<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[ X ] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1998
-----------------
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ___________
Commission File Number 0-20807
ICT GROUP, INC.
(Exact name of registrant as specified in its charter.)
Pennsylvania 23-2458937
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Town Center Drive
Langhorne, Pennsylvania 19047
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 215-757-0200
Title of each class: Name of each exchange on which registered:
None None
- ------------------------ ------------------------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01
--------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days: YES X NO
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant is approximately $25,934,375. Such aggregate market value was
computed by reference to the closing price of the Common Stock as reported on
the National Market of The Nasdaq Stock Market on July 14, 1999. For purposes of
this calculation only, the registrant has defined affiliates as including all
directors and executive officers. In making such calculation, registrant is not
making a determination of the affiliate or non-affiliate status of any holders
of shares of Common Stock.
The number of shares of the registrant's Common Stock outstanding as of July 14,
1999 was 11,643,150.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
PRELIMINARY NOTE:
This Form 10-K/A is being filed to report Part III information in lieu of the
incorporation of such information by reference to the Company's definitive proxy
material for its 1999 Annual Meeting of Shareholders.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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Directors Continuing in Office with Term Expiring in 2000
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<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- --------------------------------------------------------
<S> <C> <C>
John J. Brennan 55 Mr. Brennan has served as Chairman, President and Chief Executive
Officer of the Company and as a director since 1987, when he
managed the buyout of ICT's predecessor company, International
Computerized Telemarketing, Inc., from Decision Industries
Corporation ("DIC"). Mr Brennan was employed by DIC from May 1983
to March 1987 and over that period served as Vice President of
Product Marketing, Vice President of Corporate Planning and
Business Development and President of its subsidiary, International
Computerized Telemarketing.
John A. Stoops 45 Mr. Stoops has been Vice President and General Manager of Books and
Information Services for American Express Publishing Corporation, a
joint venture between American Express and Time Publishing, since
January 1995. From November 1990 to September 1994, Mr. Stoops was
President of Atlas Editions, U.S.A. He has been a director of the
Company since 1996.
</TABLE>
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Director Continuing in Office with Term Expiring in 2001
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<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- --------------------------------------------------------
<S> <C> <C>
Bernard Somers 49 Mr. Somers has been a partner of Somers & Associates, Chartered
Accountants, located in Dublin, Ireland, since 1988. Mr. Somers has
been a director of the Company since 1996. He currently serves as a
director of Eurotel Marketing Limited, a subsidiary of the Company,
and Commerzbank Europe (Ireland) Ltd.
</TABLE>
1
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Directors Continuing in Office with Term Expiring in 2002
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<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- --------------------------------------------------------
<S> <C> <C>
Donald P. Brennan 58 Donald P. Brennan has served as a Vice Chairman and director of the
Company since April 1987. Mr. Brennan has been a private investor
since December 1998. He had been an Advisory Director of Morgan
Stanley & Co. Incorporated since February 1996. Prior to that time,
Mr. Brennan was a Managing Director and Head of the Merchant
Banking Division of Morgan Stanley & Co. Incorporated from 1986
until his retirement in December 1998, and also has served as
Chairman of Morgan Stanley Capital Partners III, Inc., Chairman of
Morgan Stanley Leveraged Equity Fund II, Inc., Chairman of Morgan
Stanley Venture Partners and a director of Morgan Stanley & Co.
Incorporated.
</TABLE>
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Position
- ---- --- --------
John J. Brennan 55 Chairman, President, Chief Executive Officer
Vincent A. Paccapaniccia 41 Senior Vice President, Finance and
Administration, Chief Financial Officer, and
Secretary
Timothy F. Kowalski 38 Senior Vice President, Systems and
Technology, Chief Information Officer
John D. Campbell 43 President, ICT Group Sales
John L. Magee 45 President, ICT TeleServices Division
Dean J. Kilpatrick 54 President, ICT Marketing Services Division
Maurice J. Kerins 45 President, ICT Management Services Division
- -------------
John J. Brennan's employment background is described above under
"Directors Continuing In Office with Term expiring in 2000."
Vincent A. Paccapaniccia has served as the Company's Senior Vice
President, Finance and Administration, Chief Financial Officer and Secretary
since August 1998. From July 1998 through August 1998, he served as Senior Vice
president of Finance. From January 1996 through July 1998, Mr. Paccapaniccia
served as Vice President of Finance. Between August 1991 and October 1995, Mr.
Paccapaniccia served as Chief Financial Officer and then as Executive Vice
President of Operations for Villeroy and Boch Ltd. He has also held several
financial management positions for Lenox Inc. between October 1984 and August
1991, including Vice President and Controller and Director of Operations
Planning.
2
<PAGE>
Timothy F. Kowalski has served as the Company's Senior Vice President,
Systems and Technology and Chief Information Officer since August 1997. From May
1993 until July 1997, Mr. Kowalski was employed by Independence Blue Cross, a
healthcare company, where he served as Senior Director of Information and
Technology Development. From December 1984 until May 1993, Mr. Kowalski was
employed by Computer Sciences Corporation, a systems integration company, where
he served as Technical Director.
John D. Campbell has served as President of ICT Group Sales since
January 1998. He served as President of ICT Domestic Sales between January 1997
and January 1998 and as Senior Vice President, Sales and Marketing between
January 1990 and January 1998. Mr. Campbell served as the President of ICT
Direct between January 1994 and January 1997.
John L. Magee has served as the President of ICT TeleServices Division
since January 1996 and was the Executive Vice President, Operations between
January 1994 and January 1997. From November 1987 to January 1994, he served as
Senior Vice President, Operations of the Company.
Dean J. Kilpatrick has served as President of ICT Marketing Services
Division since September 1996 and was the President of ICT Research Services
from May 1994 to September 1996. From January 1992 to April 1994, Mr. Kilpatrick
was the sole proprietor of Kilpatrick and Associates, a direct marketing
consulting firm. Between February 1988 and January 1992, Mr. Kilpatrick was Vice
President, Marketing for StarTV, Inc., a start-up television network business.
From 1986 to 1988, Mr. Kilpatrick was Executive Vice President of MRI, Inc., a
market research company.
Maurice J. Kerins has served as President of ICT Management Services
Division since January 1998. He served as the Company's Senior Vice President,
Systems and Technology from April 1994 to December 1997 and as the Company's
Vice President, Systems and Technology from November 1988 to April 1994.
John J. Brennan and Donald P. Brennan are brothers.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth for the
years ended December 31, 1998, 1997 and 1996 certain compensation paid by the
Company to its Chief Executive Officer and the four other most highly
compensated executive officers of the Company whose cash compensation exceeded
$100,000 for the year ended December 31, 1998.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options/SARs Compensation(1)
--------------------------- ---- ------ ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John J. Brennan.................................... 1998 $394,940 $ 29,314(2) 116,400(3) $72,567
Chairman, President and Chief Executive Officer 1997 $330,730 $ 15,942 -- $46,008
1996 $350,449 $ 87,929 -- $79,068
</TABLE>
3
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<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options/SARs Compensation(1)
--------------------------- ---- ------ ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John L. Magee..................................... 1998 $193,192 $ 45,021 17,200(3) $ 5,191
President, ICT TeleServices Division 1997 $163,077 $ 56,161 -- $ 6,123
1996 $149,616 $ 46,103 -- $ 5,606
John D. Campbell................................... 1998 $172,654 $ 72,516 19,400(3) $ 4,926
President, ICT Group Sales 1997 $149,462 $ 94,898 -- $ 6,267
1996 $129,788 $109,202 -- $ 5,666
Maurice J. Kerins.................................. 1998 $152,423 $ 56,146 17,000(3) $ 4,496
President, ICT Management Services Division 1997 $134,462 $ 80,332 -- $ 5,158
1996 $114,904 $ 40,571 -- $ 4,060
Dean J. Kilpatrick................................. 1998 $152,577 $ 48,164 14,100(3) $ 4,952
President, ICT Marketing Services Division 1997 $139,462 $ 36,768 -- $ 5,337
1996 $124,867 $ 51,301 4,500 $ 5,844
</TABLE>
- -------------------
(1) Includes: (A) for 1998 (i) Company contributions of $3,800, $3,800, $3,800,
$3,800 and $3,800 to the Company's 401(k) tax-qualified employee savings
and retirement plan on behalf of Mr. Brennan, Mr. Magee, Mr. Campbell, Mr.
Kerins and Mr. Kilpatrick, respectively, (ii) premiums paid by the Company
in the amount of $1,800, $696, $408, $696, and $1,152 for group term life
insurance on behalf of Mr. Brennan, Mr. Magee, Mr. Campbell, Mr. Kerins and
Mr. Kilpatrick, respectively; (iii) premiums paid by the Company in the
amount of $54,725, $695 and $718 for life insurance on behalf of Mr.
Brennan, Mr. Magee and Mr. Campbell, respectively; and (iv) lease payments
paid by the Company in the amount of $12,242 for an automobile leased on
behalf of Mr. Brennan; (B) for 1997 (i) Company contributions of $4,750,
$4,750, $4,750, $4,750 and $4,185 to the Company's 401(k) tax-qualified
employee savings and retirement plan on behalf of Mr. Brennan, Mr. Magee,
Mr. Campbell, Mr. Kerins and Mr. Kilpatrick, respectively, (ii) premiums
paid by the Company in the amount of $1,152, $408, $408, $408, and $1,152
for group term life insurance on behalf of Mr. Brennan, Mr. Magee, Mr.
Campbell, Mr. Kerins and Mr. Kilpatrick, respectively; and (iii) premiums
paid by the Company in the amount of $40,106, $965 and $1,109 for life
insurance on behalf of Mr. Brennan, Mr. Magee and Mr. Campbell,
respectively; and (C) for 1996 (i) Company contributions of $4,750, $4,750,
$4,750, $3,693 and $4,750 to the Company's 401(k) tax-qualified employee
savings and retirement plan on behalf of Mr. Brennan, Mr. Magee, Mr.
Campbell, Mr. Kerins and Mr. Kilpatrick, respectively, (ii) premiums paid
by the Company in the amount of $1,152, $408, $408, $367, and $1,094 for
group term life insurance on behalf of Mr. Brennan, Mr. Magee, Mr.
Campbell, Mr. Kerins and Mr. Kilpatrick, respectively; and (iii) premiums
paid by the Company in the amount of $73,166, $448 and $508 for life
insurance on behalf of Mr. Brennan, Mr. Magee and Mr. Campbell,
respectively.
(2) This bonus represents a portion of Mr. Brennan's 1997 base salary that he
was eligible to receive in 1997, but of which he elected to defer payment
and receive as a bonus during 1998.
(3) These options were granted in 1998 as bonus compensation for the
individuals's performance during 1997.
Option Grants in Last Fiscal Year. The following table sets forth
certain information concerning grants of stock options made during 1998 to the
persons named in the Summary Compensation Table.
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realization Value
Number of % of Total at Assumed Annual Rates of
Securities Options Stock Price Appreciation for
Underlying Granted to Exercise Option Term (5 years)(1)
Options Employees In Price Expiration ----------------------------
Name Granted Fiscal Year ($/share) Date 5% 10%
---- ------------ ------------ --------- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
John J. Brennan............... 116,400 51% $4.87 02/28/08 $157,140 $345,708
John L. Magee ................ 17,200 8% $4.87 02/28/08 $ 23,220 $ 51,084
John D. Campbell.............. 19,400 9% $4.87 02/28/08 $ 26,190 $ 57,618
Maurice J. Kerins............. 17,000 8% $4.87 02/28/08 $ 22,950 $ 50,490
Dean J. Kilpatrick............ 14,100 6% $4.87 02/28/08 $ 19,350 $ 41,877
</TABLE>
4
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(1) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates set by the Securities and Exchange Commission and, therefore,
are not intended to forecast possible future appreciation of the price of
the Common Stock. The Company did not use an alternative formula for a
grant date valuation. The Company is not aware of any formula that will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
Year End Values. The following table summarizes option exercises during
1998 and the value of vested and unvested options for the persons named in the
Summary Compensation Table at December 31, 1998. Year-end values are based upon
a price of $2.5625 per share, which was the closing market price of a share of
the Company's Common Stock on December 31, 1998.
Aggregated Option Exercises in Last Year and
Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at December 31, 1998 December 31, 1998(1)
---------------------------- ------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Brennan............... -- -- 29,100 87,300 $ 0 $0
John L. Magee................. 26,000 $125,606 284,300 12,900 $705,180 $0
John D. Campbell.............. -- -- 153,350 14,550 $351,916 $0
Maurice J. Kerins.............. 8,700 $ 30,169 153,050 12,750 $352,815 $0
Dean J. Kilpatrick............. -- -- 25,350 12,375 $ 32,188 $0
</TABLE>
- -----------------
(1) Values calculated using the closing market price of a share of the
Company's Common Stock on December 31, 1998 and the per share exercise
price of the individual's options.
The Company does not currently grant any long-term incentives, other
than stock options, to its executives or other employees. Similarly, the Company
does not sponsor any defined benefit or actuarial plans at this time.
Employment Agreements
In May 1996, the Company entered into an employment agreement with John
J. Brennan as President and Chief Executive Officer. The agreement is for a
three-year term ending April 30, 1999 and renews automatically for successive
three-year periods unless either party gives written notice of termination at
least 180 days prior to the expiration date, unless earlier terminated as
provided therein. The agreement provides for a base salary of $364,000, which
shall be increased by a minimum of 5% each year but may not be decreased below
the then current level. The Board, in its sole discretion, may award incentive
bonuses in the form of cash and/or stock to Mr. Brennan, who will be eligible
each year for a minimum bonus in an amount equal to his then current salary. If
Mr. Brennan is terminated by the Company for other than willful misconduct, or
terminates his employment for "good reason," then the Company shall maintain its
obligations under the agreement through the later of (i) the expiration of the
then current term of the agreement (or the expiration of the next renewal term
if there are less than 180 days remaining in the current term and no notice of
termination was given prior thereto), or (ii) 24 months from the date of
termination. Mr. Brennan may terminate his agreement for "good reason" upon 30
days' written notice if there
5
<PAGE>
has been a reduction in his salary or benefits, a substantial change in his
duties or a change of control, defined as the decrease below 50% of the combined
voting power of the Common Stock by John J. Brennan and Donald P.
Brennan and their children and grandchildren.
In April 1987, the Company entered into employment agreements with John
L. Magee and Maurice J. Kerins that provided for base salaries of $70,000 and
$55,000 per year, respectively. Each employment agreement provides that the
employee's salary is to be reviewed annually by the Board of Directors. Messrs.
Magee's and Kerins' current base salaries are $193,192 and $152,423,
respectively. Each employment agreement had an initial term of three years, but
renews automatically each year for an additional one-year term unless either
party to the agreement terminates prior to the end of the renewal term. Each of
the agreements were renewed on January 1, 1999 for additional one-year terms. In
addition to base salary, each agreement allows for bonuses to be paid by the
Company. The Company may terminate the employment agreements described
immediately above at any time, with or without cause. Each of the employment
agreements contains severance provisions which, if triggered, entitle the
employees to monthly severance payments in an amount equal to the affected
employee's then-current monthly salary for a period of 12 months. The severance
payments are triggered by the occurrence of any of the following events:
termination of employment by the Company without cause, cessation of business
operations in a business in which the employee is employed, a merger,
consolidation or acquisition of the Company, the filing by the Company of a
voluntary petition in bankruptcy or the filing of an involuntary petition in
bankruptcy against the Company which is not dismissed within 60 days. In
addition, if the employee terminates his employment upon 90 days' prior written
notice, in certain circumstances, the Company would be required to continue to
provide the employee with his regular payments of base salary for a period of 90
days.
In October 1987, John D. Campbell entered into an employment agreement
with the Company that provided for a base salary of $43,200 per year. Mr.
Campbell's employment agreement had an initial term of one year, but renews
automatically each year for an additional one-year term unless either party
terminates prior to the end of the renewal term. Mr. Campbell's employment
agreement was renewed on January 1, 1999 for an additional one-year term. Mr.
Campbell, whose current base salary is $172,654, is eligible for bonuses from
the Company.
In 1994, the Company entered into an employment agreement with Dean J.
Kilpatrick that provided for a base salary of $110,000 per year. Mr.
Kilpatrick's employment agreement had an initial term of one year and renews
automatically for consecutive one-year periods unless terminated within 90 days
prior to the expiration of the then-current term. In addition to his base
salary, which is currently $152,577, Mr. Kilpatrick is eligible for bonuses from
the Company.
The employment agreements discussed above contain non-tampering,
non-disclosure, non-solicitation and confidentiality provisions. Although the
employment contracts restrict the employee from interfering with the Company's
current, former or potential customers, there is no provision restricting a
terminated employee's ability to work for a competitor of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's Common
Stock, to file with the SEC initial reports of beneficial ownership and reports
of changes in beneficial ownership of the Common Stock. To the Company's
knowledge, for the fiscal year ended December 31, 1998, all Section 16(a) filing
requirements applicable to its executive officers, directors and holders of more
than 10% of the Common Stock were satisfied.
6
<PAGE>
Compensation Committee Interlocks and Insider Participation
Donald P. Brennan and Bernard Somers served on the Company's
Compensation Committee during 1998. Donald P. Brennan is a party to a Voting
Trust Agreement under which he and his brother, John J. Brennan, serve as voting
trustees (See Item 13). Donald P. Brennan is also a party to a Shareholders
Agreement under which he and his brother, John J. Brennan, are prohibited from
transferring shares without the consent of one another, except in certain
circumstances (See Item 13).
Compensation of Directors
The independent directors are paid directors' fees of $2,000 for each
quarterly Board meeting attended and $500 for each special Board meeting
attended and each committee meeting attended. In addition, directors are
reimbursed for expenses incurred in connection with attendance at Board and
committee meetings.
Under the Company's 1996 Non-Employee Directors Plan, each independent
director owning less than 10% of the outstanding capital stock of the Company
receives, upon initial election to the Board, an option to purchase 1,000 shares
of Common Stock. The options are fully vested and immediately exercisable, have
an exercise price equal to the fair market value of the Common Stock on the date
of grant and expire ten years after the date of grant. In addition, each
independent director owning less than 10% of the outstanding capital stock of
the Company is granted an option to purchase 1,000 shares of Common Stock on the
date of each annual meeting; these options will vest in full one year after
grant, will have an exercise price equal to the fair market value of the Common
Stock on the date of grant and expire ten years after issuance.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth certain information as of March 31, 1999
(except as otherwise noted) regarding the ownership of Common Stock (i) by each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding Common Stock, (ii) by each director of the Company, (iii) by
each executive officer of the Company named in the Summary Compensation Table
included elsewhere in this proxy statement and (iv) by all current executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage
Names Beneficially Owned (1) of Class (2)
- ----- ---------------------- ------------
<S> <C> <C>
John J. Brennan (3)(4) ...................................... 7,595,475 59.4%
Donald P. Brennan (3) ....................................... 6,346,500 54.5%
Eileen Brennan Oakley (5).................................... 2,062,500 17.7%
Bernard Somers (7)........................................... 8,000 *
John A. Stoops (7)........................................... 2,000 *
John L. Magee (8)............................................ 317,800 2.7%
John D. Campbell (6)......................................... 162,375 1.4%
Maurice J. Kerins (9)........................................ 162,250 1.4%
Dean J. Kilpatrick (6)....................................... 32,225 *
All executive officers and directors as a group (10 persons). 7,605,475 59.4%
</TABLE>
- ------------------------
* Less than one percent
7
<PAGE>
(1) Nature of ownership consists of sole voting and investment power unless
otherwise indicated. The number of shares indicated includes shares
issuable upon the exercise of outstanding stock options held by each
individual or group to the extent such options are exercisable within
60 days of March 31, 1999.
(2) The percentage for each individual or group is based on the aggregate
number of shares outstanding as of March 31, 1999 (11,642,925) and all
shares issuable upon the exercise of outstanding stock options held by
such individual or group to the extent such options are exercisable
within 60 days of March 31, 1999.
(3) Includes 6,346,500 shares of Common Stock over which John J. Brennan
and Donald P. Brennan share voting and dispositive power pursuant to a
Voting Trust Agreement dated February 2, 1996, with John J. Brennan and
Donald P. Brennan as voting trustees, and a Shareholders' Agreement
dated February 2, 1996. The address of these shareholders is 800 Town
Center Drive, Langhorne, PA 19047.
(4) Includes (i) 69,100 issued and outstanding shares of Common Stock and
1,076,975 shares of Common Stock issuable pursuant to exercisable stock
options over which John J. Brennan exercises voting control pursuant to
certain Voting Agreements entered into by and among current and former
employees of the Company, John J. Brennan and the Company. and (ii)
30,000 issued and outstanding shares of Common Stock and 72,900 shares
of Common Stock issuable pursuant to exercisable stock options issued
in Mr. Brennan's name.
(5) These shares are held subject to seven trusts for which Ms. Oakley
serves as trustee. The address of this shareholder is 800 Town Center
Drive, Langhorne, PA 19047.
(6) Consists of shares of Common Stock issuable pursuant to stock options
exercisable as of March 31, 1999, or within 60 days thereafter. Voting
control over these shares is held by John J. Brennan pursuant to the
terms of the Voting Agreements. The address of these shareholders is
800 Town Center Drive, Langhorne, PA 19047.
(7) Includes 2,000 shares of Common Stock issuable pursuant to exercisable
stock options. The address of these shareholders is 800 Town Center
Drive, Langhorne, PA 19047.
(8) Includes 26,000 issued and outstanding shares of Common Stock and
291,800 shares of Common Stock issuable pursuant to exercisable stock
options over which John J. Brennan exercises voting control pursuant to
certain Voting Agreements entered into by and among current and former
employees of the Company, John J. Brennan and the Company.
(9) Includes 2,500 issued and outstanding shares of Common Stock and
159,750 shares of Common Stock issuable pursuant to exercisable stock
options over which John J. Brennan exercises voting control pursuant to
certain Voting Agreements entered into by and among current and former
employees of the Company, John J. Brennan and the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Certain Relationships and Related Transactions Involving Executive Officers and
Directors
Voting Trust Agreement. John J. Brennan, Donald P. Brennan and the
Company have entered into a Voting Trust Agreement that terminates December 3,
2080 (the "Voting Trust Agreement"), with John J. Brennan and Donald P. Brennan
as voting trustees. All acts of the voting trustees under the Voting Trust
Agreement must be by unanimous consent, although the agreement provides that the
voting trustees all be present for purposes of constituting a quorum at any
meeting of the shareholders, regardless of whether the shares subject to the
Voting Trust Agreement are to be voted at the meeting. Upon the death,
incompetence or resignation of John J. Brennan as a voting trustee, Donald P.
Brennan shall have the right to (i) be the sole voting trustee if he becomes
actively involved in the Company, which shall include, up to December 31, 1999,
becoming Chairman and appointing a President and Chief Executive Officer, and
thereafter holding the position of President and Chief Executive Officer, or
(ii) appoint a successor trustee if he does not become, or ceases to be,
actively involved in the Company. Upon the death, incompetence or resignation of
Donald P. Brennan as a voting trustee, John J. Brennan shall have the right to
be the sole voting trustee.
8
<PAGE>
Shareholders' Agreement. John J. Brennan, Donald P. Brennan and the
Company have entered into a Shareholders' Agreement that covers the shares
included under the Voting Trust Agreement and any other shares that they may own
(the "Shareholders' Agreement"). The Shareholders' Agreement prohibits the
transfer of shares owned by John J. Brennan and Donald P. Brennan, without the
consent of the other, except (i) pursuant to a public offering, (ii) to certain
family members and trusts therefore who agree to be bound by the Shareholders'
Agreement, (iii) to the other party, or the Company, pursuant to rights of first
refusal or (iv) to a third party if the first refusal rights have not been
exercised.
Voting Agreement. Each of the Company's employee optionholders has
entered into a ten-year voting agreement (the "Voting Agreements") with the
Company and John J. Brennan, the Chairman, President and Chief Executive
Officer, pursuant to which each has agreed to vote all shares of Common Stock
received by such individuals upon the exercise of options in the manner directed
by Mr. Brennan. The Voting Agreements are binding on each of the optionholders'
successors in interest. Mr. Brennan is required to release shares covered by the
Voting Agreements if a shareholder intends to sell shares in the public market
and completes the sale within 90 days of the release. Shares sold in the public
market will thereafter not be subject to the Voting Agreements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ICT GROUP, INC.
(Registrant)
Dated: July 14, 1999
By:/s/VINCENT A. PACCAPANICCIA
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Vincent A. Paccapaniccia
Sr. Vice President, Finance and Administration
