<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Keane, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Keane, Inc.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
________________________________________________________________________
<PAGE>
KEANE, INC.
TEN CITY SQUARE
BOSTON, MASSACHUSETTS 02129
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
----------------
The Annual Meeting of Stockholders of Keane, Inc. (the "Company") will be
held on Wednesday, May 27, 1998 at 4:30 p.m., Boston Time, at the Harvard
Club, One Federal Street, Boston, Massachusetts, to consider and act upon the
following matters:
1. To fix the number of directors at seven and to elect a Board of
Directors for the ensuing year;
2. To approve an amendment to the Company's Articles of Organization
increasing the number of shares of Common Stock which the Company is
authorized to issue from 100,000,000 to 200,000,000;
3. To approve the Company's 1998 Stock Incentive Plan (Appendix 1);
4. To ratify and approve the selection by the Board of Directors of
Coopers & Lybrand L.L.P. as the Company's independent accountants for the
current year; and
5. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
Stockholders of record at the close of business on April 1, 1998 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
The stock transfer books of the Company will remain open.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Norman B. Asher, Clerk
April 21, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED
IN THE UNITED STATES.
<PAGE>
KEANE, INC.
TEN CITY SQUARE
BOSTON, MASSACHUSETTS 02129
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Keane, Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on May 27, 1998, and at any
adjournment of that meeting. All proxies will be voted in accordance with the
instructions contained therein, and if no choice is specified, the proxies
will be voted in favor of the proposals set forth in the accompanying Notice
of Meeting. Any proxy may be revoked by a stockholder at any time before it is
exercised by giving written notice to that effect to the Clerk of the Company.
The Board of Directors has fixed April 1, 1998 as the record date for
determining stockholders who are entitled to vote at the meeting. At the close
of business on April 1, 1998, there were outstanding and entitled to vote
66,640,035 shares of Common Stock of the Company, $.10 par value per share
("Common Stock"), and 286,378 shares of Class B Common Stock of the Company,
$.10 par value per share ("Class B Common Stock"). Each share of Common Stock
is entitled to one vote, and each share of Class B Common Stock is entitled to
ten votes.
THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1997 IS BEING
MAILED TO THE COMPANY'S STOCKHOLDERS WITH THIS NOTICE AND PROXY STATEMENT ON
OR ABOUT APRIL 21, 1998. THE COMPANY WILL, UPON WRITTEN REQUEST OF ANY
STOCKHOLDER, FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1997, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), WITHOUT EXHIBITS. PLEASE ADDRESS ALL SUCH
REQUESTS TO THE COMPANY, ATTENTION OF WALLACE A. CATALDO, VICE PRESIDENT--
FINANCE AND ADMINISTRATION, TEN CITY SQUARE, BOSTON, MASSACHUSETTS 02129.
EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE
PROCESSING FEE.
As used in this Proxy Statement, the terms "Keane" and the "Company" refer
to Keane, Inc. and its wholly-owned and majority-owned subsidiaries, unless
the context otherwise requires.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 1, 1998, the beneficial
ownership of the Company's outstanding Common Stock and Class B Common Stock
of (i) each person known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock and Class B Common Stock, (ii) each
executive officer named in the Summary Compensation Table under the heading
"Executive Compensation" below, and (iii) all current directors and executive
officers as a group:
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
---------------------------------------------------
SHARES PERCENTAGE
PERCENTAGE OF OF CLASS B
SHARES OF OF COMMON CLASS B COMMON PERCENTAGE
NAME AND ADDRESS OF COMMON STOCK OUT- COMMON STOCK OUT- OF TOTAL
BENEFICIAL OWNER STOCK STANDING STOCK STANDING VOTES
- ------------------- ---------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John F. Keane(2)........... 11,993,648 18.1% 267,800 93.5% 21.2%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Marilyn T. Keane(3)........ 11,993,648 18.1% 267,800 93.5% 21.2%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Putnam Investments,
Inc.(4).................... 8,381,369 12.7% -- -- 12.2%
One Post Office Square
Boston, MA 02109
FMR Corp.(5)............... 8,572,800 13.0% -- -- 12.5%
82 Devonshire Street
Boston, MA 02109
Edward Longo(6)............ 95,040 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Raymond W. Paris(7)........ 284,816 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John Francis Keane
Irrevocable Children's
Trusts;
John K. and Marilyn T.
Keane 1997
Children's Trusts(8)....... 4,124,143 6.2% 144,665 50.5% 8.1%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Brian T. Keane(9).......... 1,493,273 2.3% 48,221 16.9% 2.9%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John F. Keane, Jr.(10) .... 1,418,821 2.2% 48,221 16.9% 2.8%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
All directors and executive
officers as a group
(11 persons)(11).......... 13,182,299 19.8% 272,463 95.1% 22.9%
</TABLE>
2
<PAGE>
- --------
* Less than 1% of outstanding stock of the respective class, or less than 1%
of aggregate voting power, as the case may be.
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the SEC and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within 60 days of February 1, 1998 through the exercise of any stock
option or other right. The inclusion herein of such shares, however, does
not constitute an admission that the named stockholder is a direct or
indirect beneficial owner of such shares. Unless otherwise indicated,
each person or entity named in the table has sole voting power and
investment power (or shares such power with his or her spouse) with
respect to all shares of capital stock listed as owned by such person or
entity. All share numbers have been appropriately adjusted to reflect
stock splits that have been effected by the Company, including a two for
one stock split effected on August 29, 1997.
(2) Includes (i) 3,525,393 shares of Common Stock held of record by John F.
Keane and his wife, Marilyn T. Keane, as trustees of the John F. Keane
Qualified Annuity Trust, of which John F. Keane is the beneficiary, (ii)
3,525,393 shares of Common Stock held of record by John F. Keane and
Marilyn T. Keane as trustees of the Marilyn T. Keane Qualified Annuity
Trust, of which Marilyn T. Keane is the beneficiary, (iii) 174,607 shares
of Common Stock held of record by Marilyn T. Keane and (iv) 3,775,000
shares of Common Stock and 140,000 shares of Class B Common Stock held of
record by Marilyn T. Keane and one other individual as trustees of three
trusts of which John and Marilyn Keane's adult children are the
beneficiaries. With regard to the children's trusts shares, Marilyn T.
Keane and the other trustee have sole voting and investment power, but
disclaim any beneficial interest in such shares. John F. Keane disclaims
beneficial ownership of the shares specified in clauses (ii), (iii) and
(iv) above.
(3) Includes (i) 3,525,393 shares of Common Stock held of record by Marilyn
T. Keane and her husband, John F. Keane, as trustees of the John F. Keane
Qualified Annuity Trust, of which John F. Keane is a beneficiary, (ii)
3,525,393 shares of Common Stock held of record by Marilyn T. Keane and
John F. Keane as trustees of the Marilyn T. Keane Qualified Annuity
Trust, of which Marilyn T. Keane is a beneficiary, (iii) 993,255 shares
of Common Stock and 127,800 shares of Class B Common Stock held of record
by John F. Keane and (iv) 3,775,000 shares of Common Stock and 140,000
shares of Class B Common Stock held of record by Marilyn T. Keane and one
other individual as trustees of three trusts of which John and Marilyn
Keane's adult children are the beneficiaries. With regard to the
children's trusts shares, Marilyn T. Keane and the other trustee have
sole voting and investment power, but disclaim any beneficial interest in
such shares. Marilyn T. Keane disclaims beneficial ownership of the
shares specified in clauses (ii), (iii) and (iv) above.
(4) The information reported is based solely on a Schedule 13G, dated January
16, 1998, filed with the SEC by Putnam Investments, Inc.
(5) Represents (i) 5,750,300 shares of Common Stock beneficially owned by
Fidelity Management & Research Company ("FMRC"), as a result of its
serving as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940 and certain other
funds which are generally offered to limited groups of investors (the
"Fidelity Funds"), (ii) 2,454,500 shares of Common Stock beneficially
owned by Fidelity Management Trust Company ("FMTC"), as a result of its
serving as trustee or managing agent for various private investment
accounts, primarily employee benefit plans, and as investment adviser to
certain other funds which are generally offered to limited groups of
investors, and (iii) 368,000 shares of Common Stock beneficially owned by
Fidelity International Limited ("FIL"), as a result of its serving as
investment adviser to various non-U.S. investment companies. FMR Corp.,
through its control of FMRC, and the Fidelity Funds each has sole power
to dispose of the 5,750,300 shares of Common Stock owned by the Fidelity
Funds. FMR Corp. does not have the sole power to vote or direct the
voting of the shares of Common Stock owned directly by Fidelity Funds,
which power resides with the Fidelity Funds' Boards of Trustees. FMR
Corp., through its control of FMTC, has sole power to dispose of the
2,454,500 shares of Common Stock and sole power to vote or direct the
voting of 2,200,300 shares of Common Stock and no power to vote or direct
the voting of 254,200 shares of Common Stock owned by the institutional
account(s) indicated above. FIL has sole power to dispose of and to vote
or direct the voting of all the shares of Common Stock it beneficially
owns.
(6) Includes options to purchase, within 60 days following February 1, 1998,
34,668 shares of Common Stock held by Mr. Longo.
(7) Includes options to purchase, within 60 days following February 1, 1998,
84,668 shares of Common Stock held by Mr. Paris.
3
<PAGE>
(8) Marilyn T. Keane and one other trustee hold sole voting and investment
power with respect to the shares held by the John Francis Keane
Irrevocable Children's Trusts, but disclaim any beneficial interest
therein. Brian T. Keane and one other trustee hold sole voting and
investment power with respect to the shares held by the John F. and
Marilyn T. Keane 1997 Children's Trust for Benefit of Victoire K. Lang,
the sister of Messrs. Brian Keane and John F. Keane, Jr., but disclaim
any beneficial interest therein. John F. Keane, Jr. and one other trustee
hold sole voting and investment power with respect to the shares held by
the John F. and Marilyn T. Keane 1997 Children's Trust for Benefit of
Brian T. Keane, but disclaim any beneficial interest therein.
(9) Includes (i) options to purchase, within 60 days following February 1,
1998, 80,001 shares of Common Stock held by Mr. Brian Keane, (ii)
1,258,333 shares of Common Stock and 46,666 shares of Class B Common
Stock held by the John Francis Keane Irrevocable Trust for Benefit of
Brian T. Keane, of which Mr. Brian Keane is the beneficiary, and (iii)
124,381 shares of Common Stock and 1,555 shares of Class B Common Stock
held by the John F. and Marilyn T. Keane 1997 Children's Trust for
Benefit of Brian T. Keane, of which Mr. Brian Keane is the beneficiary.
(10) Includes options to purchase, within 60 days following February 1, 1998,
19,716 shares of Common Stock held by Mr. John F. Keane, Jr., (ii)
1,258,333 shares of Common Stock and 46,666 shares of Class B Common
Stock held by the John Francis Keane Irrevocable Trust for Benefit of Mr.
John F. Keane, Jr., of which Mr. John F. Keane, Jr. is the beneficiary,
and (iii) 124,381 shares of Common Stock and 1,555 shares of Class B
Common Stock held by the John F. and Marilyn T. Keane 1997 Children's
Trust for Benefit of John F. Keane, Jr., of which Mr. John F. Keane, Jr.
is the beneficiary.
(11) Includes options to purchase, within 60 days following February 1, 1998,
314,053 shares of Common Stock held by all directors and executive
officers as a group.
VOTES REQUIRED
The affirmative vote of the holders of a majority of the aggregate voting
power represented by the shares of Common Stock and Class B Common Stock,
voting together as a single class, present or represented at the meeting is
required for the election of directors. The affirmative vote of the holders of
a majority of the aggregate voting power of the shares of Common Stock and
Class B Common Stock outstanding is required for the approval of the proposed
amendment to the Company's Articles of Organization. The affirmative vote of
the holders of a majority of the aggregate voting power represented by the
shares of Common Stock and Class B Common Stock, voting together as a single
class, present or represented at the meeting is required for the approval of
each of the other matters which are to be submitted to the stockholders at the
meeting.
Shares of Common Stock and Class B Common Stock represented by executed
proxies received by the Company will be counted for purposes of establishing a
quorum at the meeting, regardless of how or whether such shares are voted on
any specific proposal. With respect to the required vote on any particular
matter, abstentions will be treated as shares present and represented, while
votes withheld by nominee recordholders who did not receive specific
instructions from the beneficial owners of such shares (so called "broker non-
votes") will not be treated as shares present or represented.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy (John F. Keane and Norman B. Asher)
will vote to fix the number of directors at seven and to elect as directors
the seven nominees named below, unless authority to vote for the election of
directors is withheld by marking the proxy to that effect or the proxy is
marked with the names of nominees as to whom authority to vote is withheld.
The proxy may not be voted for more than seven directors.
Each director will be elected to hold office until the next annual meeting
of stockholders and until his successor is duly elected and qualified. If a
nominee becomes unavailable, the persons acting under the proxy may vote the
proxy for the election of a substitute. The Company does not anticipate that
any of the nominees will be unavailable.
4
<PAGE>
The following table sets forth the name of each nominee for director and
each current director, the positions and offices held by him, his age, the
year in which he became a director of the Company (for current directors), his
principal occupation(s) and business experience for the past five years, the
number of shares of Common Stock and Class B Common Stock of the Company owned
by him at February 1, 1998, and the percentage of all outstanding shares of
Common Stock and Class B Common Stock owned by him on such date:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (1)(2)
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL
OCCUPATION, BUSINESS
EXPERIENCE AND YEAR PERCENTAGE SHARES OF PERCENTAGE
IN WHICH HE FIRST SHARES OF OF COMMON CLASS B OF CLASS B PERCENTAGE
BECAME A DIRECTOR COMMON STOCK COMMON COMMON STOCK OF TOTAL
(FOR CURRENT DIRECTORS) STOCK OUTSTANDING STOCK OUTSTANDING VOTES
----------------------- ---------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
CURRENT DIRECTORS
John F. Keane(3)........ 11,993,648 81.1% 267,800 93.5% 21.2%
Age 67. Chief Executive
Officer and President.
Mr. Keane has been
Chief Executive Officer
and President and a
director of the Company
since its incorporation
in 1967.
Philip J. Harkins....... 9,900 * -- -- *
Age 50. Mr. Harkins is
currently the President
and Chief Executive
Officer of Linkage,
Inc., an organizational
development company
founded by Mr. Harkins
in 1988. Prior to 1988,
Mr. Harkins was Vice
President of Human
Resources of the
Company. Mr. Harkins
has served as director
of the Company since
February 1997.
Winston Hindle.......... 6,668 * -- -- *
Age 67. Mr. Hindle is
currently retired. From
September 1962 to July
1994, Mr. Hindle served
as a Vice President
and, subsequently,
Senior Vice President
of Digital Equipment
Corporation, a computer
systems and services
firm. Mr. Hindle has
served as a director of
the Company since
February 1995.
John F. Rockart(4)...... 73,777 * -- -- *
Age 66. Dr. Rockart is
a Senior Lecturer of
the Center for
Information Systems
Research at the Alfred
J. Sloan School of
Management of the
Massachusetts Institute
of Technology. Dr.
Rockart became a Senior
Lecturer at the Center
in 1974 and was named
as the Director in
1976. Dr. Rockart has
served as a director of
the Company since its
incorporation in 1967.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL
OCCUPATION, BUSINESS PERCENTAGE SHARES OF PERCENTAGE
EXPERIENCE AND YEAR SHARES OF OF COMMON CLASS B OF CLASS B PERCENTAGE
IN WHICH HE FIRST COMMON STOCK COMMON COMMON STOCK OF TOTAL
BECAME A DIRECTOR STOCK OUTSTANDING STOCK OUTSTANDING VOTES
-------------------- --------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Robert A. Shafto........ 4,000 -- -- -- --
Age 62. Mr. Shafto is
the Chairman of New
England Financial, an
insurance and
investment firm
formerly known as New
England Life Insurance
Company, which he
joined in 1972. Mr.
Shafto has served as a
director of the Company
since February 1994.
NOMINEES NOT CURRENTLY
DIRECTORS
Brian T. Keane.......... 1,493,273 2.3% 48,221 16.9% 2.9%
Age 37. Mr. Brian Keane
is currently Executive
Vice President of the
Company and a member of
the Office of the
President. From
December 1996 until
September 1997, Mr.
Brian Keane was Senior
Vice President of the
Company, and, from
December 1994 to
December 1996, he was
Area Vice President in
the Information
Services Division. From
July 1992 to December
1994, Mr. Keane served
as an ISD Business Area
Manager of the Company.
Mr. Brian Keane is a
son of John F. Keane,
the founder, President,
Chief Executive Officer
and a director of the
Company, and the
brother of John F.
Keane, Jr.
John F. Keane, Jr. ..... 1,418,821 2.2% 48,221 16.9% 2.8%
Age 38. Mr. John Keane,
Jr. is currently
Executive Vice
President of the
Company and a member of
the Office of the
President. From
December 1996 until
September 1997, Mr.
John Keane, Jr. was
Senior Vice President
of the Company, and,
from December 1994 to
December 1996, he was
Area Vice President in
the Information
Services Division. From
July 1992 to December
1994, Mr. Keane served
as an ISD Business Area
Manager of the Company.
Mr. John Keane, Jr. is
a son of John F. Keane,
the founder, President,
Chief Executive Officer
and a director of the
Company, and the
brother of Brian T.
Keane.
</TABLE>
- --------
* Less than 1% of outstanding stock of the respective class, or less than 1%
of aggregate voting power, as the case may be.
(1) Mr. Hindle serves as a director of CP Clare Corporation and Mestek, Inc.
Dr. Rockart serves as a director of ComShare, Inc. Mr. Shafto serves as a
director of Fleet Bank of Massachusetts, N.A.
(2) Except as otherwise indicated, each nominee or director has sole voting
and investment power with respect to the shares of Common Stock and Class
B Common Stock listed.
6
<PAGE>
(3) Includes (i) 3,525,393 shares of Common Stock held of record by John F.
Keane and his wife, Marilyn T. Keane, as trustees of the John F. Keane
Qualified Annuity Trust, of which John F. Keane is the beneficiary, (ii)
3,525,393 shares of Common Stock held of record by John F. Keane and
Marilyn T. Keane as trustees of the Marilyn T. Keane Qualified Annuity
Trust, of which Marilyn T. Keane is the beneficiary, (iii) 174,607 shares
of Common Stock held of record by Marilyn T. Keane and (iv) 3,775,000
shares of Common Stock and 140,000 shares of Class B Common Stock held of
record by Marilyn T. Keane and one other individual as trustees of three
trusts of which John and Marilyn Keane's adult children are the
beneficiaries. With regard to the children's trusts shares, Marilyn T.
Keane and the other trustee have sole voting and investment power, but
disclaim any beneficial interest in such shares. John F. Keane disclaims
beneficial ownership of the shares specified in clauses (ii), (iii) and
(iv) above.
(4) Includes 30,680 shares of Common Stock (less than 1% of the aggregate
voting power) held of record by Dr. Rockart's wife. Dr. Rockart disclaims
any beneficial interest in such shares.
(5) Includes (i) options to purchase, within 60 days following February 1,
1998, 80,001 shares of Common Stock held by Mr. Brian Keane, (ii)
1,258,333 shares of Common Stock and 46,666 shares of Class B Common Stock
held by the John Francis Keane Irrevocable Trust for Benefit of Brian T.
Keane, of which Mr. Brian Keane is the beneficiary, and (iii) 124,381
shares of Common and 1,555 shares of Class B Common Stock held by the John
F. and Marilyn T. Keane 1997 Children's Trust for Benefit of Brian T.
Keane, of which Mr. Brian Keane is the beneficiary.
(6) Includes (i) options to purchase, within 60 days following February 1,
1998, 19,716 shares of Common Stock held by Mr. John F. Keane, Jr., (ii)
1,258,333 shares of Common Stock and 46,666 shares of Class B Common Stock
held by the John Francis Keane Irrevocable Trust for Benefit of Mr. John
F. Keane, Jr., of which Mr. John F. Keane, Jr. is the beneficiary, and
(iii) 124,381 shares of Common Stock and 1,555 shares of Class B Common
Stock held by the John F. and Marilyn T. Keane Children's Trust for
Benefit of John F. Keane, Jr., of which Mr. John F. Keane, Jr. is the
beneficiary.
The Company has a standing Audit Committee, comprised of Messrs. Keane,
Harkins, Hindle and Shafto and Dr. Rockart, which held two meetings during the
year ended December 31, 1997. The Audit Committee makes recommendations to the
Board of Directors relative to the appointment of the independent auditors,
reviews the scope and results of the independent audit, and establishes and
monitors policy relative to non-audit services provided by the independent
auditors in order to ensure that the auditors are in fact independent.
The Company has a standing Compensation Committee,comprised of Messrs.
Hindle and Shafto and Dr. Rockart, which held two meetings during the year
ended December 31, 1997. The Compensation Committee annually reviews and
approves the compensation of the Company's senior executives, administers the
Company's 1992 Stock Option Plan and 1992 Employee Stock Purchase Plan, and
will administer the Company's 1998 Stock Incentive Plan (the "1998 Plan"),
subject to its approval by the stockholders.
The Company does not have a standing nominating committee.
During the year ended December 31, 1997, the Board of Directors of the
Company held five meetings, including written actions in lieu of meetings.
Each of the directors attended at least 75% of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board on which he served, in each case
during the periods that he served.
DIRECTORS' COMPENSATION
Compensation of the Company's non-employee directors currently consists of
an annual director's fee of $4,000 plus $1,000 and expenses for each meeting
of the Board of Directors attended. Directors who are officers or employees of
the Company do not receive any additional compensation for their services as
directors.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the
Company for the three years ended December 31, 1997 (such executive officers
are sometimes collectively referred to herein as the "named executive
officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------- ----------------------------------
AWARDS PAYOUTS
-------------------------- -------
SECURITIES
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) AWARDS ($)(1) (#)(2) ($) ($)(3)
--------- ---- ------- ------ ------------ ------------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Keane........... 1997 390,446 -- -- -- -- -- 2,000
President and Chief 1996 363,850 -- -- -- -- -- 750
Executive Officer 1995 341,641 -- -- -- -- -- 2,329
Edward Longo............ 1997 300,039 75,000 -- -- 16,000 -- 2,000
Senior Vice President-- 1996 283,988 62,500 -- -- 32,000 -- 750
Information Services 1995 257,402 -- -- 20,650 48,000 -- 3,078
Division
Raymond W. Paris........ 1997 237,052 25,000 -- -- 8,000 -- 2,000
Vice President-- 1996 223,369 -- -- -- 20,000 -- 750
Healthcare Services 1995 198,117 -- -- -- 36,000 -- 2,917
Division
Brian T. Keane.......... 1997 210,758 60,000 -- -- 10,000 -- 2,000
Executive Vice 1996 180,488 50,000 -- -- 20,000 -- 750
President; member 1995 160,201 -- -- 20,650 20,000 -- 2,310
of the Office of the
President
John F. Keane, Jr. ..... 1997 209,598 60,000 -- -- 10,000 -- [--]
Executive Vice 1996 170,011 57,939 -- -- 20,000 -- [--]
President; member 1995 149,958 -- -- 15,563 20,000 -- [--]
of the Office of the
President
</TABLE>
- --------
(1) Shares of restricted stock vest in three equal annual installments
commencing on the first anniversary of the date of grant. As of December
31, 1997, the values of all such shares (whether vested or unvested) held
by each of Messrs. Longo, Brian Keane and John F. Keane, Jr. were
$162,520, $162,520 and $121,890, respectively.
(2) Options become exercisable in three equal installments commencing on the
second anniversary of the date of grant.
(3) "All Other Compensation" consists of contributions to the Company's 401(k)
Plan on behalf of each of the named executive officers.
8
<PAGE>
OPTION GRANTS DURING 1997
The following table sets forth the number of shares of the Company's Common
Stock underlying options granted, the exercise price per share and the
expiration date of all options granted to each of the named executive officers
during 1997:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
------------------------------------------------- RATES OF STOCK
PERCENT PRICE
NUMBER OF OF TOTAL APPRECIATION
SECURITIES OPTIONS/SARS EXERCISE OR FOR OPTION
UNDERLYING GRANTED TO BASE PRICE TERM(2)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION ---------------
EXECUTIVE OFFICER GRANTED(#)(1) FISCAL YEAR $/SH DATE 5% ($) 10% ($)
- ----------------- ------------- ------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John F. Keane........... -- -- -- -- -- --
Edward Longo............ 16,000 4.5% 15.06 1/27/02 179,840 397,440
Raymond W. Paris........ 8,000 2.2% 15.06 1/27/02 89,920 198,720
Brian T. Keane.......... 10,000 2.8% 15.06 1/27/02 112,400 248,400
John F. Keane, Jr....... 10,000 2.8% 15.06 1/27/02 112,400 248,400
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- --------
(1) Options become exercisable in three equal installments commencing on the
second anniversary of the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
options if exercised at the end of the option terms. These gains are based
on assumed rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted. Actual gains, if any,
on stock option exercises will depend on the future performance of the
Common Stock and the date on which the options are exercised.
9
<PAGE>
OPTION EXERCISES DURING 1997 AND YEAR END OPTION VALUES
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1997, by each of the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS/SARS AT MONEY OPTIONS/SARS
FISCAL YEAR END(#) AT FISCAL YEAR END ($)
SHARES ACQUIRED VALUE ------------------------------- ----------------------------
EXECUTIVE OFFICER ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ----------------- --------------- -------------- ------------------------------- ----------------------------
<S> <C> <C> <C> <C>
John F. Keane........... -- -- --/-- --/--
Edward Longo............ 36,000 449,800 --/96,000 --/3,218,400
Raymond W. Paris........ -- -- 66,000/52,000 2,469,180/1,747,720
Brian T. Keane.......... -- -- 61,667/48,333 2,299,528/1,600,822
John F. Keane, Jr....... 52,092 1,835,207 --/50,108 --/1,664,287
</TABLE>
- --------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(2) The closing price for the Company's Common Stock as reported by the
American Stock Exchange on December 31, 1997 (the last day of trading in
1997) was $40.63. Value is calculated on the basis of the difference
between the option exercise price and $40.63, multiplied by the number of
shares of Common Stock underlying the option.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is not aware of any executive officer, director or principal
stockholder who failed to comply with filing requirements under Section 16 of
the Securities Exchange Act of 1934 (the "Exchange Act") during the year ended
December 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Hindle and Shafto and Dr.
Rockart. No executive officer of the Company has served as a director or
member of the compensation committee (or other committee serving an equivalent
function) of any other entity, one of whose executive officers served as a
director or member of the Compensation Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Company's compensation policy for executive officers has been to offer
competitive compensation based on the individual's performance as well as the
overall performance of the Company. The Company's compensation program is
intended to attract and retain executives whose abilities are critical to the
long-term success and competitiveness of the Company.
The compensation of the Company's senior executives (other than the Chief
Executive Officer) is reviewed and approved annually by the Compensation
Committee based upon the recommendations of the Chief Executive
10
<PAGE>
Officer and the evaluation of the members of the Compensation Committee. Each
of the named executives regularly makes presentations to the Board of
Directors. As a result, the members of the Compensation Committee are
personally familiar with the performance of each senior executive. The key
components of executive compensation are salary, which is based on factors
such as the individual's level of responsibility in comparison to similar
positions in comparable companies in the industry, and stock option awards,
which are intended to align the interest of such individual with the Company's
long-term success as measured by the Company's share price and book value per
share.
The compensation of the Company's Chief Executive Officer is determined
annually by the Compensation Committee. The Chief Executive Officer's salary
in 1997 was based on a variety of factors including those described above and
a comparison of the compensation of the chief executive officers of comparable
companies in the industry. Mr. Keane did not participate in any decisions
regarding his own compensation. The Compensation Committee believes that,
although the compensation of the Chief Executive Officer is not directly
related to financial performance, his compensation may be more modest than
that paid to comparable industry executives. In addition, the Compensation
Committee did not award any equity-based incentive compensation to the Chief
Executive Officer, recognizing that the size of the stock interest in the
Company controlled directly and indirectly by Mr. Keane and his wife provides
sufficient motivation.
In 1997, the Compensation Committee obtained information about compensation
levels in businesses similar to those of the Company in size and scope. The
Compensation Committee expects that compensation levels will continue to
depend primarily on each individual's personal performance as well as on the
overall performance of the Company.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Board of Directors has voted,
subject to stockholder approval, to structure the 1998 Plan in a manner that
complies with Section 162(m) of the Code (see "APPROVAL OF 1998 STOCK
INCENTIVE PLAN" below), and is currently considering whether to structure
other compensation arrangements in a manner that complies with the statute.
Winston R. Hindle, Jr. John F. Rockart Robert A. Shafto
11
<PAGE>
STOCK PERFORMANCE CHART
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 1997 with the cumulative total return on (i) the Standard &
Poor's 500 Composite Index and (ii) a peer group index* selected by the
Company which includes six publicly traded companies within the Company's
industry. The comparison assumes $100 was invested on December 31, 1992 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- -----------------------------------FISCAL YEAR ENDING--------------------------
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
KEANE INC 100 154.21 203.37 189.45 543.74 1,391.46
PEER GROUP 100 117.94 177.32 266.70 339.88 391.16
BROAD MARKET 100 110.08 111.54 153.45 188.69 251.64
</TABLE>
CERTAIN RELATED PARTY TRANSACTIONS
In February 1985, the Company entered into a lease, which subsequently was
extended to a term of 20 years, with City Square, pursuant to which the
Company leased approximately 34,000 square feet of office and development
space in a building located in Boston, Massachusetts. The Company now leases
approximately 88% of this building and the remaining 12% is occupied by other
tenants. John F. Keane, Chief Executive Officer, President and a director of
the Company, Wallace A. Cataldo, the Vice President-Finance and Administration
of the Company, and Philip J. Harkins, a director of the Company, are limited
partners of City Square. Based upon its knowledge of rental payments for
comparable facilities in the Boston area, the Company believes that the rental
payments under this lease, which will be approximately $850,000 per year
($25.00 per square foot) for the remainder of the lease term (until February
2006), plus specified percentages of any annual increases in real estate taxes
and operating expenses, were, at the time the Company entered into the lease,
as favorable to the Company as those which could have been obtained from an
independent third party.
12
<PAGE>
INCREASE IN SHARES OF AUTHORIZED COMMON STOCK
On February 19, 1998, the Board of Directors unanimously voted to recommend
to the stockholders that the Company's Articles of Organization be amended in
order to increase the authorized Common Stock from 100,000,000 shares to
200,000,000 shares (the "Amendment"). As of March 13, 1998, the Company had a
total of 66,386,367 shares of Common Stock outstanding, 4,908,996 shares
reserved for issuance pursuant to the Company's stock option and stock benefit
plans and agreements, and 286,378 shares reserved for issuance upon conversion
of the Company's Class B Common Stock.
If the Amendment is approved, the additional authorized shares of Common
Stock would be available for issuance in the future for such corporate
purposes, including, without limitation financings, acquisitions, stock
splits, stock dividends and management incentive and employee benefit plans,
as the Board may deem advisable, without the necessity of further stockholder
action. Holders of the Common Stock and Class B Common Stock have no
preemptive rights with respect to any shares which may be issued in the
future.
The Amendment may also have the effect of discouraging an attempt to obtain
control of the Company by means of a merger, tender offer, proxy contest or
otherwise, and thereby protect the continuity of present management. If the
Amendment is approved, the Board will have additional shares of Common Stock
available to effect a sale of shares (either in public or private
transactions, mergers, consolidations or similar transactions), in which case
the number of the Company's outstanding shares would be increased and would
thereby dilute the interest of a party attempting to obtain control of the
Company.
There are no current plans, arrangements or understandings with regard to the
issuance of the shares to be authorized by the Amendment.
BOARD RECOMMENDATION
The Board of Directors believes that the Amendment is in the best interests
of the Company and its stockholders and therefore recommends that the
stockholders vote FOR the Amendment.
APPROVAL OF 1998 STOCK INCENTIVE PLAN
On February 19, 1998, the Board of Directors of the Company adopted, subject
to stockholder approval, the 1998 Plan. Up to 2,000,000 shares of Common Stock
(subject to adjustment in the event of stock splits and other similar events)
may be issued pursuant to awards granted under the 1998 Plan.
The 1998 Plan is intended to replace the Company's 1992 Stock Option Plan
(the "1992 Plan"), which expires by its terms on February 27, 2002. As of
March 13, 1998, options to purchase 1,957,747 shares of Common Stock were
outstanding under the 1992 Plan and an additional 250,248 shares were reserved
for future option grants. If the 1998 Plan is approved by stockholders, all
then outstanding options under the 1992 Plan will remain in effect, but no
additional option grants may be made under the 1992 Plan.
BOARD RECOMMENDATION
The Board of Directors believes that the future success of the Company
depends, in large part, upon the ability of the Company to maintain a
competitive position in attracting, retaining and motivating key personnel.
Accordingly, the Board of Directors believes adoption of the 1998 Plan is in
the best interests of the Company and its stockholders and recommends a vote
FOR this proposal.
13
<PAGE>
SUMMARY OF THE 1998 PLAN
The following is a brief summary of the 1998 Plan.
Description of Awards
The 1998 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code, nonstatutory stock options, restricted
stock awards and other stock-based awards, including the grant of shares based
upon certain conditions, the grant of securities convertible into Common Stock
and the grant of stock appreciation rights (collectively "Awards"). Generally,
Awards under the 1998 Plan are not assignable or transferable except by will
or the laws of descent and distribution and, in the case of nonstatutory
options, pursuant to a qualified domestic relations order (as defined in the
Code).
Incentive Stock Options and Nonstatutory Stock Options. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. Subject to the limitations
described below, options may be granted at an exercise price which may be less
than, equal to or greater than the fair market value of the Common Stock on
the date of grant. Under present law, however, incentive stock options and
options intended to qualify as performance-based compensation under Section
162(m) of the Code may not be granted at an exercise price less than the fair
market value of the Common Stock on the date of grant (or less than 110% of
the fair market value in the case of incentive stock options granted to
optionees holding more than 10% of the voting power of the Company). Options
may not be granted for a term in excess of ten years. The 1998 Plan permits
the administrator to determine the manner of payment of the exercise price of
options, including through payment by cash, check or in connection with a
"cashless exercise" through a broker, by surrender to the Company of shares of
Common Stock, by delivery to the Company of a promissory note, or by any other
lawful means.
Restricted Stock Awards. Restricted stock Awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the
end of the applicable restriction period established for such Award.
Other Stock-Based Awards. Under the 1998 Plan, the Board of Directors has
the right to grant other Awards based upon the Common Stock having such terms
and conditions as the Board may determine, including the grant of shares based
upon certain conditions, the grant of securities convertible into Common Stock
and the grant of stock appreciation rights.
Eligibility to Receive Awards
Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to be granted Awards under the 1998 Plan. Under
present law, however, incentive stock options may only be granted to
employees. The maximum number of shares with respect to which an Award may be
granted to any participant under the 1998 Plan may not exceed 350,000 shares
per calendar year.
As of March 13, 1998, approximately 8,012 persons were eligible to receive
Awards under the 1998 Plan, including the Company's nine executive officers
and four non-employee directors. The granting of Awards under the 1998 Plan is
discretionary, and the Company cannot now determine the number or type of
Awards to be granted in the future to any particular person or group.
14
<PAGE>
On March 13, 1998, the last reported sale price of the Company Common Stock
on the American Stock Exchange was $46.13.
Administration
The 1998 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 1998 Plan and to interpret the provisions of the
1998 Plan. Pursuant to the terms of the 1998 Plan, the Board of Directors may
delegate authority under the 1998 Plan to one or more committees of the Board,
and subject to certain limitations, to one or more executive officers of the
Company. Subject to any applicable limitations contained in the 1998 Plan, the
Board of Directors, or any committee or executive officer to whom the Board
delegates authority, as the case may be, selects the recipients of Awards and
determines the terms of each Award, including (i) the number of shares of
Common Stock covered by options and the dates upon which such options become
exercisable, (ii) the exercise price of options, (iii) the duration of
options, and (iv) the number of shares of Common Stock subject to any
restricted stock or other stock-based Awards and the terms and conditions of
such Awards, including conditions for repurchase, issue price and repurchase
price.
The Board of Directors may, in its sole discretion, include additional
provisions in any Award granted or made under the 1998 Plan, including without
limitation restrictions on transfer, repurchase rights, commitments to pay
cash bonuses, to make, arrange for or guaranty loans or to transfer other
property to optionees upon exercise of options, or such other provisions as
shall be determined by the Board of Directors, so long as not inconsistent
with the 1998 Plan or applicable law. The Board of Directors may also, in its
sole discretion, accelerate or extend the date or dates on which all or any
particular option or options granted under the 1998 Plan may be exercised.
The Board of Directors is required to make appropriate adjustments in
connection with the 1998 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Acquisition Event (as defined in the 1998 Plan), the
Board of Directors is authorized to provide for outstanding options or other
stock-based Awards to be assumed or substituted for, to accelerate the Awards
to make them fully exercisable prior to consummation of the Acquisition Event
or to provide for a cash out of the value of any outstanding options. If any
Award expires or is terminated, surrendered, canceled or forfeited, the unused
shares of Common Stock covered by such Award will again be available for grant
under the 1998 Plan.
Amendment or Termination
No Award may be made under the 1998 Plan after February 19, 2008, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 1998 Plan or any portion thereof at
any time, provided that no amendment shall be made without stockholder
approval if such approval is necessary to comply with any applicable tax or
regulatory requirement.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under
the 1998 Plan and with respect to the sale of Common Stock acquired under the
1998 Plan.
15
<PAGE>
Incentive Stock Options
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will
recognize taxable income with respect to an incentive stock option only upon
the sale of Common Stock acquired through the exercise of the option ("ISO
Stock"). The exercise of an incentive stock option, however, may subject the
participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least
two years from the date the option was granted (the "Grant Date") and one year
from the date the option was exercised (the "Exercise Date"), then the
participant will recognize long-term capital gain in an amount equal to the
excess of the sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of
the gain recognized by the participant will be ordinary compensation income
and the remaining gain, if any, will be a capital gain. This capital gain will
be a long-term capital gain if the participant has held the ISO Stock for more
than one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a long-
term capital loss if the participant has held the ISO Stock for more than one
year prior to the date of sale.
Nonstatutory Stock Options
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation
income in an amount equal to the excess of the fair market value of the Common
Stock acquired through the exercise of the option ("NSO Stock") on the
Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will
be a long-term gain or loss if the participant has held the NSO Stock for more
than one year prior to the date of the sale.
Restricted Stock Awards
A participant will not recognize taxable income upon the grant of a
restricted stock Award, unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary income, for the year in which the Award is
granted, in an amount equal to the difference between the fair market value of
the Common Stock at the time the Award is granted and the purchase price paid
for the Common Stock. If a Section 83(b) Election is not made, then the
participant will recognize ordinary compensation income, at the time that the
forfeiture provisions or restrictions on transfer lapse, in an amount equal to
the difference between the fair market value of the Common Stock at the time
of such lapse and the original purchase price paid for the Common Stock. The
participant will have a tax basis in the Common Stock acquired equal to the
sum of the price paid and the amount of ordinary compensation income
recognized.
16
<PAGE>
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to
the difference between the sale price of the Common Stock and the
participant's tax basis in the Common Stock. The gain or loss will be a long-
term gain or loss if the shares are held for more than one year. For this
purpose, the holding period shall begin just after the date on which the
forfeiture provisions or restrictions lapse if a Section 83(b) Election is not
made, or just after the Award is granted if a Section 83(b) Election is made.
Other Stock-Based Awards
The tax consequences associated with any other stock-based Award granted
under the 1998 Plan will vary depending on the specific terms of such Award.
Among the relevant factors are whether or not the Award has a readily
ascertainable fair market value, whether or not the Award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property
to be received by the participant under the Award and the participant's
holding period and tax basis for the Award or underlying Common Stock.
Tax Consequences to the Company
The grant of an Award under the 1998 Plan will have no tax consequences to
the Company. Moreover, in general, neither the exercise of an incentive stock
option nor the sale of any Common Stock acquired under the 1998 Plan will have
any tax consequences to the Company. The Company generally will be entitled to
a business-expense deduction, however, with respect to any ordinary
compensation income recognized by a participant under the 1998 Plan, including
in connection with a restricted stock Award or as a result of the exercise of
a nonstatutory stock option or a Disqualifying Disposition. Any such deduction
will be subject to the limitations of Section 162(m) of the Code.
SELECTION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors has
selected the firm of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as the
Company's independent accountants for the year ending December 31, 1998. If
the stockholders do not ratify the selection of Coopers & Lybrand, the Board
of Directors will reconsider the matter.
On October 24, 1996, the Company dismissed Coopers & Lybrand as its
independent auditors and engaged Ernst & Young LLP ("Ernst & Young") to fill
such position. The decision to change accountants was made by the Board of
Directors of the Company. None of the reports of Coopers & Lybrand on the
financial statements of the Company for either of the past two fiscal years
contained an adverse opinion or a disclaimer of opinion, or was qualified or
modified as to uncertainly, audit scope or accounting principles. During the
Company's two most recent fiscal years and the subsequent interim period
immediately preceding the date of the dismissal of Coopers & Lybrand, the
Company had no disagreements with Coopers & Lybrand on any matter of
accounting principles of practices, financial statement disclosure or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of Coopers & Lybrand, would have caused Coopers & Lybrand to make a reference
to the subject matter of the disagreement in connection with its reports on
the financial statements of the Company. None of the reportable events listed
in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act occurred with
respect to the Company's two most recent fiscal years or the subsequent
interim period preceding the dismissal of Coopers & Lybrand.
17
<PAGE>
Prior to making the decision to retain Ernst & Young, the Company had
consulted with Ernst & Young concerning certain tax matters. However, neither
the Company nor anyone on its behalf consulted Ernst & Young regarding the
application of accounting principles to a specific completed or contemplated
transaction, or the type of audit opinion that might be rendered on the
Company's financial statements, and no written or oral advice concerning the
same was provided to the Company that was an important factor considered by
the Company in reaching a decision as to any accounting, auditing or financial
reporting issue.
On December 16, 1996, Ernst & Young informed the Company that it was
resigning as the Company's independent auditors, and the Company engaged
Coopers & Lybrand to fill such position. The reason given by Ernst & Young for
its resignation was the existence of certain mutual business opportunities on
which both Ernst & Young and the Company desire to collaborate which would
affect Ernst & Young's independence with respect to the Company. The decision
to engage Coopers & Lybrand was made by the Board of Directors of the Company.
During the period in which Ernst & Young served as the Company's independent
auditors, Ernst & Young issued no reports on the financial statements of the
Company. During the Company's two most recent fiscal years and the subsequent
interim period immediately preceding the date of the resignation of Ernst &
Young, the Company had no disagreements with Ernst & Young on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of Ernst & Young, would have caused Ernst & Young to make a reference to the
subject matter of the disagreement in connection with any report on the
financial statements of the Company had any report been issued. None of the
reportable events listed in Item 304(a)(1)(v) of Regulation S-K under the
Exchange Act occurred during the period Ernst & Young served as the Company's
auditors.
During the period in which Ernst & Young served as the Company's independent
auditors, neither the Company nor anyone on its behalf consulted Coopers &
Lybrand regarding the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered on the Company's financial statements, and no written or oral
advice concerning the same was provided to the Company that was an important
factor considered by the Company in reaching a decision as to any accounting,
auditing or financial reporting issue.
Representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting of Stockholders. They will have an opportunity to make a
statement if they desire to do so, and will also be available to respond to
appropriate questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to
the meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and the Company will reimburse them for
reasonable out-of-pocket expenses in connection with the distribution of proxy
solicitation material.
18
<PAGE>
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal
office in Boston, Massachusetts not later than December 22, 1998 for inclusion
in the proxy statement for that meeting.
By order of the Board of Directors,
Norman B. Asher,
Clerk
April 21, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. YOUR PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING, AND WE APPRECIATE YOUR
COOPERATION.
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APPENDIX 1
KEANE, INC. 1998 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1998 Stock Incentive Plan (the "Plan") of Keane, Inc., a
Massachusetts corporation (the "Company"), is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain
and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except
where the context otherwise requires, the term "Company" shall include any
present or future subsidiary corporations of Keane, Inc. as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock awards, or other
stock-based awards (each, an "Award") under the Plan. Each person who has been
granted an Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) Administration by Board of Directors. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem
advisable. The Board may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the extent it
shall deem expedient to carry the Plan into effect and it shall be the sole
and final judge of such expediency. All decisions by the Board shall be made
in the Board's sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award. No director or
person acting pursuant to the authority delegated by the Board shall be liable
for any action or determination relating to or under the Plan made in good
faith.
(b) Delegation to Executive Officers. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company
the power to make Awards and exercise such other powers under the Plan as the
Board may determine, provided that the Board shall fix the maximum number of
shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). The Board shall
appoint one such Committee of not less than two members, each member of which
shall be an "outside director" within the meaning of Section 162(m) of the
Code and a "non-employee director" as defined in Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 (the "Exchange Act"). All references in
the Plan to the "Board" shall mean the Board or a Committee of the Board or
the executive officer referred to in Section 3(b) to the extent that the
Board's powers or authority under the Plan have been delegated to such
Committee or executive officer.
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4. STOCK AVAILABLE FOR AWARDS
(a) Number of Shares. Subject to adjustment under Section 8, Awards may be
made under the Plan for up to 2,000,000 shares of the common stock, $.10 par
value per share, of the Company (the "Common Stock"). If any Award expires or
is terminated, surrendered or canceled without having been fully exercised or
is forfeited in whole or in part or results in any Common Stock not being
issued, the unused Common Stock covered by such Award shall again be available
for the grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 8, the
maximum number of shares of Common Stock with respect to which an Award may be
granted to any Participant under the Plan shall be [350,000] per calendar
year. The per-Participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code.
5. STOCK OPTIONS
(a) General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive
Stock Option (as hereinafter defined) shall be designated a "Nonstatutory
Stock Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) which is intended to be
an Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price at the time
each Option is granted and specify it in the applicable option agreement.
(d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the
applicable option agreement; provided, however, that no Option may be granted
for a term in excess of ten years.
(e) Exercise of Options. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(i) in cash or by check, payable to the order of the Company;
(ii) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, (A) by delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (B) by delivery by the
Participant to the Company
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of a copy of irrevocable and unconditional instructions to a creditworthy
broker to deliver promptly to the Company cash or a check sufficient to pay
the exercise price;
(iii) to the extent permitted by the Board and expressly provided in an
option agreement, by delivery of shares of Common Stock owned by the
Participant valued at their fair market value as determined by (or in a
manner approved by ) the Board in good faith ("Fair Market Value"), which
Common Stock was owned by the Participant at least twelve months prior to
such delivery;
(iv) to the extent permitted by the Board, in its sole discretion, and
expressly provided in an option agreement, (A) by delivery of a promissory
note of the Participant to the Company on terms determined by the Board, or
(B) by payment of such other lawful consideration as the Board may
determine; or
(v) by any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all
or part of such shares at their issue price or other stated or formula price
(or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and conditions
of any such Restricted Stock Award, including the conditions for repurchase
(or forfeiture) and the issue price, if any. Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company
(or its designee). At the expiration of the applicable restriction periods,
the Company (or such designee) shall deliver the certificates no longer
subject to such restrictions to the Participant or if the Participant has
died, to the beneficiary designated, in a manner determined by the Board, by a
Participant to receive amounts due or exercise rights of the Participant in
the event of the Participant's death (the "Designated Beneficiary"). In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including
the grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this
Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the
number and class of securities and exercise price per share subject to each
outstanding Option, (iv) the repurchase price per share subject to each
outstanding Restricted Stock Award, and (v) the terms of each other
outstanding Award shall be appropriately adjusted by the Company (or
substituted Awards may be made, if
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applicable) to the extent the Board shall determine, in good faith, that such
an adjustment (or substitution) is necessary and appropriate. If this Section
8(a) applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
(b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation
or dissolution on any Restricted Stock Award or other Award granted under the
Plan at the time of the grant of such Award.
(c) Acquisition Events
(1) Definition. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property or (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a statutory
share exchange transaction.
(2) Consequences of an Acquisition Event on Options. Upon the occurrence
of an Acquisition Event, or the execution by the Company of any agreement
with respect to an Acquisition Event, the Board may take any one or more of
the following actions:
(i) provide that outstanding Options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any options
substituted for Incentive Stock Options shall satisfy, in the
determination of the Board, the requirements of Section 424(a) of the
Code;
(ii) upon written notice to the Participants, provide that all then
unexercised Options will become exercisable in full as of a specified
time (the "Acceleration Time") prior to the Acquisition Event and will
terminate immediately prior to the consummation of such Acquisition
Event, except to the extent exercised by the Participants before the
consummation of such Acquisition Event;
(iii) in the event of an Acquisition Event under the terms of which
holders of Common Stock will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered pursuant to such
Acquisition Event (the "Acquisition Price"), provide that all
outstanding Options shall terminate upon consummation of such
Acquisition Event and each Participant shall receive, in exchange
therefor, a cash payment equal to the amount (if any) by which (A) the
Acquisition Price multiplied by the number of shares of Common Stock
subject to such outstanding Options (to the extent then exercisable),
exceeds (B) the aggregate exercise price of such Options; and
(iv) provide that all or any outstanding Options shall become
exercisable in full immediately prior to such event.
(3) Consequences of an Acquisition Event on Restricted Stock Awards. Upon
the occurrence of an Acquisition Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award shall inure to
the benefit of the Company's successor and shall apply to the cash,
securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in the same manner and to
the same extent as they applied to the Common Stock subject to such
Restricted Stock Award.
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(4) Consequences of an Acquisition Event on Other Awards. The Board shall
specify the effect of an Acquisition Event on any other Award granted under
the Plan at the time of the grant of such Award.
9. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable
only by the Participant. References to a Participant, to the extent relevant
in the context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced by a written instrument in
such form as the Board shall determine. Such written instrument may be in the
form of an agreement signed by the Company and the Participant or a written
confirming memorandum to the Participant from the Company. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms
of each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law
to be withheld in connection with Awards to such Participant no later than the
date of the event creating the tax liability. Except as the Board may
otherwise provide in an Award, Participants may satisfy such tax obligations
in whole or in part by delivery of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their Fair
Market Value. The Company may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be
required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
Without intending to limit the generality of the preceding sentence, the Board
may, without amending the Plan, modify Awards granted to Participants who are
foreign nationals or employed outside the United States to recognize
differences in laws, rules, regulations or customs of such foreign
jurisdiction with respect to tax, securities, currency, employee benefits or
other matters.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been
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satisfied, including any applicable securities laws and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has
executed and delivered to the Company such representations or agreements as
the Company may consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
(h) Acceleration. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions
or conditions, or otherwise realizable in full or in part, as the case may be.
10. MISCELLANEOUS
(a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right
at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the close of
business on the record date for such stock dividend and the close of business
on the distribution date for such stock dividend shall be entitled to receive,
on the distribution date, the stock dividend with respect to the shares of
Common Stock acquired upon such Option exercise, notwithstanding the fact that
such shares were not outstanding as of the close of business on the record
date for such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award granted to a
Participant designated as subject to Section 162(m) by the Board shall become
exercisable, vested or realizable, as applicable to such Award, unless and
until the Plan has been approved by the Company's stockholders. No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's stockholders, but Awards
previously granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that, to the extent required by
Section 162(m), no Award granted to a Participant designated as subject to
Section 162(m) by the Board after the date of such amendment shall become
exercisable, realizable or vested, as applicable to such Award (to the extent
that such amendment to the Plan was required to grant such Award to a
particular Participant), unless and until such amendment shall have been
approved by the Company's stockholders.
(e) Stockholder Approval. For purposes of this Plan, stockholder approval
shall mean approval by a vote of the stockholders in accordance with the
requirements of Section 162(m) of the Code.
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(f) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts without regard to any applicable conflicts of
law.
Adopted by the Board of Directors
on February 19, 1998.
Approved by the Company's Stockholders
on , 1998.
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DETACH HERE
KEANE, INC.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 27, 1998
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned, revoking all prior proxies, hereby appoints John F.
X Keane and Norman B. Asher, and each of them, with full power of
Y substitution, as Proxies to represent and vote as designated hereon all
shares of stock of Keane, Inc. (the "Company") which the undersigned would
be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 27, 1998, at 4:30
p.m., Boston Time, at the Harvard Club, One Federal Street, Boston,
Massachusetts and at any adjournment thereof with respect to the matters
set forth on the reverse side hereof.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POST-PAID
RETURN ENVELOPE.
----------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
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<PAGE>
DETACH HERE
[X]Please mark
votes as in
this example.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS SET
FORTH BELOW.
1. To fix the number of directors at seven and to elect a Board of Directors
for the ensuing year.
NOMINEES: John F. Keane, Philip J. Harkins, Winston Hindle, Brian T. Keane,
John F. Keane, Jr., John F. Rockart and Robert A. Shafto
FOR WITHHELD
[_] [_]
MARK HERE
FOR ADDRESS
CHANGE AND
[_]_________________________________________ NOTE BELOW
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To approve an amendment to the Company's [_] [_] [_]
Articles of Organization increasing the
number of shares of Common Stock which
the Company is authorized to issue from
100,000,000 to 200,000,000.
FOR AGAINST ABSTAIN
3. To approve the Company's 1998 Stock [_] [_] [_]
Incentive Plan.
FOR AGAINST ABSTAIN
4. To ratify and approve the selection by the [_] [_] [_]
Board of Directors of Coopers & Lybrand
L.L.P. as the Company's independent
accountants for the current year.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should add their titles.
Signature_________________________________ Date________________________________
Signature_________________________________ Date________________________________
