<PAGE> 1
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
nFRONT, 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:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------
(Bulletin No. 161, 02-03-95)
550771.01
<PAGE> 2
[nFront Logo]
nFRONT, INC.
520 GUTHRIDGE COURT, N.W.
SUITE 100
NORCROSS, GEORGIA 30092
October 18, 1999
Dear Shareholder:
On behalf of the Board of Directors and management of nFront, Inc., we
cordially invite you to attend the Annual Meeting of Shareholders to be held on
Wednesday, November 10, 1999, at 10:00 a.m. at the Northeast Atlanta Hilton,
5393 Peachtree Industrial Boulevard, Norcross, Georgia 30092.
At the Annual Meeting, the shareholders will be asked to:
1. elect three directors for three-year terms;
2. ratify the appointment of Ernst & Young LLP as nFront's
independent public accountants for the year ending June 30,
2000; and
3. transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
These matters are described in the accompanying Notice of Annual
Meeting and Proxy Statement.
We have included a copy of nFront's Annual Report to Shareholders with
the Proxy Statement. We encourage you to read the Annual Report. It includes
our audited financial statements for the year ended June 30, 1999 as well as
information about our operations, markets, products and services.
It is important that your stock be represented at the meeting
regardless of the number of shares you hold. You are encouraged to specify your
voting preferences by so marking the enclosed proxy card. Please then sign and
date the proxy card and return it in the enclosed envelope whether or not you
plan to attend the meeting. If you do attend and wish to vote in person, you
may revoke your proxy at the meeting. If you plan to attend the meeting, please
check the proxy card in the space provided. This will assist us with meeting
preparations.
Your vote is very important and we appreciate your cooperation in
considering and acting on the matters presented.
Sincerely,
/S/ BRADY L. "TRIPP" RACKLEY III
Brady L. "Tripp" Rackley III
Chairman of the Board of Directors and
Chief Executive Officer
<PAGE> 3
nFRONT, INC.
520 Guthridge Court, N.W., Suite 100
Norcross, Georgia 30092
(770) 209-4460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 10, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
nFront, Inc. (the "Company") will be held on Wednesday, November 10, 1999, at
10:00 a.m. at the Northeast Atlanta Hilton, 5393 Peachtree Industrial
Boulevard, Norcross, Georgia 30092 (the "Annual Meeting"), to consider and act
upon:
1. the election of three (3) directors to the Company's Board of
Directors;
2. a proposal to ratify the selection of independent public
accountants for the Company's current fiscal year; and
3. such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 6,
1999, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting.
By Order of the Board of Directors,
/S/ BRADY L. "TRIPP" RACKLEY III
Brady L. "Tripp" Rackley III
Chairman of the Board of Directors and
Chief Executive Officer
October 18, 1999
Atlanta, Georgia
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN PROVIDED.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. IN THE EVENT YOU ARE
ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE> 4
nFRONT, INC.
520 Guthridge Court, N.W., Suite 100
Norcross, Georgia 30092
(770) 209-4460
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
NOVEMBER 10, 1999
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
SHAREHOLDERS MEETING
This Proxy Statement and the enclosed proxy ("Proxy") are furnished on
behalf of the Board of Directors of nFront, Inc., a Georgia corporation (the
"Company"), for use at the Annual Meeting of Shareholders to be held on
November 10, 1999 at 10:00 o'clock a.m., Atlanta, Georgia time (the "Annual
Meeting"), or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at the Northeast Atlanta Hilton, 5393 Peachtree Industrial
Boulevard, Norcross, Georgia 30092. The Company intends to mail this Proxy
Statement and the accompanying Proxy card on or about October 19, 1999, to all
shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of Common Stock at the close of business on
October 6, 1999 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on October 6, 1999, the Company had
outstanding and entitled to vote 14,196,136 shares of Common Stock. Each holder
of record of Common Stock on such date will be entitled to one vote for each
share held on all matters to be voted upon at the Annual Meeting. Any
shareholder who signs and returns a Proxy has the power to revoke it at any
time before it is exercised by providing written notice of revocation to the
Secretary of the Company or by filing with the Secretary of the Company a Proxy
bearing a later date. The holders of a majority of the total shares of Common
Stock outstanding on the record date, whether present at the Annual Meeting in
person or represented by Proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The shares held by each shareholder who signs
and returns the enclosed form of Proxy will be counted for the purposes of
determining the presence of a quorum at the meeting, whether or not the
shareholder abstains on all or any matter to be acted on at the meeting.
Abstentions and broker non-votes both will be counted toward fulfillment of
quorum requirements. A broker non-vote occurs when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that proposal and has
not received instructions from the beneficial owner.
COUNTING OF VOTES
The purpose of the Annual Meeting is to consider and act upon the
matters which are listed in the accompanying Notice of Annual Meeting and set
forth in this Proxy Statement. The enclosed form of Proxy provides a means for
a shareholder to vote for all of the matters listed in the accompanying Notice
of Annual Meeting and described in the Proxy Statement. The enclosed form of
Proxy also provides a means for a shareholder to vote for all of the nominees
for Director listed thereon or to withhold authority to vote for one or more of
such nominees. The Company's Bylaws provide that Directors are elected by a
plurality of the votes cast. Plurality means that more votes must be cast in
favor of the election of a Director than those cast against election of such
<PAGE> 5
Director. Accordingly, the withholding of authority by a shareholder (including
broker non-votes) will not be counted in computing a plurality and thus will
have no effect on the results of the election of such nominees.
The accompanying form of Proxy also provides a means for a shareholder
to vote for, against or abstain from voting on each of the other matters to be
acted upon at the Annual Meeting. Each Proxy will be voted in accordance with
the shareholder's directions. The affirmative vote of a majority of the shares
of Common Stock present in person or represented by a Proxy and entitled to
vote on proposal two set forth in the accompanying Notice of Annual Meeting is
required for the approval of such proposal. Approval of any other matters as
may properly come before the meeting also will require the affirmative vote of
a majority of the shares of Common Stock present in person or represented by a
Proxy and entitled to vote at the meeting. Abstentions with respect to proposal
two will have the same effect as a vote against these proposals. With respect
to broker non-votes, the shares will not be considered present at the meeting
for the proposal to which authority was withheld. Consequently, broker
non-votes will not be counted with regard to the proposal, but they will have
the effect of reducing the number of affirmative votes required to approve the
proposal, because they reduce the number of shares present or represented from
which a majority is calculated.
PROXIES
When the enclosed Proxy is properly signed and returned, the shares
which it represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instructions, the shares
represented by a signed Proxy will be voted in favor of the nominees for
election to the Board of Directors, and in favor of the approval of proposal
two.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of
Common Stock which, as of October 11, 1999, are deemed under the rules of the
Securities and Exchange Commission (the "Commission") to be "beneficially
owned" by each member of the Board of Directors of the Company, by each nominee
to become a member of the Board of Directors, by each Executive Officer of the
Company, by all Directors, Nominees and Executive Officers of the Company as a
group, and by any person or "group" (as that term is used in the Securities Act
of 1934, as amended) known to the Company as of that date to be a "beneficial
owner" of more than 5% of the outstanding shares of Common Stock of the
Company.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF
BENEFICIALLY CLASS
NAME OF BENEFICIAL OWNER (1) OWNED OWNED (2)
- ---------------------------- ----- ---------
<S> <C> <C>
Brady L. "Tripp" Rackley III ....................................... 3,000,000 21.1%
Brady L. Rackley(3) ................................................ 2,823,051 19.9%
Noro-Moseley Partners IV, L.P.(4) .................................. 2,284,018 16.0%
W. Derek Porter .................................................... 536,716 3.8%
William H. Scott III ............................................... 203,424 1.4%
James A. Verbrugge ................................................. 119,250 *
Thomas E. Greene III ............................................... 107,344 *
Steven S. Neel ..................................................... 178,905 1.3%
Robert L. Campbell (5) ............................................. 166,088 1.2%
Charles D. Moseley, Jr.(6) ......................................... 2,284,018 16.0%
All directors and executive officers as a group (10 persons) ....... 8,922,723 62.3%
</TABLE>
- ----------
*Less than 1% of the outstanding common stock.
(1) Except as set forth herein, the business address of the named
beneficial owner is c/o nFront, Inc., 520 Guthridge Court, N.W., Suite
100, Norcross, Georgia 30092.
(2) For purposes of calculating the percentage beneficially owned, the
number of shares of common stock deemed outstanding consists of
14,596,136, plus, as to the holder thereof only, shares issuable upon
the exercise of options that may be exercised within 60 days following
October 11, 1999. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission that deem
shares to be beneficially owned by any person or group who has or
shares voting and investment power with respect to these shares.
(3) Includes 66,250 shares beneficially owned by Mr. Rackley's wife,
Katharine S. Rackley, 728,750 shares beneficially owned by The
Katharine Rackley Grantor Retained Annuity Trust and 728,750 shares
beneficially owned by The Brady Rackley Grantor Retained Annuity
Trust. Mr. Rackley disclaims beneficial ownership of shares held by
Ms. Rackley.
(4) Includes 50,000 shares subject to a presently exercisable warrant. The
address of Noro-Moseley Partners IV, L.P. is 9 North Parkway Square,
4200 Northside Parkway, Atlanta, Georgia 30327.
(5) Includes 84,720 shares subject to presently exercisable stock
options.
(6) Consists of the 2,284,018 shares beneficially owned by Noro-Moseley
Partners IV, L.P. Mr. Moseley is a member of MKFJ-IV, LLC, which is
the general partner of Noro-Moseley Partners IV, L.P. Mr. Moseley
disclaims beneficial ownership of the shares owned by Noro-Moseley
Partners IV, L.P. Mr. Moseley's address is 9 North Parkway Square,
4200 Northside Parkway, Atlanta, Georgia 30327.
3
<PAGE> 7
PROPOSAL 1
ELECTION OF DIRECTORS
INTRODUCTION
At the Annual Meeting, three directors are to be elected for the terms
described below. The Board of Directors is divided into three classes, each of
whose members serve for staggered three-year terms. The Board is currently
comprised of three Class I directors (Messrs. Brady L. "Tripp" Rackley III,
Campbell and Greene), two Class II directors (Messrs. Verbrugge and Brady L.
Rackley) and two Class III directors (Messrs. Moseley and Scott). At each
annual meeting of shareholders, a class of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are then
expiring. The terms of the initial Class I directors, Class II directors and
Class III directors will expire upon the election and qualification of
successor directors at the 1999, 2000 and 2001 annual meeting of stockholders,
respectively.
Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the three nominees named below. In
the event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as the Board of Directors may select. Each person nominated
for election has agreed to serve if elected, and management has no reason to
believe that any nominee will be unable to serve.
The Board of Directors recommends a vote FOR each named nominee.
NOMINEES, INCUMBENT DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth certain information regarding the three
nominees for director, the four incumbent directors whose terms will continue
following the Annual Meeting and the executive officers.
Nominees to Serve as Class I Directors
BRADY L. "TRIPP" RACKLEY III, age 29, founder of nFront, has served as
Chairman of the Board and Chief Executive Officer of nFront since its inception
in 1996. Prior to forming nFront, Mr. Rackley served as Chief Operating Officer
of LeapFrog Technologies, Inc., a software development company, from October
1995 until February 1996, and as Vice President -- Development of Systeme Corp.,
a software development company, from December 1992 until September 1995. Mr.
Rackley received an Industrial Engineering degree from the Georgia Institute of
Technology and has post-graduate studies in business and human computer
interface from the University of Central Florida. Mr. Rackley is also a member
of the board of the Alexander-Tharpe Foundation, Inc. Mr. Rackley is the son of
Brady L. Rackley.
ROBERT L. CAMPBELL, age 48, has served as President and Chief Operating
Officer of nFront since July 1998 and as a Director since September 1998. Prior
to joining nFront, Mr. Campbell worked as an independent consultant for Campbell
and Associates from January to July 1998. Mr. Campbell served as President of
Insight Management, a professional services business, from January 1997 until
November 1997. Mr. Campbell served as President and Chief Executive Officer of
Servantis Systems, Inc., a banking and electronic commerce software and services
firm from July 1993 until the company's acquisition by CheckFree Corp. in March
1996. Mr. Campbell received a Bachelor of Science Degree and a Masters of
Business Administration from the University of Tennessee.
THOMAS E. GREENE III, age 52, has served as a Director of nFront since
May 1998. Mr. Greene has served as Chairman of Liberty Street Capital
Corporation, an investment banking company, since May 1995. Prior to joining
Liberty Street Capital Corporation, Mr. Greene served as Vice President of
Municipal Finance of Goldman Sachs & Co. from May 1993 until May 1995.
4
<PAGE> 8
Incumbent Class II Directors (Terms Expire in 2000)
BRADY L. RACKLEY, age 55, has served as a Director of nFront since its
inception in 1996 and served as Secretary from inception to April 1999. From
1990 until 1995, Mr. Rackley was the President and Chief Executive Officer of
Systeme Corp., a software development company. Mr. Rackley also has served as
the Chairman of the Board, President and Chief Executive Officer of LeapFrog
Technologies, Inc., a software development Company, since October 1995. Mr.
Rackley is the father of Brady L. "Tripp" Rackley III.
JAMES A. VERBRUGGE, age 59, has served as a Director and a member of
the Audit Committee of nFront since May 1998. Dr. Verbrugge has served as
Professor of Finance at the University of Georgia since 1968 and currently
serves as Chairman of the University's Department of Banking and Finance. Dr.
Verbrugge is also a member of the Board of Directors of Proactive Technologies
Inc., an airport hospitality services and real estate holding company and
flightserve.com, an Internet distributor of private aviation services. Dr.
Verbrugge received a Ph.D. in Economics from the University of Kentucky.
Incumbent Class III Directors (Terms Expire in 2001)
WILLIAM H. SCOTT II, age 52, has served as a Director and a member of
the Compensation Committee of nFront since November 1998. Mr. Scott has served
as the President of ITC Holding Co., a telecommunications service provider,
since December 1991, and has been a director of ITC Holding Co. since May 1989.
Mr. Scott is also an officer and director of several ITC Holding Co.
subsidiaries. In addition, Mr. Scott serves as the Chairman of the Board of
Directors of Headhunter.net, an Internet-based employee recruiting service and
as a member of the Board of Directors of Mindspring Enterprises, Inc., an
Internet service provider; Innotrac Corporation, a customized, technology-based
marketing support services company; ITC Deltacom, Inc., a full-service
telecommunications provider; and Knology Holdings, Inc., a broadband
telecommunications service provider, formerly known as CyberNet Holdings, Inc.
Mr. Scott received a Bachelor of Arts degree from Presbyterian College and a
Masters degree in Business Administration from the University of Georgia.
CHARLES D. MOSELEY, JR., age 56, has served as a Director of nFront
since May 1998 and as a member of the Audit and Compensation Committees of the
Board of Directors of nFront since November 1998. Mr. Moseley is a member of
MKFJ-IV, LLC, which is the general partner of Noro-Moseley Partners IV, L.P., a
venture capital firm. Mr. Moseley founded Noro-Moseley Partners in 1983, and he
is a director of several private companies. Mr. Moseley received a Bachelor of
Industrial Engineering degree from the Georgia Institute of Technology and a
Masters of Business Administration from Harvard University.
Executive Officers
In addition to the directors and individuals nominated for director
above who are also executive officers of the Company, the following individuals
presently serve as executive officers of the Company:
JEFFREY W. HODGES has served as Chief Financial Officer of nFront
since November 1998 and was elected Secretary in April 1999. Prior to joining
nFront, Mr. Hodges served as Vice President -- Controller of Powertel, Inc., a
public wireless telecommunications provider, from June 1995 until November
1998. From December 1988 until June 1995, Mr. Hodges served as an auditor at
Arthur Andersen, LLP, an independent accounting firm, serving most recently as
Audit Manager from 1992 to 1995. Mr. Hodges is a graduate of Auburn University
with a degree in accounting and is a Certified Public Accountant.
VINCENT R. BRENNAN has served as Senior Vice President -- Sales of
nFront since March 1998 and is responsible for growing and managing nFront's
sales, marketing and business development units. From September 1998 until
March 1999, Mr. Brennan served as Senior Vice President -- Sales and Marketing
of nFront. Prior to joining nFront, Mr. Brennan was employed by John H. Harland
Co. from June 1986 until September 1998, serving as Senior Vice President --
Sales, managing the financial markets division from December 1995 until
September 1998 and as Vice President from April 1993 until December 1995. Mr.
Brennan received a Bachelor's degree in Business Administration from the
University of Connecticut.
5
<PAGE> 9
STEVEN S. NEEL has served as Senior Vice President -- Operations of
nFront since July 1996 and is responsible for enhancing customer satisfaction
by implementing and supporting the nFront products and services. Prior to
joining nFront, Mr. Neel served as Vice President -- Implementations of
LeapFrog Technologies, Inc., a software development company, from October 1995
until July 1996. Prior to joining LeapFrog Technologies, Inc., Mr. Neel was a
partner in an Atlanta-based consulting firm from April 1993 until October 1995
where he obtained experience in the financial services industry. Mr. Neel
received a Bachelor's degree in Management from the Georgia Institute of
Technology.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended June 30, 1999, the Board of Directors met
five times and took action by unanimous written consent three times. All of the
incumbent directors attended at least 75% of the aggregate total number of
meetings of the Board of Directors and meetings of committees of the Board of
Directors on which they served. The Board of Directors has established a
Compensation Committee and an Audit Committee to which it has assigned certain
responsibilities in connection with the governance and management of the
Company. The Company has no standing nominating or other committee performing
similar functions. The Board of Directors as a whole acts as a nominating
committee to select nominees for election as directors of the Company. The
Board of Directors will consider nominees recommended by shareholders if
submitted to the Board in accordance with the procedures specified in the
Company's Bylaws. The Bylaws provide that a shareholder seeking to nominate a
candidate for election as a director at a meeting of the shareholders must
provide notice of such nomination not less than 60 days prior to the meeting,
and such notice must provide the Company certain information regarding the
nominee.
Compensation Committee. The Compensation Committee is comprised of
Messrs. Moseley and Scott. The Compensation Committee reviews and evaluates the
compensation and benefits of all our officers, reviews general policy matters
relating to compensation and benefits of employees of nFront and makes
recommendations concerning these matters to the Board of Directors. The
Compensation Committee also administers our stock option plans. During fiscal
1999, the Compensation Committee met two times and took action by unanimous
written consent one time.
Audit Committee. The Audit Committee is comprised of Messrs. Moseley
and Verbrugge. The Audit Committee reviews the scope and timing of our audit
services and any other services our independent auditors are asked to perform,
the auditor's report on our financial statements following completion of their
audit and their policies and procedures with respect to internal accounting and
financial control. In addition, the Audit Committee makes annual
recommendations to the Board of Directors for the appointment of independent
auditors for the following year. The Audit Committee was formed in November
1998 and did not meet in fiscal 1999.
DIRECTORS' COMPENSATION
The Company reimburses all directors for their travel and other
expenses incurred in connection with attending Board or committee meetings. In
addition, the non-employee members of the Board are entitled to receive options
pursuant to the nFront Director Stock Option Plan which became effective in
April 1999 (the "Director Plan"). Under the terms of the Director Plan, (a)
each non-employee director (other than the current non-employee directors) will
be automatically granted an option to purchase 2,500 shares on the date the
non-employee director first becomes a director, unless such director was a
director at the time of becoming a non-employee director; (b) each non-employee
director will be automatically granted an option to purchase 1,000 shares on
the date of the non-employee director's re-election if, on such date, the
non-employee director had already been a director for at least six months; (c)
as to a non-employee director serving a multi-year term, the non-employee
director shall receive an additional automatic grant of an option to purchase
1,000 shares on the date of each Shareholders Annual Meeting during such term
(other than the Annual Meeting at which the non-employee director is elected
and the Annual Meeting at which his or her term ends). The exercise price for
each option shall be the fair market value of the Common Stock on the date that
the option is granted. The aggregate number of shares of nFront common stock
reserved for issuance under the Director Plan is 200,000 shares. At the first
annual meeting
6
<PAGE> 10
of shareholders, nFront intends to grant options pursuant to the Director Plan
to purchase shares of nFront Common Stock to each of our non-employee directors
who are either re-elected at such meeting or whose terms continue beyond the
meeting.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE.
The following table sets forth, for the year ended June 30, 1999, the
total compensation paid to or accrued by our Chief Executive Officer and the
five other executive officers with the next highest total annual salary and
bonus which exceeded $100,000 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------------------
NUMBER OF
OTHER SECURITIES ALL
FISCAL ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
- --------------------------- ------ --------- -------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Brady L. "Tripp" Rackley III ........... 1999 $ 175,000 $140,000 $ 14,880(2) -- $ 6,400(4)
Chairman of the Board and Chief 1998 108,271 -- $ 13,717(3) -- --
Executive Officer
Robert L. Campbell ..................... 1999 131,550(5) 94,500 -- 564,800 --
President and Chief Operating 1998 -- -- -- -- --
Officer
Jeffrey W. Hodges ...................... 1999 58,846(5) 60,000 -- 112,890 --
Chief Financial Officer and 1998 -- -- -- -- --
Secretary
Vincent R. Brennan ..................... 1999 79,423(5) 52,795 -- 112,890 --
Senior Vice President-Sales 1998 -- -- -- -- --
</TABLE>
- -------------------------
(1) In accordance with the rules of the Securities and Exchange
Commission, other compensation received in the form of perquisites and
other personal benefits has been omitted because such perquisites and
other personal benefits constituted less than the lesser of $50,000 or
10% of the total annual salary and bonus for the Named Executive
Officer for such year.
(2) Includes $10,000 in country club dues and $4,800 in personal
automobile expenses.
(3) Includes $12,177 in personal automobile expenses.
(4) Represents relocation related expenses.
(5) Amounts reflect employment dates for Mr. Campbell, Mr. Hodges and Mr.
Brennan of July 14, 1998, November 30, 1998 and September 16, 1998,
respectively.
7
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth all individual grants of stock options
during the year ended June 30, 1999, to each of the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SECURITIES TOTAL OPTIONS VALUE AT ASSUMED
UNDERLYING GRANTED TO EXERCISE OR ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRICE APPRECIATION
NAME GRANTED FISCAL YEAR PER SHARE DATE FOR OPTION TERM(1)
---- ---------- ------------- ----------- ---------- ------------------------
5% 10%
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Brady L. "Tripp" Rackley III ... -- -- -- -- -- --
Robert L. Campbell ............. 564,800 55% $ 1.2302 9/16/08 $ 434,896 $1,107,008
Jeffrey W. Hodges .............. 112,890 11% 1.2302 11/30/08 86,925 221,264
Vincent R. Brennan ............. 112,890 11% 1.2302 9/16/08 86,925 221,264
Steven S. Neel ................. -- -- -- -- -- --
</TABLE>
- ----------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on the fair market value per share on the date of
grant and assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted
to their expiration date. These assumptions are mandated by the rules
of the Securities and Exchange Commission and are not intended to
forecast future appreciation of our stock price. The potential
realizable value computation is net of the applicable exercise price,
but does not take into account federal or state income tax
consequences and other expenses of option exercises or sales of
appreciated stock. Actual gains, if any, are dependent upon the timing
of such exercise and the future performance of our common stock. There
can be no assurance that the rates of appreciation in this table can
be achieved. This table does not take into account any appreciation in
the price of our common stock to date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table summarizes the number of shares and value realized
by each of the Named Executive Officers upon the exercise of options and the
value of the outstanding options held by the Named Executive Officers at June
30, 1999:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES SECURITIES UNDERLYING UNEXERCISED
ACQUIRED VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME ON EXERCISE REALIZED(1) AT FISCAL YEAR-END AT FISCAL YEAR-END(2)
---- ----------- ----------- ----------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brady L. "Tripp" Rackley III ... -- -- -- -- $ -- $ --
Robert L. Campbell ............. -- -- 84,720 480,080 1,182,522 6,700,956
Jeffrey W. Hodges .............. -- -- -- 112,890 -- 1,575,718
Vincent R. Brennan ............. -- -- -- 112,890 -- 1,575,718
Steven S. Neel ................. -- -- -- -- -- --
</TABLE>
- ----------
(1) Amounts disclosed in this column do not reflect amounts actually
received by the Named Executive Officers but are calculated based on
the difference between the fair market value on the date of exercise
of the options and the exercise price of the options. The Named
Executive Officers will receive cash only if and when they sell the
common stock issued upon exercise of the options, and the amount of
cash received by such individuals is dependent on the price of our
common stock at the time of such sale.
(2) Based on the fair market value of our common stock as of June 30, 1999
of $15.188 per share as reported on The Nasdaq National Market, less
the exercise price payable upon exercise of such options.
EMPLOYMENT AGREEMENTS
Brady L. "Tripp" Rackley III and Robert L. Campbell have entered into
employment agreements and non-disclosure, non-solicitation and non-competition
agreements with the Company. Under the employment agreements, Mr. Rackley is
entitled to receive an annual base salary of $175,000 and Mr. Campbell is
entitled to an annual base salary of $135,000. Both are entitled to bonuses as
determined by the Board of Directors. In addition, both are eligible to
participate in nFront's Stock Incentive Plan. Under the terms of the
non-disclosure, non-
8
<PAGE> 12
solicitation and non-competition agreements, Messrs. Rackley and Campbell have
assigned to the Company all of their copyrights, trade secrets and patent
rights that relate to the business of nFront. Additionally, they have agreed
not to compete with the Company during the term of their employment and for one
year afterward. They have also agreed not to solicit customers and employees of
the Company for a period of one year following termination of their employment
with the Company. If the Company terminates their employment when they had not
violated any specific provision of the agreement or they terminate their
employment for reasons that are deemed to be proper under the agreements, they
will be entitled to receive severance payments equal to the amount of their
then-current base salary and benefits for a twelve month period following
termination. Additionally, in connection with the negotiation of the components
of Mr. Campbell's initial compensation, the Company agreed to pay him a bonus
of $88,624, payable in four equal, annual installments of $22,156 each,
commencing on July 1, 1999.
BENEFIT PLANS
nFront, Inc. Stock Incentive Plan. Our Stock Incentive Plan became
effective on September 9, 1998. The aggregate number of shares of nFront common
stock reserved for issuance under the Stock Incentive Plan is 2,188,900 shares.
The number of shares of common stock available for issuance under the Stock
Incentive Plan shall automatically increase on the last trading day of the last
month of each of nFront's fiscal years, beginning with the fiscal year ending
June 30, 2000 and continuing through the fiscal year ending June 30, 2004, by a
number of shares equal to one and one-quarter percent (1.25%) of the total
number of shares of common stock outstanding on the last trading day of the
month preceding the final month of each such fiscal year, but in no event shall
any such annual increase exceed 1,000,000 shares (as adjusted under the terms
of the plan). The purpose of the Stock Incentive Plan is to provide incentives
for key employees, officers, consultants and directors to promote the success
of nFront, thereby benefiting shareholders and aligning the economic interests
of the participants with those of the shareholders. Awards granted under the
Stock Incentive Plan may be either restricted stock or options intended to
qualify as "incentive stock options" or nonqualified stock options.
As of June 30, 1999, options to purchase 1,020,013 shares of common
stock were outstanding under the Stock Incentive Plan at a weighted average
exercise price of $1.71 per share. No shares of common stock have been issued
upon exercise of options granted under the Stock Incentive Plan.
Incentive Compensation Plan. We adopted a cash incentive compensation
plan for our 1999 fiscal year. The plan is administered by the Compensation
Committee of the Board of Directors, which determines eligible participants,
performance goals, measurement criteria, performance ratings and amount and
timing of payments. Awards under the plan are determined annually on the basis
of our performance over the year in relation to pre-determined financial and
operating goals. All awards are paid in full, in cash, following the year of
performance. Awards are granted under the plan at the sole discretion of the
Compensation Committee.
nFront, Inc. Employee Stock Purchase Plan. In June 1999, our
shareholders approved the nFront, Inc. Employee Stock Purchase Plan which is
intended to qualify under Section 423 of the Internal Revenue Code. The stock
purchase plan became effective upon completion of the initial public offering.
The stock purchase plan allows employees to purchase common stock through
payroll deductions for 85% of the fair market value of the common stock.
Participation in the stock purchase plan is voluntary. Employees may become
participants in the stock purchase plan by authorizing payroll deductions of
one to ten percent of their base pay for each payroll period. At the end of
each six-month purchase period, each participant in the stock purchase plan
will receive an amount of our common stock equal to the sum of that
participant's payroll deductions during the period multiplied by 85% of the
lower of the fair market value of our common stock at the beginning of the
period, or the fair market value of our common stock at the end of the period.
No employee may participate in the stock purchase plan if such employee owns or
would own 5% or more of the voting power of all classes of our stock. There are
currently 100,000 shares of common stock reserved for issuance under the stock
purchase plan. The number of shares of common stock available for issuance
under the stock purchase plan shall automatically increase on the last trading
day of the last month of each of nFront's fiscal years, beginning with the
fiscal year ending June 30, 2000 and continuing through the fiscal year ending
June 30, 2004, by a number of shares equal to one-quarter percent (0.25%) of
the total number of shares of common stock outstanding on the last trading day
of the month preceding the final month of each such fiscal year, but in no
event shall any such annual increase exceed 1,000,000 shares (as adjusted under
the terms of the plan). We are permitted under the stock purchase plan to
purchase shares of common stock on the open market for the purpose of reselling
the shares to participants in the stock purchase plan.
9
<PAGE> 13
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Second Amended and Restated Articles of Incorporation provide that
the liability of our directors for monetary damages shall be eliminated to the
fullest extent permissible under Georgia law and that we may indemnify our
officers, employees and agents to the fullest extent permitted under Georgia
law.
Our Bylaws provide that we must indemnify our directors against all
liabilities to the fullest extent permitted under Georgia law and that we must
advance all reasonable expenses incurred in a proceeding where the director was
either a party or a witness because he or she was a director.
We have entered into agreements that require us to indemnify our
directors and our officers to the full extent permitted under Georgia law. In
addition, we have agreed to defend, hold harmless and indemnify our directors
and our officers against any obligation to pay a judgment, penalty, fine,
expenses and settlement amounts in connection with any action, suit or
proceeding brought by reason of the fact that he or she is a director or
officer, as the case may be, of nFront or is serving, at the request of nFront,
as a director, officer, employee, agent or consultant of another entity. No
indemnification will be provided for any misappropriation of any nFront
business opportunity, any act or omission involving intentional misconduct or a
knowing violation of law, any transaction from which an improper personal
benefit was received and other types of liability under Georgia law. Further,
nFront will pay expenses incurred by directors and officers in defending any
covered action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding. We believe that these agreements, as well as the
provisions contained in our articles and bylaws described above, are necessary
to attract and retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors of nFront pursuant to the
provisions of our charter documents, Georgia law or the agreements described
above, nFront has been advised that in the opinion of the Securities and
Exchange Commission, this indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors were the members of the
Compensation Committee of the Board of Directors during 1999: Charles D.
Moseley, Jr. and William H. Scott, III. Neither of the current members of the
Compensation Committee has any direct or indirect material interest in the
Company outside of his position as a director. From September 1998 until April
1999, Brady L. "Tripp" Rackley III, the Company's Chairman and Chief Executive
Officer also served as a member of the Compensation Committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act 1934 requires the
Company's directors and executive officers and persons who own beneficially
more than 10% of the Company's Common Stock to file reports of ownership and
changes in ownership of such stock with the Securities and Exchange Commission.
To the Company's knowledge, based solely on review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended June 30, 1999, all Section 16(a) filing
requirements applicable to the directors, executive officers and greater than
10% beneficial owners were complied with by such persons, except late filings
by two executive officers, Vincent R. Brennan and Steven S. Neel, of Form 3's
to report their beneficial ownership at the time of the Company's initial
public offering and by Steven S. Neel of a Form 4 to report his sale of 19,845
shares of Common Stock in that offering.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee consists of Charles D. Moseley, Jr. and William H. Scott, III. The
Committee also administers the Company's Stock Incentive Plan and Employee
Stock Purchase Plan.
The Company's executive compensation policy, as implemented by the
Committee, is designed to provide a competitive compensation program that will
enable the Company to attract, motivate, reward and retain executives who have
skills, experience and talents required to promote the short-term and long-term
financial performance and growth of the Company. The compensation policy is
designed to link compensation to the value and level of the performance of the
executive as well as to the performance of the Company. In so doing, the policy
strives to align the financial rewards to the Company's executive officers with
the financial interests of the Company's shareholders.
The Compensation Committee seeks to achieve these objectives by
implementing, as the principal components of compensation, a program of base
salary, incentive bonus compensation and equity-based incentives. The
compensation decisions of the Committee relative to the Company's executive
officers and key employees are described below as to each of the foregoing
components.
For the Company's year ended June 30, 1999, the Committee approved the
final compensation plan for the executive officers in January 1999, effective
retroactively for the full fiscal year. The Committee approved the Company's
current compensation plan in May 1999.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
Base Salary. Base Salary levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within a
range of base salaries that the Committee believes are paid to similar
executive officers at companies deemed comparable based on the similarity in
revenue level, industry segment and competitive employment market to Company.
In addition, the Committee generally takes into account the Company's past
financial performance and future expectations, as well as the performance of
the executives and changes in the executives' responsibilities. The base
salaries of the executive officers for fiscal 1999 were not linked to specific
Company performance criteria.
Incentive Cash Bonuses. The Company's executive officers, as well as
other management employees, are eligible to receive cash bonus awards. The
Committee determines eligible participants, performance goals, measurement
criteria, performance ratings and amount and timing of payments. Under the
current compensation plan, bonus awards are determined annually on the basis of
the Company's performance over the year in relation to pre-determined targets
in four criteria: revenue, net income, total assets of banks with signed
contracts and number of end users. Bonuses are calculated as a percentage of
base salary, with the percentage varying depending on the Company's
performance, on the average, against all four criteria. The judgment of the
Committee, and of the Chief Executive Officer in the case of other executive
officers, as to the impact of the individual on the financial performance of
the Company are also considered. All awards are paid in full, in cash,
following the year of performance. Bonus awards are granted to executive
officers under the plan at the sole discretion of the Compensation Committee.
During the 1999 fiscal year the methodology for measuring the Company's
performance was the same, with the exception that the criteria measured did not
include the number of end users. The Company exceeded the three criteria, on an
averaged basis, by more than 20%.
Equity Incentives. The Committee believes that long-term incentive
compensation in the form of stock options is the most direct way of making
executive compensation dependent upon increases in shareholder value. The
Company's Stock Incentive Plan provides the means through which executive
officers can build an investment in Common Stock which will align such
officers' economic interests with the interests of the Company's shareholders.
Under the Stock Incentive Plan, the Company may award incentive stock options,
non-qualified stock
11
<PAGE> 15
options, restricted stock awards and stock appreciation rights. To date, the
Company has issued only options under the plan.
For the Company's fiscal year ended June 30, 1999, the Company granted
options to purchase 564,800, 112,890 and 112,890 shares to Mr. Campbell, Mr.
Hodges and Mr. Brennan, respectively. These options were granted under the
commitments made to the individuals in their offers of employment and were
granted upon the commencement of their employment with the Company. Mr. Rackley
did not receive options during the 1999 fiscal year. For the Company's current
fiscal year, the Committee intends to grant options to all employees based upon
the Company's achievement of the plan objectives for each of the four criteria
described above and the Committee's assessment of the individual's contribution
to the Company's performance.
Executive officers are also entitled to participate in the Company's
Employee Stock Purchase Plan on the same basis as other employees of the
Company. The plan commenced following completion of the Company's initial
public offering and is described under the heading "Executive Compensation -
Stock Option Plans - nFront, Inc. Employee Stock Purchase Plan."
Other Benefits. Executive officers also participate, on a voluntary
basis, in the Company's regular employee benefit programs, including group
medical and dental coverage, group life insurance and group long-term
disability insurance. In addition, executive officers receive, along with and
on the same terms as other employees, certain benefits pursuant to the
Company's 401(k) Plan, including Company matching contributions. The rate of
match is 25% of a participant's contribution, not to exceed 3% of the
employee's salary.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee annually reviews the performance and compensation of the
Chief Executive Officer based on the assessment of his past performance and its
expectation of his future contributions to the Company's performance. Brady L.
"Tripp" Rackley III has served as the Company's Chief Executive Officer since
inception. For the fiscal year ended June 30, 1999, Mr. Rackley's compensation
plan included a base salary of $175,000 and a bonus based on the Company's
achievement of the specified targets for the three measurement criteria for
1999 described above. Since the Company exceeded such targets, and it was
believed that Mr. Rackley, and the rest of the executive officers, made strong
contributions to the growth of the Company and the completion of the Company's
initial public offering, Mr. Rackley received a bonus of $140,000 for the 1999
fiscal year. The Committee believes that Mr. Rackley's total fiscal year 1999
compensation was below the average total cash compensation paid to chief
executive officers by comparable companies. Mr. Rackley's base salary for the
current fiscal year is $175,000. Mr. Rackley did not receive any options or
other equity-based incentives during the 1999 fiscal year. Mr. Rackley will be
entitled to receive options during the current fiscal year, depending upon the
Committee's assessment of his performance and the Company's achievement of the
specified objectives for the performance criteria described above.
12
<PAGE> 16
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the deduction allowable to the Company for compensation paid to the
Chief Executive Officer and each of the four other most highly compensated
executive officers to $1.0 million. Qualified performance-based compensation is
excluded from this limitation if certain requirements are met. The Company's
policy is generally to preserve the federal income tax deductibility of
compensation paid, to the extent feasible. The Committee believes that awards
under the Company's management incentive plan and its award of options made
under stock option plans for employees will qualify as performance-based
compensation and thereby be excluded from the $1.0 million limitation.
Notwithstanding the Company's policy to preserve the federal income tax
deductibility of compensation payments, under certain circumstances, the
Committee, in its discretion, may authorize payment, such as salary, bonuses or
otherwise, that may cause an executive officer's income to exceed the
deductible limits.
Compensation Committee:
Charles D. Moseley, Jr.
William H. Scott, III
13
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following line-graph provides a comparison of the cumulative total
shareholder return on the Company's Common Stock for the period from June 30,
1999, the date following the Company's initial public offering on June 29, 1999
through August 31, 1999, against the cumulative shareholder return during such
period achieved by the Nasdaq Stock Market (U.S. Companies) and the Index for
Nasdaq Computer and Data Processing Stocks. All amounts have been calculated as
if all dividends were reinvested.
[GRAPHIC]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
06/30/99 07/30/99 08/31/99
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CRSP Nasdaq Stock Market (U.S. Companies) 100.00 98.63 102.81
- ------------------------------------------------------------------------------------------------
CRSP Index for Nasdaq Computer & Data Processing Stocks 100.00 94.60 99.23
- ------------------------------------------------------------------------------------------------
nFront, Inc. 100.00 118.51 87.24
- ------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(a) The lines represent annual index levels derived from
compounded daily returns that include all dividends.
(b) The indexes are reweighed daily, using the market
capitalization on the previous trading day.
(c) If the fiscal year end is not a trading day, the preceding
trading day is used.
(d) The index level for all series was set to 100 on June 30,
1999.
(e) The Company's Common Stock began trading on the Nasdaq Stock
Market on June 29, 1999.
14
<PAGE> 18
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
In January 1997, LeapFrog Technologies, Inc., a Georgia corporation of
which Brady L. Rackley is Chairman of the Board, exchanged office furniture
having a fair market value of $83,986 for programming services furnished by
nFront having the same value. In October 1997, we loaned Mr. Rackley $20,000,
and he repaid $20,875 in February 1998, constituting payment in full. The loan
was unsecured and had an interest rate of 10.5% per year. In addition, nFront
has retained Mr. Rackley to provide marketing and sales consulting services to
nFront for $70,000 per year. Mr. Rackley is a Director and principal
shareholder of nFront.
During the period from October 1997 through January 1998, we borrowed
a total of $90,000 from Brady L. "Tripp" Rackley III, our Chief Executive
Officer. The loans were unsecured, had an interest rate of 10.5% per year and
were repaid in February 1998.
In May 1998, we issued to Noro-Moseley Partners IV, L.P. 255,885
shares of redeemable convertible preferred stock at a per share price of $9.77.
These shares were automatically converted into 2,034,285 shares of common stock
upon the completion of our initial public offering. One of our directors, Mr.
Charles D. Moseley, Jr., is a member of MKFJ-IV, LLC, the general partner of
Noro-Moseley.
In May 1998, we paid a $125,000 fee to Liberty Street Capital, an
investment banking company controlled by Mr. Thomas E. Greene III, one of our
directors. The fee was payment for services provided by Liberty Street Capital
to us in connection with the investment in nFront by Noro-Moseley.
In April 1999, we entered into a debenture purchase agreement with
Noro-Moseley Partners IV, L.P. Under this agreement, Noro-Moseley agreed to
purchase up to $5.0 million of senior subordinated debentures upon request by
us. No debentures were issued under this agreement and the obligation of
Noro-Moseley to purchase debentures under the agreement expired upon the
completion of our initial public offering. In exchange for its commitment under
the agreement, we agreed to issue to Noro-Moseley a three-year warrant to
purchase a number of shares of common stock equal to $500,000 divided by the
initial public offering price of our common stock and exercisable at that
price. Based on the price per share in the initial public offering, the
warrant, as issued, entitles Noro-Moseley to purchase 50,000 shares of common
stock at $10.00 per share. The warrant was issued upon commencement of the
public offering.
Our Chief Executive Officer, Mr. Rackley, and our President, Mr.
Campbell, have employment agreements described in "Employment Agreements."
Our Board of Directors has adopted a resolution whereby all future
transactions with related parties, including any loans from us to our officers,
directors, principal shareholders or affiliates, must be approved by a majority
of the Board of Directors, including a majority of the independent and
disinterested members of the Board of Directors or a majority of the
disinterested shareholders and must be on terms no less favorable to us than
could be obtained from unaffiliated third parties.
15
<PAGE> 19
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
In January 1999, the Board of Directors appointed the accounting firm
of Ernst & Young LLP to serve as its independent auditor. The appointment of
this firm was recommended to the Board by its Audit Committee. A proposal to
ratify that appointment will be presented at the Annual Meeting.
Representatives of Ernst & Young LLP are expected to be present at the meeting.
They will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions from shareholders.
The Board of Directors recommends that the shareholders vote FOR
ratification of selection of independent auditors.
SHAREHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any
proposal by a shareholder of the Company for consideration at the 2000 Annual
Meeting of Shareholders must be received by the Company no later than June 20,
1999, if any such proposal is to be eligible for inclusion in the Company's
proxy materials for its 2000 Annual Meeting. Under such rules, the Company is
not required to include shareholder proposals in its proxy materials unless
certain other conditions specified in such rules are met.
In order for a shareholder to bring any business or nominations before
the 1999 Annual Meeting of Shareholders, certain conditions set forth in
Sections 2.13 and 3.8 of the Company's Bylaws must be complied with, including,
but not limited to, delivery of notice to the Company not less than 60 days
prior to the meeting as originally scheduled; provided, however, that in the
event that less than 60 days notice or public disclosure of the date of the
meeting is given or made to the shareholders, notice by the shareholders to be
timely must be received not later than the close of business on the 10th day
following the date on which such notice of the date of meeting was mailed or
such public disclosure was made.
16
<PAGE> 20
OTHER MATTERS
Management of the Company is not aware of any other matter to be
presented for action at the Annual Meeting other than those mentioned in the
Notice of Annual Meeting of Shareholders and referred to in this Proxy
Statement.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ BRADY L. "TRIPP" RACKLEY III
Brady L. "Tripp" Rackley III
Chairman of the Board of Directors and
Chief Executive Officer
17
<PAGE> 21
[Front of Proxy Card]
nFront, Inc.
520 Guthridge Court, N.W.
Suite 100
Norcross, Georgia 30092
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brady L. "Tripp" Rackley III and
Robert L. Campbell, and each of them, with full power of substitution, as
Proxy, to represent and vote all the shares of Common Stock of nFront, Inc.
held of record by the undersigned on October 6, 1999, at the annual meeting of
Shareholders to be held on November 10, 1999 or any adjournment thereof, as
designated on the reverse side hereof and in their discretion as to other
matters.
Please sign exactly as name appears on the reverse side. When shares
are held by joint tenants, both should sign. When signing as attorney, as
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.
(Please date and sign on reverse)
(Continued on reverse side)
[Back of Proxy Card]
The shares represented by this proxy will be voted as directed by the
Shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" the Proposal.
The Board of Directors Recommends a vote "FOR " the Proposal. I PLAN TO
ATTEND MEETING [ ]
Proposal 1- Election of the following Nominees as Directors:
<TABLE>
<S> <C> <C>
NOMINEES: Brady L. "Tripp" Rackley III
FOR all Nominees WITHHELD Robert L. Campbell Thomas E. Greene III
listed at right (except for all Nominees (Instruction: To withhold authority to vote
as marked to the contrary) listed at right any individual nominee, strike a line
through the nominee's name as listed
above.)
</TABLE>
[ ] [ ]
Proposal 2- Approval of the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 30, 2000.
For Against Abstain
[ ] [ ] [ ]
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE OR BLACK INK.
- ----------------------------------------------
Date
- ----------------------------------------------
Signature
- ----------------------------------------------
Signature if held jointly
- ----------------------------------------------
Please mark, date and sign as your name appears above and return in the
enclosed envelope.
