SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
14-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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THE A CONSULTING TEAM, INC.
(Name of Registrant as Specified in its Charter)
- - - - - - - - - - - - - --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rule 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:
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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 feee paid:
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/_/ Fee paid previously with preliminary materials
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/_/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing by registration 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 No.: _____________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
<PAGE>
THE A CONSULTING TEAM, INC.
200 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10003
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27TH, 1999
To the Holders of the Common Stock of THE A CONSULTING TEAM, INC.
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of The A
Consulting Team, Inc. (the 'Company') will be held at 10:00 a.m. (local time),
on May 27, 1999, at the offices of Barst & Mukamal LLP, 2 Park, Avenue, 19th
Floor, New York, New York 10016 for the following purposes:
1. To elect the Board of Directors of the Company to serve until the annual
meeting of shareholders in 1999 and until their respective successors are duly
elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as the independent public
accountants of the Company for the fiscal year ending December 31, 1999; and
3. To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
Only holders of the Common Stock at the close of business on April 13, 1999
will be entitled to notice of and to vote at this meeting and any adjournment or
postponement thereof.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, please complete, sign, date and return the enclosed proxy
card promptly. This will insure that your shares are voted in accordance with
your wishes. Your cooperation is appreciated since a majority of the outstanding
shares entitled to vote must be represented, either in person or by proxy, to
constitute a quorum for the purposes of conducting business at the meeting.
By Order of the Board of Directors,
Frank T. Thoelen,
Secretary
April 15, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION........................................................................................ 1
SOLICITATION AND VOTING OF PROXIES; REVOCATION; RECORD DATE................................................ 1
ELECTION OF DIRECTORS...................................................................................... 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS................................................ 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................. 3
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES...................................................... 4
EXECUTIVE COMPENSATION..................................................................................... 6
Summary Compensation Table............................................................................ 6
Option Grants for the Year Ended December 31, 1998.................................................... 6
Aggregated Option Exercises in the Year Ended December 31, 1998 and Fiscal Year-End Option Values..... 6
Director Compensation................................................................................. 7
Employment Agreements................................................................................. 7
Compensation Committee Interlocks and Insider Participation........................................... 8
Report of the Executive Compensation Committee of the Board of Directors.............................. 8
Performance Graph..................................................................................... 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................................. 9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................................................... 10
SHAREHOLDER PROPOSALS...................................................................................... 10
OTHER BUSINESS............................................................................................. 11
</TABLE>
i
<PAGE>
THE A CONSULTING TEAM, INC.
200 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10003
Dear Shareholder:
You are cordially invited to attend the Company's annual meeting on May 27,
1999. The meeting will begin promptly at 10:00 a.m. at the offices of Barst &
Mukamal LLP, 2 Park Avenue, 19th Floor, New York, New York 10016.
The official Notice of Meeting, proxy statement and form of proxy are
included with this letter. The matters listed in the Notice of Meeting are
described in detail in the proxy statement.
The vote of every shareholder is important. Please sign, date and promptly
mail your proxy. The Board of Directors and management look forward to greeting
those shareholders who are able to attend.
Sincerely,
THE A CONSULTING TEAM, INC.
By: /s/ SHMUEL BENTOV
---------------------------------
Shmuel BenTov
President and Chief Executive
Officer
<PAGE>
THE A CONSULTING TEAM, INC.
200 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10003
(212) 549-8228
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1999
------------------------
This proxy statement and the accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of The A
Consulting Team, Inc., a New York corporation (the 'Company'), to be voted at
its Annual Meeting of Shareholders which will be held at 10:00 a.m. (local
time), on May 27, 1999 at the offices of Barst & Mukamal LLP, 2 Park Avenue,
19th Floor, New York, New York 10016 and at any postponements or adjournments
thereof (the 'Annual Meeting').
At the Annual Meeting, the Company's shareholders will be asked (i) to
elect Messrs. Shmuel BenTov, Frank T. Thoelen, Joseph E. Imholz, Steven S.
Mukamal and Reuven Battat as Directors of the Company to serve until the annual
meeting of shareholders in 1999 and until their respective successors are duly
elected and qualified, (ii) to ratify the appointment of Ernst & Young LLP as
the Company's independent public accountants for the fiscal year ending December
31, 1998 and (iii) to take such other action as may properly come before the
Annual Meeting or any adjournments thereof.
This proxy statement and the accompanying form of proxy, together with the
Company's 1998 Annual Report to Shareholders, are being mailed to shareholders
on or about April 15, 1999.
<PAGE>
GENERAL INFORMATION
SOLICITATION AND VOTING OF PROXIES; REVOCATION; RECORD DATE
Shares represented by each properly executed and returned proxy card will
be voted (unless earlier revoked) in accordance with the instructions indicated.
If no instructions are indicated on the proxy card, all shares represented by
valid proxies received pursuant to this solicitation (and not revoked before
they are voted) will be voted 'FOR' the election of the nominees for director
named below 'FOR' the ratification of the Company's independent public
accountants and by the proxies in their discretion on any other matters to come
before the Annual Meeting.
A shareholder may revoke a proxy at any time before it is exercised by
filing with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date or by voting in person at the meeting. Any written
notice revoking the proxy should be sent to the attention of Frank T. Thoelen,
Secretary, The A Consulting Team, Inc., 200 Park Avenue South, New York, New
York 10003, (212) 979-8228.
Proxies may be solicited by mail, and may also be made by personal
interview, telephone and facsimile transmission, and by directors, officers and
employees of the Company (without special compensation). The expenses for the
preparation of proxy materials and the solicitation of proxies for the Annual
Meeting will be paid by the Company. The Company has retained ChaseMellon
Shareholder Services to assist in the solicitation. In accordance with the
regulations of the Securities and Exchange Commission, the Company will
reimburse, upon request, banks, brokers and other institutions, nominees and
fiduciaries for their expenses incurred in sending proxies and proxy materials
to the beneficial owners of the Company's Common Stock. Expenses for the
solicitation are estimated to be approximately $2,500, plus other reasonable
expenses.
Only holders of record of the Company's Common Stock, $0.01 par value per
share ('Common Stock'), at the close of business on April 13, 1999 (the 'Record
Date') are entitled to notice of and to vote at the Annual Meeting. As of April
13, 1999, there were outstanding 5,485,000 shares of Common Stock. Under the
Company's By-Laws, the presence at the Annual Meeting, in person or by duly
authorized proxy, of the holders of a majority of the total number of
outstanding shares of Common Stock entitled to vote constitutes a quorum for the
transaction of business. Each share is entitled to one vote.
New York's Business Corporation Law provides that, a quorum being present,
nominees for the office of director are to be elected by a plurality of votes
cast at the meeting. Only shares affirmatively voted in favor of a nominee will
be counted toward the achievement of a plurality. Votes withheld (including
broker non-votes) are counted as present for the purpose of determining a quorum
but are not counted as votes cast in determining a plurality.
With respect to the items described in clauses (2) and (3) of the Notice of
Annual Meeting of Shareholders dated April 15, 1999, New York's Business
Corporation Law provides that, a quorum being present, approval is to be
determined by a majority of the votes cast at the meeting. Abstentions and
broker non-votes are counted in determining the existence of a quorum but are
not counted as votes cast for the proposals as to which the shareholder
abstained or the broker withheld authority. Abstentions and broker non-votes
have the effect of reducing the number of affirmative votes required to achieve
a majority of the votes cast.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Pursuant to the Company's By-Laws, the Board of Directors shall be
comprised of not less than three, unless all of the outstanding shares are owned
beneficially and of record by less than three shareholders. At each annual
meeting of shareholders, directors shall be elected for the ensuing year.
NOMINEES STANDING FOR ELECTION
The following nominees are standing for election to serve as Directors
until the annual meeting of shareholders in 2000 and until their respective
successors are duly elected and qualified:
SHMUEL BENTOV is the founder, Chairman of the Board, Chief Executive
Officer and President of the Company. Mr. BenTov received a B.Sc. in Economics
and Computer Science in 1979 from the Bar-Ilan
<PAGE>
University in Israel and founded the Company in 1983. From 1979 to 1983, Mr.
BenTov was a consultant Database Administrator and then an Account Manager with
Spiridellis & Associates. From 1972 to 1979, Mr. BenTov served with the Israeli
Defense Forces as a Programmer, Analyst, Project Manager, Database Administrator
and Chief Programmer.
FRANK T. THOELEN is the Chief Financial Officer of the Company. Mr. Thoelen
is a C.P.A. and received a B.S. in Public Accounting in 1971 from the University
at Albany, New York. Prior to joining the Company in June 1997, Mr. Thoelen was
President of FTT Consulting Inc., his own consulting firm. From 1971 to 1996,
Mr. Thoelen was with Arthur Andersen LLP, an international consulting and
business advisory firm. From 1989 to 1996, he was the Division Head for the
Business Systems Consulting and Computer Risk Management Business Unit. Prior to
that, he was an Audit and Business Advisory Partner, serving a variety of global
companies.
JOSEPH E. IMHOLZ has been a director of the Company since 1997. Mr. Imholz
received a B.S. in Management in 1957 from Hofstra University. From 1987 until
his retirement in 1995, Mr. Imholz was Vice President and Chief Information
Officer of the Property and Casualty Division of Metropolitan Life Insurance Co.
('MetLife'). From 1985 to 1987, Mr. Imholz was Executive Director and Chief
Information Officer of Albany Life Insurance, a subsidiary of MetLife. From 1981
to 1985, Mr. Imholz was Vice President of Corporate Information Systems of
MetLife, and from 1974 to 1981 he was the officer in charge of the MetLife
Computer Center in Greenville, South Carolina. From 1957 to 1974, Mr. Imholz
served in various capacities with MetLife, including Analyst, Programmer and
Manager of Information Systems.
STEVEN S. MUKAMAL has been a director of the Company since 1997. Mr.
Mukamal received a B.A. in 1962 from Michigan State University and a J.D./L.L.B.
in 1965 from Brooklyn Law School. Since 1965, he has been a member and senior
partner of the law firm Barst & Mukamal LLP. Mr. Mukamal specializes in the
areas of immigration and nationality law, consular law and real estate and debt
restructuring.
REUVEN BATTAT has been a director of the Company since 1997 and is the
Senior Vice President and General Manager of Global Marketing for Computer
Associates International, Inc. and is responsible for Computer Associates'
world-wide marketing activities and long-term planning of product development in
new and emerging markets. Mr. Battat is an expert in the field of enterprise
management and object technologies. From 1981 to 1987, Mr. Battat was Manager of
key systems management projects at IBM Corporation.
Proxies are solicited in favor of the Director nominees and it is intended
that the proxies will be voted for the nominees unless otherwise specified.
Should a nominee become unable to serve for any reason, unless the Board of
Directors by resolution provides for a lesser number of directors, the person
named in the enclosed proxy will vote for the election of a substitute nominee.
The Board of Directors has no reason to believe that the nominees will be unable
to serve.
RECOMMENDATION
The Board of Directors recommends that stockholders vote FOR each of the
nominees.
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
The Audit Committee has recommended to the Board of Directors of the
Company the selection of Ernst & Young LLP ('Ernst & Young') as independent
public accountants of the Company for the year ending December 31, 1999.
A representative of Ernst & Young will be present at the meeting. The
representative will be given the opportunity to make a statement at the meeting
and will be available to respond to appropriate questions.
2
<PAGE>
RECOMMENDATION
The Board of Directors recommends that the shareholders RATIFY the
selection of Ernst & Young LLP to be the independent public accountants of the
Company for the year ending December 31, 1998.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 3, 1999, certain information
regarding the beneficial ownership of TACT Common Stock by (i) each of the
Company's directors, (ii) each of the executive officers named in the Summary
Compensation Table, (iii) all directors and officers of the Company as a group
and (iv) each person known by the Company to own beneficially more than 5% of
the Common Stock. Unless otherwise indicated in the table below, each person or
entity named below has an address in care of the Company's principal office. All
share amounts are rounded to the nearest whole share.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE OF
BENEFICIALLY TOTAL
NAME AND ADDRESS OF SHAREHOLDER OWNED(1) VOTING SHARES
- - - - - - - - - - - - - --------------------------------------------------------------------------------- ---------------- -------------
<S> <C> <C>
Shmuel BenTov.................................................................... 3,415,000 62.3%
Kennedy Capital Management, Inc.
10829 Olive Boulevard, St. Louis, MO 63151..................................... 472,050 8.6%
Mr. Frank T. Thoelen, Chief Financial Officer and Director....................... 23,700 *
Mr. Joseph E. Imholz, Director................................................... 1,000 *
Mr. Steven S. Mukamal, Director.................................................. 1,000 *
Mr. Reuven Battat, Director...................................................... 1,000 *
All directors and executive officers as a group (5 persons)...................... 3,441,700 62.3%
</TABLE>
- - - - - - - - - - - - - ------------------
* indicates less than 1%
(1) As used in the tables above, 'beneficial ownership' means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition
of any security. A person is deemed to have 'beneficial ownership' of any
security that such person has a right to acquire within 60 days of the date
of this annual statement. Any security that any person named above has the
right to acquire within 60 days is deemed to be outstanding for purposes of
calculating the ownership of such person but is not deemed to be outstanding
for purposes of calculating the ownership percentage of any other person.
Unless otherwise noted, each person listed has the sole power to vote, or
direct the voting of, and power to dispose, or direct the disposition of,
all such shares.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 1998, the Board of Directors met four
times and acted by written consent in lieu of a meeting four times. All
directors attended 100% of the aggregate number of meetings of the board and its
committees on which they served.
The following are the current members and functions of the standing
committees of the Board of Directors:
Audit Committee. The Audit Committee is authorized to engage the
Corporation's independent public accountants and review with such public
accountants (i) the scope and timing of their audit services and any other
services they are asked to perform, (ii) their report on the Company's financial
statements following completion of their audit and (iii) the Company's policies
and procedures with respect to internal accounting and financial controls. The
Audit Committee is composed of Messrs. Imholz, Battat and BenTov. Mr. Imholz is
the Chairman. During the year ended December 31, 1998, the Audit Committee met
four times.
Executive Compensation Committee. The Executive Compensation Committee is
authorized and empowered to approve appointments and promotions of executive
officers of the Company and fix salaries for such officers; provided that all
actions of the Executive Compensation Committee must be ratified by the full
3
<PAGE>
Board of Directors within six months of the subject action. The Executive
Compensation Committee is also authorized to administer the Company's 1997 Stock
Option Plan. The Executive Compensation Committee is composed of Messrs. BenTov,
Mukamal and Battat. Mr. Mukamal is the Chairman. During the year ended December
31, 1998, the Executive Compensation Committee met four times during that
period.
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded or paid to, or
earned by, the Company's Chief Executive Officer during the years ended December
31, 1998, 1997 and 1996 and the Company's Chief Financial Officer during the
year ended December 31, 1998 and 1997. No other executive officer of the Company
received a total salary and bonus of $100,000 or more for such years.
Accordingly, no information is reported for such persons.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------------------- ------------
OTHER SECURITIES
FISCAL ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#)
- - - - - - - - - - - - - ------------------------------------------ ------ --------- ---------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Shmuel BenTov............................. 1998 $ 250,000 $ -- $ 4,043 --
Chairman, Chief Executive 1997 $ 250,000 $ -- $ 6,636 --
Officer and President 1996 $ 350,000 $1,272,886(1) $ 12,886 --
1995 $ 350,000 $1,250,000 $ 15,163 --
Frank Thoelen(2).......................... 1998 $ 150,000 $ 43,750 $ -- 10,000
Chief Financial Officer 1997 $ 87,500 50,000 $ -- 60,000
</TABLE>
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(1) Includes payments with respect to life insurance, car allowance and health
insurance.
(2) Mr. Thoelen was hired in June 1997.
The following table provides certain information regarding the stock
options granted during the year ended December 31, 1998 to the executive officer
named in the Summary Compensation Table who owned options as of December 31,
1998.
OPTION GRANTS FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OF OPTION TERM(2)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION ------------------
NAME GRANTED(#) IN FISCAL YEAR(1) $/SHARE DATE 5% 10%
- - - - - - - - - - - - - -------------------------- ---------- ----------------- ----------- ------------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Frank T. Thoelen.......... 10,000 7.1% $7.00 December 31, 2004 $19,340 $42,736
</TABLE>
- - - - - - - - - - - - - ------------------
(1) Based on an aggregate of 141,000 options granted to employees of the Company
for the year ended December 31, 1998.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% rates of stock price appreciations are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
The following table sets forth certain information for the executive
officer named in the Summary Compensation Table who owned options as of December
31, 1998, with respect to the exercise of options to
4
<PAGE>
purchase Common Stock during the year ended December 31, 1998 and the number and
value of securities underlying unexercised options held by such executive
officer as of December 31, 1998.
AGGREGATED OPTION EXERCISES IN THE YEAR ENDED
DECEMBER 31, 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE AT DECEMBER 31, 1998 DECEMBER 31, 1998
NAME EXERCISE(#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - - - - - - - - - - - - --------------------------------------- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Frank T. Thoelen....................... -- -- 22,500/47,500 $0/$0
</TABLE>
Since the initial granting of stock options by the Company in August and
December of 1997, the Company's stock price has fluctuated, and generally the
Company's stock has been trading at a price below the stock price as of the
Company's initial public offering on August 8, 1997. No employees exercised any
options as of November, 1998, despite the fact that a number of employee options
had vested as of August 8, 1998. In November, 1998, the Board of Directors
approved a stock option repricing program pursuant to which all employees of the
Company (including the only executive officer to receive options, Frank T.
Thoelen, Chief Financial Officer) who received stock option awards on August 8,
1997 and December 17, 1997 may elect to exchange their then outstanding employee
stock options for new employee stock options having exercise prices of $7.50 per
share (equal to the fair market value of the Company's common stock on October
14, 1998). No other changes, restrictions or amendments were made with respect
to the stock option awards. The vesting schedules and expiration dates of the
stock options were left unchanged. There is no prohibition or restriction on
exercising the stock options. Approximately 416,150 options were eligible for
repricing. As of December 31, 1998 no stock options were exercised by any
employee.
OPTION REPRICING IN THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK EXERCISE PRICE NEW TERM REMAINING
OPTIONS AT TIME OF AT TIME OF EXERCISE AT DATE
NAME DATE REPRICED(#) REPRICING($) REPRICING($) PRICE($) OF REPRICING
- - - - - - - - - - - - - --------------------------- -------- ------------- ------------ -------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Frank T. Thoelen........... 10/14/98 50,000 $7.50 $12.00 $7.50 3 Yrs., 8 Mos.
10/14/98 10,000 $7.50 $10.25 $7.50 4 Yrs., 2 Mos.
</TABLE>
DIRECTOR COMPENSATION
All of the outside directors of the Company are compensated for their
services provided as a director. Each outside director is paid $4,000 a year and
all reasonable expenses relating to the business of the Company are paid by the
Company. In addition, each outside director is awarded 1,000 stock options each
year.
EMPLOYMENT AGREEMENTS
On August 7, 1997, the Company and Shmuel BenTov entered into a two-year
employment agreement providing for his employment as the Company's Chairman of
the Board, President and Chief Executive Officer with an annual base salary of
$250,000. Mr. BenTov and the Company have agreed during the two year term of his
employment agreement not to (i) increase Mr. BenTov's compensation (including
base salary and bonus) or (ii) otherwise amend the terms of Mr. BenTov's
employment agreement. The employment agreement provides that in the event of
termination: (i) without cause, Mr. BenTov will receive a lump sum severance
allowance in an amount equal to 2.00 times his then annual base salary; (ii) as
a result of the disability or incapacity of Mr. BenTov, Mr. BenTov will be
entitled to receive his then annual base salary during the two years following
the termination notice; and (iii) as a result of the death of Mr. BenTov, Mr.
BenTov's estate will be entitled to receive a lump sum payment equal to his then
annual base salary. The agreement includes a two-year non-compete covenant
commencing on the termination of employment.
5
<PAGE>
Effective June 30, 1997, the Company and Mr. Thoelen entered into a three
year employment agreement providing for his employment as the Company's Chief
Financial Officer at an initial base salary of $150,000. The employment
agreement provides that in the event of termination due to a change of control
or without cause, Mr. Thoelen will receive a lump sum severance allowance in an
amount equal to his then annual base salary. The agreement includes a one-year
non-compete covenant commencing on the termination of employment. Pursuant to
the employment agreement, Mr. Thoelen received a one-time signing bonus of
$25,000 and five-year options to purchase an aggregate 50,000 shares of Common
Stock at $12.00 per share, 20,000 of which options vest after one year and
30,000 of which vest ratably over the following three years. The options expire
in five years. The purchase price of all 50,00 options was changed to $7.50 per
share (the market price of the Company's common stock as of the close of
business on October 15, 1998) pursuant to resolutions of the Company's Board of
Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATING
Shmuel BenTov, Chairman of the Board, Chief Executive Officer and President
of TACT, served as a member of the Executive Compensation Committee during 1998.
No other interlocks or insider participation required to be disclosed under this
caption occurred during 1998.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Executive Compensation Committee of the Board of Directors has
responsibility for establishing and monitoring compensation programs of the
Company's executive officers, which include the Company's President and Chief
Executive Officer and Chief Financial Officer. The Executive Compensation
Committee is composed of Shmuel BenTov, Reuven Battat and Steven S. Mukamal.
Compensation arrangements for the Company's executive officers are usually
negotiated on an individual basis between the Chief Executive Officer and
President and each executive. Although these arrangements are, by and large,
subjective, objective measurements such as industry comparisons, compensation
history and other significant factors were also taken into account. From the
Company's point of view, these compensation arrangements are invariably designed
to attract talented executives to a challenging and demanding environment and to
retain such executives for the long-term benefit of the Company. In furtherance
of such goals and to provide incentives to enhance stockholder value, the
Company's compensation arrangements with its executive officers often provide
for equity participation in the Company. The Company believes the interests of
its shareholders are well served if part of the compensation of the Company's
executives is tied to the performance of the Company.
The compensation package of the Chief Executive Officer and President and
the Chief Financial Officer are set forth in employment agreements with the
Company. See '--Employment Agreements.' The Company's executive officers are
entitled to participate in a bonus program that is administered by the
non-employee directors of the Executive Compensation Committee.
In determining bonus compensation, the Executive Compensation Committee
seeks to create a direct link between the bonus payable to each executive
officer and the financial performance of the Company as a whole. Factors which
may be considered in determining the amount of individual bonus awards include
earnings per share targets and individual performance compared to
pre-established strategic, financial and operational objectives. For the year
ended December 31, 1998, the Chief Financial Officer received $43,750 as a cash
bonus award and the Chief Executive Officer and President did not receive a cash
bonus award. For the year ending December 31, 1999, the Chief Executive Officer
and President may be entitled to receive a cash bonus not to exceed one percent
of the Company's total revenues for the year subject to approval by the
non-employee directors of the Executive Compensation Committee and further
subject to the Company meeting certain financial performance criteria.
The Executive Compensation Committee:
Shmuel BenTov
Reuven Battat
Steven S. Mukamal
6
<PAGE>
PERFORMANCE GRAPH
The following graph depicts the performance of $100 invested on August 8,
1997, (the date of the Company's initial public offering), in the Company's
Common Stock on (i) a Peer Index of selected information technology consulting
companies and (ii) the Nasdaq(Registered) Major Market Computer and Data
Processing Services Index. The comparison assumes reinvestment of all dividends
for the years ended December 31, 1997 and 1998.
<TABLE>
<CAPTION>
Aug '97 Sep '97 Dec '97 Mar '98 Jun '98 Sep '98 Dec '98
<S> <C> <C> <C> <C> <C> <C> <C>
TACT $ 100.00 $ 96.93 $ 89.86 $ 94.91 $ 85.82 $ 76.74 $ 56.54
Peer Index $ 100.00 $ 105.28 $ 98.62 $ 134.99 $ 127.09 $ 89.39 $ 110.91
Major Market Index $ 100.00 $ 99.16 $ 93.59 $ 123.71 $ 137.29 $ 104.61 $ 135.46
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a $2,100,000 line of credit with Citibank, N.A. Shmuel
BenTov, the Chairman, Chief Executive Officer and President of the Company, is a
personal guarantor of the line of credit. The Company had nothing outstanding
under this line of credit as of December 31, 1998. The line of credit bears
interest at a variable rate based on prime plus 1% (8.75% at December 31, 1998).
On August 7, 1997, the Company and Mr. BenTov entered into the S
Corporation Termination, Tax Allocation and Indemnification Agreement (the
'Termination Agreement') 'Termination Agreement') providing, among other things,
that the Company will be indemnified by Mr. BenTov with respect to any federal,
state or local corporate income taxes (plus interest and penalties) as a result
of the Company's failure to qualify as an S Corporation with respect to tax
returns in which the Company reported its income as an S Corporation. Mr.
BenTov's liability under the Termination Agreement will be limited to the
aggregate amount of all distributions received by Mr. BenTov from the Company
during such S Corporation reporting period, net of taxes paid or payable by Mr.
BenTov with respect to such distributions. The Termination Agreement provides
that the Company will indemnify Mr. BenTov on an after-tax basis with respect to
any federal, state or local income taxes (plus interest and penalties) paid or
required to be paid by Mr. BenTov, and Mr. BenTov will pay to the Company any
refunds of federal, state or local income taxes (including interest received
thereon) received by (or credited to) Mr. BenTov, as a result of a subsequent
adjustment in income of the Company with respect to any tax return in which the
Company reported its income as an S Corporation. The Termination Agreement
provides that Mr. BenTov shall have the option to control the filing of the
current year's tax returns and control or participate in audits and certain
other matters for any period in which the Company reported its income as an S
Corporation.
7
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain of its executive officers, to file with the Securities and
Exchange Commission (the 'SEC') and the Nasdaq(Registered) Stock Market reports
of ownership of the Common Stock of the Company. SEC regulations also require
the Company to identify in this proxy statement any person subject to this
requirement who failed to file any such report on a timely basis. Based solely
on the Company's review of the copies of such reports it has received, the
Company believes that all of its directors and officers complied with all
reporting requirements applicable to them with respect to transactions during
1998.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2000 Annual Meeting
of Shareholders must be received by the Company at the address appearing on the
first page of this proxy statement by January 26, 2000 in order to be considered
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters to
come before the Annual Meeting. If any other matter should come before the
meeting, the persons named in the enclosed proxy intend to vote the proxy
according to their best judgment.
8
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein
or, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ELECTION OR THE
NOMINEES NAMED BELOW AND FOR PROPOSAL 2.
Please mark
your votes as
indicated in /x/
this example
1. ELECTION OF FOR WITHHOLD
DIRECTORS NOMINEES. all nominees listed AUTHORITY
to the left (except to vote for all
as marked to the nominees listed
contrary below) to the left
/ / / /
Shmuel BenTov
Frank T. Thoelen
Joseph E. Imholz
Steven S. Mukamal
Reuven Battat
2. TO RATIFY THE APPOINTMENT OF ERNST & FOR AGAINST ABSTAIN
YOUNG LLP AS THE INDEPENDENT PUBLIC / / / / / /
ACCOUNTANTS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999.
3. IN HIS DISCRETION, THE PROXY IS
AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
(INSTRUCTION: To withhold authority to
vote for any individual nominee write
that nominee's name in the space
provided below.)
- - - - - - - - - - - - - -----------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated:__________________________________,1999
______________________________________________
Signature
______________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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FOLD AND DETACH HERE
THE A CONSULTING TEAM, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, hereby appoints Frank T. Thoelen, Chief Financial Officer of
The A Consulting Team, Inc., a New York corporation (the 'Company') as proxy for
the undersigned, with full power of substitution, for and in the name of the
undersigned to act for the undersigned and to vote, as designated below, all of
the shares of common stock, $0.01 par value per share, of the Company that the
undersigned is entitled to vote at the 1999 Annual Meeting of Shareholders of
the Company, to be held on May 27, 1999, at 10:00 a.m. (local time), at the
offices of Barst & Mukamal LLP, 2 Park Avenue, 19th Floor, New York, New York
10016 and at any adjournments or postponements thereof, in accordance with the
directions as follows with respect to the following matters:
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FOLD AND DETACH HERE
