<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the 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 (S) 240.14a-11(c) or (S) 240.14a-12
ENTRUST TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
ENTRUST TECHNOLOGIES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
Entrust Technologies Inc., a Maryland corporation (the "Company"), will be
held on May 5, 1999 at 10:00 a.m. at Suite 85, 4975 Preston Park Boulevard,
Plano, Texas 75093 (the "Meeting") for the purpose of considering and voting
upon the following matters:
1. To elect two Class I Directors for the ensuing three years and one
Class III Director for the ensuing two years;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the current year; and
3. To transact such other business, if any, as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
Holders of record of the Company's Common Stock and Special Voting Stock at
the close of business on March 26, 1999 are entitled to notice of and to vote
at the Meeting and at any adjournments thereof. A list of the Company's
stockholders is open for examination to any stockholder at the principal
executive offices of the Company, One Preston Park South, Suite 400, 4975
Preston Park Boulevard, Plano, Texas 75093 and will be available at the
Meeting.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, which contains consolidated financial statements and other
information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
By Order of the Board of Directors,
James D. Kendry, Secretary
April 16, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
ENTRUST TECHNOLOGIES INC.
One Preston Park South, Suite 400
4975 Preston Park Boulevard
Plano, Texas 75093
PROXY STATEMENT
For the Annual Meeting of Stockholders
To Be Held on May 5, 1999
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Entrust Technologies Inc., a Maryland corporation (the
"Company"), of proxies for use at the Annual Meeting of Stockholders to be
held on May 5, 1999 at 10:00 a.m. at Suite 85, 4975 Preston Park Boulevard,
Plano, Texas 75093 and at any adjournments thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation to the Secretary of the Company. Attendance at the Meeting
will not itself be deemed to revoke a proxy unless the stockholder gives
affirmative notice at the Meeting that the stockholder intends to revoke the
proxy and vote in person.
The Board of Directors has fixed March 26, 1999 as the record date (the
"Record Date") for determining holders of the Company's Common Stock, $.01 par
value per share (the "Common Stock"), and holders of the Company's Special
Voting Stock, $.01 par value per share (the "Special Voting Stock"), who are
entitled to vote at the Meeting. At the close of business on the Record Date,
there were outstanding and entitled to vote 43,327,156 shares of Common Stock
and 5,157,289 shares of Special Voting Stock. The holders of Common Stock vote
together with the holders of Special Voting Stock as a single class. Each
share entitles the record holder to one vote on each of the matters to be
voted upon at the Meeting.
The Notice of Meeting, this Proxy Statement, the enclosed Proxy Card and the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 are
first being sent or given to stockholders on or about April 16, 1999. The
Company will, upon written request of any stockholder and the payment of an
appropriate processing fee, furnish copies of the exhibits to its Annual
Report on Form 10-K. Please address all such requests to the Company,
Attention of David Wagner, Controller, Entrust Technologies Inc., One Preston
Park South, Suite 400, 4975 Preston Park Boulevard, Plano, Texas 75093.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of February 28, 1999,
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) the directors and nominees for
director of the Company, (iii) the Chief Executive Officer and the four other
most highly compensated executive officers who were serving as executive
officers on December 31, 1998 (the "Named Executive Officers"), and (iv) all
executive officers, directors and nominees for director of the Company as a
group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership(1)
------------------------------------
Name and Address Number of Percent of
of Beneficial Owner Shares Class(%)
------------------- ---------------- -------------
<S> <C> <C>
5% Stockholders
Northern Telecom Limited................. 25,457,289(2) 53.4%
8200 Dixie Road, Suite 100
Brampton, Ontario L6T5P6
Robert S. Morris......................... 4,689,994(3)(4) 10.8
Metro Center, One Station Place
Stamford, CT 06902
Olympus Partners......................... 4,666,883(3) 10.8
Metro Center, One Station Place
Stamford, CT 06902
Putnam Investments, Inc.................. 2,462,162(5) 5.7
One Post Office Square
Boston, MA 02109
Societe Generale Investment Corporation.. 2,337,275(6) 5.4
1221 Avenue of the Americas
New York, NY 10020
Other Directors and Nominees
John A. Ryan............................. 775,046(7) 1.8
F. William Conner........................ 20,055(8) *
Butler C. Derrick, Jr.................... -- --
Frank A. Dunn............................ 18,110(9) *
Terrell B. Jones......................... -- --
Michael P. Ressner....................... -- --
James A. Thomson......................... -- --
Other Named Executive Officers
Bradley N. Ross.......................... 313,684(10) *
Brian O'Higgins.......................... 337,604(11) *
Richard D. Spurr......................... 127,000(12) *
Hansen Downer............................ 81,077(13) *
Executive officers, directors and nomi-
nees for director,
as a group (13 persons)................. 7,029,070(14) 15.6
</TABLE>
- --------
* Less than 1%.
(1) The number of shares beneficially owned by each director, executive officer
and stockholder is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual
has the right to acquire within 60 days after February 28, 1999 through the
exercise of any stock option or other right ("Presently Exercisable
Options"). The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares. Unless otherwise indicated, each person or
entity named in the table has
2
<PAGE>
sole voting power and investment power (or shares such power with his or her
spouse) with respect to all shares of capital stock listed as owned by such
person or entity.
(2) The 25,457,289 shares beneficially owned by Northern Telecom Limited
("NTL") consist of (i) 20,300,000 shares of Common Stock held of record by
Northern Telecom Inc., a wholly owned subsidiary of NTL ("NTI"), and (ii)
5,157,289 shares of Common Stock issuable upon the exchange of 5,157,289
Exchangeable Shares (the "Exchangeable Shares") of Entrust Technologies
Limited, a majority-owned subsidiary of the Company, held by NTL. NTL also
holds 5,157,289 shares of Special Voting Stock. At any time prior to
December 31, 2006, NTL may exchange one Exchangeable Share, together with
one share of Special Voting Stock, for one share of Common Stock of the
Company. NTL has sole voting and investment power with respect to the
shares of Common Stock held by NTI. NTL, NTI and their affiliates are
referred to herein collectively as "Nortel."
(3) Consists of 4,620,215 shares of Common Stock held of record by Olympus
Growth Fund II, L.P., a Delaware limited partnership ("Olympus Growth"),
and 46,668 shares of Common Stock held of record by Olympus Executive Fund,
L.P., a Delaware limited partnership ("Olympus Executive"). OGP II, L.P., a
Delaware limited partnership ("OGP"), as the general partner of Olympus
Growth, RSM, L.L.C., a Delaware limited liability company ("RSM LLC"),
Conroy, L.L.C., a Delaware limited liability company ("Conroy LLC"), LJM,
L.L.C., a Delaware limited liability company ("LJM LLC"), and Nibur,
L.L.C., a Delaware limited liability company, ("Nibur"), as general
partners of OEF, L.P., a Delaware limited partnership ("OEF"), and Robert
S. Morris ("Morris"), James A. Conroy ("JA Conroy"), Louis J. Mischianti
("Mischianti") and Paul A. Rubin ("Rubin"), as the Managing Members of RSM
LLC, Conroy LLC, LJM LLC and Nibur, respectively, have shared voting and
dispositive power over the shares held by Olympus Growth and may be deemed
to be the beneficial owners of these shares. OEF, as the general partner of
Olympus Executive, RSM Corporation, a Delaware corporation ("RSM"), Conroy
Corporation, a Delaware corporation ("Conroy"), and LJM Corporation, a
Delaware corporation ("LJM"), as general partners of OEF, and Morris, JA
Conroy and Mischianti, as Presidents of RSM, Conroy and LJM, respectively,
have shared voting and dispositive power over the shares held by Olympus
Executive and may be deemed to be the beneficial owners of these shares.
Each holder of voting and dispositive power disclaims beneficial ownership
of the foregoing shares except to the extent of his pecuniary interests
therein.
(4) Includes 23,111 shares which may be acquired by Mr. Morris pursuant to
Presently Exercisable Options.
(5) Putnam Investments, Inc. has shared voting power with respect to 20,400
shares and shared dispositive power with respect to 2,462,162 shares.
Putnam Investment Management, Inc. has shared dispositive power with
respect to 2,335,962 shares. The Putnam Advisory Company, Inc. has shared
voting power with respect to 20,400 shares and shared dispositive power
with respect to 126,200 shares. Putnam Investments, Inc., a wholly owned
subsidiary of the Marsh & McLennan Companies, Inc., is the sole stockholder
of Putnam Investment Management, Inc. and The Putnam Advisory Company, Inc.
This information is derived solely from a Schedule 13G filed with the
Securities and Exchange Commission on February 4, 1999.
(6) This information is derived solely from a Schedule 13G filed with the
Securities and Exchange Commission on February 16, 1999.
(7) Includes 5,000 shares held by Mr. Ryan's spouse and 769,397 shares which
may be acquired pursuant to Presently Exercisable Option.
(8) Includes 18,055 shares which may be acquired pursuant to Presently
Exercisable Options.
(9) Includes 16,110 shares which may be acquired pursuant to Presently
Exercisable Options. Mr. Dunn, a current Class III director of the Company,
intends to resign as a director of the Company prior to the Meeting.
(10) Includes 312,276 shares which may be acquired pursuant to Presently
Exercisable Options.
(11) Includes 337,276 shares which may be acquired pursuant to Presently
Exercisable Options.
(12) Includes 126,000 shares which may be acquired pursuant to Presently
Exercisable Options.
(13) Includes 81,077 shares which may be acquired pursuant to Presently
Exercisable Options.
(14) Includes 1,734,302 shares which may be acquired pursuant to Presently
Exercisable Options.
3
<PAGE>
Votes Required
The holders of a majority of the shares of Common Stock and Special Voting
Stock issued and outstanding and entitled to vote at the Meeting, voting
together as a single class, shall constitute a quorum for the transaction of
business at the Meeting. Shares present in person or represented by proxy
(including shares which abstain or do not vote with respect to one or more of
the matters presented for stockholder approval) will be counted for purposes
of determining whether a quorum exists at the Meeting.
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares
present or represented by proxy and voting on the matter is required to ratify
the appointment of Deloitte & Touche LLP as the Company's independent public
accountants for the current year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a
particular matter, will not be counted as votes in favor of such matter, and
will also not be counted as votes cast or shares voting on such matter.
Accordingly, abstentions and "broker non-votes" will have no effect on the
voting on a matter that requires the affirmative vote of a certain percentage
of the votes cast or shares voting on a matter.
PROPOSAL 1--ELECTION OF DIRECTORS
Directors and Nominees for Director
The Company has a classified Board of Directors currently consisting of one
Class I director, two Class II directors and two Class III directors. The
Class I, Class II and Class III directors will serve until the annual meeting
of stockholders to be held in 1999, 2000 and 2001, respectively, and until
their respective successors are elected and qualified. At each annual meeting
of stockholders, directors are elected for a full term of three years to
succeed those whose terms are expiring.
The persons named in the enclosed proxy will vote to elect, as Class I
directors, Butler C. Derrick, Jr. and James A. Thomson, unless the proxy is
marked otherwise. Robert S. Morris, a current Class I director of the Company,
is not standing for re-election to the Board of Directors, and David D.
Archibald resigned as a Class I director of the Company in January 1999,
leaving one Class I directorship vacant. Frank A. Dunn, a current Class III
director of the Company, intends to resign as a director of the Company prior
to the Meeting, and the persons named in the enclosed proxy will vote to
elect, as a Class III director, Michael P. Ressner, unless the proxy is marked
otherwise.
Each Class I director will be elected to hold office until the 2002 annual
meeting of stockholders and until his successor is elected and qualified, and
the Class III director will be elected to hold office until the 2001 annual
meeting of stockholders and until his successor is elected and qualified. Each
of the nominees has indicated his willingness to serve, if elected; however,
if any nominee should be unable to serve, the person acting under the proxy
may vote the proxy for a substitute nominee. The Board of Directors has no
reason to believe that any of the nominees will be unable to serve if elected.
For each member of the Board of Directors whose term of office as a director
continues after the Meeting, including those who are nominees for election as
Class I and Class III directors, there follows information given by each
concerning his principal occupation and business experience for at least the
past five years, the names of other publicly held companies of which he serves
as a director and his age and length of service as a director of the Company.
There are no family relationships among any of the directors, nominees for
director and executive officers of the Company.
Nominees for Terms Expiring in 2002 (Class I Directors)
Butler C. Derrick, Jr., age 62, is a nominee for election to the Board of
Directors of the Company. Since August 1998, Mr. Derrick has been a Partner at
the law firm of Powell, Goldstein, Frazer & Murphy LLP, Washington, D.C. From
January 1995 to July 1998, Mr. Derrick was a Partner at the law firm of
Williams &
4
<PAGE>
Jensen, Washington, D.C. Mr. Derrick served in Congress as a United States
Representative from South Carolina from January 1975 to January 1995. While in
Congress, Mr. Derrick held numerous posts, including Chief Deputy Majority
Whip and Vice Chairman of the House Rules Committee.
James A. Thomson, age 54, is a nominee for election to the Board of
Directors of the Company. Dr. Thomson has been President and Chief Executive
Officer of RAND, a nonprofit, nonpartisan research and analysis institution
since August 1998. Dr. Thomson served as director of RAND's research program
in national security, foreign policy, defense policy and arms control from
1981 to 1985. He also served as Vice President in charge of the Project AIR
FORCE division from 1984 to 1988 and as Executive Vice President during 1989.
Prior to that time, Dr. Thomson was a member of the National Security Council
staff at the White House. Dr. Thomson currently serves on the Boards of
Directors of AK Steel Corporation and Texas Biotechnology Corporation.
Directors Whose Terms Expire in 2000 (Class II Directors)
F. William Conner, age 40, has been a director of the Company since July
1997 and Chairman of the Board since October 1998. He has served as Executive
Vice President, Corporate Marketing and Communications, for Nortel Networks
since September 1998. Prior to that time, from February 1998 to September
1998, he served as Senior Vice President and President of Nortel's Enterprise
Data Networks line of business since February 1998. From August 1995 until
February 1998, Mr. Conner served as Executive Vice President, Sales and
Marketing for the Enterprise Networks line of business of Nortel. Prior to
that time, from 1992 until July 1995, Mr. Conner held a variety of sales and
marketing executive positions in Nortel's voice and data enterprise lines of
business.
John A. Ryan, age 42, has served as President and Chief Executive Officer
and as a director of the Company since its founding in December 1996. From
October 1995 until December 1996 he served as the Vice President and General
Manager for the Multimedia and Internet Solutions business unit of Nortel.
Prior to that time, from August 1992 until October 1995, he served as
Assistant Vice President, Marketing for the Enterprise Network group of
Nortel. Since joining Nortel in 1981, he has also served in various senior
positions in marketing, customer service and finance.
Director Whose Term Expires in 2001 (Class III Director)
Terrell B. Jones, age 50, has been a director of the Company since November
1998. Mr. Jones has served as Chief Information Officer and Senior Vice
President of the SABRE Group Holdings, Inc., an information technology
company, as well as President of SABRE Interactive since July 1996. He
previously served as President of SABRE Computer Services for American
Airlines from 1993 to 1996.
Nominee for Term Expiring in 2001 (Class III Director)
Michael P. Ressner, age 50, is a nominee for election to the Board of
Directors of the Company. Mr. Ressner has served as the Vice President of
Finance of Nortel's Enterprise Solutions group since February 1999. From May
1994 to January 1999, Mr. Ressner served as Vice President of Finance for
Nortel's Carrier Solutions business unit. Prior to these assignments,
Mr. Ressner held a number of senior finance management posts within various
Nortel business units.
For information relating to shares of Common Stock owned by each of the
directors, see "Security Ownership of Certain Beneficial Owners and
Management."
Board and Committee Meetings
The Board of Directors of the Company met nine times (including by telephone
conference) during 1998. All directors attended at least 75% of the meetings
of the Board of Directors and of the committees on which they served.
The Board of Directors has a Compensation Committee, which has the authority
and responsibility to establish the compensation of, and compensation policies
applicable to, the Company's executive officers and
5
<PAGE>
administers and grants stock options and other stock awards pursuant to the
Company's stock plans. The Compensation Committee held three meeting during
1998. The current members of the Compensation Committee are Messrs. Conner and
Morris.
The Board of Directors has an Audit Committee, which makes recommendations
to the Board of Directors concerning the appointment or replacement of the
Company's independent public accountants, confers with such accountants
regarding such accountants' audit of the Company and recommends and implements
desired changes to the scope of the Company's audit. The Audit Committee held
two meetings during 1998. The current members of the Audit Committee are
Messrs. Dunn, Jones and Morris.
Although the Company has no nominating committee of the Board of Directors,
on February 26, 1999, the Company appointed Mr. Ryan and Mr. Conner to an ad
hoc committee which was responsible for recruiting director nominees for the
Meeting. Stockholders wishing to propose director candidates for consideration
by the Company may do so by writing to the Secretary of the Company and
providing information specified in the Company's Bylaws, including the
candidate's name, address and principal occupation. The Company's Bylaws set
forth further requirements for stockholders wishing to nominate director
candidates for consideration by stockholders including, among other things,
that a stockholder must give written notice of an intent to make such a
nomination complying with the Bylaws of the Company to the Secretary of the
Company not less than 60 days nor more than 90 days prior to the stockholders'
meeting; provided that, in the event less than 70 days' notice or prior
disclosure of the date of the meeting is given or made, the Company must
receive notice from the stockholder not later than the 10th day following the
date on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first.
Director Compensation
Directors receive a $1,000 cash fee for each Board or committee meeting
attended and are reimbursed for expenses incurred in connection with their
attendance at such meetings. During the year ended December 31, 1998, Messrs.
Conner, Dunn, Morris and Archibald each received $5,000 total for their
service on the Board. Mr. Jones will receive $1,000 during the year ending
December 31, 1999 for a Board meeting he attended in 1998. Non-employee
directors are eligible to receive stock options under the Company's Amended
and Restated 1996 Stock Incentive Plan. The following table sets forth certain
information with respect to options granted to non-employee directors during
the year ended December 31, 1998.
Options Granted to Non-employee Directors
<TABLE>
<CAPTION>
Number of
Shares
Underlying Exercise
Options Price
Director Grant Date (#) ($)(1) Vesting
-------- ---------- ---------- -------- -------
<S> <C> <C> <C> <C>
David D. Archibald...................... 11/5/98 32,000 $16.625 (2)
F. William Conner....................... 11/5/98 37,000 16.625 (3)
Frank A. Dunn........................... 11/5/98 32,000 16.625 (2)
Terrell Jones........................... 11/19/98 24,000 19.25 (4)
Robert S. Morris........................ 11/5/98 8,000 16.625 (5)
</TABLE>
- --------
(1) The closing sale price of Common Stock on the Nasdaq National Market on
the date of grant.
(2) With respect to 24,000 shares, the option cumulatively vests as to one-
third of the shares on November 5, 1998 and one-twenty-fourth of the
shares on the 5th of each successive month thereafter. With respect to
8,000 shares, the option cumulatively vests as to one-third of the shares
on February 19, 1999 and one-twenty-fourth of the shares on the 19th of
each successive month thereafter.
6
<PAGE>
(3) With respect to 24,000 shares, the option cumulatively vests as to one-
third of the shares on November 5, 1998 and one-twenty-fourth of the
shares on the 5th of each successive month thereafter. With respect to
13,000 shares, the option cumulatively vests as to one-third of the shares
on February 19, 1999 and one-twenty-fourth of the shares on the 19th of
each successive month thereafter.
(4) The option cumulatively vests as to one-third of the shares on November
19, 1999 and one-twenty-fourth of the shares on the 19th of each
successive month thereafter.
(5) The option cumulatively vests as to one-third of the shares on November 5,
1999 and one-twenty-fourth of the shares on the 5th of each successive
month thereafter.
Compensation of Executive Officers
Summary Compensation
The following table sets forth certain information with respect to the
annual and long-term compensation of each of the Named Executive Officers for
the two years ended December 31, 1997 and December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------------- ------------
Awards
------------
Other Annual Securities
Compensation Underlying All Other
Name and Principal Position Year Salary($) Bonus($) ($) Options(1) Compensation
- --------------------------- ---- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John A. Ryan............ 1998 $218,077(2)(3) -- -- 7,668 $5,294(4)
President and Chief 1997 185,000 $79,800(6) -- 1,445,800 --
Executive Officer
Brian O'Higgins......... 1998 115,566 -- -- 3,344 3,468(5)
Executive Vice 1997 94,319 46,123(6) -- 602,400 --
President and Chief
Technology Officer
Bradley N. Ross......... 1998 132,198 -- 58,926(7) 3,344 4,432(5)
President of 1997 94,175 45,298(6) -- 602,400
European Operations
Richard D. Spurr........ 1998 233,965(3)(8) -- -- -- --
Senior Vice 1997 68,217 43,820 -- 440,000 --
President, Sales and
Marketing
Hanson Downer(9)........ 1998 129,808(3) -- -- 308 3,914(4)
Vice President, 1997 -- -- -- 200,000 --
Professional Services
</TABLE>
- --------
(1) Represents the number of shares covered by options to purchase shares of
Common Stock granted during the years ended December 31, 1997 and December
31, 1998. The Company has never granted any stock appreciation rights.
(2) Mr. Ryan's salary was subsequently increased to $225,000 effective on
January 1, 1999.
(3) Includes one extra bi-weekly payment for the year ended December 31, 1998.
(4) Represents the Company's contribution under its 401(k) savings plan.
(5) Represents the Company's contribution under its Canadian Registered
Retirement Savings Plan.
(6) Represents bonuses paid for 1996 performance at Nortel.
(7) Consists of payments by the Company in the following amounts: (1) $41,890
for cost of living adjustment and gross-up, (2) $12,003 for rent, (3)
$2,648 for European subsidiary Board service, (4) $1,765 for discretionary
funds and (5) $620 for health insurance.
(8) Includes a sales commission in the amount of $104,157 paid by the Company.
Mr. Spurr's salary was subsequently increased to $175,000 effective
January 1, 1999.
(9) Mr. Downer joined the Company as Vice President, Professional Services in
December 1997.
7
<PAGE>
Option Grants
The following table sets forth certain information concerning grants of
stock options made during the year ended December 31, 1998 to each of the
Named Executive Officers. The Company granted no stock appreciation rights
during the year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
----------------------------------------------------------- -----------------------
Number of Percent of Total
Securities Options
Underlying Granted to Exercise Price
Options Employees in Per
Name Granted(#) Fiscal Year(%) Share($)(2) Expiration Date 5%($) 10%($)
---- ---------- ---------------- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
John A. Ryan............ 7,668(3) * $6.25 2/19/08 $30,140 $76,380
Brian O'Higgins......... 3,344(3) * 6.25 2/19/08 13,144 33,309
Bradley N. Ross......... 3,344(3) * 6.25 2/19/08 13,144 33,309
Richard D. Spurr........ -- -- -- -- -- --
Hansen Downer........... 308(3) * 6.25 2/19/08 1,211 3,068
</TABLE>
- --------
* Less than 1%
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value of the Common Stock on the date of option grant over the
term of the options. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth. Actual gains, if any,
on stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by
the option holder.
(2) All options were granted at fair market value as determined by the Board
of Directors of the Company on the date of the grant.
(3) The grant date of the option was February 19, 1998. Each option
cumulatively vests as to one-quarter of the shares on the first
anniversary of the grant date and each of the second, third and fourth
anniversaries of the grant date.
8
<PAGE>
Fiscal Year-End Option Value Table
The following table summarizes certain information regarding the number and
value of unexercised stock options held as of December 31, 1998 by each of the
Named Executive Officers. No stock options were exercised during fiscal 1998
by the Named Executive Officers, and no stock appreciation rights were
exercised during fiscal 1998 or outstanding at year end.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options
Fiscal Year-End at Fiscal Year-End
(#) ($)
------------------------------- -------------------------------
Name Exercisable(1)/Unexercisable Exercisable(1)/Unexercisable(2)
---- ------------------------------- -------------------------------
<S> <C> <C>
John A. Ryan............ 867,480 / 585,988 $18,867,690 / $12,713,609
Brian O'Higgins......... 361,440 / 244,304 7,861,320 / 5,299,818
Bradley N. Ross......... 361,440 / 244,304 7,861,320 / 5,299,818
Richard D. Spurr........ 176,000 / 264,000 3,828,000 / 5,742,000
Hansen Downer........... 80,000 / 120,308 1,710,000 / 2,580,429
</TABLE>
- --------
(1) Exercisable options include vesting as of January 1, 1999 for Messrs.
Ryan, O'Higgins and Ross.
(2) Value based upon the last sales price per share ($23.875) of the Company's
Common Stock on December 31, 1998, as reported on the Nasdaq National
Market, less the exercise price.
Employment Agreements
Pursuant to a letter agreement between John A. Ryan and the Company, dated
as of April 21, 1997, the Company agreed to employ Mr. Ryan as the Company's
President and Chief Executive Officer, with an annual salary of $185,000 and
an annual bonus of up to 35% of the base salary. Mr. Ryan's annual salary was
subsequently increased to $210,000 in January 1998 and $225,000 in January
1999. The Company also agreed to reimburse up to $35,000 of expenses related
to executive perquisites in Mr. Ryan's first year of employment as President
and Chief Executive Officer, and up to $12,000 for such expenses in each
subsequent year of employment. Mr. Ryan will receive a relocation assistance
payment of up to $100,000 if he is required to relocate his residence due to
the relocation of the Company's headquarters. If Mr. Ryan's employment is
terminated by the Company within two years of such a relocation, for any
reason other than for cause, disability, retirement, resignation or death,
then Mr. Ryan is entitled to payment of his base salary for up to 36 weeks.
Mr. Ryan's employment is terminable at will.
Pursuant to a letter agreement between Brian O'Higgins and NTL, on behalf of
the Company, dated as of November 18, 1996, the Company agreed to employ Mr.
O'Higgins as the Company's Executive Vice President, Technology, with an
annual salary of CDN$130,000. Mr. O'Higgins was appointed as the Company's
Executive Vice President and Chief Technology Officer in December 1996, and in
September 1997 and January 1999 his annual salary was increased to CDN$160,000
and US$125,000, respectively. Upon termination of his employment without just
cause, Mr. O'Higgins will be entitled to payment of his base salary for 12
months, plus an allowance of CDN$10,000 for benefits. Mr. O'Higgins has agreed
not to compete against the Company for 12 months following the termination of
his employment with the Company.
Pursuant to a letter agreement between Bradley N. Ross and NTL, on behalf of
the Company, dated as of November 18, 1996, the Company agreed to employ Mr.
Ross as the Company's Executive Vice President, Marketing and Product Line
Management, with an annual salary of CDN$130,000. Mr. Ross currently serves as
the Company's President of European Operations. In September 1997 and January
1999, Mr. Ross' annual salary was increased to CDN$160,000 and US$140,000,
respectively. Upon termination of his employment without just cause, Mr. Ross
will be entitled to payment of his base salary for 12 months, plus an
allowance of CDN$10,000
9
<PAGE>
for benefits. Mr. Ross has agreed not to compete against the Company for 12
months following the termination of his employment with the Company.
Pursuant to a letter agreement between Richard D. Spurr and the Company,
dated as of June 4, 1997, the Company agreed to employ Mr. Spurr as the
Company's Vice President of Global Sales, with an annual salary of $125,000.
This salary was subsequently increased to $175,000 in January 1999. Mr. Spurr
currently serves as the Company's Senior Vice President, Sales and Marketing.
Mr. Spurr is also eligible to receive up to $125,000 through the Company's
sales incentive program. Mr. Spurr's employment is terminable at will.
Pursuant to a letter agreement between Michele L. Axelson and the Company,
dated as of July 2, 1998, the Company agreed to employ Ms. Axelson as the
Company's Senior Vice President, Finance and Business Development and Chief
Financial Officer, with an annual salary of $150,000 and a signing bonus of
$25,000, payable in two installments on the date of the letter and September
11, 1998. Ms. Axelson's salary was subsequently increased to $175,000 in
January 1999. In addition, the Company loaned $375,000 to Ms. Axelson pursuant
to a demand note dated July 2, 1998 bearing interest at the rate of 6% per
year. Under the terms of the letter agreement, the principal and interest on
the loan will be repaid in four annual installments, and the Company may
forgive any such installment based on Ms. Axelson's successful performance of
her duties during the preceding year, as determined by the Chief Executive
Officer. The company has also granted to Ms. Axelson an option to purchase up
to 300,000 shares of Common Stock of the Company. The vesting of 50% of any
unvested shares under the option will be accelerated if Ms. Axelson's
employment as Chief Financial Officer is terminated within one year following
an Acquisition Event (as defined in the Company's Amended and Restated 1996
Stock Incentive Plan). Ms. Axelson's employment is terminable at will.
Certain Transactions
In connection with the incorporation and financing of the Company in
December 1996 and January 1997 (the "Financing"), the Company entered into a
strategic alliance agreement (the "Strategic Alliance Agreement") pursuant to
which it agreed to grant to NTL at NTL's request for three years, or as long
as the Company is controlled by NTL, whichever is longer, the right to
distribute some of the Company's products on terms no less favorable to NTL
than the terms of the agreements then in effect with other resellers of the
Company. The Company agreed to grant to NTL at NTL's request for three years,
or as long as the Company is controlled by NTL, whichever is longer, a
royalty-bearing license to use and modify the Company's source code in some of
the Company's products on terms no less favorable to NTL than those offered to
other source code licensees. NTL granted to the Company and the Company
granted to NTL world-wide, royalty-free licenses to use, sell or license any
of the grantor's products or services, excluding existing exclusive licenses,
until the grant expires or NTL ceases to control the Company, whichever comes
first. In addition, NTL may restrict the Company, for so long as NTL maintains
beneficial ownership of a majority of the voting power of the Company, from
any act which may reasonably be anticipated to contravene any material
instrument binding on Nortel, any order of any governmental body which has
jurisdiction over Nortel or any of its assets, or any applicable law or
regulation. As of February 28, 1999, Nortel beneficially owned approximately
53.4% of the Company's Common Stock.
In connection with the Financing, the Company and NTL entered into an
intercompany services and operating agreement (the "Services Agreement") with
respect to services offered by NTL to the Company. The Services Agreement
provides that such services will be provided in exchange for fees (based upon
allocation of its current costs for such services not to exceed fair market
value), which management of the Company believes are substantially consistent
with the allocation of the costs of such services set forth in the historical
financial statements of the Company. During the year ended December 31, 1998,
the Company paid $38,000 to Nortel for services rendered and $572,000 to the
direct and indirect subsidiaries of Bell Canada Enterprises, a Canadian
corporation ("BCE") that has a 40% equity investment in Nortel, for services
rendered. The Company reimbursed Nortel $1,390,000 for payment on a lease
covering property located at 750 Heron Road, Tower E, Ottawa, Canada, which
property the Company subleased from Nortel.
10
<PAGE>
In the year ended December 31, 1998 the Company recognized revenue in the
amount of $1,916,000 from Nortel and $2,076,000 from BCE Emergis, Inc. ("BCE
Emergis"). BCE Emergis is a 65% subsidiary of Bell Canada, which is a wholly
owned subsidiary of BCE. For a description of certain employment and other
arrangements between the Company and its executive officers, see "Compensation
of Executive Officers--Employment Agreements."
Report of the Compensation Committee on Executive Compensation
The Compensation Committee (the "Committee") of the Board of Directors sets
the compensation of the Chief Executive Officer, reviews the design,
administration and effectiveness of compensation programs for other key
executives, and approves stock option grants for all executive officers. The
Committee, serving under a charter adopted by the Board of Directors,
currently consists of Messrs. Conner and Morris.
Executive Compensation Philosophy
The Board and the Compensation Committee believe that the goals with respect
to executive compensation are to align compensation with business objectives
and performance and to enable the Company to attract, retain and reward
executive officers and other key employees who contribute to the long-term
success of the Company, and to establish an appropriate relationship between
executive compensation and the creation of long-term stockholder value. To
meet these goals, the Committee has adopted a mix among the compensation
elements of salary, cash bonus and stock options. While the ultimate goal of
the Company is long-term success, execution of the Company's short-term
objectives and strategies, particularly in relationship to quarterly
performance, is a critical element of achieving long-term success.
Accordingly, the compensation philosophy of the Company is designed to reward
achievement of both short-term and long-term success through a quarterly and
annual cash incentive bonus and long-term equity incentives.
The Board and the Committee also believe that the compensation of the Chief
Executive Officer and the Company's other executive officers should be based
to a substantial extent on the Company's performance and adjusted where
appropriate, based on such executive officer's performance against personal
performance objectives. Generally, when establishing salaries, bonus levels
and stock option awards for executive officers, the Committee considers: (a)
the Company's financial performance during the past year and recent quarters,
(b) the individual's performance during the past year and recent quarters and
(c) the salaries of executive officers in similar positions of companies of
comparable size, capitalization and other companies within the enterprise
software industry.
Compensation Components
The three major components of the Company's executive officer compensation
are (a) base salary, (b) variable incentive awards and (c) long-term, equity-
based incentive awards.
Base Salary. John A. Ryan, the Company's Chief Executive Officer and
President, is party to a letter agreement that set his annual base salary
initially at $185,000. In January 1998, the Committee voted to increase Mr.
Ryan's salary to $210,000. At that time the Committee decided to increase the
salary levels for its other executive officers to parallel Mr. Ryan's salary
increase. The Committee recognizes the importance of maintaining compensation
practices and levels of compensation competitive with other enterprise
software companies. In November 1998, the Committee reviewed the base salaries
of the Chief Executive Officer and each of the Company's senior executive
officers. When reviewing base salaries, the Committee considered individual
and corporate performance, levels of responsibility, prior experience, breadth
of knowledge and competitive pay practices. As a result of this review, the
Committee approved increases in the base salaries of Messrs. Ryan and Spurr
from $210,000 and $125,000 to $225,000 and $175,000, respectively. The
Committee also approved an increase in Ms. Axelson's base salary from $150,000
to $175,000. Such increases were effective January 1, 1999.
11
<PAGE>
Cash Bonus. In 1998, the Company did not have an established cash incentive
program and, accordingly, no cash bonuses were paid to the executive staff in
1998, except $25,000 which was awarded to Ms. Axelson as an inducement to join
the Company in May 1998. In November 1998, management recommended and the
Committee approved a cash bonus program which was implemented in January 1999
and is designed to motivate executives and employees to work effectively to
achieve the Company's financial performance objectives and to reward them when
objectives are met. The Committee adopted a semi-annual, rather than an
annual, executive bonus program because a semi-annual bonus payment (a) is an
important benefit for retention purposes, (b) is consistent with bonus
payments made to similarly situated individuals in comparable companies and
(c) more accurately and timely compensates the executive staff for growth in
the Company's quarterly revenue and earnings per share and achievement of
personal objectives.
Under the bonus program, the executive staff will receive semi-annual
bonuses based on recommendations made by the Chief Executive Officer within
the framework of the bonus plans approved by the Committee for each executive.
Thirty percent of the Chief Executive Officer's bonus as proposed is based not
only upon achievement of the approved operating plan, but also on achievement
of personal objectives that have been established by the Committee and
approved by the Board. The Chief Executive Officer is responsible for
establishing and communicating to the other executives the personal objectives
related to each executive's individual bonus plan.
Long-Term Incentive Compensation. The 1996 Stock Incentive Plan has been
established to provide all employees of the Company, including executive
officers, with an opportunity to share, along with stockholders of the
Company, in the long-term performance of the Company. The Committee strongly
believes that a primary goal of the compensation program is to provide key
employees who have significant responsibility for the management, growth and
future success of the Company with the opportunity to participate in the
financial gain from Company stock price increases. Executives are eligible to
receive stock options generally not more than once a year, giving them the
right to purchase shares of Common Stock of the Company in the future at a
price equal to the fair market value at the date of grant. All initial grants
to executives are exercisable 20% at time of grant and 20% on each anniversary
date thereafter over a four-year period. Annual grants to executives other
than the Chief Executive Officer are approved by the Committee based upon
recommendations made by the Chief Executive Officer at the end of each year
based upon the individual executive's performance during that year. Annual
grants to the Chief Executive Officer are determined by the Committee at the
end of each year based upon the Chief Executive Officer's performance during
the year and will vest as described in the immediately preceding sentence.
During fiscal 1998, the Committee granted Mr. Ryan an option to purchase
7,668 shares of Common Stock. During fiscal 1998, the Company granted options
to purchase an aggregate of 306,996 shares of Common Stock to executive
officers of the Company other than Mr. Ryan, including an option to purchase
300,000 shares of Common Stock granted to Ms. Axelson in connection with her
commencement of employment.
Section 162(m). Section 162(m) of the Internal Revenue Code ("Section
162(m)"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million dollars paid to its Chief Executive
Officer or any of its four other most highly compensated executive officers.
Qualifying performance-based compensation is not subject to the deduction
limit if certain requirements, such as stockholder approval of a compensation
plan, are met. Although the Committee considered the limitations on the
deductibility of executive compensation imposed by Section 162(m) in designing
the Company's executive compensation programs, the Committee believes that it
is unlikely that such limitation will affect the deductibility of the
compensation to be paid to the Company's executive officers in the near term.
The Committee will, however, continue to monitor the impact of Section 162(m)
on the Company.
F. William Conner
Robert S. Morris
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
The current members of the Company's Compensation Committee are Messrs.
Conner and Morris. Mr. Archibald served as a member of the Committee until his
resignation as a director of the Company in January 1999. No executive officer
of the Company has served as a director or member of the compensation
committee (or other committee serving an equivalent function) of any other
entity, one of whose executive officers served as a director, or member of the
Compensation Committee, of the Company.
Comparative Stock Performance
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the period from August 18, 1998 through
December 31, 1998 with the cumulative total return on (i) the Nasdaq Computer
& Data Processing Index and (ii) the Russell 2000 Index. The comparison
assumes the investment of $100 on August 18, 1998 in the Company's Common
Stock and in each of the indices and, in each case, assumes reinvestment of
all dividends. Prior to August 17, 1998, the Company's Common Stock was not
registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company's Common Stock began trading on the Nasdaq
National Market on August 18, 1998.
[GRAPH APPEARS HERE]
Cumulative Total Return
----------------------------------------
8/18/98 8/98 9/98 10/98 11/98 12/98
ENTRUST TECNOLOGIES, INC. 100 83 93 104 133 149
NASDAQ COMPUTER & DATA PROCESSING 100 81 97 94 108 125
RUSSELL 2000 100 86 92 96 101 107
13
<PAGE>
PROPOSAL 2--RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP as independent
public accountants of the Company for the year ending December 31, 1999,
subject to ratification by stockholders at the Meeting. If the stockholders do
not ratify the selection of Deloitte & Touche LLP, the Board of Directors will
reconsider the matter. A representative of Deloitte & Touche, which served as
the Company's independent public accountants for the year ended December 31,
1998, is expected to be present at the Meeting to respond to appropriate
questions and to make a statement if he or she so desires.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 2000 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at
its offices, One Preston Park South, Suite 400, 4975 Preston Park Boulevard,
Plano, Texas 75093, no later than December 18, 1999 in order to be considered
for inclusion in the Company's proxy statement and proxy card relating to that
meeting.
If a stockholder of the Company wishes to present a proposal before the 2000
Annual Meeting, but does not wish to have the proposal considered for
inclusion in the Company's proxy statement and proxy card, such stockholder
must also give written notice to the Secretary of the Company at the address
noted above. The Secretary must receive such notice not less than 60 days nor
more than 90 days prior to the 2000 Annual Meeting; provided that, in the
event that less than 70 days' notice or prior public disclosure of the date of
the 2000 Annual Meeting is given or made, notice by the stockholder must be
received not later than the close of business on the 10th day following the
date on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first. If a stockholder fails to provide
timely notice of a proposal to be presented at the 2000 Annual Meeting, the
proxies designated by the Board of Directors of the Company will have
discretionary authority to vote on any such proposal.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
("Reporting Persons") to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Based solely on its review
of copies of reports filed by the Reporting Persons furnished to the Company,
the Company believes that during 1998 the Reporting Persons complied with all
Section 16(a) filing requirements.
14
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, facsimile
and personal interviews. The Company will also request brokerage houses,
custodians, nominees and fiduciaries to forward copies of the proxy material
to those persons for whom they hold shares and request instructions for voting
the Proxies. The Company will reimburse such brokerage houses and other
persons for their reasonable expenses in connection with this distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXY CARDS.
By Order of the Board of Directors,
James D. Kendry, Secretary
April 16, 1999
15
<PAGE>
ENTRUST TECHNOLOGIES INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
To be held MAY 5, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY AND SHOULD BE RETURNED AS SOON AS POSSIBLE
The undersigned, having received notice of the Annual Meeting of Stockholders
and the Board of Directors' proxy statement therefor, and revoking all prior
proxies, hereby appoint(s) John A. Ryan, Michele L. Axelson and James D.
Kendry, and each of them, attorneys or attorney of the undersigned (with full
power of substitution in them and each of them) for and in the name(s) of the
undersigned to attend the Annual Meeting of Stockholders of ENTRUST
TECHNOLOGIES INC. (the "Company") to be held on Wednesday, May 5, 1999 at 10:00
a.m. at Suite 85, 4975 Preston Park Boulevard, Plano, Texas 75093, and any
adjournments thereof, and there to vote and act upon the following matters
proposed by the Company in respect of all shares of stock of the Company which
the undersigned may be entitled to vote or act upon, with all the powers the
undersigned would possess if personally present.
In their discretion, the proxy holders are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments thereof.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal, this proxy will be voted as recommended by the Board of Directors.
Attendance of the undersigned at the meeting or at any adjournment thereof will
not be deemed to revoke this proxy unless the undersigned shall revoke this
proxy in writing.
[x] Please mark your votes as in this example using dark ink only.
1. To elect the following two Class I Directors for the ensuing three
years and the following Class III Director for the ensuing two years
(except as marked below):
(INSTRUCTION: To
withhold a vote for an
individual nominee(s),
write the name of such
nominee(s) in the space
provided below. Your
shares will be voted for
the remaining
nominee(s).)
Class I Nominees:Butler C. Derrick, Jr. James A. Thomson
Class III Nominee:Michael P. Ressner
FOR [_] WITHHOLD [_]
ALL NOMINEES
(except as marked to the right)
_____________________
<PAGE>
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the current year.
FOR [_] AGAINST [_] ABSTAIN [_]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE
PROXIES SHALL VOTE "FOR" ALL DIRECTOR NOMINEES AND "FOR" PROPOSAL 2. A VOTE
"FOR" ALL DIRECTOR NOMINEES AND A VOTE "FOR" PROPOSAL 2 ARE RECOMMENDED BY THE
BOARD OF DIRECTORS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT
THEREOF.
Dated: , 1999
----------------
--------------------------
Signature
--------------------------
Signature if held
jointly
Note: Please sign exactly as name
appears hereon. When shares are held by
joint owners, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by authorized officer,
giving full title. If a partnership,
please sign in partnership name by
authorized person, giving full title.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
