aware of all revocations and can more accurately determine which proxies
that have been received are valid.

STOCKHOLDERS OF RECORD ON THE RECORD DATE ARE ELIGIBLE TO VOTE ON THE
MATTERS DISCUSSED ABOVE. MR. BRONSON RECOMMENDS THAT ANYONE OWNING SHARES OF THE
COMPANY'S COMMON STOCK BENEFICIALLY (BUT NOT OF RECORD), SUCH AS A PERSON WHOSE
OWNERSHIP OF SHARES IS THROUGH A BROKER, BANK OR OTHER FINANCIAL INSTITUTION,
SHOULD INSTRUCT THAT BROKER, BANK OR FINANCIAL INSTITUTION TO EXECUTE THE BLUE
PROXY CARD ON HIS OR HER BEHALF OR TO HAVE THE BROKER, BANK OR FINANCIAL
INSTITUTION'S NOMINEE EXECUTE THE BLUE PROXY CARD.

SOLICITATION OF PROXIES

Proxies may be solicited by Mr. Bronson and by his agents by mail,
telephone, telegraph and personal solicitation. Banks, brokerage houses and
other custodians, nominees and fiduciaries will be requested to forward proxy
solicitation material to the beneficial owners of the Company's Common Stock
that such institutions hold of record.

The entire expense of preparing and mailing this Proxy Statement, and the
total expenditures relating to the solicitation of proxies (including, without
limitation, costs, if any, related to advertising, printing, fees of attorneys,
financial advisors, solicitors, consultants, accountants, public relations,
transportation and litigation) will be borne by Mr. Bronson.

Mr. Bronson has retained The Altman Group, Inc., 60 East 42nd Street, New
York, New York 10017 (the 'Agent') to assist him in the solicitation of proxies
and for related services. Mr. Bronson has agreed to pay the Agent a fee and to
reimburse it for its reasonable out-of-pocket expense. Mr. Bronson estimates
that such fee will be approximately $35,000. The Agent will solicit proxies for
the Annual Meeting from individuals, brokers, banks, nominees and other
institutional holders. The Agent has advised Mr. Bronson that it anticipates
that it will use approximately 15 employees to engage in such solicitation
activities. Mr. Bronson estimates that his total

DEFC14A 14th Page of 22 TOC 1st Previous Next ↓Bottom Just 14th
expenditures relating to this proxy solicitation will be approximately $100,000.
Total expenditures to date relating to this proxy solicitation have been
approximately $20,000.

Mr. Bronson intends to seek reimbursement from the Company for its expenses
in connection with this proxy solicitation. Unless the Company submits the
question of such reimbursement to a vote of the Common Stockholders at the
Annual Meeting, such question will not be submitted to a vote of the Company's
security holders.

ADDITIONAL INFORMATION

Stockholders are referred to the Company Proxy Statement with respect to
the compensation and remuneration paid and payable and other information related
to the Company's officers and directors, beneficial ownership of the Company's
securities and the procedures for submitting proposals for consideration at the
1999 annual meeting of the stockholders of the Company.

Certain information contained herein is based on, or incorporated by
reference to, the Company Proxy Statement. Mr. Bronson is not aware that any of
such information is inaccurate or incomplete.

STEVEN N. BRONSON

June 17, 1998

DEFC14A 15th Page of 22 TOC 1st Previous Next ↓Bottom Just 15th
IMPORTANT

1. If your shares of the Company's Common Stock are registered in your own
name, please sign, date and return the BLUE Proxy Card furnished to you by Mr.
Bronson.

2. If your shares of the Company's Common Stock are held in the name of a
brokerage firm, bank nominee or other institution, only that firm can execute
a vote on your behalf, and only after it has received your instructions.

3. Time is critically short. Even if you have already signed a WHITE
management proxy, you can revoke your prior vote by completing and returning a
BLUE proxy card. Remember, only your latest dated Proxy Card will count. Please
sign, date and mail the enclosed BLUE Proxy Card today in the envelope provided.

If you have any questions about voting your proxy or require assistance in
voting your shares of Common Stock, please call:

THE ALTMAN GROUP, INC.
60 EAST 42ND STREET
NEW YORK, NY 10017
(212) 681-9600 (COLLECT)

DEFC14A 16th Page of 22 TOC 1st Previous Next ↓Bottom Just 16th
THIS PROXY IS SOLICITED BY STEVEN N. BRONSON IN OPPOSITION TO THE
BOARD OF DIRECTORS PROPOSED BY THE MANAGEMENT OF THE COMPANY IN
CONNECTION WITH THE 1998 ANNUAL MEETING OF STOCKHOLDERS
OF
INFORMATION RESOURCE ENGINEERING, INC.

The undersigned stockholder of INFORMATION RESOURCE ENGINEERING, INC. (the
'Company') hereby appoints each of Steven N. Bronson and James S. Cassel as
lawful attorney and proxy, with several power of substitution, for and in the
name of the undersigned to represent and vote, as designated below, all shares
of the common stock, par value $.01 per share, of the Company which the
undersigned is entitled to vote at the 1998 annual meeting of stockholders of
the Company, to be held on July 10, 1998 at 8029 Corporate Drive, Baltimore,
Maryland, commencing at 10:30 a.m., or at any adjournment, postponement or
rescheduling thereof (collectively, the 'Annual Meeting'). The undersigned
hereby revokes any and all previous proxies with respect to the matters covered
by this proxy and the voting of such shares at the Annual Meeting.

A. ELECTION OF DIRECTORS: Nominees of Steven N. Bronson:

[ ] FOR the nominees listed below

[ ] WITHHOLD AUTHORITY for the nominees listed below.

NOMINEES: JEFFERY ADDUCI, MATTHEW E. TUTINO, STANLEY L. NEWMAN, STEVEN N.
BRONSON AND JAMES S. CASSEL

(TO WITHHOLD AUTHORITY TO VOTE FOR A NOMINEE, STRIKE THE NAME OF THE NOMINEE.)

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.

DEFC14A 17th Page of 22 TOC 1st Previous Next ↓Bottom Just 17th
B. DISCRETIONARY AUTHORITY: In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the Annual
Meeting or any adjournment thereof.

This Proxy Card, when properly executed, will be voted as directed herein.
IF NO INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
'FOR' THE NOMINEES LISTED ABOVE AND IN THE DISCRETION OF THE PROXIES AS TO ALL
OTHER MATTERS.

Dated: ___________________________,
1998

Signature: _______________________
Signature: _______________________
Title: ___________________________

If stock is jointly held, each
joint owner should sign. When
signing as attorney in fact,
executor, administrator, trustee,
guardian, corporate officer or
partner, please give full title.

PLEASE DATE AND SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS HEREON.

DEFC14A 18th Page of 22 TOC 1st Previous Next ↓Bottom Just 18th
STEVEN N. BRONSON
201 SOUTH BISCAYNE BOULEVARD
MIAMI, FLORIDA 33131
(305) 536-8500

TO MY FELLOW SHAREHOLDERS:

WHY WON'T INFORMATION RESOURCE ENGINEERING
MANAGEMENT LET ME TALK TO YOU?

IREG management has flatly refused to give me the stockholder list. It's my
opinion that the company doesn't want me to talk with you and personally bring
to your attention their record.

I HAVE BEEN FORCED TO SUE THE COMPANY IN DELAWARE CHANCERY COURT to get the
list which I need in order to contact you by phone.

In the meantime, management--or the solicitation firm they've hired--have
been calling many of you seeking your support.

While I expect that the Court will order management to stop stalling and
give me the list, I can't be sure that I will get it in a timely fashion. So, if
after reading the enclosed materials, you decide to vote for my nominees, I'd
appreciate it if you would:

o Tell the company or its proxy solicitor, if they call you again, that you
have decided to vote the BLUE proxy and ask them: 'Why didn't you make
the shareholder list available to Mr. Bronson? What are you afraid of?'

o Call the Altman Group, the firm I've hired to assist in this effort,
COLLECT AT (212) 681-9600. Tell them you're returning the BLUE proxy
card.

If you have any questions about why I've started this proxy fight, please
feel free the call me or The Altman Group at the phone numbers listed above.

Thanks for your time and attention.

Steven N. Bronson

TIME IS SHORT.

The annual meeting is on July 10th. Please read the enclosed materials
carefully and call with any questions. Remember, even if you have already voted
a management proxy, you have EVERY right to change your vote by dating, signing
and returning the BLUE proxy card in the postage-paid return envelope provided.

DEFC14A 19th Page of 22 TOC 1st Previous Next ↓Bottom Just 19th
STEVEN N. BRONSON
201 SOUTH BISCAYNE BOULEVARD
SUITE 2950
MIAMI, FLORIDA 33131

June 17, 1998

IMPORTANT INFORMATION ABOUT YOUR INVESTMENT IN

INFORMATION RESOURCE ENGINEERING

TO MY FELLOW SHAREHOLDERS:

I am writing to urge you to support the opposition slate for the company's
board of directors, and to reject those currently on the board.

As the owner of 150,000 shares, I have become increasingly concerned about
our company and its repeated failures. I have finally had enough, and I am
joining in an effort to unseat what I can see only as a self-serving,
see-nothing, do-nothing board of directors.

I am asking you to join with me in protecting what's left of our
investment.

The record clearly demonstrates that our company has been badly mismanaged,
and I believe those responsible must be removed before it is too late.

CONSIDER THESE FACTS:

o THE STOCK PRICE HAS PLUMMETED.

On June 12, 1996, shares in our company traded at $29.50. Now, less than 2
years later, the stock is trading at around $8.00. IN THE MIDST OF THE GREAT
BULL MARKET, SOME STOCKHOLDERS MAY HAVE LOST MORE THAN 70% OF THEIR
INVESTMENT! And the multiple which investors are willing to pay is far below
those of other companies in the same business.

o THE COMPANY HAS NOT MADE A PROFIT SINCE 1992.

o MAJOR CUSTOMERS HAVE BEEN LOST BECAUSE THE COMPANY CANNOT DELIVER PRODUCTS OR
MEET DEADLINES.

On June 30, 1996, the company's backlog stood at $9,284,000. However, more
than three-fourths of that backlog, $7,149,000, represented products which
MCI had agreed in September l995 to buy. But less than six months later, MCI
canceled the contract. Losing that contract virtually wiped out the backlog,
and eliminated revenues of $7 million which the company should have received
by September 30, 1997. The company has never explained the loss of this
major customer, which by itself accounted for 27% of the Company's revenue
in 1996 and 13% of revenue in 1995. (There was a reference to a 'cooperative
marketing initiative' that obligates MCI to buy absolutely nothing from the

DEFC14A 20th Page of 22 TOC 1st Previous Next ↓Bottom Just 20th
Company. That 'initiative' may allow management to claim MCI is still a
customer, but there is no way it replaces the 27% of revenue lost!)

WHAT HAPPENED? AND WHY DID IT HAPPEN? I'VE HEARD NOTHING TO EXPLAIN IT. HAVE
YOU?

o Management has lost credibility with investors.

Not once in the past five years has management delivered on its own stated
revenue and earnings goals.

Only one analyst is publishing earnings estimates for the Company.

And trading volume, which in 1996 ranged from 1,000,000 to 2,700,000 common
shares a month, had fallen significantly. In three of the first four months
of 1998, fewer than 400,000 shares traded.

In the face of all these problems, it was just over a year ago that the
chief executive officer, Mr. Caputo, was rewarded--REWARDED!--by the board with
a five-year contract that gives him:

o A SALARY OF $250,000 A YEAR IN THE FIRST YEAR

o GUARANTEED RAISES OF AT LEAST 10% EACH YEAR FOR THE NEXT FOUR YEARS

o BONUS PAYMENTS OF AS MUCH AS ONE-HALF OF HIS ANNUAL SALARY

o AND OPTIONS ON 50,000 SHARES AT $8.25 PER SHARE!

(How do you suppose the board's compensation committee arrived at the terms
of this generous contract? Could it have been because two of the three
members of that committee are Mr. Caputo himself, and Bruce R. Thaw, Esq?
Although he is not listed as an officer of the company, the Company's proxy
statement confirms that Mr. Thaw serves as the company's general counsel, a
job that, combined with his seat on the compensation committee, puts him in
the position of deciding how much to pay the same man who doles out hundreds
of thousands of dollars in fee income to him. Is it coincidental that Mr.
Thaw has collected more than $300,000 in legal fees in just the last two
years, presumably with the approval of Mr. Caputo?)

AND HOW DOES THIS BOARD RESPOND TO SHAREHOLDER CONCERNS?

I SAY, 'INADEQUATELY, AT BEST.' In late 1996, shareholders quite reasonably
complained when the Company lost the MCI account. These shareholders questioned
the abilities of management and the strength of the board. The company (with
great fanfare) responded with a so-called 'Advisory Board', theoretically to
help the company build shareholder value.

For their participation, two 'Advisory Board' members were issued a total
of 125,000 options: William E. Simon was given 100,000 and Daniel L. Mosley got
25,000.

DEFC14A 21st Page of 22 TOC 1st Previous Next ↓Bottom Just 21st
I am unaware that the 'Advisory Board' has any ability whatsoever to make
operations more efficient or to have any meaningful effect on the company's
decision-making process. Nor have we seen any meaningful effort to 'build
shareholder value.' Have YOU seen any added shareholder value since the
'Advisory Board' was formed in January of 1997?

THE CAVALIER TREATMENT OF SHAREHOLDERS was underlined once again in January
of this year, when I met with Mr. Caputo and Mr. Thaw, the same compensation
committee member who collects substantial fees as the Company's counsel. I
raised concerns about Mr. Caputo's effectiveness and accountability, and
expressed the need for a board with truly outside representation, dedicated to
all shareholders' best interests. Mr. Caputo immediately became extremely
defensive and was clearly irked. (Who was I to raise such issues, or question
his stewardship? I'M ONLY ONE OF THE OWNERS.)

Clearly, neither Mr. Caputo nor the current board sees any problem with

o the current direction of the company,

o its pathetic stock valuation,

o its 5 years without a penny of profit,

o its loss of major customers,

Nor does the board see anything amiss about paying excessive compensation
to a CEO who clearly hasn't delivered.

They don't see these things, BUT I DO. And another thing I see clearly is
that THE TIME HAS COME TO REPLACE THIS SEE-NOTHING, DO-NOTHING BOARD with people
dedicated to serving ALL the shareholders, and committed to building shareholder
value.

The accompanying proxy statement gives more detail about the failures and
mismanagement of the incumbent board and management, as well as about our highly
qualified candidates and how we will work to grow shareholder value.

I ESPECIALLY DIRECT YOUR ATTENTION TO THE INFORMATION ON MATTHEW E. TUTINO.
If our slate is elected, our first order of business will be to name Mr. Tutino
chief executive officer. Matt Tutino has earned a solid reputation as a
turnaround and restructuring specialist, and has in-depth knowledge of the high
technology industries as well as finance and investment banking. In addition to
his successes at such companies as Symbol Technology, Mohawk Data and Lockheed,
Matt served as executive vice president and chief operating officer of the
Export-Import Bank of the United States, and as a senior executive of a major
investment banking firm. Broad experience and special expertise such as Matt's
will certainly be needed to reverse the sorry failures of the current management
and board.

DEFC14A Last Page of 22 TOC 1st Previous Next ↓Bottom Just 22nd
I urge you to read the proxy statement carefully, because

I believe that when you know the facts, you will agree:
IT IS TIME FOR THE CURRENT BOARD AND MANAGEMENT TO GO.
THEY SEE NOTHING
THEY DO NOTHING
WE SAY: THEY HAD THEIR CHANCE, AND THEY HAVEN'T DONE THE JOB!

VOTE THE BLUE PROXY TODAY

Thank you for your time and attention to this extremely important matter.

Sincerely,
Steven N. Bronson

Voting Instructions

1. If your shares of the Company's common stock are registered in your own
name, please sign, date and return the BLUE Proxy Card furnished to you by
Steven N. Bronson.

2. If your shares of the Company's common shares are held in the name of a
brokerage firm, bank nominee or other institution, that firm can execute a vote
on your behalf, and only after it has received your instructions.

If you have any questions, or need any additional information, please call
our solicitation agent,

THE ALTMAN GROUP
60 EAST 42ND STREET
NEW YORK, NY 10165
(212) 681-9600 (CALL COLLECT)

DEFC14A	1st Page of 22	TOC	↑Top	Previous	Next	↓Bottom	Just 1st

DEFC14A	2nd Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 2nd

DEFC14A	3rd Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 3rd

DEFC14A	4th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 4th

DEFC14A	5th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 5th

DEFC14A	6th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 6th

DEFC14A	7th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 7th

DEFC14A	8th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 8th

DEFC14A	9th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 9th

DEFC14A	10th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 10th

DEFC14A	11th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 11th

DEFC14A	12th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 12th

DEFC14A	13th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 13th

DEFC14A	14th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 14th

DEFC14A	15th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 15th

DEFC14A	16th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 16th

DEFC14A	17th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 17th

DEFC14A	18th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 18th

DEFC14A	19th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 19th

DEFC14A	20th Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 20th

DEFC14A	21st Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 21st

DEFC14A	Last Page of 22	TOC	1st	Previous	Next	↓Bottom	Just 22nd

Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘DEFC14A’ Filing	Date	First	Last	Other Filings

	2/20/00	11
	8/5/98	5
	7/10/98	2	16	DEF 14A
	6/18/98
Filed on:	6/17/98	2	19
	5/22/98	2
	5/15/98	11
	5/14/98	11		SC 13D/A
	4/30/98	2		DEF 14A
	4/29/98	2	9
	3/31/98	5		10-Q
	9/30/97	4	19	10-Q
	8/26/97	7
	2/20/97	11
	6/30/96	4	19	10QSB
	6/12/96	4	19
				List all Filings

↑Top

Filing Submission 0000889812-98-001523 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Bronson Steven N – ‘DEFC14A’ on 6/17/98 re: Safenet Inc

As of: Wednesday, 6/17/98 · Accession #: 889812-98-1523 · File #: 0-20634

Definitive Proxy Solicitation Material — Contested Solicitation — Schedule 14AFiling Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Definitive Proxy Solicitation Material — Contested Solicitation — Schedule 14A
Filing Table of Contents