<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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
MELITA INTERNATIONAL 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)(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:
<PAGE> 2
MELITA INTERNATIONAL CORPORATION
5051 PEACHTREE CORNERS CIRCLE
NORCROSS, GEORGIA 30092-2500
(770) 239-4000
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1998
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Melita
International Corporation (the "Company") will be held at the Atlanta Financial
Center, 18th Floor, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326, at 10:00
a.m., Atlanta, Georgia time, on Monday, May 11, 1998 (the "Annual Meeting"), to
consider and act upon:
1. the election of three persons to serve as members of the Company's Board
of Directors;
2. a proposal to increase the number of shares of the Company's common
stock available for issuance under the Company's 1997 Stock Option Plan
from 1,350,000 shares to 1,850,000 shares, an increase of 500,000
shares, and to authorize the Company to automatically adjust the number
of shares available under the 1997 Stock Option Plan on the first day of
each fiscal year;
3. a proposal to ratify the selection of independent public accountants for
the Company's current fiscal year; and
4. such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 31, 1998,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting.
By Order of the Board of Directors,
/S/ Dan K. Lowring
Dan K. Lowring
Secretary
April 17, 1998
Atlanta, Georgia
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN
PROVIDED. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. IN THE EVENT
YOU ARE ABLE TO ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON.
(MELITA LOGO)
<PAGE> 3
MELITA INTERNATIONAL CORPORATION
5051 PEACHTREE CORNERS CIRCLE
NORCROSS, GEORGIA 30092-2500
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 1998
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
SHAREHOLDERS MEETING
This Proxy Statement and the enclosed proxy ("Proxy") are furnished on
behalf of the Board of Directors of Melita International Corporation, a Georgia
corporation (the "Company"), for use at the Annual Meeting of Shareholders to be
held on May 11, 1998 at 10:00 a.m., Atlanta, Georgia time (the "Annual
Meeting"), or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at the Atlanta Financial Center, 18th Floor, 3343 Peachtree
Road, N.E., Atlanta, Georgia 30326. The Company intends to mail this Proxy
Statement and the accompanying Proxy card on or about April 17, 1998, to all
shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of the Company's common stock, no par value ("Common
Stock"), at the close of business on March 31, 1998 will be entitled to notice
of and to vote at the Annual Meeting. At the close of business on March 31,
1998, the Company had outstanding and entitled to vote 15,169,645 shares of
Common Stock. Each holder of record of Common Stock on such date will be
entitled to one vote for each share held on all matters to be voted upon at the
Annual Meeting. Any shareholder who signs and returns a Proxy has the power to
revoke it at any time before it is exercised by providing written notice of
revocation to the Secretary of the Company or by filing with the Secretary of
the Company a Proxy bearing a later date. The holders of a majority of the total
shares of Common Stock outstanding on the record date, whether present at the
Annual Meeting in person or represented by Proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. The shares held by each
shareholder who signs and returns the enclosed form of Proxy will be counted for
the purposes of determining the existence of a quorum at the Annual Meeting,
whether or not the shareholder abstains on all or any matter to be acted on at
the Annual Meeting. Abstentions and broker non-votes both will be counted toward
fulfillment of quorum requirements. A broker non-vote occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that proposal and has not received instructions from the beneficial owner.
COUNTING OF VOTES
The purpose of the Annual Meeting is to consider and act upon the matters
which are listed in the accompanying Notice of Annual Meeting and set forth in
this Proxy Statement. The enclosed form of Proxy provides a means for a
shareholder to vote for all of the matters listed in the accompanying Notice of
Annual Meeting and described in the Proxy Statement. The enclosed form of Proxy
also provides a means for a shareholder to vote for all of the nominees for
Director listed thereon or to withhold authority to vote for one or more of such
nominees. The Company's Bylaws provide that Directors are elected by a plurality
of the votes cast. Plurality means that more votes must be cast in favor of the
election of a Director than those cast against election of such Director.
Accordingly, the withholding of authority by a shareholder (including broker
non-
<PAGE> 4
votes) will not be counted in computing a plurality and thus will have no effect
on the results of the election of such nominees.
The accompanying form of Proxy also provides a means for a shareholder to
vote for, against or abstain from voting on each of the other matters to be
acted upon at the Annual Meeting. Each Proxy will be voted in accordance with
the shareholder's directions. The affirmative vote of a majority of the shares
of Common Stock present in person or represented by a Proxy and entitled to vote
on proposals two and three set forth in the accompanying Notice of Annual
Meeting is required for the approval of each such proposal. Approval of any
other matters as may properly come before the meeting also will require the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by a Proxy and entitled to vote at the meeting. Abstentions with
respect to proposals two and three will have the same effect as a vote against
these proposals. With respect to broker non-votes, the shares will not be
considered present at the meeting for the proposal to which authority was
withheld. Consequently, broker non-votes will not be counted with regard to the
proposal, but they will have the effect of reducing the number of affirmative
votes required to approve the proposal, because they reduce the number of shares
present or represented from which a majority is calculated. There are no
dissenter's rights with respect to any matter to be acted upon pursuant to this
Proxy Statement.
PROXIES AND SOLICITATION
When the enclosed Proxy is properly signed and returned, the shares which
it represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instructions, the shares
represented by a signed Proxy will be voted in favor of the nominees for
election to the Board of Directors, and in favor of the approval of proposals
two and three.
Proxies will be solicited from the Company's shareholders by mail. The
Company will pay all expenses in connection with the solicitation, including
postage, printing and handling, and the expenses incurred by brokers,
custodians, nominees and fiduciaries in forwarding proxy material to beneficial
owners. It is possible that directors, officers and other employees of the
Company may make further solicitation personally or by telephone, facsimile or
mail. Directors, officers and other employees of the Company will receive no
additional compensation for any such further solicitation.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of Common
Stock which, as of March 31, 1998, are deemed under the rules of the Securities
and Exchange Commission (the "Commission") to be "beneficially owned" by each
member of the Board of Directors of the Company, by each nominee for election to
the Board of Directors, by each executive officer of the Company, by all
directors, nominees and executive officers of the Company as a group, and by any
person or "group" (as that term is used in the Securities Act of 1934, as
amended) known to the Company as of that date to be a "beneficial owner" of more
than 5% of the outstanding shares of Common Stock of the Company.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED(1)
---------------------------------
NUMBER OF SHARES OF PERCENTAGE
DIRECTORS AND EXECUTIVE OFFICERS COMMON STOCK OF CLASS
- -------------------------------- ------------------- ----------
<S> <C> <C>
Aleksander Szlam(2)......................................... 11,147,395 73.5%
Donald L. House(3).......................................... 8,500 *
Don W. Hubble(4)............................................ 7,500 *
Mark B. Adams(5)............................................ 6,003 *
William K. Dumont........................................... -- *
Lee H. Davies(6)............................................ 13,974 *
John A. Lamb(7)............................................. 15,000 *
Dan K. Lowring(8)........................................... 1,895 *
All executive officers and directors as a group (8
persons)(9)............................................... 11,200,267 73.8%
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) Information with respect to "beneficial ownership" shown in the table above
is based on information supplied by the directors and executive officers of
the Company and filings made with the Commission or furnished to the Company
by other shareholders. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Except as indicated
by footnote, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Percentage of beneficial ownership is based on
15,169,645 shares of Common Stock outstanding as of March 31, 1998 and
includes shares of Common Stock subject to options which may be exercised
within 60 days of March 31, 1998. Such shares are deemed to be outstanding
for the purposes of computing the percentage ownership of the individual
holding such shares, but are not deemed outstanding for purposes of
computing the percentage of any other person shown in the table.
(2) Consists of 11,143,395 shares held by a limited partnership controlled by
Mr. Szlam and 4,000 shares held indirectly by Mr. Szlam's children.
(3) Includes 6,000 shares issuable pursuant to options exercisable within 60
days of March 31, 1998.
(4) Includes 6,000 shares issuable pursuant to options exercisable within 60
days of March 31, 1998.
(5) Includes 5,000 shares issuable pursuant to options exercisable within 60
days of March 31, 1998.
(6) Includes 10,000 shares issuable pursuant to options exercisable within 60
days of March 31, 1998.
(7) Includes 15,000 shares issuable pursuant to options exercisable within 60
days of March 31, 1998.
(8) Includes 1,250 shares issuable pursuant to options exercisable within 60
days of March 31, 1998.
(9) Includes 11,143,395 shares held by a limited partnership controlled by Mr.
Szlam, 4,000 shares held indirectly by Mr. Szlam's children, and 43,250
shares issuable pursuant to options exercisable within 60 days of March 31,
1998.
3
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
INTRODUCTION
At the Annual Meeting, three directors are to be elected for the terms
described below. Each of the nominees for election to the Board of Directors is
currently a director of the Company. If elected at the Annual Meeting, each of
the nominees would serve until the Annual Meeting held in 1999 and until his
successor is duly elected and qualified, or until such directors earlier death,
resignation or removal.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the three nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as the Board of Directors may select. Each person nominated
for election has agreed to serve if elected, and management has no reason to
believe that any nominee will be unable to serve.
The Board of Directors recommends a vote FOR each named nominee.
NOMINEES
The name and age, principal occupation or employment, and other data
regarding each nominee, based on information received from the respective
nominees, are set forth below:
ALEKSANDER SZLAM
Mr. Szlam, 46, founded the Company in 1979 and has served as Chairman
of the Board and Chief Executive Officer of the Company since its
inception. Mr. Szlam also has served as Chairman of the Board, President
and Chief Executive Officer of Inventions, Inc. since 1987, and Chairman of
the Board of Melita Europe Limited since 1991. Prior to founding the
Company, Mr. Szlam worked as a design engineer and scientist at Lockheed
Corporation, NCR and Solid State Systems.
DONALD L. HOUSE
Mr. House, 56, is a private investor and business consultant. From
January 1993 until December 1997, he served as Chairman of the Board of
Directors of SQL Financials International, Inc., a developer of
client/server application software. From September 1991 until December
1992, Mr. House served as President of Prentice Hall Professional Software,
Inc., a subsidiary of Simon and Schuster, Inc. Since 1988, he has been a
business advisor, director and investor in a number of emerging growth high
technology companies. From 1968 through 1987, Mr. House served in a number
of positions with Management Science America, Inc., a provider of
application software. Mr. House presently serves as a director of
XcelleNet, Inc., a remote access software company, and as Chairman of its
Audit and Nominating Committees.
DON W. HUBBLE
Mr. Hubble, 58, is Chairman, President and CEO of Angelica
Corporation. Mr. Hubble served with National Service Industries, Inc.
("NSI") from 1980 until October 1996, most recently serving as President
and Chief Operating Officer. During this period, Mr. Hubble also served in
various capacities with a number of divisions of NSI, including National
Linen Service, Block Industries and Certified Leasing Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1997, the Board of Directors held 4 meetings. All of the directors
attended at least 75% of the aggregate total number of meetings of the Board of
Directors held during their tenure and meetings of committees of the Board of
Directors on which they served.
4
<PAGE> 7
The Company's Board of Directors has established an Audit Committee and
Compensation Committee. Donald L. House and Don W. Hubble presently serve on the
Audit Committee. The Audit Committee met one time in 1997. The primary functions
of the Audit Committee are to (i) review the scope and timing of the audit and
non-audit services to be rendered by the Company's independent accountants, to
review audit plans of the independent accountants and internal auditors and to
review the reports upon completion of their audits, (ii) to review the
appropriateness of the Company's accounting policies, the adequacy of its
financial controls and the reliability of the financial information reported to
the public, and (iii) to report to the Board of Directors on its activities.
Donald L. House and Don W. Hubble presently serve on the Compensation Committee.
The Compensation Committee met two times in 1997. The primary functions of the
Compensation Committee are to review and approve, subject to ratification of the
Board of Directors, the Chief Executive Officer's compensation, to consult with
the Chief Executive Officer and approve compensation for executive officers and
other key employees, to administer the Company's stock option plans and employee
stock purchase plan including approval of all awards thereunder, to approve
management incentive plans for senior management, and to report to the Board of
Directors on these activities.
As compensation for serving on the Board of Directors, directors who are
not also employees of the Company ("Nonemployee Directors") receive $1,000 for
each meeting of the full Board and $500 for each Committee meeting. In the
Company's discretion, Nonemployee Directors may also be reimbursed for
reasonable expenses incurred by them in connection with their attendance at
Board Meetings. Nonemployee Directors are also eligible to receive options under
the Company's 1997 Stock Option Plan. Under this plan, Nonemployee Directors
receive an option to purchase 3,000 shares of the Company's common stock each
year, with one-sixth of such options vesting for each bi-monthly board meeting
attended. These options vest ratably upon a director's attendance at each of the
regular board meetings.
EXECUTIVE OFFICERS
In addition to the individuals nominated for director above who are also
executive officers of the Company, the following individuals presently serve as
executive officers of the Company:
MARK B. ADAMS
Mr. Adams has served as Vice President, Finance and Chief Financial
Officer of the Company since September 1996. During 1996 prior to joining
the Company, Mr. Adams served as President of INITIAL Contract Services, a
building services company. From 1993 to 1995, Mr. Adams served as Executive
Vice President, Finance and Chief Financial Officer of INITIAL Contract
Services. From 1989 to 1993, Mr. Adams served as Vice President, Finance
for Suntory Water Group, a consumer products company. Mr. Adams is a member
of the American Institute of Certified Public Accountants and is a
Certified Public Accountant in the State of Georgia.
WILLIAM K. DUMONT
Mr. Dumont has served as Vice President, Sales of the Company since
December 1996. From 1994 to 1996, Mr. Dumont served as Regional Manager for
Octel Communications Corporation, and from 1990 to 1994 he served as
Regional Vice President of VMX, Inc., both of which are voice processing
companies.
LEE H. DAVIES
Mr. Davies has served as Vice President, International of the Company
since September 1997. From September 1995 to September 1997, Mr. Davies
served as Vice President, Operations of the Company. Prior to joining the
Company, Mr. Davies served as Vice President of Sales, Marketing and
Customer Support for Aristacom International, Inc., an inbound call center
software company, from 1994 to 1995. From 1991 to 1994, Mr. Davies served
as a marketing director for Digital Equipment Corporation.
5
<PAGE> 8
JOHN A. LAMB
Mr. Lamb has served as Vice President, New Business Development of the
Company since September 1996, and was Director of Special Projects of the
Company from February 1996 to September 1996. From January 1995 to November
1995, he was Vice President, Research and Development of Microhelp, Inc., a
software development company. From 1990 to 1995, he held various positions
in the sales and engineering departments of the Company.
DAN K. LOWRING
Mr. Lowring has served as Vice President, Corporate and Strategic
Planning of the Company since December 1997. He has also served as
Treasurer of the Company since January 1997 and as Secretary since March
1997. From July 1993 to December 1996 he served as Director, Finance of the
Company. From March 1993 to July 1993, he served as Controller of the
Company, and from October 1990 to March 1993 he served as Manager, Finance
of the Company.
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation earned for services rendered to the Company by the Company's Chief
Executive Officer and each of the other four most highly compensated executive
officers of the Company during 1997 (collectively the "Named Executive
Officers") for the fiscal years ended December 31, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(#) COMPENSATION
- --------------------------- ---- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Aleksander Szlam 1997 $300,000 $160,000(3) $ -- -- $ --
Chairman of the Board 1996 300,001 154,502 86,040(4)
and Chief Executive Officer
J. Neil Smith 1997 $245,192 $ 93,000 -- -- 3,800
President and Chief 1996 220,399 82,500 3,600
Operating Officer
Lee H. Davies 1997 $140,997 $ 34,000 -- 30,000 3,383
Vice President, Operations 1996 127,211 13,320 1,586
John A. Lamb 1997 $119,596 $ 15,000 -- 35,000 2,870
Vice President, New 1996 84,326 2,000 1,252
Business Development
Mark B. Adams 1997 $123,462 $ 6,554 -- 34,000 2,963
Vice President, Finance 1996 32,769 --
and Chief Financial Officer
</TABLE>
- ---------------
(1) Except as noted, bonuses awarded and paid in each year were based upon prior
year performance.
(2) In accordance with rules of the Securities and Exchange Commission, other
compensation in the form of perquisites and other personal benefits has been
omitted because such perquisites and other personal benefits constituted
less than the lesser of $50,000 or 10% of the total annual salary and bonus
for the Named Executive Officer for such year.
(3) Bonus accrued during 1997 pursuant to Mr. Szlam's employment agreement with
the Company.
(4) Includes the value of the non-business use of two automobiles provided by
the Company and reimbursement of the associated income taxes in the
aggregate amount of $64,068, health and life
6
<PAGE> 9
insurance premiums and reimbursement of the associated income taxes in the
aggregate amount of $13,623, auto insurance premiums and reimbursement of
the associated income taxes in the aggregate amount of $6,308, and ad
valorem tax payments and reimbursement of the associated income taxes in the
aggregate amount of $2,041.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted during
the year ended December 31, 1997 to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL EXERCISE STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED TO OR BASE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ---------- ------------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Aleksander Szlam....... -- -- -- -- --
J. Neil Smith.......... -- -- -- -- --
Lee H. Davies.......... 20,000 4.4% $5.50 2/6/2007 $ 69,178 $175,312
10,000 2.2 9.38 11/28/2007 58,990 149,493
John A. Lamb........... 20,000 4.4% $5.50 2/6/2007 $ 69,178 $175,312
15,000 3.3 9.38 11/28/2007 88,485 224,240
Mark B. Adams.......... 20,000 4.4% $5.50 2/6/2007 $ 69,178 $175,312
14,000 3.1 9.38 11/28/2007 82,586 209,290
</TABLE>
- ---------------
(1) The options granted to the named executive officers were awarded under the
Company's 1997 Stock Option Plan (the "1997 Plan"). The options granted
under the 1997 Plan are exercisable for a period not to exceed ten years
from the date of grant. Options generally vest over four years of continuous
employment with the Company. The exercise price of each option granted was
not less than 100% of the fair market value of a share of Common Stock on
the date of grant.
(2) Amounts represent the hypothetical gains that could be achieved for the
respective options at the end of the ten year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by the rules of the
Securities and Exchange Commission and may not accurately reflect the
appreciation of the price of the Common Stock from the grant date until the
expiration of the option term. These assumptions are not intended to
represent a forecast of future stock appreciation of the Company's Common
Stock. No assurance can be given that the Company's Common Stock will
appreciate at all.
7
<PAGE> 10
OPTIONS EXERCISED AND YEAR-END VALUES OF AN EXERCISED OPTION
The following table sets forth information, as of December 31, 1997,
regarding the number of shares received and the value realized upon exercise of
the stock options, and the number and value of exercisable and unexercisable
options to purchase Common Stock of the Company held by the Company's Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1997 AT DECEMBER 31, 1997(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Aleksander Szlam............. -- -- -- -- -- --
J. Neil Smith................ -- -- 337,500 -- $2,075,625 --
Lee H. Davies................ -- -- 5,000 25,000 17,800 $53,400
Mark B. Adams................ -- -- 5,000 29,000 17,800 53,400
John A. Lamb................. -- -- 5,000 30,000 17,800 53,400
</TABLE>
- ---------------
(1) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price for the Common Stock of $9.06 as
reported by The NASDAQ Stock Market on December 31, 1997 and the exercise
price of the options.
AGREEMENTS WITH EMPLOYEES
Principal employees of the Company, including executive officers, are
required to sign an agreement with the Company restricting the ability of the
employee to compete with the Company during his or her employment and for a
period of one year thereafter, restricting solicitation of customers and
employees following employment with the Company, and providing for ownership and
assignment of intellectual property rights to the Company.
Mr. Szlam has entered into an employment agreement with the Company
effective June 4, 1997 that terminates on June 4, 1999. Pursuant to the
agreement, Mr. Szlam is entitled to receive an annual base salary of $300,000,
and is entitled to an annual bonus of $160,000. Mr. Szlam's employment under the
agreement automatically renews for additional two-year terms unless the Company
or Mr. Szlam cancels such renewal by giving three months' prior written notice.
Under the terms of the agreement, Mr. Szlam has agreed to assign to the Company
all patents, copyrights and other intellectual property developed by him during
the course of his employment by the Company. In addition, Mr. Szlam has agreed
not to solicit the customers or employees of the Company or to compete with the
Company for two years following any termination of his employment.
Mr. J. Neil Smith, who resigned from the Company effective December 31,
1997, had entered into an employment agreement with the Company. Upon
termination of employment, Mr. Smith was entitled to receive termination pay
equal to one year's salary. Further, as a consequence of Mr. Smith's leaving the
Company, the right to exercise 112,500 of the options held as of the date of his
resignation were forfeited, with the balance of 337,500 being immediately vested
and exercisable. Under the terms of the employment agreement, Mr. Smith agreed
to assign to the Company all patents, copyrights and other intellectual property
developed by him during the course of his employment by the Company. In
addition, Mr. Smith agreed not to solicit the customers or employees of the
Company or to compete with the Company for two years following termination of
his employment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of the Common Stock to file initial statements of
beneficial ownership (Form 3) and statements of changes in beneficial ownership
(Forms
8
<PAGE> 11
4 and 5) of Common Stock and any other equity securities of the Company with the
Securities and Exchange Commission and The NASDAQ Stock Market. Officers,
directors and greater than ten percent shareholders are required by Securities
Exchange Commission regulations to furnish the Company with copies of all such
forms they file.
Based solely on a review of the copies of the forms that it has received,
and on written representations from certain reporting persons that no additional
forms were required, the Company believes that its officers, directors and
greater than ten percent beneficial owners complied with all of these filing
requirements in 1997.
401(K) PROFIT SHARING PLAN
The Company maintains a 401(k) Profit Sharing Plan (the "401(k) Plan")
which is intended to be a tax-qualified defined contribution plan under Section
401(k) of the Code. In general, all U.S. employees of the Company are eligible
to participate at the beginning of the quarter following their hire date. The
401(k) Plan includes a salary deferral arrangement pursuant to which
participants may contribute, subject to certain Code limitations, a maximum of
15% of their salary on a pre-tax basis, with a maximum deferral of $9,750 for
1997. Starting in 1998, the Company guarantees a matching contribution of 40% of
each participant's contribution up to 6% of the participant's salary and a
discretionary match of up to 60% of each participant's contribution up to 6% of
the participant's salary. In 1997, the Company's matching contribution was 40%
of each participant's contribution up to 6% of the participant's salary, for an
aggregate contribution of $192,304. A separate account is maintained for each
participant in the 401(k) Plan. The portion of a participant's account
attributable to his or her own contributions is 100% vested. The portion of the
account attributable to Company contributions (including matching contributions)
vests ratably over the first two years of service with the Company as defined in
the 401(k) Plan. Distributions from the 401(k) Plan may be made in the form of a
lump-sum payment in cash or property or in the form of an annuity.
STOCK OPTION PLANS AND STOCK PURCHASE PLAN
1997 Stock Option Plan. The Company's 1997 Stock Option Plan (the "1997
Stock Option Plan") became effective on February 6, 1997. The aggregate number
of shares reserved for issuance under the 1997 Stock Option Plan is 1,350,000
shares, less the number of shares issued pursuant to the Company's 1992
Discounted Stock Option Plan. The purpose of the 1997 Stock Option Plan is to
provide incentives for key employees, officers, consultants and directors to
promote the success of the Company, and to enhance the Company's ability to
attract and retain the services of such persons. Options granted under the 1997
Stock Option Plan may be either options intended to qualify as "incentive stock
options" under Section 422 of the Code or nonqualified stock options.
As of March 31, 1998, options to purchase 698,950 shares of Common Stock
were outstanding under the 1997 Stock Option Plan at a weighted average exercise
price of $6.22 per share and 1,250 shares of Common Stock have been issued upon
exercise of options granted under the 1997 Stock Option Plan.
1992 Discounted Stock Option Plan. The Company's 1992 Discounted Stock
Option Plan (the "1992 Stock Option Plan") became effective on June 4, 1992. The
aggregate number of shares reserved for issuance under the 1992 Stock Option
Plan is 1,000,000 shares. The purpose of the 1992 Stock Option Plan is to
provide incentives for key employees to promote the success of the Company, and
to enhance the Company's ability to attract and retain the services of such
persons. Options granted under the 1992 Stock Option Plan are not intended to
qualify as "incentive stock options" under Section 422 of the Code. Options
granted under the 1992 Stock Option Plan vest over a period of time specified in
the relevant option agreement, and will first become exercisable as to the
vested portion on August 10, 1998.
As of March 31, 1998, options to purchase 802,688 shares of Common Stock
were outstanding under the 1992 Stock Option Plan at a weighted average exercise
price of $2.99 per share and no shares of Common Stock have been issued upon
exercise of options granted under the 1992 Stock Option Plan.
Employee Stock Purchase Plan. The Company adopted an Employee Stock
Purchase Plan (the "Stock Purchase Plan") on March 1, 1997, to become effective
on June 4, 1997. A total of 250,000 shares of the
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<PAGE> 12
Company's Common Stock have been reserved for issuance under the Stock Purchase
Plan. The Stock Purchase Plan is intended to qualify under sec.423 of the Code.
An employee electing to participate in the Stock Purchase Plan must authorize on
a semi-annual basis a stated dollar amount or percentage of the employee's
regular pay (not to exceed 10%) to be deducted by the Company from the
employee's pay. The price at which employees may purchase Common Stock is 85% of
the closing price of the Common Stock on the NASDAQ National Market on the first
day of the semi-annual period or the last day of the semi-annual period,
whichever is lower. An employee may not sell shares of Common Stock purchased
under the Stock Purchase Plan until the later of: (i) 180 days after the closing
of this offering; or (ii) the first day of the second semi-annual period
following the semi-annual period in which the right to purchase such shares was
granted. Employees of the Company who have completed six full months of service
with the Company and whose customary employment is more than 20 hours per week
for more than nine months per calendar year are eligible to participate in the
Stock Purchase Plan. An employee may not be granted an option under the Stock
Purchase Plan if after the granting of the option such employee would be deemed
to own 5% or more of the combined voting power or value of all classes of stock
of the Company. As of March 31, 1998, approximately 205 employees are eligible
to participate in the Stock Purchase Plan. The Stock Purchase Plan is
administered by the Compensation Committee of the Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Company's Board of Directors has
furnished the following report on Executive Compensation in accordance with the
rules and regulations of the Securities and Exchange Commission. This report
outlines the duties of the Committee with respect to executive compensation, the
various components of the Company's compensation program for executive officers
and other key employees, and the basis on which the 1997 compensation was
determined for the executive officers of the Company, with particular detail
given to the 1997 compensation for the Company's Chief Executive Officer.
During 1997, the Compensation Committee was comprised of Donald L. House
and Don W. Hubble.
Duties of the Committee include establishing and approving compensation of
the Chief Executive Officer, consulting with the Chief Executive Officer for the
purpose of reviewing and approving compensation for other executive officers and
key employees, administering the Company's stock option plans for employees, and
approving management incentive bonuses. In performing the duties described
above, the Compensation Committee seeks to achieve the following:
(i) to provide compensation opportunities that are based on the
performance of the Company,
(ii) to provide competitive compensation programs that enable the Company
to attract and retain highly qualified executive managers who are
focused on enhancing shareholder value, and
(iii) to coordinate compensation programs and practices so that they
promote the Company's annual and long-term business objectives and
strategies.
The Compensation Committee in all instances seeks to link compensation to
the value and level of the performance of the executive. The Compensation
Committee seeks to achieve this objective by implementing, as the principal
components of compensation, a program of base salary, incentive compensation and
equity-based incentives. The compensation decisions of the Committee relative to
the Company's executive officers and key employees are described below as to
each of the foregoing components.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
Salary. The salary levels of the Company's executive officers and other
key employees are reviewed by the Committee annually. In determining appropriate
base-salary levels, the Committee considers factors such as duties and
responsibilities inherent in the position held, initiative, performance, tenure
and pay practices for
10
<PAGE> 13
other companies of similar size in the electronics industry, as well as business
conditions generally prevailing in the software and technology industries.
The Company refers to external information to determine base salaries paid
by other companies for comparable positions. For example, the Company refers to
a survey by organizations such as the American Electronics Association and
Culpepper and Associates for both executives and non-executives to determine
market salaries for comparable positions paid by other software and electronic
companies of similar size, and awards salary increases based on the number of
years experience and performance, giving consideration to the market salaries
reflected by these surveys.
Cash Bonuses. Annual cash bonuses are determined and paid to executives
and key employees pursuant to the Company's compensation plan for executive
officers and other key employees. For each executive and key employee, the cash
bonus is based upon the attainment of financial and other objectives, either for
the Company as a whole, or for the employee's area of responsibility. Cash
bonuses for executive officers and other key employees are targeted at ranges
from 15% of base salary to 66% of base salary. The amount of the bonus payable
to any executive officer or other key employee ranges from 0% of targeted bonus
to a maximum of 100% of targeted bonus depending on the level of performance
goals achieved. Since bonus payments are based on the degree in which the
Company achieves its overall operating income and revenue goals, the
compensation of executive officers and key employees is higher during years in
which the Company meets or exceeds its specified financial performance goals.
Operating income (excluding acquisition related charges) and revenues for the
year ended December 31, 1997 were $11.4 million and $65.8 million, respectively,
as compared to an operating income and revenues of $7.3 million and $47.5
million, respectively, for the year ended December 31, 1996. Total cash bonuses
of approximately $478,666 were paid to 7 members of senior management
participating in the incentive plan during 1997. Total cash bonuses of
approximately $308,976 were paid to 6 members of senior management participating
in the plan during 1996.
Equity-based Incentives. The Company maintains stock option plans to
provide executive officers and other key employees and consultants with
additional incentive to promote the financial success of the Company which, in
turn, is intended to positively impact the value of the Company's Common Stock.
Options granted under the Company's Stock Option Plans have generally been
long-term (ten years). All such options are granted at an exercise price equal
to fair market value on the date of grant. With such features, the Company
considers stock options as a way of aligning the interest of management with the
interest of the Company's shareholders to promote growth in the Company's stock
price and inducing executive officers and other key employees to remain with the
Company on a long-term basis. The Compensation Committee believes that the
Company's long-term goals will best be achieved by maintaining in place the core
management team of executive officers and other key employees. During 1997,
options to purchase 151,000 shares of the Company's Common Stock were awarded to
executive officers of the Company. As of March 31, 1998, options to purchase an
aggregate 676,623 shares of the Company's Common Stock were held by 162
employees under the Company's Stock Option Plans. Included in this amount as of
March 31, 1998 are options to purchase approximately 45,650 shares of the
Company's Common Stock at an average exercise price of $5.50 held by executive
officers named in the Summary Compensation Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing the 1997 cash bonus compensation for Mr. Szlam, the Company
observed similar guidelines as set forth for executive officers generally. The
Company does not assign specific weighting to the various guidelines or factors,
other than the consideration that is given to the Company's achievement of its
overall operating income and revenue goals. During 1997, Mr. Szlam's base salary
was set at $300,000, effective June 4, 1997, as compared to $300,001 for the
immediately preceding year. Mr. Szlam's bonus was targeted at $160,000 for 1997.
The Compensation Committee approved a bonus of $240,000 to Mr. Szlam for 1997,
reflecting the fact that the Company had exceeded its targeted goals for
operating income and revenue for 1997. In 1996, Mr. Szlam received a bonus of
$154,502.
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<PAGE> 14
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deduction allowable to the Company for compensation paid to the Chief Executive
Officer and each of the four other most highly compensated executive officers to
$1.0 million. Qualified performance-based compensation is excluded from this
limitation if certain requirements are met. The Company's policy is generally to
preserve the federal income tax deductibility of compensation paid, to the
extent feasible. The Compensation Committee believes that awards under the
Company's management incentive plan and its award of options made under stock
option plans for employees will qualify as performance-based compensation and
thereby be excluded from the $1.0 million limitation. Notwithstanding the
Company's policy to preserve the federal income tax deductibility of
compensation payments, under certain circumstances, the Compensation Committee,
in its discretion, may authorize payment, such as salary, bonuses or otherwise,
that may cause an executive officer's income to exceed the deductible limits.
Compensation Committee
Donald L. House
Don W. Hubble
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<PAGE> 15
STOCK PERFORMANCE GRAPH
The following line-graph provides a comparison of the cumulative total
shareholder return on the Company's Common Stock for the period from the date of
the Company's initial public offering on June 4, 1997 through December 31, 1997,
against the cumulative shareholder return during such period achieved by the
NASDAQ Stock Market (U.S. Companies) and an index of the Company's competitors
in the customer contact and call management systems industry (the "Call
Management Index"). All amounts have been calculated as if all dividends were
reinvested.
<TABLE>
<CAPTION>
CALL
Measurement Period MELITA MANAGEMENT
(Fiscal Year Covered) INTERNATIONAL NASDAQ US INDEX
<S> <C> <C> <C>
6/97 100 100 100
1997 90.62 113.03 81.45
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, Donald L. House and Don W. Hubble served as members of the
Compensation Committee of the Board of Directors. Neither of these directors
served as an officer or employee or was formerly an officer of the Company or
its subsidiaries.
CERTAIN TRANSACTIONS
COMBINATION OF MELITA EUROPE AND INVENTIONS
On June 4, 1997, the Company acquired Melita Europe Limited ("Melita
Europe") and Inventions, Inc. ("Inventions") by share exchanges with their
existing shareholders, which were Mr. Szlam, a limited partnership controlled by
Mr. Szlam and a trust controlled by his spouse. The Company issued a total of
3,143,395 shares of its Common Stock to the shareholders of Melita Europe and
Inventions in such share exchanges. The exchange ratios and number of shares
issued in the share exchange were based on relative valuations of the Company,
Melita Europe and Inventions determined by an independent appraisal firm.
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<PAGE> 16
S CORPORATION DISTRIBUTION AND TERMINATION OF S CORPORATION STATUS
On June 4, 1997 (the "Termination Date"), the Company terminated its status
as an S corporation under the Code. All undistributed S corporation earnings
through the Termination Date were distributed to the Company's principal
shareholder using a portion of the net proceeds of the Company's initial public
offering.
TAX INDEMNIFICATION AGREEMENT
The Company has entered into Tax Indemnification Agreements with its
existing shareholders providing for, among other things, the indemnification of
the Company by such shareholders for any federal and state income taxes
(including interest) incurred by the Company if for any reason the Company is
deemed to be treated as a C corporation during any period for which it reported
its earnings to the taxing authorities as an S corporation. The Tax
Indemnification Agreements further provide for the cross-indemnification of the
Company and of each existing shareholder for certain additional taxes (including
interest and, in the case of existing shareholders, penalties) resulting from
the Company's operations during the period in which it was an S corporation.
PROPOSAL 2
AMENDMENT TO THE 1997 STOCK OPTION PLAN
The Board has approved and recommends to the Shareholders that they approve
a proposal to amend the Company's 1997 Stock Option Plan to increase the number
of shares of Common Stock available for grant under such plan from 1,350,000 to
1,850,000, an increase of 500,000 shares of Common Stock. As of March 31, 1998,
there were approximately 698,950 outstanding options to purchase shares of
Common Stock under the 1997 Plan. In addition, the proposed amendment authorizes
the Company to automatically adjust the number of shares of Common Stock
available for issuance under the 1997 Plan on the first day of each fiscal year,
beginning with the 1998 fiscal year, by a number of shares such that the total
number of shares reserved for issuance under the 1997 Plan equals the sum of (i)
the aggregate number of shares previously issued under the 1997 Plan and the
1992 Plan; (ii) the aggregate number of shares subject to outstanding options
granted under the 1997 Plan and the 1992 Plan; and (iii) 5% of the number of
shares outstanding on the last day of the preceding fiscal year. Notwithstanding
the foregoing, the proposed amendment provides that not more than 750,000 of the
shares available for grant each year shall be available for "incentive stock
options" under Section 422 of the Code. In the event that the proposed amendment
is approved, options to purchase approximately 430,469 shares would be available
for grant under the 1997 Plan as of March 31, 1998.
The text of the proposed amendment to the 1997 Plan is set forth in Annex A
to this Proxy Statement. The 1997 Plan is described above under "Proposal
1 -- Election of Directors -- Stock Option Plans and Stock Purchase Plan" and is
qualified in its entirety by reference to the text of the 1997 Plan.
The proposed amendment to the 1997 Plan will be adopted upon receiving the
affirmative vote of holders of a majority of the shares present or represented
by proxy at the Annual Meeting. Proxies will be voted in accordance with the
specifications marked thereon, and if no specifications are made, will be voted
"FOR" adoption of the proposed amendment to the 1997 Plan. The Board has
determined that the amendment to the 1997 Plan is in the best interest of the
Company and its shareholders. The proposed amendment would provide a stable pool
of additional shares for grant to officers, directors, consultants and key
employees of the Company. The Board believes that grants of stock options are an
effective method to attract and retain officers, directors, consultants and key
employees and that the availability of shares for future grants under the plan
is important to the Company's business prospects and operations.
The Board of Directors recommends a vote FOR the approval of the Amendment
to the 1997 Plan.
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<PAGE> 17
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
In January 1998, the Board of Directors appointed the accounting firm of
Arthur Andersen, LLP to serve as its independent auditor. The appointment of
this firm was recommended to the Board by its Audit Committee. A proposal to
ratify that appointment will be presented at the Meeting. Representatives of
Arthur Andersen, LLP are expected to be present at the meeting. They will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions from shareholders.
The Board of Directors recommends that the shareholders vote FOR
ratification of selection of independent auditors.
SHAREHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any proposal
by a shareholder of the Company for consideration at the 1999 Annual Meeting of
Shareholders must be received by the Company no later than December 18, 1998, if
any such proposal is to be eligible for inclusion in the Company's proxy
materials for its 1999 Annual Meeting. Under such rules, the Company is not
required to include shareholder proposals in its proxy materials unless certain
other conditions specified in such rules are met.
In order for a shareholder to bring any business or nominations before the
1998 Annual Meeting of Shareholders, certain conditions set forth in Section
2.13 of the Company's Amended and Restated Bylaws must be complied with,
including, but not limited to, delivery of notice to the Company not less than
60 days prior to the meeting as originally scheduled; provided, however, that in
the event that less than 70 days notice or prior public disclosure of the date
of the meeting is given or made to the shareholders, notice by the shareholders
to be timely 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 meeting was mailed.
OTHER MATTERS
Management of the Company is not aware of any other matter to be presented
for action at the Annual Meeting other than those mentioned in the Notice of
Annual Meeting of Shareholders and referred to in this Proxy Statement. However,
if any other matters are properly presented to the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote, or otherwise
act, in accordance with their judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ Dan K. Lowring
Dan K. Lowring
Secretary
April 17, 1998
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<PAGE> 18
ANNEX A
AMENDMENT NO. 1
TO
MELITA INTERNATIONAL CORPORATION
1997 STOCK OPTION PLAN
The Melita International Corporation 1997 Stock Option Plan (the "Plan") is
hereby amended as follows:
1. Amendment Regarding Option Replenishment. Section 3 of the Plan is
hereby amended as follows:
SECTION 3.
SHARES SUBJECT TO OPTIONS
The initial number of Shares reserved for issuance under this Plan shall be
1,850,000 Shares of Common Stock, less the number of Shares (a) which have been
issued pursuant to exercised grants made under the Melita International
Corporation 1992 Discounted Stock Option Plan (the "1992 Plan"), or (b) which
are subject to options granted which remain outstanding under the 1992 Plan. The
number of shares of Common Stock available for issuance under the Plan shall be
automatically adjusted on the first day of each fiscal year, beginning with the
1998 fiscal year, by a number of Shares such that the total number of shares
reserved for issuance under this Plan equals the sum of (i) the aggregate number
of Shares previously issued under this Plan and the 1992 Plan; (ii) the
aggregate number of Shares subject to then outstanding options granted under
this Plan and the 1992 Plan; and (iii) 5% of the number of shares of Common
Stock outstanding on the last day of the preceding fiscal year. Notwithstanding
the foregoing, not more than 750,000 of the Shares available for grant each year
shall be available for issuance pursuant to ISOs, such that not more than
7,500,000 shares resulting from such automatic adjustments may ever be issued
pursuant to ISOs during the term of the Plan.
Such Shares shall be reserved, to the extent that the Company deems
appropriate, from authorized but unissued Shares, and from Shares which have
been reacquired by the Company. Furthermore, any Shares subject to an Option
which remain unissued after the cancellation, expiration or exchange of such
Option thereafter shall again become available for use under this Plan, and any
Shares subject to an option granted under the 1992 Plan which remain unissued
after the cancellation, expiration or exchange of such option thereafter shall
become available for use under this Plan. Notwithstanding the above, any
Surrendered Shares which remain after the surrender of an Option under Section
11 shall not again become available for use under this Plan.
2. Effective Date. The effective date of this Amendment shall be October
21, 1997, provided, the shareholders of the Company approve this Amendment
within 12 months after such effective date. Any Options granted under the Plan
as amended hereby before the date of such approval automatically shall be
granted subject to such approval.
3. Miscellaneous. (a) Capitalized terms not otherwise defined herein shall
have the meanings given them in the Plan.
(b) Except as specifically amended hereby, the Plan shall remain in full
force and effect.
A-1
<PAGE> 19
APPENDIX
MELITA INTERNATIONAL CORPORATION
5051 PEACHTREE CORNERS CIRCLE
NORCROSS, GEORGIA 30092-2500
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF MELITA INTERNATIONAL
CORPORATION (THE "COMPANY") FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON MAY 11, 1998 (THE "ANNUAL MEETING").
The undersigned hereby appoints Aleksander Szlam and Dan K. Lowring, and
each of them, with full power of substitution, as proxies to vote all of the
shares of Common Stock of the Company which the undersigned may be entitled to
vote at the Annual Meeting, and at any adjournments thereof, on the following
matters in the following manner:
<TABLE>
<S> <C> <C>
1. Election of Directors. [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary vote for all nominees listed below
below)
</TABLE>
Aleksander Szlam, Donald L. House, Don W. Hubble
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below.)
---------------------------------------------------------------------
2. Approval of Amendment No. 1 to the Melita International Corporation 1997
Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of the appointment of Arthur Andersen, LLP as the independent
auditors of the Company for the fiscal year ended December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In accordance with their judgment, upon such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
PLEASE SIGN AND DATE ON REVERSE.
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, AND NOT REVOKED, THE
SHARES IT REPRESENTS WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE CHOICES
SPECIFIED ABOVE. IF NO CHOICE IS SPECIFIED, IT WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES LISTED IN PROPOSAL 1 ABOVE AND FOR PROPOSALS 2 AND 3.
PLEASE DATE AND SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS BELOW.
Date: , 1998
-------------------
------------------------------
Signature
------------------------------
Signature
NOTE: When signing as
attorney, trustee,
administrator, executor or
guardian, please give your
full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. In the case of joint
tenants, each joint owner must
sign.
I PLAN TO ATTEND THE MEETING [ ]
