<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 Section 240.14a-11(c) or Section 240.14a-12
Keane, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Keane, Inc.
- --------------------------------------------------------------------------------
(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:
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Notes:
<PAGE>
KEANE, INC.
Ten City Square
Boston, Massachusetts 02129
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On December 2, 1999
----------------
A Special Meeting of Stockholders of Keane, Inc. (the "Company") will be
held on Thursday, December 2, 1999 at 4:30 p.m., Boston Time, at the offices
of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, to consider and
act upon the following matters:
1. To approve an amendment to the Company's 1998 Stock Incentive Plan to
increase the number of shares of the Company's Common Stock authorized for
issuance thereunder from 2,000,000 to 7,000,000; and
2. 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 October 22, 1999 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
Boston, Massachusetts
October 29, 1999
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 SPECIAL MEETING OF STOCKHOLDERS
To Be Held On December 2, 1999
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Keane, Inc. ("Keane" or the "Company")
for use at a Special Meeting of Stockholders to be held on December 2, 1999,
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 or by voting in person at the Special Meeting.
The Board of Directors has fixed October 22, 1999 as the record date for
determining stockholders who are entitled to vote at the meeting. At the close
of business on October 22, 1999, there were outstanding and entitled to vote
71,555,266 shares of Common Stock of the Company, $.10 par value per share
("Common Stock"), and 285,163 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 Notice of Meeting, this Proxy Statement and the enclosed proxy are first
being sent or given to stockholders on or about October 29, 1999.
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 September 30, 1999 (or such other date
as is set forth in the footnotes below), 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 director, (iii)
each executive officer named in the Summary Compensation Table under the
heading "Executive Compensation" below, and (iv) all current directors and
executive officers as a group:
<PAGE>
Amount and Nature of Beneficial Ownership(1)
<TABLE>
<CAPTION>
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)........... 11,463,031 16.1% 267,800 93.9% 19.1%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Marilyn T. Keane(3)........ 11,463,031 16.1% 267,800 93.9% 19.1%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Edward Longo(4)............ 110,042 * -- -- *
c/o Renaissance
189 Wells Avenue
Newton, MA 02459
Raymond W. Paris(5)........ 270,381 * -- -- *
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(6)....... 3,704,143 5.2% 144,665 50.7% 6.9%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Brian T. Keane(7).......... 1,415,282 2.0% 48,221 16.9% 2.6%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John F. Keane, Jr.(8)...... 1,292,609 1.8% 48,221 16.9% 2.4%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John F. Rockart............ 41,149 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Robert A. Shafto........... 12,000 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
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>
Philip J. Harkins......... 9,900 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Winston Hindle............ 14,000 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
All directors and
executive officers as a
group (11 persons) (9)... 12,598,916 17.6% 272,463 95.5% 20.6%
</TABLE>
- --------
* Less than 1% of outstanding stock of the respective class, or less than 1%
of aggregate voting power, as the case may be. Except as otherwise
indicated, each individual or entity has sole voting and investment power
with respect to the shares of Common Stock and Class B Common Stock listed.
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission ("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 September
30, 1999 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.
(2) Includes (i) 3,086,747 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)
3,086,747 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) 613,636 shares
of Common Stock held of record by Marilyn T. Keane, and (iv) 3,524,000
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) 3,086,747 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)
3,086,747 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) 1,159,981 shares
of Common Stock and 127,800 shares of Class B Common Stock held of record
by John F. Keane, and (iv) 3,524,000 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 (i), (iii) and (iv) above.
(4) Mr. Longo ceased to serve as an executive officer of the Company on July
16, 1999.
(5) Includes options to purchase, within 60 days following September 30, 1999,
53,254 shares of Common Stock held by Mr. Paris.
(6) 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.
(7) Includes (i) options to purchase, within 60 days following September 30,
1999, 44,168 shares of Common Stock held by Mr. Brian Keane, (ii)
1,137,330 shares of Common Stock and 46,666 shares of Class B Common Stock
held by the John Francis Keane Irrevocable
3
<PAGE>
Trust for Benefit of Brian T. Keane, of which Mr. Brian Keane is the
beneficiary, and (iii) 105,381 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.
(8) Includes options to purchase, within 60 days following September 30, 1999,
24,562 shares of Common Stock held by Mr. John F. Keane, Jr., (ii)
1,193,330 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) 49,381 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.
(9) Includes options to purchase, within 60 days following September 30, 1999,
145,193 shares of Common Stock held by all directors and executive
officers as a group.
Votes Required
The holders of a majority of the aggregate voting power represented by the
shares of Common Stock and Class B Common Stock, issued and outstanding and
entitled to vote at the meeting, together as a single class, shall constitute
a quorum for transacting business at the meeting. The shares of Common Stock
and Class B Common Stock present in person or 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.
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 proposed amendment to the 1998 Stock Incentive Plan (the
"1998 Plan") to be submitted to the stockholders at the meeting.
In determining whether the proposal to approve the amendment to the 1998
Plan has received the requested number of votes, 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.
4
<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, 1998 (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
----------------------- -------
Number of
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Awards Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($)(1) (1) ($) ($)(2)
--------- ---- ------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Keane 1998 428,961 -- -- -- -- -- 2,000
President and Chief 1997 390,446 -- -- -- -- -- 2,000
Executive Officer 1996 363,850 -- -- -- -- -- 750
Edward Longo(3) 1998 347,934 141,700 -- -- 20,000 -- 2,000
Senior Vice President-- 1997 300,039 75,000 -- -- 16,000 -- 2,000
Information Services 1996 283,988 62,500 -- -- 32,000 -- 750
Division
Brian T. Keane 1998 308,472 105,000 -- -- 30,000 -- 2,000
Executive Vice 1997 210,758 60,000 -- -- 10,000 -- 2,000
President; member of 1996 180,488 50,000 -- -- 20,000 -- 750
the Office of the
President
John F. Keane, Jr 1998 308,472 105,000 -- -- 30,000 -- 1,412
Executive Vice 1997 209,598 60,000 -- -- 10,000 -- --
President; member of 1996 170,011 57,939 -- -- 20,000 -- --
the Office of the
President
Raymond W. Paris 1998 255,790 80,000 -- -- 5,000 -- 2,000
Vice President-- 1997 237,052 25,000 -- -- 8,000 -- 2,000
Healthcare Services 1996 223,369 -- -- -- 20,000 -- 750
Division
</TABLE>
- --------
(1) Options become exercisable in three/four equal installments commencing on
the first/second anniversary of the date of grant.
(2) "All Other Compensation" consists of contributions to the Company's 401(k)
Plan on behalf of each of the named executive officers.
(3) Mr. Longo ceased serve as an executive office of the Company on July 16,
1999.
5
<PAGE>
Option Grants During 1998
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 1998:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------
Potential Realizable
Percent Value at Assumed
Number of of Total Annual Rates of Stock
Securities Options/SARs Exercise or Price Appreciation
Underlying Granted to Base Price for Option Term(2)
Options Employees in Per Share Expiration ----------------------
Executive Officer Granted(1) Fiscal Year $/Sh Date 10% ($)
- ----------------- ---------- ------------ ----------- ---------- 5% ($) -----------
<S> <C> <C> <C> <C> <C> <C>
John F. Keane........... -- -- -- -- -- --
Edward Longo(3)......... 20,000 2.02% 38.38 1/16/03 212,000 468,600
Brian T. Keane.......... 30,000 3.03% 38.38 1/16/03 318,000 702,900
John F. Keane, Jr. ..... 30,000 3.03% 38.38 1/16/03 318,000 702,900
Raymond W. Paris........ 5,000 .5% 38.38 1/16/03 53,000 117,150
</TABLE>
- --------
(1) Options become exercisable in four equal installments commencing on the
first anniversary of the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
options if exercised at the end of the option terms. These gains are based
on assumed rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted. Actual gains, if any,
on stock option exercises will depend on the future performance of the
Common Stock and the date on which the options are exercised.
(3) Mr. Longo ceased to serve as an executive officer of the Company on July
16, 1999.
6
<PAGE>
Option Exercises During 1998 and Year End Option Values
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1998, by each of the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs In-The-Money Options/SARs
Number of at Fiscal Year End at Fiscal Year End ($)
Shares Acquired Value ------------------------------- -----------------------------
Executive Officer on Exercise Realized($)(1) Exercisable/Unexerciseable(2)
- ----------------- --------------- -------------- Exercisable/Unexerciseable -----------------------------
<S> <C> <C> <C> <C>
John F. Keane........... -- -- --/-- --/--
Edward Longo(3)......... 34,668 1,654,256 --/81,332 --/1,987,288
Briane T. Keane......... 45,000 2,124,900 35,001/59,999 1,219,284/979,766
John F. Keane, Jr....... 19,716 930,794 --/60,392 --/993,423
Raymond W. Paris........ 54,000 2,533,140 30,668/38,332 1,060,312/1,076,328
</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, 1998 (the last day of trading in
1998) was $39.94. Value is calculated on the basis of the difference
between the option exercise price and $39.94, multiplied by the number of
shares of Common Stock underlying the option.
(3) Mr. Longo ceased to serve as an executive officer of the Company on July
16, 1999.
Executive Employment Agreement
The Company is a party to an agreement with John Leahy relating to Mr.
Leahy's employment as the Company's Senior Vice President and Chief Financial
Officer. Pursuant to the agreement, Mr. Leahy is entitled to an annual salary
of $300,000. The agreement also provides for the participation of Mr. Leahy in
the Company's Senior Management Bonus Plan, at a level of up to 35% of Mr.
Leahy's salary based upon achievement of established annual criteria, and the
grant to Mr. Leahy of options to purchase 45,000 shares of the Company's
common stock under the 1998 Plan. Under the agreement, if the Company
terminates Mr. Leahy's employment during his first year of employment other
than "for cause," the Company must pay Mr. Leahy one year's salary on
termination.
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>
APPROVAL OF AMENDMENT TO 1998 STOCK INCENTIVE PLAN
On October 21, 1999, the Board of Directors adopted resolutions, subject to
stockholder approval, to approve an amendment (the "1998 Plan Amendment") to
the Company's 1998 Stock Incentive Plan (the "1998 Plan") to increase the
number of shares of Common Stock authorized for issuance thereunder from
2,000,000 to 7,000,000. The Board adopted the 1998 Plan Amendment because the
number of shares currently available under the 1998 Plan is insufficient to
satisfy the Company's anticipated incentive compensation needs for current and
future employees. The Board of Directors believes that grants of stock options
under the 1998 Plan have been and will continue to be an important element in
attracting and retaining key employees who are expected to contribute to the
Company's growth and success. If the Plan Amendment is approved, the Company
will have additional authorized shares of Common Stock available for future
grants, including grants in connection with any acquisitions by the Company.
As of September 30, 1999, 59,517 shares were available for issuance under
the 1998 Plan.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 1998 PLAN AMENDMENT
IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A
VOTE FOR THIS PROPOSAL.
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 Internal Revenue Code (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 total combined voting power of all
classes of stock of the Company). Options may not be granted for a term in
excess of ten years (five years in the case of incentive stock options granted
to optionees holding more than 10% of the voting power of all classes of stock
of the Company). 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. Under the 1998
Plan, the Board of Directors is prohibited from repricing outstanding options.
8
<PAGE>
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 Awards may be
granted to any participant under the 1998 Plan may not exceed 350,000 shares
per calendar year.
As of September 30, 1999, approximately 9,022 persons were eligible to
receive Awards under the 1998 Plan, including the Company's seven 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.
On September 30, 1999, the last reported sale price of the Company Common
Stock on the American Stock Exchange was $22.81.
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.
9
<PAGE>
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 subject, however, in the case of incentive stock options
to any restrictions under the Code.
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.
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.
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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.
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
11
<PAGE>
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.
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.
Deadline for Submission of Stockholder Proposals
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company at its principal
office in Boston, Massachusetts not later than December 17, 1999 for inclusion
in the proxy statement for that meeting.
By order of the Board of Directors,
Norman B. Asher, Clerk
October 29, 1999
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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<PAGE>
PROXY
KEANE, INC.
SPECIAL MEETING OF STOCKHOLDERS
December 2, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints John F.
Keane, Brian T. Keane, John F. Keane, Jr. and Norman B. Asher, and each of them,
with full power of 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 a Special Meeting of
Stockholders of the Company to be held on Thursday, December 2, 1999, at 4:30
p.m., Boston Time, at the offices of Hale and Dorr LLP, 60 State 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
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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<PAGE>
[X] Please mark
votes as in
this example.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL SET
FORTH BELOW.
FOR AGAINST ABSTAIN
VOTED: To approve an amendment to the Company's [_] [_] [_]
1998 Stock Incentive Plan increasing the
number of shares of Common Stock which
the Company is authorized to issue under
the 1998 Stock Incentive Plan from 2,000,000
to 7,000,000.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournmrnt
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
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:
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