<PAGE>
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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 Section 240.14a-11(c) or Section 240.14a-12
QAD, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF QAD]
QAD INC.
6450 Via Real
Carpinteria, California 93013
805-684-6614
May 16, 1999
To All QAD Stockholders:
On behalf of the Board of Directors of QAD Inc., I cordially invite you to
attend the annual meeting of stockholders of QAD to be held at the Fess Parker's
DoubleTree Resort, 633 East Cabrillo Street, Santa Barbara, California, on June
22, 1999 at 10:00 a.m. Pacific Time. A notice of the meeting, form of proxy and
a proxy statement containing information about the matters to be acted upon at
the annual meeting are enclosed.
At this year's meeting you will be asked to elect one director, to
approve an increase in the number of shares of QAD's common stock reserved for
issuance under the QAD Inc. 1997 Stock Incentive Program by 4,000,000 shares and
to ratify the selection of the independent auditors. The accompanying notice of
the meeting and proxy statement describes these proposals. We encourage you to
read this information carefully.
Whether in person or by proxy, it is important that your shares be
represented at the annual meeting. To ensure your participation in the annual
meeting, regardless of whether you plan to attend in person, please complete,
sign, date and return the enclosed proxy promptly. If you attend the annual
meeting and wish to vote your proxy in person, you can revoke your previously
voted proxy at the meeting.
We look forward to seeing you at the annual meeting.
Sincerely,
Karl F. Lopker
Chief Executive Officer
<PAGE>
[LOGO OF QAD]
QAD Inc.
6450 Via Real
Carpinteria, California 93013
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 22, 1999
10:00 a.m. Pacific Time
To the Stockholders of QAD Inc.:
NOTICE is hereby given on the annual meeting of stockholders of QAD Inc., a
Delaware corporation will take place on Tuesday, June 22, 1999, 10:00 a.m.
Pacific Time at Fess Parker's DoubleTree Resort, 633 East Cabrillo Street, Santa
Barbara, California.
Purposes:
1. To elect one director to hold office until the annual meeting of
stockholders in 2002 (Class I Director);
2. To approve an amendment to the QAD Inc. 1997 Stock Incentive Program
increasing the number of shares of common stock reserved for issuance
by 4,000,000 shares;
3. To ratify the appointment of independent auditors; and
4. To conduct other business if it is properly raised.
The items of business are more fully described in the proxy statement
accompanying this notice. Only stockholders of record on May 11, 1999 are
entitled to vote at the meeting.
Your vote is important. Please promptly complete, sign, date and return your
proxy card in the enclosed envelope.
By Order of the Board of Directors
Joseph E. Nida,
Secretary
Carpinteria, California
May 16, 1999
<PAGE>
QAD Inc.
6450 Via Real
Carpinteria, CA 93013
PROXY STATEMENT
QAD's board is using this proxy statement to solicit proxies from the holders
of QAD Inc. common stock to be used at the annual meeting of stockholders. This
meeting will be held at 10:00 a.m. Pacific Time. We are first mailing this
proxy statement and the accompanying form of proxy to QAD stockholders on or
about May 16, 1999.
Matters relating to the annual meeting:
Time and Place: June 22, 1999
10:00 a.m. Pacific Time
Fess Parker's DoubleTree Resort
633 East Cabrillo Street
Santa Barbara, California 93103
Record Date: May 11, 1999
Outstanding Shares Held on
Record Date: 30,128,528 shares of common stock
Shares Entitled to Vote: 30,128,528 shares of common stock
Quorum Requirement: A quorum of shareholders is necessary to hold
a valid meeting. The presence in person or by
proxy at the meeting of holders of shares
representing a majority of the votes of the
common stock entitled to vote at the meeting
is a quorum.
Abstentions and broker "non-votes" count as
present for establishing a quorum. Shares
held by QAD in its treasury do not count
toward a quorum. A broker non-vote occurs on
an item when a broker is not permitted to
vote on that item without instruction from
the beneficial owner of the shares and no
instruction is given.
Shares Beneficially
Owned by QAD Officers
and Directors on
May 11, 1999: 19,508,774 shares of common stock, including
exercisable options. These shares represent
in total approximately 65 percent of the
voting power of QAD's common stock. These
individuals have indicated that they will
vote in favor of the proposals recommended by
QAD's board.
Annual report: The annual report to stockholders that
accompanies this proxy statement is not proxy
soliciting material.
Company contact: For additional information or copies of the
annual report please contact:
QAD Inc.
Attn: Investor Relations
6450 Via Real
Carpinteria, California 93013
<PAGE>
The proposals and vote necessary to approve them:
ITEM I: To elect one director to hold office until the annual meeting of
stockholders in the year 2002 (a Class I director).
Directors are elected by a plurality of the votes represented by
the shares of common stock present at the meeting in person or by
proxy. This means that the director nominees with the most
affirmative votes are elected to fill the available seats. Only
the number of votes "FOR" affect the outcome. Withheld votes and
abstentions have no effect on the vote.
Because only one director is up for election, the single nominee
with the greatest number of votes will be elected to fill the
vacancy.
ITEM II: To approve an amendment to the QAD Inc. 1997 Stock Incentive
Program increasing the number of shares of QAD common stock
reserved for issuance under the plan by 4,000,000 shares.
The approval of the amendments to the QAD Inc. 1997 Stock
Incentive Program to increase the shares reserved for issuance
under the plan requires the affirmative vote of a majority of the
votes cast by holders of the common stock present, in person or
by proxy, and entitled to vote at the meeting. Withheld votes
and abstentions have the same effect as a vote against.
ITEM III: To ratify the appointment of KPMG LLP as QAD's independent
auditors for QAD's 2000 fiscal year.
Ratification of the selection of KPMG LLP as QAD's independent
auditors for the 2000 fiscal year requires a majority of the
votes cast by holders of the common stock. Abstentions have no
effect on the vote.
ITEM IV: To conduct other business if it is properly raised.
Under New York Stock Exchange rules, which govern most brokers, if your broker
holds your shares in its name, your broker is generally permitted to vote your
shares on each of Items I, II and III in its discretion if it does not receive
voting instructions from you. If a broker determines that, under applicable
rules, it is not entitled to vote your shares without your voting instructions,
a broker non-vote will occur. This will have no effect on the election of
directors and will have the effect of not being entitled to vote and not cast on
Items II and III, and therefore not counted as a vote for or against those
Items.
The stockholders have no dissenters' or appraisal rights in connection with
any of Items I, II or III.
Proxies
Voting instructions are included on your proxy card. If you properly submit
your proxy in time to vote, one of the individuals named as your proxy will vote
your shares as you have directed. You may vote for or withhold authority to
vote for QAD's director nominee. You also may vote for or against the other
proposals or abstain from voting.
If you submit your proxy but do not make specific choices, your proxy will
follow the board's recommendations and vote your shares:
FOR the election of the one director nominee; FOR the amendment of the QAD
Inc. 1997 Stock Incentive Program to increase the number of shares reserved
under the plan by 4,000,000 shares; FOR the ratification of KPMG LLP as the
independent auditors for fiscal year 2000; FOR any proposal by QAD's board to
adjourn the annual meeting; and, in its discretion as to any other business as
may properly come before the annual meeting.
2
<PAGE>
Voting your proxy. You may vote in person at your meeting or by proxy. We
recommend you vote by proxy even if you plan to attend the meeting. You can
always change your vote at the meeting. You may be requested to present
documents for the purpose of establishing your identity. In addition, if your
shares are held in the name of your broker, bank or other nominee, you must
bring an account statement or letter from the nominee indicating that you are
the beneficial owner of the shares on May 11, 1999, the record date for voting.
Revoking your proxy. You may revoke your proxy before it is voted by either
submitting a new proxy with a later date, notifying QAD's Secretary in writing
at the address provided above before the meeting that you have revoked your
proxy, or by voting in person at the meeting.
People with disabilities. We can provide reasonable assistance to help you
participate in the meeting if you tell us about your disability and your plan to
attend. Please call or write QAD's Secretary at least two weeks before the
meeting at the number or address on the first page of this proxy statement.
Confidential voting. Independent inspectors count the votes. Your individual
vote is kept confidential unless special circumstances exist. For example, a
copy of your proxy card will be sent to QAD if you write comments on the card.
Proxy solicitation. The Company pays its own costs of soliciting proxies. In
addition to this mailing, QAD employees may solicit proxies personally.
Other Business; Adjournments
Management is not currently aware of any other business to be acted upon at
the meeting. If, however, other matters are properly brought before the
meeting, or any adjourned meeting, your proxies will have discretion to vote or
act on those matters according to their best judgment, including adjourning the
meeting.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by approval
of the holders of shares representing a majority of the votes present in person
or by proxy at the meeting, whether or not a quorum exists, without further
notice other than by an announcement made at the meeting. We do not currently
intend to seek an adjournment of the meeting.
ELECTION OF A DIRECTOR
(ITEM I)
Pursuant to QAD's certificate of incorporation, the board of directors is
divided into three classes of directors, with each class having a number of
directors as nearly equal in number as possible and with the terms of each class
expiring in a different year. The members of the board serve for three years.
The terms of office of the members of one class of directors expire each year in
rotation so that the members of one class are elected at each annual meeting for
full three-year terms. The term of office of only one of the present directors
will expire at this annual meeting.
One director has been nominated for election to a three-year term expiring at
the annual meeting in 2002. The terms of the other directors will continue as
indicated below.
Valid proxies received will be voted, unless contrary instructions are given,
to elect the one nominee named in the following table to Class I of the board of
directors. Should the nominee decline or be unable to accept the nomination to
serve as a director, an event that is not currently anticipated, your proxies
will have the right, in their discretion, to vote for a substitute nominee
designated by the board of directors, to the extent consistent with QAD's
certificate of incorporation and its bylaws.
3
<PAGE>
Nominee for Director
The nominee for director to be elected by the stockholders is currently a
member of the board. If elected, the nominee will hold office until the annual
meeting of stockholders in 2002, as specified in the table and until his
successor is duly elected and qualified.
Nominee for Director to Hold Office Until 2002
<TABLE>
<CAPTION>
Name Age Director Since Positions with the Company Committees
- ------------------------------- ------ --------------------- ----------------------------- --------------
<S> <C> <C> <C> <C>
Evan M. Bishop 45 1981 Director, Functional
Architect/Manufacturing
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE INCUMBENT DIRECTOR
IDENTIFIED ABOVE.
Incumbent Directors not standing for election
The following table sets forth information about the other four members of the
board of directors none of whom are up for election at the 1999 annual meeting.
Directors Holding Office Until 2000
<TABLE>
<CAPTION>
Name Age Director Since Positions with the Company Committees
- ------------------------------- ------ --------------------- -------------------------------- ---------------
<S> <C> <C> <C> <C>
Karl F. Lopker 47 1981 Director, Chief Executive Audit (Ex Officio),
Officer Compensation
Pamela M. Lopker 44 1979 Director, Chairman of the Board
and President
Directors Holding Office Until 2001
Name
- -------------------------------
Peter R. van Cuylenburg 50 1997 Director Audit,
Compensation
Koh Boon Hwee 48 1997 Director Audit,
Compensation
</TABLE>
Information Concerning the Nominee for Election and the other Incumbent
Directors
Set forth below is information with respect to the single nominee for election
to the board of directors who is standing for election at the 1999 annual
meeting.
EVAN M. BISHOP
Evan M. Bishop has served the company as a Director since joining QAD in 1981.
Mr. Bishop currently also holds the position of Functional
Architect/Manufacturing. Mr. Bishop is certified in Production and Inventory
Management by the American Production and Inventory Control Society. Mr. Bishop
holds a Bachelor of Arts degree in Mathematics and Economics from the University
of California at Santa Barbara.
Set forth below is information with respect to the other incumbent directors
who are not standing for election at the 1999 annual meeting.
Directors holding office until the 2000 annual meeting of stockholders:
KARL F. LOPKER
Karl F. Lopker has served as Director, Chief Executive Officer and Secretary
since joining the company in 1981. Mr. Lopker was founder and President of
Deckers Outdoor Corporation from 1973 to 1981, where he currently serves as a
Director. Mr. Lopker is certified in Production and Inventory Management at the
4
<PAGE>
Fellow level by the American Production and Inventory Control Society. Mr.
Lopker studied Electrical Engineering and Computer Science at the University of
California at Santa Barbara. Mr. Lopker and Pamela Lopker are married to one
another.
PAMELA M. LOPKER
Pamela M. Lopker founded QAD in 1979 and has been its Chairman of the Board
and President since inception. Prior to founding the company, Ms. Lopker served
as Senior Systems Analyst for Comtek Research from 1977 to 1979. Ms. Lopker is
certified in Production and Inventory Management by the American Production and
Inventory Control Society. Ms. Lopker earned a Bachelor of Arts degree in
Mathematics from the University of California at Santa Barbara. Ms. Lopker and
Karl Lopker are married to one another.
Directors holding office until the 2001 annual meeting of stockholders:
KOH BOON HWEE
Koh Boon Hwee was appointed an outside director in September 1997. Mr. Koh
currently serves as Executive Chairman of Singapore-based Wuthelam Group, a
diversified holding company whose core businesses include electronics
manufacturing; paints, coating and chemicals and private direct investments.
Mr. Koh also serves as Chairman of Singapore Telecom, Singapore Post and the
Council of the Nanyang Technological University. He serves on the boards of
several other statutory and public organizations including the Securities
Industry Council, the Institute of Policy Studies, Singapore International
Foundation and the Singapore-U.S. Business Council.
PETER R. VAN CUYLENBURG
Peter R. van Cuylenburg was appointed an outside Director in November 1997.
Mr. van Cuylenburg is the president of Quantum Corporation's Specialty Storage
Products Group, based in Milpitas, California. He also serves on the board of
directors of Dynatech Corporation and Mitel Corporation. Past board memberships
include NeXT Computer and Cable and Wireless, plc. Mr. van Cuylenburg's career
includes executive posts at Xerox Corporation, NeXT Computer, Inc., Cable and
Wireless, plc., and Texas Instruments, in the U.K., U.S. and France. Mr. van
Cuylenburg holds a Diploma in Electrical Engineering from Bristol Polytechnic
and an Honorary Doctorate of Technology from Bristol Polytechnic.
Compensation of Directors
QAD employees receive no extra pay for serving as directors. Directors are
reimbursed for direct expenses relating to their activities as members of the
board of directors. Pursuant to our 1997 Stock Incentive Program, directors are
eligible to participate in the Nonqualified Stock Option Plan and directors who
are not employees may participate in the Non-Employee Director Stock Option
Plan.
Upon joining QAD in 1997, Mr. Koh and Mr. van Cuylenburg each were granted by
the board of directors a nonqualified stock option for 15,000 shares of common
stock. QAD also granted to Mr. Koh and Mr. van Cuylenburg a nonqualified stock
option for 7,500 shares each in fiscal 1999. The grant date of the first 15,000
share option to each director was the date of the director's appointment to the
board of directors or their retention as a consultant, whichever was earlier.
The grant date of the second option was the first anniversary of the director's
appointment as a director.
QAD also has committed to grant to Mr. Koh and Mr. van Cuylenburg additional
options, each to acquire 7,500 shares of common stock in fiscal 2000, on the
second anniversary of each director's appointment, provided the director is
still then a director. All of the options vest in four equal installments on
each of the first through fourth anniversaries of the respective grant date.
QAD intends to continue to make appropriate awards under the 1997 Stock
Incentive Program to each non-employee director upon election to the board.
5
<PAGE>
In October 1998, QAD's board, with non-employee directors abstaining, adopted
a stock grant plan to supplement stock option grants to non-employee directors.
The plan provides that each non-employee director be granted 7,500 shares
annually, in four quarterly installments of 1,875 shares each. The installments
are made at the beginning of each calendar quarter, subject to each non-employee
director purchasing at least a corresponding number of shares in the open
market. For every share purchased, one share will be granted, up to 1,875
shares per quarter. A director may cumulate the rights under the plan for up to
three quarters per year, but all purchases must occur before the end of each
year of the plan. In addition, each non-employee director must agree that the
shares purchased or granted will be held for three years from the purchase date.
If non-employee director status is terminated prior to the expiration of the
three-year period, except for death or a change in control of QAD, the shares
that were granted will be forfeited to QAD. The plan commenced as of the fiscal
quarter beginning November 1, 1998. The plan will continue through the quarter
ending October 31, 1999, at which time the directors who do not participate in
the plan will evaluate the effectiveness of the plan to determine whether it
should be renewed or revised.
Board of Directors
During fiscal 1999, the board of directors held four regularly scheduled and
special meetings and acted by unanimous written consent on nine occasions.
During fiscal 1999, all directors attended at least seventy-five percent (75%)
of the meetings of the board, and of the meetings of committees of the board of
which they were a member. In addition to attending meetings, directors also
discharge their responsibilities by review of company reports to directors,
visits to company facilities, correspondence and telephone conferences with
executive officers and others regarding matters of interest and concern to QAD.
Board Committees
The board appoints committees to work on key issues in greater detail than
would be possible at full board meetings. Each committee reviews the results of
its meetings with the full board.
Audit Committee
The audit committee is composed of the following directors: Mr. van
Cuylenburg (Chair), Mr. Koh and Mr. Lopker (ex officio).
The audit committee met on four occasions during fiscal 1999. The committee
is responsible for accounting and internal control matters. Duties of the audit
committee include: reviewing with management the internal auditors and the
independent auditors policies and procedures with respect to internal controls
and significant accounting matters; approving the audited financial statements
prior to public distribution; approving any significant changes in accounting
principles or financial reporting practices; reviewing independent auditor
services and making recommendations regarding the independent auditor firm for
the following year. In addition to its regular activities, the committee is on
call to meet at the request of the independent accountants, controller or
internal auditor whenever a special situation arises.
Compensation Committee
The compensation committee is composed of the following directors: Mr. van
Cuylenburg (Chair), Mr. Koh, and Mr. Lopker.
The compensation committee (including for purposes of administering the QAD
Inc. 1997 Stock Incentive Program) met on one occasion during fiscal 1999.
Duties of the compensation committee include: recommending to the board of
directors the compensation and cash bonus plans, including the objectives to be
achieved with respect to the chairman of the board and president, chief
executive officer and the other executive officers; administering QAD's
compensation plans for the same executives;
6
<PAGE>
determining equity compensation for all employees; reviewing and approving the
cash compensation and bonus objectives recommended by the chairman of the board
and president and the chief executive officer for the other executive officers;
and reviewing various matters relating to employee compensation and benefits.
Mr. Lopker is recused from all matters involving QAD's chairman of the board
and president and the chief executive officer and he does not participate in
administration of the QAD Inc. 1997 Stock Incentive Program. A sub-committee of
the compensation committee composed of Messrs. Koh and van Cuylenburg
administers, and makes all determinations concerning matters relevant to the
stock incentive program.
Compensation Committee Interlocks and Insider Participation
Messrs. van Cuylenburg, Koh and Lopker currently are members of the
compensation committee. Mr. Lopker is the chief executive officer of QAD. No
other interlocking relationships exist between the compensation committee and
the board of directors or compensation committee of any other company, nor has
any such interlocking relationship existed in the past.
Board Compensation Committee Report on Executive Compensation
The compensation committee believes that the compensation levels of QAD's
executive officers, who provide leadership and strategic direction, should
consist of (1) base salaries that are commensurate with executives of other
comparable software companies and (2) cash bonus opportunities based on
achievement of company objectives. These objectives are set by the compensation
committee with respect to the chairman and president and chief executive officer
and they are set by the chairman and the chief executive officer, in
consultation with the compensation committee, for the other executive officers.
The compensation committee also believes that it is important to provide
executive officers with significant stock-based incentive compensation, which
increases in value in direct correlation with improvement in the performance of
the common stock, thereby aligning management's interests with those of the
stockholders.
The compensation committee considers the following factors (ranked in order of
importance) when determining compensation of executive officers: (1) QAD's
performance measured by attainment of specific strategic objectives and
operating results, (2) the individual performance of each executive officer,
including the achievement by the executive (or the executive's functional group)
of identified goals, and (3) historical cash and equity compensation levels.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to a publicly held company for compensation in excess of $1,000,000
paid to the company's chief executive officer and its four other most highly
compensated executive officers, unless the plan and awards pursuant to which any
portion of the compensation is paid meet certain requirements. The QAD Inc.
1997 Stock Incentive Program includes provisions which will enable QAD to meet
those requirements if it becomes necessary. Because the compensation committee
has not yet been and does not anticipate being faced in the near future with
compensation levels that are affected by Section 162(m), the compensation
committee has not yet determined that meeting those requirements will
necessarily be in the best interest of the QAD.
Cash Compensation
The base salaries of the executive officers are generally set at the time of
their initial hiring, subject to possible increases in future periods.
As stated above, the compensation of executive officers also is based in part
upon corporate performance, individual performance and comparative industry
compensation levels. Each year, management establishes a performance plan with
the compensation committee. The annual plan sets forth overall goals to be
achieved by QAD, as well as specific performance goals to be achieved by each of
its executive officers according to his or her duties and responsibilities.
7
<PAGE>
For fiscal 1999, the compensation committee set the overall corporate goals
to focus exclusively on QAD's financial performance. The financial performance
criteria and the bonus eligibility for achievement of the overall corporate
goals were weighted, as follows: revenue--40%; profit after tax--40%; and
accounts receivable collection--20%.
QAD did not meet any of the financial performance criteria established by the
committee in fiscal 1999 and no bonuses were paid to any executives under this
aspect of the bonus program. The portion of bonuses paid to executives was
based on individual performance goals for fiscal 1999.
The base salaries of each of the executive officers named in the following
summary compensation table were either set by, or determined by reference to,
the executives' compensation with QAD prior to QAD's initial public offering or
the terms of the executive's initial hiring. Except for Ms. Lopker and Mr.
Lopker, bonus compensation for these executives was determined based on a
formula that tied the target bonus objective (which in most instances is
established as a percentage of base salary) to the achievement by QAD of the
overall corporate goals described above and to the achievement of specified
individual or functional area goals. Under this formula, the executive
officers' bonus amounts could be greater or less than the target bonus objective
based on QAD's and the executives' performance against such goals. In fiscal
1999, Ms. Lopker and Mr. Lopker received no bonus. The other executives'
bonuses, which were tied to achievement of individual goals, are identified in
the Summary Compensation Table that follows. On average, the compensation
committee believes the cash compensation for the executive officers is
comparable to industry salary and bonus levels.
Equity Compensation
The non-employee members of the compensation committee administer and
authorize all grants and awards made under the 1997 Stock Incentive Program. In
some instances, awards are authorized for new employees as incentives to join
QAD. In determining whether and in what amount to grant stock options or other
equity compensation to executive officers in fiscal 1999, the non-employee
members of the compensation committee considered the amount and date of vesting
of currently outstanding incentive equity compensation granted previously to
each of the executive officers. The compensation committee believes that
continued grants of equity compensation to key executives is an important tool
to retain and motivate exceptionally talented executives who are necessary to
achieve QAD's long-term goals, especially at a time of significant competition
and other challenges in the industry.
In fiscal 1999, the board agreed that in order to provide incentives to its
employees, repricing of outstanding options was needed to align the option
exercise price more closely with the fair market value of the underlying common
stock as determined by the marketplace. Therefore, QAD implemented a program
whereby option holders under the 1997 Stock Incentive Program could exchange
higher priced option shares for the same number of lower priced option shares.
The new options were issued on August 14, 1998 at $5.1875 per share. The
repricing excluded QAD officers and directors and prohibited employees from
exercising repriced options for the next 12 months. QAD officers and directors
whose options were not repriced were issued additional grants under the same
plan.
During fiscal 1999, the non-employee members of the compensation committee
approved grants of equity compensation to the executive officers named in the
Summary Compensation Table below who received grants and the committee also
approved grants of equity compensation to other executive officers, consistent
with the board of directors' and the compensation committee's overarching policy
of granting equity compensation to key executives and to employees in general.
The Compensation Committee
Koh Boon Hwee
Peter R. van Cuylenburg
Karl F. Lopker
8
<PAGE>
Executive Compensation
No executive officer named in the following table received perquisites or
other personal benefits, securities or property in an amount in excess of the
lesser of $50,000 or 10 percent of that officer's cash compensation, nor did all
named officers together receive that type of other compensation in excess of the
lesser of $50,000 times the number of named officers or 10 percent of the named
officers' aggregate cash compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
-----------------
Annual Compensation Awards
----------------------------------- -----------------
Restricted
Stock All Other
Name and Fiscal Salary Bonus Awards Compensation
Principal Position Year ($) ($) ($) ($) (1)
- --------------------------------- ---------- --------- ------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Pamela M. Lopker 1999 162,500 -- -- --
Chairman of the Board and 1998 162,500 49,574 -- --
President 1997 170,236 83,902 -- --
Karl F. Lopker 1999 162,500 -- -- --
Chief Executive Officer 1998 162,500 -- -- --
1997 166,561 127,143 -- --
A. J. Moyer (2) 1999 225,611 56,800 (3) 305,000 (4) 14,400
Executive Vice President,
Chief Financial Officer
Rita V. Foley (5) 1999 205,578 26,344 -- 189,595 (6)
Executive Vice President, 1998 121,174 125,658 -- 37,352 (6)
Sales and Marketing
Vincent P. Niedzielski 1999 244,215 45,360 -- --
Executive Vice President, 1998 245,000 54,000 -- --
Research & Development 1997 205,857 -- 190,500 (7) --
Barry R. Anderson 1999 179,000 52,009 (8) -- 5,164
Executive Vice President, 1998 134,750 43,500 (8) -- 10,145
Administration
</TABLE>
- ---------------
(1) Except for (6) below, "All other Compensation" comprises of reimbursements
for relocation costs.
(2) Mr. Moyer joined QAD on April 1, 1998. As a result, the compensation
received by him for fiscal 1999 is for the 10 month period ended January
31, 1999.
(3) Does not include a loan in the amount of $50,000, which is subject to
forgiveness over a six year period. None of the loan was forgiven in
fiscal 1999, and, correspondingly, no compensation is reflected in the
table.
(4) The restricted stock granted to Mr. Moyer vests ratably over a three year
period, with no shares having vested in fiscal 1999.
(5) Rita V. Foley is no longer an employee of QAD and the compensation for
fiscal 1999 is for the nine month period ended October 31, 1998.
(6) The $189,595 consists of $126,000 for severance and $63,595 for relocation
cost reimbursement in fiscal 1999. The $37,352 was reimbursement for
relocation costs in fiscal 1998.
(7) The restricted stock granted to Mr. Niedzielski vests ratably over a five
year period, with a portion of the shares having vested in January 1998 and
January 1999.
(8) During fiscal 1998 a loan was issued in the amount of $77,728, which is
subject to forgiveness over a three year period. None of the loan was
forgiven in fiscal 1998. $25,909 of the loan was forgiven in fiscal 1999
and, correspondingly, the compensation in fiscal 1999 is reflected in the
table.
9
<PAGE>
Option Grants in Fiscal 1999
The following table sets forth option grants made in fiscal 1999. QAD did not
grant any stock appreciation rights in fiscal 1999.
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options Exercise
Underlying Granted to Or Base
Name and Options Employees Price Expiration Present
Principal Position Granted (1) In FY 1999 ($/Share) Date Value ($) (2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Karl F. Lopker -- -- -- -- --
Pamela M. Lopker -- -- -- -- --
A. J. Moyer 150,000 $15.2500 3/30/06 1,642,943
75,000 11.7% (3) $ 5.1875 8/12/06 279,435
Rita V. Foley -- -- -- -- --
Vincent P. Niedzielski 20,000 1.0% $ 5.1875 8/12/06 74,516
Barry R. Anderson 30,000 $ 5.1875 8/12/06 111,774
25,000 2.9% (3) $ 4.2500 11/30/06 76,312
</TABLE>
- ---------------
(1) All granted options vest in four annual increments, 25% on each of the
first through fourth anniversaries of the date of grant, and expire in
eight years.
(2) The fair value of each option grant is estimated on the date of grant using
the Black-Scholes model of option valuation to determine grant date fair
value, as prescribed under Statement of Financial Accounting Standards No.
123 Accounting for Stock-Based Compensation, with the following
assumptions:
Expected stock price volatility 75%
Risk-free interest rate 5.5%
Expected life of options 6.5 years
Expected dividend yield 0.00%
QAD's stock options currently are not transferable, and the actual value of
the stock options that an employee may realize, if any, will depend on the
excess of the market price on the date of exercise over the exercise price,
so that there is no assurance the value realized by an executive will be at
or near the value estimated by the Black-Scholes model. Assumptions for
stock price volatility are based on the variance of monthly closing prices
of QAD stock from its initial public offering date to the present averaged
against the volatility for a peer group.. The risk-free rate of return used
equals the average yield on 10-year zero coupon U.S. Treasury issues for
fiscal year 1999. No discount was applied to the value of the grants for
non-transferability, and risk of forfeiture was accounted for in the
expected life of the options.
(3) Represents the combined percentage for both grants.
10
<PAGE>
Option Exercises in Fiscal 1999 and Fiscal Year End Option Values
<TABLE>
Value of
Number of Securities Unexercised
Shares Underlying Unexercised In-The-Money
Acquired Value Options/SARs Options/SARs
on Exercise Realized At Fiscal Year-End At Fiscal Year-End
Name (#) ($) (#) (#)(1)
- ------------------------- ----------- ----------- ---------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Karl F. Lopker -- -- -- -- -- --
Pamela M. Lopker -- -- -- -- -- --
A. J. Moyer -- -- -- 225,000 -- --
Rita V. Foley -- -- -- -- -- --
Vincent P. Niedzielski -- -- 26,667 73,333 -- --
Barry R. Anderson -- -- 12,500 102,500 -- --
</TABLE>
__________________
(1) The difference between the option exercise price and the market price of QAD
common stock at the fiscal year end. The actual gain, if any, realized will
depend on the market price of QAD stock at the time of exercise. "In-the-
money" means the market price of the stock is greater than the exercise
price of the option on the date specified.
Employment Agreements and Change of Control Arrangements
Each of Mr. Moyer, Mr. Anderson, and Ms. Foley have or had severance
agreements that provide for the payment to them of an amount equal to six
months' salary in the event of a termination of their employment with QAD. In
fiscal 1999, QAD paid Ms. Foley $126,000 in connection with the severing of her
employment contract.
Certain Transactions
See footnotes 3 and 8 of Summary of Compensation Table.
Director and Executive Officer Stock Ownership
The following table shows how much QAD common stock each executive named in
the summary compensation table on page 9 and each director owned on May 11,
1999. Shares of common stock subject to options held by a person that are
currently exercisable or become exercisable within 60 days following May 11,
1999 are deemed outstanding and beneficially owned by that person. Those shares,
however, are not deemed outstanding for the purpose of computing the percentage
ownership of any other person. Except as provided below, the persons named in
the table have sole voting and sole investment power with respect to the shares
set forth opposite the stockholder's name. All shares held by Pamela Lopker and
Karl Lopker are held jointly, except that 680,092 shares are held in trust for
the Lopkers' minor children and 12,000 shares are held in a charitable remainder
trust. Pamela Lopker and Karl Lopker act as joint trustees of the trusts. The
following table does not include 311,000 shares, which are held by a charitable
foundation of which the Lopkers are officers.
11
<PAGE>
<TABLE>
<CAPTION>
Shares Covered
Directors by Exercisable Percent
Executive Officers Shares Owned Options of Class
------------------ ------------ ------- --------
<S> <C> <C> <C>
Pamela M. Lopker 18,555,723 -- 61.6%
Karl F. Lopker 18,555,723 -- 61.6%
A. J. Moyer 8,666 37,500 *
Vincent P. Niedzielski 500 53,333 *
Barry R. Anderson 12,189 22,500 *
Evan M. Bishop 761,000 2,500 2.5%
Peter R. van Cuylenburg 7,500 3,750 *
Koh Boon Hwee -- 3,750 *
All directors and
executive officers
as a group (10 persons) 19,375,441 133,333 64.8%
</TABLE>
__________________
*Less than 1 percent.
12
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
The line graph below compares the yearly percentage change in the cumulative
total stockholder return on QAD's common stock with the cumulative total return
of the Nasdaq Composite Index and the BancAmerica Robertson Stephens (BARS)
Software Index for the period beginning August 5, 1997 and ending January 31,
1999. The graph assumes that $100 was invested on the date of QAD's initial
public offering and that all dividends were reinvested. Historic stock price
performance should not be considered indicative of future stock price
performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG QAD INC., THE NASDAQ TOTAL RETURN INDEX,
AND THE BANCAMERICA ROBERTSON STEPHENS SOFTWARE INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Periods NASDAQ BARS
(Months from IPO through Total Return Software
Fiscal Year 1999 Covered) QAD Inc. Index Index
<S> <C> <C> <C>
08/05/97 100.00 100.00 100.00
10/31/97 94.17 98.46 103.46
01/30/98 97.50 100.35 102.27
04/30/98 92.50 115.74 130.27
07/31/98 55.83 115.63 115.56
10/30/98 31.25 110.46 114.74
01/29/99 27.92 156.98 155.12
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires QAD's officers and directors and
persons who own more than 10% of the common stock to file reports of ownership
and changes in ownership with the SEC and Nasdaq and to furnish QAD with copies
of all Section 16(a) forms they file. Based solely on a review of the copies of
those forms from persons subject to the reporting requirements of Section 16(a),
management believes that all reporting persons complied with all applicable
filing requirements of Section 16(a) for the fiscal year ended January 31, 1999.
13
<PAGE>
APPROVAL OF AMENDMENT TO QAD INC. 1997 STOCK INCENTIVE PROGRAM
(ITEM II)
The stockholders are being asked to approve an amendment to the QAD Inc. 1997
Stock Incentive Program that will increase the number of shares of common stock
available for issuance under the 1997 program from 4,000,000 shares to 8,000,000
shares. The 4,000,000-share increase was approved by the board on March 1999,
subject to stockholder approval at the annual meeting. The board believes it is
in QAD's best interest to increase the share reserve so that QAD can continue to
attract and retain the services of those persons essential to the company's
growth and financial success.
Of the 4,000,000 shares currently authorized under the 1997 program, only
494,784 shares remained available as of March 2, 1999. The rest have been
granted in various forms permitted by the 1997 plan as set forth below over a
period from April, 1997 through March 2, 1999, a period of nearly two years.
The board believes that the approval of an additional 4,000,000 shares under the
1997 program should be sufficient for the company's needs under the 1997 program
for the next two or three years.
Summary of the QAD Inc. 1997 Stock Incentive Program
The following is a summary of the principal features of the 1997 program. Any
stockholder who wishes to obtain a copy of the actual plan document may do so
upon written request to the Secretary at QAD's offices listed on page 2 under
"company contact."
In May 1997, the board of directors adopted and the stockholders approved the
QAD Inc. 1997 Stock Incentive Program. Under the 1997 program, the board of
directors, or its designated administrators, have the flexibility to determine
the type and amount of awards to be granted to eligible participants.
Purpose, structure, awards and eligibility. The 1997 program is intended to
secure for QAD and its stockholders the benefits arising from ownership of
common stock by individuals employed or retained by QAD who will be responsible
for the future growth of the enterprise. The 1997 program is designed to help
attract and retain superior personnel for positions of substantial
responsibility, and to provide individuals with an additional incentive to
contribute to the company's success.
The 1997 program is composed of seven parts and the program administrators may
make the following types of awards under the 1997 program:
(1) incentive stock options (ISOs) under the Incentive Stock Option Plan;
(2) nonqualified stock options (NQSOs) under the Nonqualified Stock Option
Plan;
(3) restricted shares under the Restricted Shares Plan;
(4) rights to purchase stock under the Employee Stock Purchase Plan (ESPP);
(5) grants of options under the Non-Employee Director Stock Option Plan;
(6) stock appreciation rights (SARs) under the Stock Appreciation Rights Plan;
and
(7) specified other stock rights under the Stock Rights Plan, which may include
the issuance of units representing the equivalent of shares of common
stock, payments of compensation in the form of shares of common stock and
rights to receive cash or shares of common stock based on the value of
dividends paid on a share of common stock.
Officers, key employees, employee directors, consultants and other independent
contractors or agents of QAD or our subsidiaries who are responsible for or
contribute to the management, growth or profitability of our business are
eligible for selection by the program administrators to participate in the 1997
program, provided, however, that incentive stock options may be granted under
the Incentive Stock Option Plan only to a person who is an employee of QAD or
its subsidiaries.
14
<PAGE>
Shares subject to 1997 program. There were previously authorized and reserved
for issuance an aggregate of 4,000,000 shares of QAD common stock under the 1997
program. The shares of common stock issuable under the 1997 program may be
authorized but unissued shares, shares issued and reacquired, or shares
purchased by the company on the open market. If any of the awards granted under
the 1997 program expire, terminate or are forfeited for any reason before they
have been exercised, vested or issued in full, the unused shares subject to
those expired, terminated or forfeited awards will again be available for
purposes of the 1997 program.
Effective date and duration. All of the plans other than the Incentive Stock
Option Plan and the Employee Stock Purchase Plan, became effective upon their
adoption by the board of directors. The Incentive Stock Option Plan and the
Employee Stock Purchase Plan became effective upon their adoption by the board
of directors and approval of the 1997 program by a majority of the stockholders.
The 1997 program will continue in effect until May 2007 unless sooner terminated
under the general provisions of the 1997 program.
Administration. The 1997 program is administered by the board of directors or
by a committee appointed by the board. That committee must consist of not less
than two directors who are:
. non-employee directors within the meaning of SEC Rule 16b-3 under the
Securities Exchange Act of 1934, so long as non-employee director
administration is required under Rule 16b-3; and
. outside directors as defined in Section 162(m) of the Internal Revenue Code
(the Code) of 1986, so long as outside directors are required by the Code.
Subject to these limitations, the board of directors may from time to time
remove members from the committee, fill all vacancies on the committee, and
select one of the committee members as its chair. The program administrators
may hold meetings when and where they determine, will keep minutes of their
meetings, and may adopt, amend and revoke rules and procedures in accordance
with the terms of the 1997 program. The 1997 program is presently administered
by the non-employee directors who serve on the compensation committee of the
board.
New plan benefits
As of May 1, 1999, no options had been granted and no direct stock issuances
had been made with respect to the 4,000,000-share increase proposed in this Item
II.
Federal income tax consequences
Option Grants
Options granted under the 1997 program may be either incentive stock options
(ISOs) which satisfy the requirements of Section 422 of the United States
Internal Revenue Code of 1986 or nonqualified stock options (NQSOs) which are
not intended to meet those requirements. Options granted under the Non-Employee
Directors Stock Option are non-statutory options. To date under the 1997 plan,
no ISOs have been granted. The federal income tax treatment for the NQSOs is as
follows:
. Nonqualified Stock Options. No taxable income is recognized by an optionee
upon the grant of a nonqualified stock option. Generally, the optionee will
recognize ordinary income in the year in which the option is exercised. The
amount of ordinary income will equal the excess of the fair market value of
the purchased shares on the exercise date over the exercise price paid for
the shares. The optionee is required to satisfy the tax withholding
requirements applicable to that income.
QAD will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised
nonqualified stock option. The deduction generally will be allowed for by
QAD in the taxable year that the ordinary income is recognized by the
optionee.
15
<PAGE>
Restricted Shares Plan
. The tax principles applicable to the issuance of restricted shares under the
1997 program will be substantially the same as those summarized above for
the exercise of non-statutory option grants in that they are both governed
by Section 83 of the Code. Restricted shares are not taxed at the time of
grant unless the grantee elects to be taxed under Section 83(b) of the Code.
When the restriction lapses, the grantee will have ordinary income equal to
the fair market value of the shares on the vesting date. Alternatively, at
the time of the grant, the grantee may elect under Section 83(b) of the Code
to include as ordinary income in the year of the grant, an amount equal to
the fair market value of the granted shares on the grant date. If the
Section 83(b) election is made, the grantee will not recognize any
additional income when the restriction lapses. QAD will be entitled to an
income tax deduction equal to the ordinary income recognized by the grantee
in the year in which the grantee recognizes such income.
Employee Stock Purchase Plan (ESPP) issuances
. The ESPP is intended to be an employee stock purchase plan within the
meaning of Section 423 of the Code. Under a plan that so qualifies, no
taxable income will be recognized by a participant, and no deductions will
be allowable to QAD, in connection with the grant or the exercise of an
outstanding purchase right. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under the plan
or in the event the participant should die while still owning the purchased
shares.
If the participant sells or otherwise disposes of the purchased shares within
two years after the start date of the purchase period in which the shares were
acquired, then the participant will recognize ordinary income in the year of
sale or disposition equal to the amount by which the fair market value of the
shares on the purchase date exceeded the purchase price paid for those shares,
and QAD will be entitled to an income tax deduction, for the taxable year in
which the sale or disposition occurs, equal in amount to the excess.
If the participant sells or disposes of the purchased shares more than two
years after the start date of the purchase period in which the shares were
acquired, then the participant will recognize ordinary income in the year of
sale or disposition equal to the lesser of (1) the amount by which the fair
market value of the shares on the sale or disposition date exceeded the purchase
price paid for those shares or (2) 15% of the fair market value of the shares on
the start date of that purchase period, and any additional gain upon the
disposition will be taxed as a long-term capital gain. QAD will not be entitled
to any income tax deduction with respect to that sale or disposition.
If the participant still owns the purchased shares at the time of death, the
lesser of (1) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (2) 15% of the fair market value of
the shares on the start date of the purchase period in which those shares were
acquired will constitute ordinary income in the year of death.
Stock Appreciation Rights (SARs)
. A 1997 program participant who is granted an SAR will recognize ordinary
income in the year of exercise equal to the amount of the appreciation
distribution. QAD will be entitled to an income tax deduction equal to the
appreciation distribution for in the taxable year that the ordinary income
is recognized by the participant.
16
<PAGE>
Stock Rights
. Generally, a program participant who is granted other stock rights will
recognize ordinary income in the year of the grant of the right, if a
present transfer of stock or value is made to the participant, or in the
year of payment, such as in the case of a dividend equivalent right. That
income will generally equal to the fair market value of the granted right or
payment. QAD will generally be entitled to an income tax deduction equal to
the income recognized by the participant on the grant or payment date for
the taxable year in which the ordinary income is recognized by the
participant.
Deductibility of executive compensation
We anticipate that any compensation deemed paid by QAD in connection with the
disqualifying disposition of incentive stock option shares or the exercise of
nonqualified stock options granted with exercise prices equal to the fair market
value of the shares on the grant date will generally qualify as performance-
based compensation for purposes of Code Section 162(m) and will not have to be
taken into account for purposes of the $1 million limitation per covered
individual on the deductibility of the compensation paid to certain executive
officers of QAD. Accordingly, we believe all compensation deemed paid under the
1997 program with respect to those dispositions or exercises will remain
deductible by QAD without limitation under Code Section 162(m).
Accounting treatment
Option grants or stock issuances with exercise or issue prices less than the
fair market value of the shares on the grant or issue date will result in
compensation expense to QAD equal to the difference between the exercise or
issue price and the fair market value of the shares on the grant or issue date.
The only exception to this are shares issued under the ESPP. Under current
accounting rules, the issuance of common stock under the ESPP allows QAD to
continue to measure compensation cost of this Plan using the intrinsic value.
However, the impact of purchase rights granted under the ESPP must be disclosed
in pro forma financial statements to reflect their impact on reported earnings
and earnings per share as if the fair value method had been applied.
Compensation expense will be expensed over the period that the option shares or
issued shares are to vest. Option grants or stock issuances at 100% of fair
market value will not result in any charge to QAD's earnings. Whether or not
granted at a discount, the number of outstanding options may be a factor in
determining QAD's earnings per share on a diluted basis.
Under a recently proposed amendment to the current accounting principles,
option grants made to non-employee board members or consultants after December
15, 1998 will result in a direct charge to QAD's reported earnings based upon
the fair value of the option measured on the vesting date of each installment of
the underlying option shares. The charge must include the appreciation in the
value of the option shares over the period between the grant date of the option
(or, if later, the effective date of the final amendment) and the vesting date
of each installment of the option shares. In addition, if the proposed
amendment is adopted, any options that are repriced after December 15, 1998 also
will trigger a direct charge to QAD's reported earnings measured by the
appreciation in the value of the underlying shares over the period between the
grant date of the repriced option (or, if later, the effective date of the final
amendment) and the date the option is exercised.
If an optionee is granted stock appreciation rights having no conditions upon
exercisability other than a service or employment requirement, then those rights
will result in compensation expense to QAD.
Stockholder Approval
QAD is seeking stockholder approval of the increase in the number of shares
authorized and reserved for issuance under the 1997 program.
17
<PAGE>
The board believes that it is in the best interest of QAD to continue to have
a comprehensive equity incentive program for QAD which will provide a meaningful
opportunity for officers, key employees, employee directors, consultants and
other independent contractors or agents of QAD or our subsidiaries to acquire a
substantial proprietary interest in QAD and thereby encourage those individuals
to remain in QAD's service and more closely align their interests with those of
the stockholders.
The board recommends that you vote "FOR" the approval of the amendment to the
1997 program.
RATIFICATION OF INDEPENDENT AUDITORS
(ITEM III)
The audit committee of the board has appointed KPMG LLP to audit QAD's
financial statements for fiscal year 2000. Management asks you to ratify that
appointment. KPMG has been QAD's independent accounting firm for many years, and
management believes KPMG is well qualified for the job. Although the
ratification is not required by law, the board believes that stockholders should
be given this opportunity to express their views on the subject. While not
binding on the board, the failure of the stockholders to ratify the appointment
of KPMG as QAD's independent auditors would be considered by the board and the
audit committee in determining whether to continue the engagement of KPMG. A
KPMG representative will be at the annual meeting to answer appropriate
questions and to make a statement if he or she desires.
The board recommends you vote "FOR" this proposal.
STOCKHOLDER PROPOSALS
Any shareholder proposal for QAD's annual meeting in 2000 must be sent to the
Secretary at the address of QAD's principal executive office given under
"company contact" on page 2. Any stockholder who wishes to present a proposal
for the inclusion in the proxy statement for action at the 2000 annual meeting
must comply with QAD's certificate of incorporation and bylaws and the rules and
regulations of the SEC then in effect. The deadline for receipt of a proposal
to be considered for inclusion in QAD's proxy statement is January 15, 2000. On
request, the Secretary will provide detailed instructions for submitting
proposals.
IMPORTANT
TO ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE TRANSACTION OF BUSINESS AT
THE ANNUAL MEETING, WE URGE YOU TO PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD PROMPTLY.
QAD Inc.
May 16, 1999
18
<PAGE>
QAD INC.
ANNUAL MEETING OF STOCKHOLDERS, JUNE 22, 1999
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE 1999
ANNUAL MEETING OF STOCKHOLDERS OF QAD INC. The undersigned hereby appoints
Pamela M. Lopker, Karl. F. Lopker and A. J. Moyer, and each of them, as proxies,
each with the power to appoint his or her substitutes, and hereby authorizes
them to represent and to vote, as designated on the reverse side and in
accordance with their judgment upon any other matter properly presented, all the
shares of common stock, of QAD Inc. held of record by the undersigned at the
close of business on May 11, 1999, at the annual meeting of stockholders to be
held on June 22, 1999 or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE NAMED
HEREIN AS A DIRECTOR OF QAD INC., FOR THE APPROVAL OF THE PROPOSED INCREASE IN
THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE UNDER THE QAD INC.
1997 STOCK INCENTIVE PROGRAM BY 4,000,000 SHARES AND FOR RATIFICATION OF KPMG
LLP AS QAD'S INDEPENDENT AUDITORS FOR FISCAL YEAR 2000.
Should the nominee decline or be unable to accept his nomination to serve as a
director, an event that we do not currently anticipate, the persons named in the
enclosed proxy reserve the right, in their discretion, to vote for a substitute
nominee designated by the board of directors.
PLEASE MARK, SIGN, DATE AND RETURN THIS FORM PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS INDICATED IN
THIS EXAMPLE.
FOR WITHHELD
1. Election of [_] [_] Nominee: Evan M. Bishop
director to
serve until the
2002 annual
meeting of
stockholders.
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To approve an amendment to the QAD Inc. 1997 [_] [_] [_]
Stock Incentive Program increasing the number of
shares of QAD's common stock reserved for
issuance under the plan by 4,000,000 shares.
3. The proposal to ratify the appointment of KPMG [_] [_] [_]
LLP as the QAD Inc.'s auditors for fiscal year 2000.
Please indicate by a check mark whether you plan to attend the annual meeting. [_]
</TABLE>
This proxy, when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is mad, the proxy will be voted
FOR the election of the nominee named herein and FOR Items 2 and 3.
SIGNATURE(S)________________PRINT NAME OF STOCKHOLDER_______________ DATE______
NOTE: PLEASE SIGN YOUR NAME BELOW. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE THE FULL TITLE OR CAPACITY. IF A CORPORATION, PLEASE
SIGN IN CORPORATE NAME BY AN AUTHORIZED OFFICER AND GIVE TITLE. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
