<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by registrant [X]
Filed by a party other than the registrant [ ]
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
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Abacus Direct Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
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:
- --------------------------------------------------------------------------------
<PAGE> 2
ABACUS DIRECT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 1999
To our Stockholders:
You are cordially invited to attend the annual meeting of the stockholders,
or any adjournments or postponements thereof (the "Meeting"), of Abacus Direct
Corporation (the "Company"), which will be held on June 4, 1999 at 9:30 a.m.
(EST), at The Rihga Royal Hotel, 151 West 54th Street, New York, New York, for
the following purposes:
1. To elect five directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified
(Proposal 1);
2. To consider and vote upon a proposal to ratify and approve the 1999
Stock Incentive Plan of the Company (Proposal 2);
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 1999
(Proposal 3); and
4. To transact such other business as may properly be brought before
the Meeting.
Stockholders of record at the close of business on April 16, 1999 shall be
entitled to notice of and to vote at the Meeting. A copy of the Annual Report of
the Company for the fiscal year ended December 31, 1998 is being mailed to
stockholders simultaneously herewith.
YOU ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO BE
PRESENT, KINDLY COMPLETE AND SIGN THE ENCLOSED PROXY EXACTLY AS YOUR NAME
APPEARS ON YOUR STOCK CERTIFICATES, AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR VOTE CAN BE RECORDED.
By order of the Board of Directors
Carlos E. Sala
Secretary
April 30, 1999
Broomfield, Colorado
<PAGE> 3
ABACUS DIRECT CORPORATION
11101 WEST 120TH AVENUE
BROOMFIELD, COLORADO 80021
PROXY STATEMENT
Your proxy is solicited by the Board of Directors (the "Board" or "Board of
Directors") of Abacus Direct Corporation (the "Company") for use at the annual
meeting of stockholders, or any adjournment or postponement thereof, to be held
on Friday, June 4, 1999 (the "Meeting") at 9:30 a.m. (EST), at The Rihga Royal
Hotel, 151 West 54th Street, New York, New York, for the purposes set forth in
the attached Notice of Meeting. This Proxy Statement and form of proxy are being
mailed to stockholders on or about April 30, 1999.
Any stockholder giving a proxy may revoke it at any time prior to its use
at the Meeting by giving written notice of revocation to the Secretary of the
Company; mere attendance at the Meeting, without such notice, will not revoke
the proxy. Properly executed proxies will be voted in the manner directed by a
stockholder and, if no direction is made, will be voted FOR the election of each
of the five management nominees for election as directors (Proposal 1), FOR the
ratification and approval of the adoption of the 1999 Stock Incentive Plan of
the Company (the "1999 Plan") (Proposal 2) and FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as the Company's independent auditors
(Proposal 3).
The Board of Directors does not intend to present at the Meeting any
matters other than those set forth in this Proxy Statement, nor does the Board
of Directors know of any other matters which may come before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote it in
accordance with their judgment.
As of April 16, 1999, the record date fixed for the determination of
stockholders entitled to notice of and to vote at the Meeting, there were
outstanding 9,878,871 shares of the Company's common stock, par value $.001 per
share (the "Common Stock") which is the only outstanding class of voting
securities of the Company. Each outstanding share of Common Stock is entitled to
one vote on each matter to be voted upon.
The By-laws of the Company provide that stockholders holding one-third of
the shares of Common Stock shall constitute a quorum at meetings of the
stockholders. Shares represented in person or by proxy as to any matter will be
counted toward the fulfillment of a quorum. The affirmative vote of a plurality
of the votes cast in person or by proxy is necessary for the election of
directors (Proposal 1). The affirmative vote of a majority of the votes cast in
person or by proxy is necessary for the approval of the ratification of the
adoption of 1999 Plan (Proposal 2) and the ratification of the appointment of
independent auditors (Proposal 3).
Votes at the Meeting will be tabulated by an independent inspector of
election appointed by the Company or the Company's transfer agent. Since the
affirmative vote of a plurality of votes cast is required for the election of
directors, abstentions and "broker non-votes" will have no effect on the outcome
of such election. Since the affirmative vote of a majority of the votes cast is
necessary for the approval of the ratification and approval of the adoption of
the 1999 Plan (Proposal 2) and the ratification of the appointment of
independent auditors (Proposal 3), an abstention will have the same effect as a
negative vote, but "broker non-votes" will have no effect on the outcome of the
vote.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from beneficial owners. If
specific instructions are not received, brokers may be precluded from exercising
their discretion, depending on the type of proposal involved. Shares as to which
brokers have not exercised discretionary authority or received instructions from
beneficial owners are considered "broker non-votes."
Only stockholders of record at the close of business on April 16, 1999 will
be entitled to vote at the Meeting or any adjournment or postponement thereof.
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS'
INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND
<PAGE> 4
TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED
PROXY TO ENSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT AT THE
MEETING AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON BY
GIVING WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY. PLEASE RETURN YOUR
EXECUTED PROXY PROMPTLY.
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 16, 1999 (i) the name, address
and holdings as to each person (including any "group" as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
known by the Company to be the beneficial owner of more than five percent of the
Common Stock, and (ii) the beneficial ownership of Common Stock of each of the
executive officers and directors of the Company and all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
<S> <C> <C>
Pilgrim Baxter & Associates, Ltd.(1)........................ 833,479 8.4%
825 Duportail Road
Wayne, PA 19087
Citigroup, Inc.(2).......................................... 613,505 6.2%
153 East 53rd Street
New York, NY 10043
Nicholas Applegate Capital Management(3).................... 549,400 5.6%
600 West Broadway
San Diego, CA 92101
Putnam Investments Inc.(4).................................. 492,387 5.0%
One Post Office Square
Boston, MA 02109
M. Antony White(5).......................................... 635,500 6.3%
One Rockefeller Plaza
New York, New York 10020
Daniel C. Snyder(6)......................................... 228,069 2.3%
Carlos E. Sala(7)........................................... 95,750 1.0%
Frank Kenny(8).............................................. 13,000 *
Antony H. Lee(9)............................................ 10,000 *
Robert L. North(10)......................................... 0 *
Christopher M. Dice(11)..................................... 0 *
All executive officers and directors as a group (7 982,319 9.5%
persons)..................................................
</TABLE>
- ---------------
* Less than one (1%) percent
(1) Based upon information supplied by Pilgrim Baxter & Associates, Ltd.
(2) Based upon information supplied by Citigroup, Inc.
(3) Based upon information supplied by Nicholas Applegate Capital Management.
(4) Based upon information supplied by Putnam Investments, Inc., ("PI") on
behalf of Marsh and McLennan Companies, Inc. ("MMC") Putnam Investment
Management, Inc. ("PIM") and The Putnam Advisory Company, Inc. ("PAC"). PI,
a wholly owned subsidiary of MMC, owns PIM, investment advisors to the
Putnam family of mutual funds and PAC, investment advisor to Putnam's
institutional clients.
2
<PAGE> 5
(5) Includes (i) presently exercisable options to purchase 130,000 shares of
Common Stock, of which 43,200 shares are subject to certain repurchase
rights of the Company in the event Mr. White's employment with the Company
ceases, and (ii) 38,500 shares of Common Stock owned by the White Family
Charitable Foundation, Inc., of which Mr. White disclaims beneficial
ownership. Excludes options to purchase 79,000 shares of Common Stock which
are not exercisable within 60 days of the date hereof.
(6) Comprised of presently exercisable options to purchase 228,069 shares of
Common Stock, of which 178,327 shares are subject to certain repurchase
rights of the Company in the event Mr. Snyder's employment with the Company
ceases. Excludes options to purchase 37,301 shares of Common Stock which
are not exercisable within 60 days of the date hereof.
(7) Comprised of presently exercisable options to purchase 95,750 shares of
Common Stock. Excludes options to purchase 190,250 shares which are not
exercisable within 60 days of the date hereof.
(8) Comprised of presently exercisable options to purchase 13,000 shares of
Common Stock, exercisable within 60 days of the date hereof. Excludes
options to purchase 10,844 shares of Common Stock which are not exercisable
within 60 days of the date hereof.
(9) Comprised of presently exercisable options to purchase 10,000 shares of
Common Stock. Excludes options to purchase 10,844 shares of Common Stock
which are not exercisable within 60 days of the date hereof.
(10) Excludes options to purchase 7,844 shares which are not exercisable within
60 days of they date hereof.
(11) Excludes options to purchase 148,000 shares of Common Stock which are not
exercisable within 60 days of the date hereof.
PROPOSAL 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Company shall have between two
and twelve directors, with such number to be fixed by the Board of Directors.
Effective at the time and for the purposes of the Meeting, the number of
directors of the Company, as fixed by the Board of Directors pursuant to the
By-laws of the Company, is five.
Unless otherwise specified, each proxy received will be voted for the
election as directors of the five nominees named below to serve until the next
annual meeting of stockholders and until their successors shall have been duly
elected and qualified. Each of the nominees has consented to be named a nominee
in the Proxy Statement and to serve as a director if elected. Should any nominee
become unable or unwilling to accept a nomination or election, the persons named
in the enclosed proxy will vote for the election of a nominee designated by the
Board of Directors or will vote for such lesser number of directors as may be
prescribed by the Board of Directors in accordance with the By-laws of the
Company.
The following persons have been nominated as directors:
M. Anthony White, 49, has served as Chairman of the Board, Chief Executive
Officer and a director of the Company since he co-founded the Company in May
1989. Mr. White served as Senior Vice President -- Marketing and General Manager
of National Demographics and Lifestyles, a consumer database company, from
January 1982 through January 1990. Mr. White also serves on the Board of
Directors of the Direct Marketing Association ("DMA"). Mr. White holds a B.A.
degree in Economics and Social Studies from Trinity College in Dublin.
Daniel C. Snyder, 51, has served as President -- New Markets and
Chairman -- Abacus Europe of the Company since October 1998 and as a director of
the Company since July 1995. Prior to October 1998, Mr. Snyder served as
President and Chief Operating Officer of the Company since July 1995. Mr. Snyder
served as Senior Vice President and General Manager of the direct insurance
business unit of Providian Corporation, a financial services company, from
August 1990 to June 1995. Prior to that, Mr. Snyder served in various management
positions with Equifax, Inc. a consumer information company, from 1970 to 1990,
most recently as Vice President -- Equifax Marketing Services, Inc. Mr. Snyder
holds a degree in Business Administration from Sinclair College.
3
<PAGE> 6
Frank Kenny, 55, has served as a director of the Company since December
1989. Mr. Kenny has served as Managing Partner of Delta Partners Ltd., a venture
capital firm, since June 1994. Mr. Kenny has served as Managing Partner of Beta
Partners, Inc., a venture capital firm, since 1987. Mr. Kenny also serves on the
Board of Directors of Vivid Technologies, Inc. Mr. Kenny holds an M.B.A. degree
from the University of Chicago.
Antony H. Lee, 43, has served as a director of the Company since October,
1996. Mr. Lee has served as President and a director of Distribution Associates,
Inc. (formerly known as National Catalog Corporation), a catalog fulfillment and
warehousing company, since he founded the company in 1995. Mr. Lee served as
President and a director of Aegis Safety Holdings Inc., a direct marketer and
retailer of safety products, from its founding in 1989 until it was sold in
1995. Mr. Lee holds a Bachelor of Laws degree from the University of London,
King's College.
Robert North, 63, has served as a director of the Company since September,
1998. Mr. North has served as President, Chief Executive Officer and a director
of HNC Software, Inc. ("HNC"), a predictive software solutions company, since
June 1987. Mr. North also serves as a director of Peerless Systems Corp. and as
director of Digital Insight. For 21 years prior to joining HNC, he was a senior
executive for TRW, Inc., most recently as Vice President and General Manager of
the Electronics Systems Group. Mr. North holds B.S. and M.S. degrees in
electrical engineering from Stanford University.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
- ---- -------------------------
<S> <C>
M. Anthony White.......................... Chairman of the Board and Chief Executive Officer
Christopher M. Dice....................... President and Chief Operating Officer
Carlos E. Sala............................ Senior Vice President -- Finance, Chief Financial
Officer, Secretary and Treasurer
Daniel C. Snyder.......................... President -- New Markets and Chairman -- Abacus Europe
</TABLE>
See the table of nominees for election as directors for biographical data
with respect to Messrs. White and Snyder.
Christopher M. Dice, 48, has served as President and Chief Operating
Officer of the Company since October 1998. Mr. Dice served as President of
ImageSoft Technologies, a Fiserv image and document management company, from
1995 to 1998. Mr. Dice served in various positions with First Financial
Management Corp. from 1985 through 1995 most recently as Executive Vice
President -- Financial Services. Mr. Dice holds B.A. and M.B.A. degrees from the
University of Colorado.
Carlos E. Sala, 39, has served as Senior Vice President -- Finance, Chief
Financial Officer, Secretary and Treasurer of the Company since May 1997. Mr.
Sala served in various positions with Dal Tile International Inc., a building
products company, from 1990 through April 1997, most recently as Executive Vice
President -- Finance and Chief Financial Officer. Prior to that, Mr. Sala served
in various positions with Ernst & Young, an accounting firm, from 1984 to 1991,
most recently as a Manager -- Mergers and Acquisitions. Mr. Sala is a Certified
Public Accountant and holds a B.A. degree in finance and accounting from the
University of Georgia.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal years ended December 31,
1998, 1997 and 1996, compensation paid by the Company to the Chief Executive
Officer and to each of the other executive officers (the "named executive
officers") of the Company who served in such capacities during fiscal year 1998,
and whose total compensation, including salary, bonuses, stock options and
certain other compensation, exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------- -------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
- --------------------------- ---- --------- -------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
M. Anthony White,........... 1998 $330,000 $282,849 38,000 $15,341
Chairman of the Board 1997 $300,000 $200,564 25,000 $52,230(2)
and Chief Executive
Officer 1996 262,885 253,606 108,000 10,591
Daniel C. Snyder,........... 1998 $275,000 $235,706 23,000 $18,029
President -- New Markets 1997 250,000 166,663 18,000 17,944
and Chairman -- Abacus 1996 212,885 206,442 -- 10,693
Europe(6)
Carlos E. Sala,............. 1998 $253,000 $216,872 23,000 $26,297(5)
Senior Vice President -- 1997 144,782(3) 154,770 300,000 17,896(4)
Finance, Chief Financial
Officer, Secretary and
Treasurer
</TABLE>
- ---------------
(1) The Company provides each of Messrs. White, Snyder and Sala with certain
group life, health, medical and other non-cash benefits generally available
to all salaried employees and not included in this column pursuant to the
rules promulgated under the Exchange Act. The amounts shown include (i)
matching contributions by the Company for each of Messrs. White and Snyder
under the Company's 401(k) retirement savings plan maintained by the
Company, and (ii) Insurance premiums paid by the Company on behalf of each
of Messrs. White, Snyder and Sala under term life and disability insurance
plans that the Company provides for certain key employees.
(2) Includes forgiveness of indebtedness to the Company of an aggregate of
$37,500.
(3) Mr. Sala's employment by the Company commenced in May 1997. His annualized
salary for the year ended December 31, 1997 was $230,000.
(4) Includes $17,006 in moving and relocation expenses paid by the Company to
Mr. Sala.
(5) Includes $20,492 in moving and relocation expenses paid by the Company to
Mr. Sala.
(6) Through December 1998, Mr. Snyder served as the Company's President and
Chief Operating Officer.
OPTIONS GRANTED IN FISCAL 1998
The following information is furnished for the fiscal year ended December
31, 1998 with respect to the Company's Chief Executive Officer and each of the
other named executive officers of the Company, for stock options granted during
such fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL 1998 SHARE DATE 5% 10%
- ---- ---------- ------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. Anthony White.......... 38,000 9% $44.06 4/7/08 $1,053,017 $2,668,553
Daniel C. Snyder.......... 23,000 6% $44.06 4/7/08 $ 637,353 $1,615,177
Carlos E. Sala............ 23,000 6% $44.06 4/7/08 $ 637,353 $1,615,177
</TABLE>
5
<PAGE> 8
- ---------------
(1) Such options have a term of 10 years and were granted under the Company's
Amended and Restated 1996 Stock Incentive Plan, as amended (the "1996
Plan"). Such options become exercisable in four equal annual installments
commencing the first anniversary of the date of grant. The exercise price
per share of such options is the fair market value per share on the date of
grant.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND FISCAL YEAR END OPTION VALUES
The following information is furnished for the fiscal year ended December
31, 1998 with respect to the Company's Chief Executive Officer and each of the
other named executive officers of the Company for stock option exercises during
such fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN THE
UNDERLYING UNEXERCISED MONEY OPTIONS AT
OPTIONS AT 12/31/98(#) 12/31/98($)
SHARES ------------------------- ---------------------------
ACQUIRED ON VALUE NON- NON-
NAME EXERCISE (#) REALIZED($) EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ---- ------------ ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
M. Anthony White....... 0 0 114,250 56,750 $4,610,400 $ 504,606
Daniel C. Snyder....... 112,500 $4,899,600 217,819 36,500 $9,623,570 $ 357,051
Carlos E. Sala......... 60,000 $1,503,125 15,000 248,000 $ 288,750 $4,364,301
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements"), with each of M. Anthony White, Daniel C. Snyder, Carlos E. Sala
and Christopher M. Dice (the "Executives") which became effective October 2,
1996, October 2, 1996, May 19, 1997 and October 26, 1998, respectively. Each of
the Employment Agreements has an initial term of one year and provides for
automatic renewal for up to three additional one year periods, unless the
Company or the Executive elects to terminate his Employment Agreement by written
notice. The Employment Agreements provide for initial annual base salaries for
each of Messrs. White, Snyder, Sala and Dice of $300,000, $250,000, $230,000 and
$225,000, respectively, with future increases based on increases in the consumer
price index or by such higher amount as determined by the Board of Directors.
The Employment Agreements also provide that each Executive may be granted a
bonus of up to fifty percent (50%) of the Executive's base salary based on the
Company's financial performance, and any additional bonus the Board of Directors
may deem appropriate. The Company may terminate each of the Employment
Agreements for disability or with or without cause. Each Executive may terminate
his Employment Agreement in the event of (i) a material breach of the Employment
Agreement by the Company, (ii) the Executive's removal from his current position
without cause, or (iii) "a change in control" of the Company. In the event the
Company terminates an Executive's employment for a reason other than disability
or cause, or if the Executive terminates his employment as set forth above, or
if the respective Employment Agreement is not renewed, such Executive will be
entitled to receive a payment equal to the annual base salary then in effect and
the bonus amount the Executive would have been eligible for on the date of the
termination. Under the Employment Agreements, "change in control" of the Company
means (i) the acquisition by any person of beneficial ownership of forty percent
(40%) or more of the voting stock of the Company or (ii) the approval by the
Board of Directors of a sale of all or substantially all of the assets of the
Company unless the Executive is a member of the Board of Directors who
affirmatively votes in favor of such sale transaction resulting in the "change
of control."
On December 3, 1998, the Company entered into a Letter Agreement with
Daniel C. Snyder providing for the change of Mr. Snyder's job title to
"President -- New Markets and Chairman-Abacus Europe". In addition, the Company
and Mr. Snyder acknowledged that pursuant to certain option agreements between
the Company and Mr. Snyder, the Company has certain repurchase rights, which
terminate in 20% increments (each such 20% increment, a "Repurchase Share") on
each anniversary of the date of grant. The Letter Agreement also provides that
in the event the Company terminates the Employment Agreement with Mr. Snyder for
any reason other than for Cause, as defined in such Employment Agreement, prior
to September 15, 1999, the Company will be deemed to have waived a pro rata
portion of the Repurchase Share
6
<PAGE> 9
which would have terminated on September 15, 1999, based upon the amount of time
that Mr. Snyder was employed by the Company during the twelve (12) month period
ending on such date.
On January 7, 1999, the Company entered into agreements (the "Amendments")
which amend each of the Employment Agreements with Messrs. M. Anthony White,
Daniel C. Snyder, Carlos E. Sala and Christopher M. Dice. The Amendments amend
the Agreements to provide that if the Executives' employment with the Company
shall be terminated by the Executive or by the Company upon or within four (4)
months following a "change in control", then the Executives' shall be entitled
to receive, among other things, a lump-sum severance payment in an amount equal
to the sum of (x) twenty-four (24) months of the base salary then in effect and
(y) an amount equal to two (2) times any incentive compensation earned by the
Executive in the most recently completed fiscal year of the Company.
On January 7, 1999, the Company entered into Omnibus Amendments to the
Stock Option Agreements of each of the M. Anthony White and Daniel C. Snyder,
which generally provide that, in the event of a change in control, as defined in
the 1996 Plan, of the Company, (i) any options issued to Messrs. White and
Snyder, as the case may be, pursuant to agreements under the 1996 Plan shall
immediately vest and become exercisable by such Executive with respect to one
hundred percent (100%) of the shares subject to such options, and (ii)
notwithstanding anything to the contrary contained in any agreements (the "1989
Plan Agreements") entered into with M. Anthony White and Daniel C. Snyder
relating to options issued under the 1989 Plan, the Company would agree to waive
its right to repurchase any and all of the shares that may or may have been
acquired by such Executive pursuant to the exercise of options issued pursuant
to the 1989 Plan Agreements.
On January 7, 1999, the Company entered into Omnibus Amendments to the
Stock Option Agreements of Carlos E. Sala, which generally provides that, in the
event of a Change in Control, as defined in the 1996 Plan, of the Company, any
options issued to Mr. Sala pursuant to agreements under the 1996 Plan shall
immediately vest and become exercisable by Mr. Sala with respect to one hundred
percent (100%) of the shares subject to such options.
The Company is the beneficiary of a $1.5 million key man life insurance
policy with respect to each of Messrs. White and Snyder.
STOCK OPTION PLANS
Amended and Restated 1989 Stock Option Plan
The Company adopted an Amended and Restated 1989 Stock Option Plan (the
"1989 Plan") for officers, directors, employees, and consultants of the Company
in March 1989. As of April 16, 1999, ten year options under the 1989 Plan to
purchase an aggregate of 415,793 shares of the Common Stock at a weighted
average exercise price of $3.50 per share were outstanding. The Company has
determined not to grant further options under the 1989 Plan. Options granted to
employees pursuant to the 1989 Plan may either be Incentive Stock Options
("ISOs") that qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or nonqualified stock options ("NQSOs"). The 1989 Plan is
administered by the Board of Directors and provides that the Board may determine
the exercise price provided that such price may not be less than the fair market
value of the Common Stock on the date of grant.
The options granted under the 1989 Plan vest either (i) in either four or
five equal annual installments commencing on the first anniversary of the date
of grant, or (ii) immediately, subject to repurchase at the exercise price of
any shares purchased upon exercise in the event of termination of the optionee's
employment with the Company (other than due to death or disability). The
Company's repurchase right is reduced by either twenty percent (20%) or twenty
five percent (25%) on each anniversary of the grant date. The options may be
exercised either by payment in cash of the exercise price or, at the discretion
of the Board, by tendering shares of Common Stock having a fair market value
equal to the option exercise price.
7
<PAGE> 10
Amended and Restated 1996 Stock Incentive Plan, As Amended
The Company has adopted the 1996 Plan for officers, directors, employees,
and consultants of the Company and its subsidiaries in August 1996. The 1996
Plan authorizes the issuance of up to 1,100,000 shares of Common Stock. The 1996
Plan provides for its administration by either a committee of two or more
outside directors or the Board of Directors (the "96 Plan Administrator"). In
general, the 96 Plan Administrator, in its sole discretion, determines which
eligible employees, officers, directors and consultants of the Company and its
subsidiaries may participate in the 1996 Plan and the type, extent and terms of
the equity-based awards to be granted to them. In the event of a change in
control, as defined in the 1996 Plan, all options will become immediately vested
and exercisable and the restrictions with regard to restricted stock will lapse
unless the 96 Plan Administrator reasonably determines in good faith, prior to
the occurrence of the change in control, that the options will be honored or
assumed, or new rights substituted therefor. Options granted to employees may
either be ISOs or NQSOs. Each option has a maximum term of ten years from the
date of the grant, subject to early termination. The 96 Plan Administrator may
determine the exercise price provided that such price may not be less than the
fair market value of the Common Stock on the date of grant. At the discretion of
the 96 Plan Administrator, the exercise price of the options may be paid in cash
or by tendering of shares of Common Stock having a fair market value equal to
the exercise price of such option.
The 1996 Plan provides for the automatic grant to each of the Company's
non-employee directors of options, which have a ten (10) year term to purchase
(i) 8,000 shares of Common Stock on the date of the Company's annual meeting of
stockholders, 4,000 of which become exercisable on the six month anniversary of
the date of grant and 4,000 of which become exercisable in four equal annual
installments commencing the first anniversary of the date of grant, and (ii)
4,000 shares of Common Stock simultaneously with the commencement of service as
a director, which become exercisable in four equal annual installments
commencing the first anniversary of the date of grant. The options have an
exercise price equal to the fair market value of the Common Stock on the date of
grant. Options granted to non-employee directors do not qualify as ISOs within
the meaning of 422A of the Code.
As of April 16, 1999, 248 persons have been granted 10-year options under
the 1996 Plan to purchase an aggregate of 1,160,113 shares of Common Stock
(including options to purchase an aggregate of 60,113 shares which were canceled
and subsequently regranted) at a weighted average exercise price of $34.98 per
share, of which options to purchase 991,736 shares of Common Stock are currently
outstanding. The closing price of the Common Stock as traded on the Nasdaq
National Market System on April 16, 1999 was $73.25.
1999 Stock Incentive Plan
See Proposal 2.
OTHER
The Company does not currently maintain a pension plan or other actuarial
retirement plan for its named executive officers. The Company does not currently
maintain any long term incentive plans. The Company's named executive officers
are eligible to participate in benefit plans which are generally available to
the Company's employees, including a 401(k) savings plan and the health and life
insurance programs.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for service as directors. During the fiscal year ended December 31,
1998, each non-employee director received a formula award grant of 8,000 options
under the 1996 Plan. In addition, during the fiscal year ended December 31,
1998, each non-employee director was paid a fee of $2,500 for each Board meeting
and $1,500 for each Committee meeting attended. All directors are reimbursed for
all reasonable expenses incurred on behalf of the Company.
Antony H. Lee, a director, provided certain consulting services to the
Company during the fiscal year ended December 31, 1998, and was paid $15,000 in
consulting fees by the Company during such year.
8
<PAGE> 11
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
Compensation Policy
The Compensation Committee is responsible for setting and administering the
policies which govern annual executive salaries, raises and bonuses and the
award of stock options (in the case of options to be granted under the Company's
stock option plans, such responsibility is limited to the recommendation of
awards to the Company's Board of Directors). The Compensation Committee is
currently composed of three members, two of whom Mr. Kenny and Mr. Lee are
non-employee directors, and one of whom, Mr. White, is the Chairman of the Board
and Chief Executive Officer of the Company.
The policy of the Compensation Committee is to provide compensation to the
Chief Executive Officer and the Company's other executive officers reflecting
the contribution of such executives to the Company's growth in sales and
earnings, the implementation of strategic plans consistent with the long term
growth objectives of the Company and the enhancement of shareholder value as
reflected in the growth of the Company's market capitalization. Contributions to
specific Company objectives, including the expansion of the Abacus database,
increase in revenues from new and existing members of the Abacus Alliance and
the development of new product and market opportunities are evaluated in setting
compensation policy. Growth in sales and earnings are the primary factors in
consideration of compensation at the senior executive levels. Executive
compensation decisions have traditionally been made on a calendar year basis.
The Company's compensation program consists of base salary, bonus and long
term incentive compensation comprised exclusively of the award of stock options
under the Company's incentive stock option plans.
Company Performance and CEO Compensation
Executive compensation for the fiscal year ended December 31, 1998
consisted of base salary, an annual bonus and the award of stock options. The
base salary paid to each of the executive officers of the Company during 1998
was in accordance with written employment agreements described herein under
"Employment Agreements." The Compensation Committee met in January 1998 to
establish a bonus policy of the Company based upon the achievement of net income
objectives during 1998. The Compensation Committee met once in 1999 to review
the financial results of the Company and its executive bonus compensation for
the calendar year ended December 31, 1998 based upon the previously established
bonus policy. The Compensation Committee had requested, and management had
prepared, data relating to operating and financial goals and achievements (and
specifically relating to sales growth, earnings growth, membership growth of the
Abacus Alliance (the Company's cooperative database), the progress of
development of other market and product opportunities and the Company's market
capitalization). In addition, the Compensation Committee requested information
concerning proposed increases in compensation of the Company's employees
generally and comparable companies.
The Compensation Committee noted that for the year ended December 31, 1998,
the Company's sales grew by approximately 52% over the comparable period of the
prior year and net income grew by approximately 52% over the comparable period
of the prior year. The Compensation Committee also noted that the growth of
sales and net income was substantially in excess of those being achieved by
other publicly held companies in the direct marketing industry and by other
publicly held companies of comparable size.
The Compensation Committee further noted the achievement of the following
strategic objectives during calendar year 1998: the significant expansion of the
Abacus Alliance, the development of direct marketing initiatives outside of the
consumer catalogue industry and the achievement of strong profitability while
supporting rapid growth. In addition, the Board noted that the Company's
employees generally were awarded raises averaging approximately 13% including
certain adjustments made to reflect promotions or prevailing market conditions.
The Board then noted that the compensation of the CEO and the other executive
officers of the Company were reflective of the Company's performance and were
comparable to that at other public companies exhibiting strong growth and
profitability.
The Compensation Committee considered the foregoing factors with particular
emphasis upon the growth in sales and earnings and increases proposed by
management for the Company's employees generally.
9
<PAGE> 12
The Compensation Committee, therefore, concluded that bonuses proposed for each
of the CEO and the other executive officers were justified. Based upon the
foregoing, the Compensation Committee approved a bonus for Mr. White in the
amount of $282,849, in accordance with the annual bonus policy of the Company
and based upon the achievement of net income objectives during 1998.
During fiscal 1998, the Board awarded stock options to Mr. White and the
other executive officers named in the table set forth at "Options Granted in
Fiscal 1998" in the amounts set forth therein. The Board determined to continue
the Company's long-standing policy of utilizing the award of stock options,
which provide value to the executive over time as growth in the market price of
the Company's shares reflects the successful achievement of the Company's
business objectives and increases in value for stockholders, to identify the
success of the Company's executives with the growth in equity value to the
Company's stockholders. The size of the awards made were determined based upon
the level of management responsibility of the various executive officers, their
respective prior and anticipated contribution to the achievement of the
performance objectives described above and the Committee's view of an
appropriate equity position to be maintained by the Company's executive officers
in light of the Company's market capitalization.
The Committee has considered the potential impact of Section 162(m) of the
Code on executive compensation. Section 162(m) disallows a tax deduction for any
publicly-held corporation for individual compensation exceeding $1 million in
any tax year for any executive officer, unless compensation is based on
performance and satisfies certain other requirements. The Company maintains
executive cash compensation below the $1 million threshold, and the Company
believes that any options granted under the Plan to any of its executive
officers will qualify as performance-based compensation, to the extent that any
of the same may result in compensation in excess of the threshold. Consequently,
the Committee does not believe that Section 162(m) will have any impact on the
deductibility to the Company of any compensation paid to executive officers. The
Committee, however, reserves the right to award non-deductible compensation in
circumstances they deem appropriate. Because of uncertainty as to the
application and interpretation of Section 162(m), no assurance can be given that
compensation intended by the Company to satisfy the requirements for
deductibility under Section 162(m), does in fact do so.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Frank Kenny
Antony H. Lee
M. Anthony White
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
M. Anthony White, the Company's Chairman of the Board and Chief Executive
Officer, is a member of the Compensation Committee of the Board and participated
in deliberations concerning executive compensation. Mr. White abstained from
voting with respect to his own compensation.
10
<PAGE> 13
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock since the initial public offering of the Common Stock ("IPO") with
the cumulative total return on the Nasdaq US Index and the Nasdaq Computer and
Data Processing Index over the same period (assuming the investment of $100 in
the Common Stock, the Nasdaq US Index and the Nasdaq Computer and Data
Processing Index on September 26, 1996, and the reinvestment of all dividends).
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
NASDAQ
COMPUTER
ABACUS AND DATA
MEASUREMENT PERIOD DIRECT NASDAQ US PROCESSING
(FISCAL YEAR COVERED) CORPORATION INDEX INDEX
<S> <C> <C> <C>
9/26/96 100 100 100
12/31/96 134 105 104
12/31/97 293 129 127
12/31/98 325 180 228
</TABLE>
COMMITTEES; BOARD MEETINGS
The Company has an Audit Committee composed of Messrs. White, Kenny and
Lee. During the fiscal year ended December 31, 1998, the Audit Committee met on
one occasion for the purpose of (i) approving the selection of the Company's
independent auditors; (ii) reviewing the results and scope of the audit; and
(iii) reviewing the Company's internal accounting procedures and controls and
recommendations of the Company's auditors.
The Company has a Compensation Committee composed of Messrs. White, Kenny
and Lee. During the fiscal year ended December 31, 1998, the Compensation
Committee met on one occasion for the purpose of establishing and reviewing the
Company's policies and guidelines with respect to the compensation of executive
officers.
The Board of Directors of the Company held four meetings during the fiscal
year ended December 31, 1998. All directors attended all such Board meetings and
all Committee meetings of each committee of which he is a member.
The Company does not have a Nominating Committee.
11
<PAGE> 14
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 ten percent (10%) of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the stock exchange upon which the Company's stock is
listed, initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. Officers, directors and
greater than ten-percent shareholders are required to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's knowledge, based
solely on review of the copies of such reports furnished to the Company, during
the year ended December 31, 1998, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent (10%)
beneficial owners were complied with.
CERTAIN TRANSACTIONS
In connection with the consummation on October 2, 1996 of the IPO, a
Securities Purchase Agreement (the "Securities Purchase Agreement") dated
November 30, 1990, among the Company, various investors named therein, M.
Anthony White and Karl M. Friedman, pursuant to which the Company issued certain
of its securities, was terminated. In connection with the termination of the
Securities Purchase Agreement, which provided for the grant of certain
registration rights, Messrs. White and Friedman (along with the other parties to
the Securities Purchase Agreement), were granted two demand registration rights
and unlimited piggyback registration rights which rights terminate on the
earlier of August 4, 1999 or the date on which there are no registerable
securities outstanding.
The Company entered into an agreement on April 19, 1999 with HNC which
provides for the non exclusive license by the Company of certain software of HNC
and by HNC of certain proprietary data of the Company. Such agreement provides
for an initial term of 3 years, and fees to each licensor equal to 50% of the
incremental gross revenue received by a party from the use of the licensed
technology but in no event less than the licensors basic fee for such licensed
technology. Robert L. North, a director of the Company, serves as President,
Chief Executive Officer and a director of HNC. Management believes that such
transaction was on terms that were at least as favorable to the Company as would
have been available from unrelated parties.
PROPOSAL 2
ADOPTION OF THE 1999 STOCK INCENTIVE PLAN
The 1999 Stock Incentive Plan of the Company (the "1999 Plan") was adopted
by the Board of Directors on April 14, 1999 and will become effective on June 4,
1999, subject to approval by the stockholders at the Meeting. The purpose of the
1999 Plan is to attract and retain the best available personnel for positions of
substantial responsibility and to provide additional incentives to employees,
officers, directors, consultants, independent contractors and advisors to
promote the growth and success of the Company's business. Plans such as the 1999
Plan have become particularly important for the Company to be able to continue
to retain and attract key management and directors because of the competitive
nature of the market in which the Company operates. There are only 3,561 shares
remaining under the 1996 Plan which are available for grant. As a result, the
Board of Directors has adopted resolutions authorizing the establishment of the
1999 Plan. The 1999 Plan is designed to permit the Company to take a deduction
under Section 162(m) of the International Revenue Code.
SUMMARY OF THE 1999 STOCK INCENTIVE PLAN
Administration and Eligibility. The 1999 Plan authorizes the issuance of up
to 750,000 shares of Common Stock upon the exercise of stock options or in
connection with the issuance of restricted stock and stock bonuses. The 1999
Plan authorizes the granting of (i) stock options, restricted stock and stock
bonuses to employees, officers, directors and consultants, independent
contractors and advisors of the Company and its subsidiaries and affiliates
provided such consultants, independent contractors and advisors render bona fide
12
<PAGE> 15
services not in connection with the offer and sale of securities in a
capital-raising transaction and (ii) non-discretionary automatic awards of stock
options to non employee directors of the Company. The 1999 Plan provides for its
administration by either a committee which has two or more outside directors or
the Board of Directors (the "Administrator"). In general, the Administrator, in
its sole discretion, determines which eligible employees, officers, directors,
consultants, independent contractors and advisors of the Company, its
subsidiaries and its affiliates may participate in the 1999 Plan and the type,
extent and terms of the equity-based awards to be granted to them.
The 1999 Plan provides for the grant of both ISOs that qualify under
Section 422 of the Code, and NQSOs. ISOs may be granted only to employees of the
Company or of a parent or subsidiary of the Company. NQSOs (and all other Awards
other than ISOs) may be granted to employees, officers, directors and
consultants, independent contractors and advisors that render bona fide services
not in connection with the offer and sale of securities in a capital-raising
transaction. The exercise price of ISOs must be at least equal to the fair
market value of the Company's Common Stock on the date of grant. (The exercise
price of ISOs granted to 10% stockholders must be at least equal to 110% of that
value.) The exercise price of NQSOs must be at least equal to 85% of the fair
market value of the Company's Common Stock on the date of grant. The maximum
term of options granted under the 1999 Plan is ten years. Awards granted under
the 1999 Plan may not be transferred in any manner other than by will or by the
laws of descent and distribution and may be exercised during the lifetime of the
optionee only by the optionee (unless otherwise determined by the Administrator
and set forth in the award agreement with respect to awards that are not ISOs).
Options granted under the 1999 Plan generally expire three months after the
termination of the optionee's service to the Company or a parent, subsidiary or
affiliate of the Company, except in the case of death or disability, in which
case the options generally may be exercised up to 12 months following the date
of death or termination of service. Options will generally terminate immediately
upon termination for cause. In the event of the Company's dissolution or
liquidation or a "change in control" transaction, outstanding awards may be
assumed or substituted by the successor corporation (if any). In the discretion
of the Administrator the vesting of such awards may accelerate upon such
transaction.
Restricted Stock. The Administrator may make grants of restricted stock for
cash or other consideration, as the Administrator determines. The number of
shares of Common Stock granted to each grantee will be determined by the
Administrator. Grants of restricted stock will be made subject to such
restrictions and conditions as the Administrator may determine in its sole
discretion, including periods of restriction on transferability during which
time the grant may be required to be deposited with an escrow agent, if the
Administrator so determines.
Stock Bonuses. A stock bonus is an award of shares (which may consist of
Restricted Stock) for services rendered to the Company or any subsidiary of the
Company for past or future services. Stock bonuses and the criterion they are
based upon will be determined by the Administrator.
Formula Awards. The 1999 Plan provides for the automatic grant to each of
the Company's non-employee directors of options, which have a ten (10) year term
to purchase (i) 8,000 shares of Common Stock on the date of the Company's annual
meeting of stockholders, 4,000 of which become exercisable on the six month
anniversary of the date of grant and 4,000 of which become exercisable in four
equal annual installments commencing the first anniversary of the date of grant,
and (ii) 4,000 shares of Common Stock simultaneously with the commencement of
service as a director, which become exercisable in four equal annual
installments commencing the first anniversary of the date of grant. The options
have an exercise price equal to the fair market value of the Common Stock on the
date of grant. Options granted to non-employee directors do not qualify as ISOs
within the meaning of 422A of the Code.
Amendment. The Board has the right to amend, suspend or terminate the 1999
Plan at any time, provided, however, that no amendment or change in the 1999
Plan that requires stockholder approval will be effective without such approval.
Certain Tax Consequences. No taxable income is realized by an optionee upon
the grant or exercise of an ISO. If Common Stock is issued to an optionee
pursuant to the exercise of an ISO, and if no disqualifying disposition of such
shares is made by such optionee within two years after the date of grant or
within one year
13
<PAGE> 16
after the transfer of such shares to such optionee, then (i) upon sale of such
shares, any amount realized in excess of the option price will be taxed to such
optionee as a long-term capital gain and any loss sustained will be a long-term
capital loss, and (ii) no deduction will be allowed to the optionee's employer
for Federal income tax purposes. If Common Stock acquired upon the exercise of
an ISO is disposed of prior to the expiration of either holding period described
above, generally (i) the optionee will realize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market value
of such shares at exercise (or, if less, the amount realized on the disposition
of such shares) over the option price paid for such shares, and (ii) the
optionee's employer will be entitled to deduct such amount for Federal income
tax purposes if the amount represents an ordinary and necessary business
expense. Any further gain (or loss) realized by the optionee upon the sale of
the Common Stock will be taxed as short-term or long-term capital gain (or
loss), depending on how long the shares have been held, and will not result in
any deduction by the employer. Subject to certain exceptions for disability or
death, if an ISO is exercised more than three months following termination of
employment, the exercise of the option will generally be taxed as the exercise
of a non-ISO. For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income, and
compute the tax basis in the stock so acquired, in the same manner as if the
optionee had exercised a non-ISO. Each optionee is potentially subject to the
alternative minimum tax. In substance, a taxpayer is required to pay the higher
of his/her alternative minimum tax liability or his/her "regular" income tax
liability. As a result, a taxpayer has to determine his/her potential liability
under the alternative minimum tax.
With respect to non-ISOs (i) no income is realized by the optionee at the
time the option is granted; (ii) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the difference between the option
price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the optionee's employer is generally
entitled to a tax deduction in the same amount subject to applicable tax
withholding requirements; and (iii) at sale, appreciation (or depreciation)
after the date of exercise is treated as either short-term or long-term capital
gain (or loss) depending on how long the shares have been held. Individuals
subject to Section 16(b) of the Exchange Act will recognize ordinary income at
the time of exercise of a non-ISO as noted above, provided at least six months
have elapsed from the date of grant to the date of exercise. In the event that
less than six months have elapsed, such individual will recognize ordinary
income at the time such six month period elapses in an amount equal to the
excess of the fair market value of the shares on such date over the exercise
price.
The granting of an award of restricted stock does not result in taxable
income to the recipient unless the recipient elects to report the award as
taxable income under Section 83(b) of the Code. Absent such an election, the
value of the award is considered taxable income once it is vested and
distributed. Dividends are paid concurrent with, and in an amount equal to,
ordinary dividends and are taxable as paid. If a Section 83(b) election is made,
the recipient recognizes ordinary income in the amount of the total value on the
date of grant and the Company receives a corresponding tax deduction. Any gain
or loss subsequently experienced will be a capital gain or loss to the recipient
and the Company does not receive an additional tax deduction.
Optionees are strongly advised to consult with their individual tax
advisers to determine their personal tax consequences resulting from the grant
and/or exercise of options or stock bonuses or the issuance and sale of
restricted stock under the 1999 Plan. The foregoing summary of the 1999 Plan is
qualified by reference to the 1999 Plan which is printed in its entirety as
Exhibit A hereto.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE RATIFICATION
AND APPROVAL OF THE ADOPTION OF THE 1999 PLAN.
14
<PAGE> 17
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP has audited the financial statements
of the Company for each of the four fiscal years ended December 31, 1998. The
Board of Directors desires to continue the services of PricewaterhouseCoopers
LLP for the current fiscal year ending December 31, 1999. Accordingly, the Board
of Directors will recommend to the Meeting that the stockholders ratify the
appointment by the Board of Directors of the firm of PricewaterhouseCoopers LLP
to audit the financial statements of the Company for the current fiscal year.
Representatives of that firm are expected to be present at the Meeting, will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions. In the event the
stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the
appointment will be reconsidered by the Audit Committee and the Board of
Directors.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP.
MISCELLANEOUS
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1998 is
being mailed to stockholders contemporaneously with this Proxy Statement.
FORM 10-K
UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON
STOCK ENTITLED TO VOTE AT THE MEETING, THE COMPANY WILL PROVIDE WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE COMMISSION FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1998. REQUESTS SHOULD BE MAILED TO CORPORATE SECRETARY,
ABACUS DIRECT CORPORATION, 11101 W. 120TH AVENUE, BROOMFIELD, COLORADO 80021.
COST OF SOLICITATION
The cost of soliciting proxies has been or will be paid by the Company. In
addition to solicitation by mail, arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxy material to
beneficial owners, and the Company will, upon request, reimburse them for their
reasonable expenses in doing so. To the extent necessary in order to assure
sufficient representation, officers and regular employees of the Company and a
commercial proxy solicitation firm may be engaged to assist in the solicitation
of proxies. Whether either measure will be necessary depends entirely upon how
promptly proxies are received. No outside proxy solicitation firm has been
selected or employed by the Company in respect of the Meeting as of the date of
this Proxy Statement, and the Company is unable to estimate the costs to it of
any such services.
15
<PAGE> 18
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders to be presented at the annual meeting of
stockholders to be held in the year 2000 must be received by the Company for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting no later than December 9, 1999.
Stockholders are urged to send in their proxies without delay.
Carlos E. Sala,
Secretary
Dated: April 30, 1999
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<PAGE> 19
EXHIBIT A
ABACUS DIRECT CORPORATION
1999 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the Abacus Direct Corporation 1999 Stock
Incentive Plan (the "Plan") is to provide a means through which the Company and
its Subsidiaries and Affiliates may attract able persons to enter and remain in
the employ of the Company and its Subsidiaries and Affiliates and to provide a
means whereby eligible persons can acquire and maintain Common Stock ownership,
or be paid incentive compensation measured by reference to the value of Common
Stock, thereby strengthening their commitment to the welfare of the Company and
its Subsidiaries and Affiliates and promoting an identity of interest between
stockholders and these eligible persons.
So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options, Nonqualified Stock Options, Restricted Stock
Awards and Stock Bonuses, or any combination of the foregoing. Capitalized terms
not defined in the text are defined in Section 25.
2. SHARES SUBJECT TO THE PLAN. Subject to Section 18, the total number of
Shares reserved and available for grant and issuance pursuant to this Plan will
be 750,000 Shares plus Shares that are subject to: (a) issuance upon exercise of
an Option but cease to be subject to such Option for any reason other than
exercise of such Option; (b) an Award granted hereunder but are forfeited or are
repurchased by the Company at the original issue price; and (c) an Award that
otherwise terminates without Shares being issued. At all times the Company shall
reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding Options granted under this Plan and
all other outstanding but unvested Awards granted under this Plan.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only to
employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent, Affiliate or Subsidiary of the
Company; provided such consultants, contractors and advisors render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board. Subject to the general purposes, terms and
conditions of this Plan, and to the direction of the Board, the Committee
will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(1) select persons to receive Awards;
(2) determine the nature, extent, form and terms of Awards and the
number of Shares or other consideration subject to Awards;
(3) determine the vesting, exercisability and payment of Awards;
(4) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(5) determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of
the Company;
(6) prescribe, amend and rescind rules and regulations relating to
this Plan or any Award;
(7) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
A-1
<PAGE> 20
(8) grant waivers of Plan or Award conditions;
(9) determine whether an Award has been earned; and
(10) make all other determinations necessary or advisable for the
administration of this Plan.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.
4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time
of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final
and binding on the Company and on all persons having an interest in any
Award under this Plan.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be intended to be Incentive Stock Options
within the meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOS"),
the number of Shares subject to the Option, the Exercise Price of the Option,
the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement ("Stock Option Agreement"), which will
expressly identify the Option as an ISO or an NQSO, and will be in such
form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.
5.2 Exercise Period. Options may be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option
will be exercisable after the expiration of ten (10) years from the date
the Option is granted; and provided further that no ISO granted to a person
who directly or by attribution owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of
any Parent or Subsidiary of the Company ("Ten Percent Stockholder") will be
exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for Options to become exercisable
at one time or from time to time, periodically or otherwise, in such number
of Shares or percentage of Shares as the Committee determines.
5.3 Exercise Price.The Exercise Price of an Option will be determined
by the Committee when the Option is granted and may be not less than 85% of
the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair
Market Value of the Shares on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Stockholder will not be less than
110% of the Fair Market Value of the Shares on the date of grant. Payment
for the Shares purchased may be made in accordance with Section 8 of this
Plan.
5.4 Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy
of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.5 Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same
for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement,
if any, and such representations and agreements regarding Participant's
investment intent and access to information and
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other matters, if any, as may be required or desirable by the Company to
comply with applicable securities laws, together with payment in full of
the Exercise Price for the number of Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods set forth in
the Stock Option Agreement, exercise of an Option will always be subject to
the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's death
or Disability (or the Participant dies within three (3) months
after a Termination other than for Cause or because of
Participant's Disability), then Participant's Options may be
exercised only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal representative
or authorized assignee) no later than twelve (12) months after
the Termination Date (or such shorter or longer time period not
exceeding five (5) years as may be determined by the Committee,
with any such exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other
than the Participant's death or Disability, or (b) twelve (12)
months after the Termination Date when the Termination is for
Participant's death or Disability, deemed to be an NQSO), but
in any event no later than the expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant,
the Participant's estate nor such other person who may then
hold the Option shall be entitled to exercise any Option with
respect to any Shares whatsoever, after termination of service,
whether or not after termination of service the Participant may
receive payment from the Company or Subsidiary for vacation
pay, for services rendered prior to termination, for services
rendered for the day on which termination occurs, for salary in
lieu of notice, or for any other benefits. In making such
determination, the Board shall give the Participant an
opportunity to present to the Board evidence on his behalf. For
the purpose of this paragraph, termination of service shall be
deemed to occur on the date when the Company dispatches notice
or advice to the Participant that his service is terminated.
5.7 Limitations on ISO. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year
(under this Plan or under any other incentive stock option plan of the
Company, Parent or Subsidiary of the Company) will not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which
ISO are exercisable for the first time by a Participant during any calendar
year exceeds $100,000, then the Options for the first $100,000 worth of
Shares to become exercisable in such calendar year will be ISO and the
Options for the amount in excess of $100,000 that become exercisable in
that calendar year will be NQSOs. In the event that the Code or the
regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of
Shares permitted to be subject to ISO, such different limit will be
automatically incorporated herein and will apply to any Options granted
after the effective date of such amendment.
5.8 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options
in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's
rights under any
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Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section
424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a
written notice to them; provided, however, that the Exercise Price may not
be reduced below the minimum Exercise Price that would be permitted under
Section 5.3 of this Plan for Options granted on the date the action is
taken to reduce the Exercise Price.
5.9 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.10 No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO
under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to
sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that will be in such form
(which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. The offer of Restricted Stock will be accepted
by the Participant's execution and delivery of the Restricted Stock
Purchase Agreement and full payment for the Shares to the Company within
thirty (30) days from the date the Restricted Stock Purchase Agreement is
delivered to the person. If such person does not execute and deliver the
Restricted Stock Purchase Agreement along with full payment for the Shares
to the Company within thirty (30) days, then the offer will terminate,
unless otherwise Determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten
Percent Stockholder, in which case the Purchase Price will be 100% of the
Fair Market Value. Payment of the Purchase Price may be made in accordance
with Section 8 of this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set
out in advance in the Participant's individual Restricted Stock Purchase
Agreement. Restricted Stock Awards may vary from Participant to Participant
and between groups of Participants. Prior to the grant of a Restricted
Stock Award, the Committee shall: (a) determine the nature, length and
starting date of any Performance Period for the Restricted Stock Award; (b)
select from among the Performance Factors to be used to measure performance
goals, if any; and (c) determine the number of Shares that may be awarded
to the Participant. Prior to the payment of any Restricted Stock Award, the
Committee shall determine the extent to which such Restricted Stock Award
has been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Restricted Stock Awards that are
subject to different Performance Periods and having different performance
goals and other criteria.
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6.4 Stock Restrictions. Each certificate representing Restricted
Stock awarded under the Plan shall bear the following legend until the
lapse of all restrictions with respect to such Stock:
"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated
as of , between Abacus Direct Corporation and
. A copy of such Agreement is on file at the Principal
executive offices of the Company."
Stop transfer orders shall be entered with the Company's transfer
agent and registrar against the transfer of legended securities.
6.5 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Shares, cash or
otherwise) with respect to the Restricted Stock Award only to the extent
earned as of the date of Termination in accordance with the Restricted
Stock Purchase Agreement, unless the Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus may be
awarded for past services already rendered to the Company, or any Parent or
Subsidiary of the Company pursuant to an Award Agreement (the "Stock Bonus
Agreement") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A
Stock Bonus may be awarded upon satisfaction of such performance goals as
are set out in advance in the Participant's individual Award Agreement (the
"Performance Stock Bonus Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to
time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to
Participant and between groups of Participants, and may be based upon the
achievement of the Company, Parent or Subsidiary and/or individual
performance factors or upon such other criteria as the Committee may
determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number
of Shares to be awarded to the Participant. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee will: (a) determine the nature,
length and starting date of any Performance Period for each Stock Bonus;
(b) select from among the Performance Factors to be used to measure the
performance, if any; and (c) determine the number of Shares that may be
awarded to the Participant. Prior to the payment of any Stock Bonus, the
Committee shall determine the extent to which such Stock Bonuses have been
earned. Performance Periods may overlap and Participants may participate
simultaneously with respect to Stock Bonuses that are subject to different
Performance Periods and different performance goals and other criteria. The
number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses
to take into account changes in law and accounting or tax rules and to make
such adjustments as the Committee deems necessary or appropriate to reflect
the impact of extraordinary or unusual items, events or circumstances to
avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of
cash or whole Shares or a combination thereof, either in a lump sum payment
or in installments, all as the Committee will determine.
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8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares); or (2)
were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to the Participant for
services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
i. through a "same day sale" commitment from the Participant and
a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the
Participant irrevocably elects to exercise the Option and to
sell a portion of the Shares so purchased to pay for the
Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
ii. through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such Shares. Whenever, under this
Plan, payments in satisfaction of Awards are to be made in cash, such
payment will be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements.
9.2 Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any
Award that is subject to tax withholding and the Participant is obligated
to pay the Company the amount required to be withheld, the Committee may in
its sole discretion allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from
the Shares to be issued that number of Shares having a Fair Market Value
equal to the minimum amount required to be withheld, determined on the date
that the amount of tax to be withheld is to be determined. All elections by
a Participant to have Shares withheld for this
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purpose will be made in accordance with the requirements established by the
Committee and be in writing in a form acceptable to the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Award Agreement a right to
repurchase a portion of or all Unvested Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other securities delivered
under this Plan will be subject to such stock transfer orders, legends and other
restrictions as the Committee may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities law, or
any rules, regulations and other requirements of the SEC or any stock exchange
or automated quotation system upon which the Shares may be listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
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16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other
than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under
this Plan are assumed, converted or replaced by the successor corporation,
which assumption will be binding on all Participants), (c) a merger in
which the Company is the surviving corporation but after which the
stockholders of the Company immediately prior to such merger (other than
any stockholder that merges, or which owns or controls another corporation
that merges, with the Company in such merger) cease to own their shares or
other equity interest in the Company, (d) the sale of substantially all of
the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all Participants.
In the alternative, the successor corporation may substitute equivalent
Awards or provide substantially similar consideration to Participants as
was provided to stockholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection
18.1, such Awards will expire on such transaction at such time and on such
conditions as the Committee will determine. Notwithstanding anything in
this Plan to the contrary, the Committee may, in its sole discretion,
provide that the vesting of any or all Awards granted pursuant to this Plan
will accelerate upon a transaction described in this Section 18 or
otherwise. If the Committee exercises such discretion with respect to
Options, such Options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the
Committee determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate at such
time as determined by the Committee.
18.2 Other Treatment of Awards. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 18, in the
event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, or sale of
assets.
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18.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied
to an Award granted under this Plan. Such substitution or assumption will
be permissible if the holder of the substituted or assumed award would have
been eligible to be granted an Award under this Plan if the other company
had applied the rules of this Plan to such grant. In the event the Company
assumes an award granted by another company, the terms and conditions of
such award will remain unchanged (except that the exercise price and the
number and nature of Shares issuable upon exercise of any such option will
be adjusted appropriately pursuant to Section 424(a) of the Code). In the
event the Company elects to grant a new Option rather than assuming an
existing option, such new Option may be granted with a similarly adjusted
Exercise Price.
18.4 Adjustment of Shares. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without
consideration, then (a) the number of Shares reserved for issuance under
this Plan, (b) the Exercise Prices of and number of Shares subject to
outstanding Options, and (c) the number of Shares subject to other
outstanding Awards will be proportionately adjusted, subject to any
required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a
cash payment equal to the Fair Market Value of such fraction of a Share or
will be rounded up to the nearest whole Share, as determined by the
Committee.
19. AUTOMATIC GRANTS OF STOCK OPTIONS TO DIRECTORS. An Outside Director
shall be automatically granted a NQSO to purchase 4,000 shares of Common Stock
(the "Initial Option") upon the date the Outside Director begins service as a
non-employee director on the Board (even if previously an employee director).
Thereafter, for the remainder of the term of the Plan and provided he remains a
Outside Director of the Company, on the date of each of the Company's Annual
Meeting of Stockholders, each Outside Director shall be automatically granted
without further action by the Board or the Committee a NQSO to purchase 8,000
shares of Stock. All such Options granted to Outside Directors shall hereinafter
be referred to as Director Stock Options.
19.1 Option Price; Term. All Director Stock Options shall have an
Exercise Price per share equal to the Fair Market Value of a share of
Common Stock on the Date of Grant. The Initial Option and 4,000 shares of
each Annual Option shall vest and become exercisable over a period of four
years at the rate of 25% of each grant annually on each of the four
consecutive anniversaries of the date of grant directly following the date
of grant provided the Outside Director's services as a director continue
through each such anniversary. The remaining 4,000 shares of each such
Annual Option shall vest and become exercisable six months following the
date of grant provided the Outside Director's services as a director
continue through such time. The term of each Director Stock Option
("Term"), after which each such Option shall expire, shall be ten years
from the date of Grant.
19.2 Expiration. If prior to the expiration of the Term of a Director
Stock Option the Outside Director shall cease to be a member of the Board
for any reason other than his death, the Director Stock Option shall expire
on the earlier of the expiration of the Term or the date that is three
months after the date of such cessation. If prior to the expiration of the
Term of a Director Stock Option, an Outside Director shall cease to be a
member of the Board by reason of his death, the Director Stock Option shall
expire on the earlier of the expiration of the Term or the date that is one
year after the date of such cessation. In the event a Outside Director
ceases to be a member of the Board for any reason, any unexpired Director
Stock Options shall thereafter be exercisable until their expiration only
to the extent that such Director Stock Options were exercisable at the time
of such cessation.
19.3 Director Stock Option Agreement. Each Director Stock Option
shall be evidenced by an Award Agreement, which shall contain such
provisions as may be determined by the Committee;
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provided, however, that such provisions shall not be inconsistent with the
provisions of Rule 16b-3 pursuant to the Exchange Act.
19.4 Nontransferability; Exclusive Grant. Subject to the terms
hereof, Outside Director Options shall not be transferable except by will
or the laws of descent and distribution and shall be exercisable during the
Non-Employee Director's lifetime only by him. Outside Directors are
eligible to receive Awards under this Plan in addition to (and not in lieu
of) any Awards pursuant to this Section 19.
20. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on
the date that this Plan is approved by the stockholders of the Company Plan),
consistent with applicable laws (the "Effective Date").
21. TERM OF PLAN. Unless earlier terminated as provided herein, this Plan
will terminate ten (10) years from the date this Plan is adopted by the Board
or, if earlier, the date of stockholder approval.
22. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval.
23. EFFECT OF SECTION 162(M) OF THE CODE. The Plan, and all Awards issued
thereunder, are intended to be exempt from the application of Section 162(m) of
the Code, which restricts under certain circumstances the Federal income tax
deduction for compensation paid by a public company to named executives in
excess of $1 million per year. The exemption is based on Treasury Regulation
Section 1.162-27(f) as in effect on the effective date of the Plan, with the
understanding that such regulation generally exempts from the application of
Section 162(m) of the Code compensation paid pursuant to a plan that existed
before a company becomes publicly held. The Committee may, without stockholder
approval (unless otherwise required to comply with Rule 16b-3 under the Exchange
Act), amend the Plan retroactively and/or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company's Federal income tax
deduction for compensation paid pursuant to the Plan. To the extent that the
Committee determines as of the Date of Grant of an Award that (i) the Award is
intended to comply with Section 162(m) of the Code and (ii) the exemption
described above is no longer available with respect to such Award, such Award
shall not be effective until any stockholder approval required under Section
162(m) of the Code has been obtained.
24. GENERAL.
24.1 Additional Provisions of an Award. Awards under the Plan also
may be subject to such other provisions (whether or not applicable to the
benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Stock upon the exercise of
Options, provisions for the forfeiture of or restrictions on resale or
other disposition of shares of Stock acquired under any Award, provisions
giving the Company the right to repurchase shares of Stock acquired under
any Award in the event the Participant elects to dispose of such shares,
and provisions to comply with Federal and state securities laws and Federal
and state tax withholding requirements. Any such provisions shall be
reflected in the applicable Award agreement.
24.2. Claim to Awards and Employment Rights. No employee or other
person shall have any claim or right to be granted an Award under the Plan
or, having been selected for the grant of an Award, to be selected for a
grant of any other Award. Neither the Plan nor any action taken hereunder
shall be construed as giving any Participant any right to be retained in
the employ or service of the Company, a Subsidiary or an Affiliate.
24.3. Designation and Change of Beneficiary. Each Participant shall
file with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with
respect to an Award of Restricted Stock, if any, due under the Plan upon
his death. A Participant may, from time to time, revoke or change his
beneficiary designation without the consent of any prior beneficiary by
filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation
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<PAGE> 29
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date
prior to such receipt. If no beneficiary designation is filed by the
Participant, the beneficiary shall be deemed to be his or her spouse or, if
the Participant is unmarried at the time of death, his or her estate.
24.4. Payments to Persons Other Than Participants. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his affairs because of illness or accident, or is a
minor, or has died, then any payment due to such person or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be paid to
his spouse, child, relative, an institution maintaining or having custody
of such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and
the Company therefor.
24.5. No Liability of Committee Members. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his behalf in his capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee and
each other employee, officer or director of the Company to whom any duty or
power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a claim)
arising out of any act or omission to act in connection with the Plan
unless arising out of such person's own fraud or willful bad faith;
provided, however, that approval of the Board shall be required for the
payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
24.6. Governing law. The Plan and all agreements hereunder shall be
governed by and construed in accordance with the internal laws of the State
of Delaware without regard to the principles of conflicts of law thereof.
24.7. Funding. No provision of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase
assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered
fund for such purposes. Participants shall have no rights under the Plan
other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.
24.8. Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing
to act, and shall not be liable for having so relied, acted or failed to
act in good faith, upon any report made by the independent public
accountant of the Company and its Subsidiaries and Affiliates and upon any
other information furnished in connection with the Plan by any person or
persons other than himself.
24.9. Relationship to Other Benefits. No payment under the Plan shall
be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the
Company or any Subsidiary except as otherwise specifically provided in such
other plan.
24.10. Expenses. The expenses of administering the Plan shall be borne
by the Company and its Subsidiaries and Affiliates.
24.11. Pronouns. Masculine pronouns and other words of masculine
gender shall refer to both men and women.
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<PAGE> 30
24.12. Titles and Headings. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.
24.13. Termination of Employment. For all purposes herein, a person
who transfers from employment or service with the Company to employment or
service with a Subsidiary or Affiliate or vice versa shall not be deemed to
have terminated employment or service with the Company, a Subsidiary or
Affiliate.
24.14. Nonexclusivity of The Plan. Neither the adoption of this Plan
by the Board, the submission of this Plan to the stockholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
25. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"Affiliate" means any affiliate of the Company within the meaning of
17 CFR ss. 230.405.
"Award" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Cause" means the Company, a Subsidiary or Affiliate having cause to
terminate a Participant's employment or service under any existing
employment, consulting or any other agreement between the Participant and
the Company or a Subsidiary or Affiliate or, in the absence of such an
employment, consulting or other agreement, upon (i) the determination by
the Committee that the Participant has ceased to perform his duties to the
Company, a Subsidiary or Affiliate (other than as a result of his
incapacity due to physical or mental illness or injury), which failure
amounts to an intentional and extended neglect of his duties to such party,
(ii) the Committee's determination that the Participant has engaged or is
about to engage in conduct materially injurious to the Company, a
Subsidiary or Affiliate or (iii) the Participant having been convicted of a
felony.
"Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations
under such section.
"Committee" means the Stock Option Committee or such other committee
appointed by the Board which has two or more Outside Directors or the
Board.
"Company" means Abacus Direct Corporation or any successor
corporation.
"Disability" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the NASDAQ National
Market, its closing price on the NASDAQ National Market on the
date of determination as reported in The Wall Street Journal;
A-12
<PAGE> 31
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on
the NASDAQ National Market nor listed or admitted to trading on
a national securities exchange, the average of the closing bid
and asked prices on the date of determination as reported in
The Wall Street Journal;
(d) if none of the foregoing is applicable, by the Committee in
good faith.
"Insider" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"Option" means an award of an option to purchase Shares pursuant to
Section 5.
"Outside Director" means a person who is (i) a "nonemployee director"
within the meaning of Rule 16b-3 under the Exchange Act, or any successor
rule or regulation and (ii) an "outside director" within the meaning of
Section 162(m) of the Code.
"Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations
other than the Company owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
"Participant" means a person who receives an Award under this Plan.
"Performance Factors" means the factors selected by the Committee from
among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total stockholder return and/or total stockholder return
growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"Performance Period" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"Plan" means this Abacus Direct Corporation 1999 Stock Incentive Plan,
as amended from time to time.
"Restricted Stock Award" means an award of Shares pursuant to Section
6.
A-13
<PAGE> 32
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and
any successor security.
"Stock Bonus" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.
"Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"Termination" or "Terminated" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the
Company. An employee will not be deemed to have ceased to provide services
in the case of (i) sick leave, (ii) military leave, or (iii) any other
leave of absence approved by the Committee, provided, that such leave is
for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute or unless
provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing. In the case
of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Subsidiary as it may deem
appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the Option agreement. The Committee
will have sole discretion to determine whether a Participant has ceased to
provide services and the effective date on which the Participant ceased to
provide services (the "Termination Date").
"Unvested Shares" means "Unvested Shares" as defined in the Award
Agreement.
"Vested Shares" means "Vested Shares" as defined in the Award
Agreement.
As adopted by the Board of Directors of Abacus Direct Corporation as of
April 14, 1999.
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<PAGE> 33
SKU 1564-PS-99
<PAGE> 34
DETACH HERE
PROXY
[ABACUS LOGO]
Abacus Direct Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY - FOR THE ANNUAL MEETING OF STOCKHOLDERS - JUNE 4, 1999
The undersigned stockholder of ABACUS DIRECT CORPORATION, revoking any
previous proxy for such stock, hereby appoints M. Anthony White and Carlos E.
Sala, or either of them, the attorneys and proxies of the undersigned, with
full power of substitution, and hereby authorizes them to vote all shares of
Common Stock of ABACUS DIRECT CORPORATION which the undersigned is entitled to
vote at the Annual Meeting of Stockholders, or any adjournments or
postponements thereof, to be held on June 4, 1999 at 9:30 A.M., (EDT) RIHGA
Royal Hotel, 151 West 54th Street, New York, New York, on all matters coming
before said meeting.
In the event no contrary instructions are indicated by the undersigned
stockholder, the proxies designated hereby are authorized to vote the shares as
to which the proxy is given FOR proposals 1, 2 and 3, all of which are set
forth on this card, and in the discretion of the proxies on any other matters.
The Board of Directors Recommends a Vote FOR each of the proposals.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 35
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
PLEASE MARK BOXES IN BLUE OR BLACK INK.
1. Election of Five Directors.
NOMINEES: M. Anthony White, Daniel C. Snyder, Frank Kenny, Antony H. Lee
and Robert L. North
FOR [ ] [ ] WITHHELD
[ ]
----------------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote any individual nominee,
write that nominee's name on the line above)
2. Ratification and approval of the 1999 Stock Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Ratification of PricewaterhouseCoopers LLP as Accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
I plan to attend the annual meeting of stockholders on Friday, June 4, 1999
at The RIHGA Royal Hotel in New York City. [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign here exactly as your name(s) appear(s) on this proxy. If signing
for an estate, trust or corporation, title or capacity should be stated. If
shares are held jointly, each holder should sign. If a partnership, sign in
partnership name by authorized person.
Signature: Date:
---------------------------------------- -----------------------
Signature: Date:
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