<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CompuTrac, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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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<PAGE> 2
COMPUTRAC, INC.
222 MUNICIPAL DRIVE
RICHARDSON, TX 75080
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 15, 1999
To the Stockholders of CompuTrac, Inc:
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
CompuTrac, Inc., a Texas corporation (the "Company"), will be held on Thursday,
July 15, 1999, at the Company's offices, 222 Municipal Drive, Richardson, Texas
75080 beginning at 2:00 p.m. local time for the following purposes:
1. To elect five (5) persons to the Company's Board of Directors
to hold office until their terms shall expire and until their
successors are duly elected and qualified.
2. To approve the adoption of the Company's 1999 Stock Option
Plan.
3. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
Stockholders of record at the close of business on May 28, 1999, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment(s)
thereof.
You are cordially invited to attend the meeting. Whether or not you
expect to be present at the meeting, please date and sign the enclosed Proxy and
return it promptly in the enclosed envelope. Returning the proxy will not affect
your right to revoke it and vote your shares in person if you attend the
meeting.
By Order of the Board of Directors
Dana E. Margolis
Secretary and Treasurer
Richardson, Texas
June 7, 1999
<PAGE> 3
COMPUTRAC, INC.
222 MUNICIPAL DRIVE
RICHARDSON, TX 75080
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of CompuTrac, Inc., a Texas corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), for use at the 1999 Annual Meeting of
Stockholders to be held on Thursday, July 15, 1999, at the Company's offices,
222 Municipal Drive, Richardson, Texas 75080, beginning at 2:00 p.m. local time.
The approximate date that this Proxy Statement and the enclosed form of
Proxy are first being sent to stockholders is June 7, 1999. Stockholders should
review the information provided herein in conjunction with the Company's Annual
Report for the fiscal year ended January 31, 1999 which accompanies this Proxy
Statement. The Annual Report does not form a part of this Proxy Statement and is
not intended to serve as soliciting material for the Proxy.
INFORMATION CONCERNING PROXY
The solicitation is made on behalf of the Board of Directors of the
Company. By executing and returning the enclosed Proxy card, you authorize the
persons named in the Proxy to represent you and vote your shares in connection
with the purposes set forth in the Notice of Annual Meeting.
All shares represented by a valid Proxy received prior to the meeting
will be voted in accordance with any specification made on such Proxy. Any
stockholder giving a Proxy has the power to revoke it at any time before it is
exercised by submitting a notice of revocation to the Company or by attending
the meeting and voting in person.
The cost of preparing, assembling and mailing the enclosed material
will be borne by the Company. In addition to solicitation by mail, employees of
the Company may, without additional compensation, solicit Proxies on behalf of
the Board of Directors by telephone, telegraph or personal interview. The
Company may make arrangements with banks, brokerage houses and other custodians,
nominees and fiduciaries to send Proxies and Proxy material to their principals
and to request authority for the execution of Proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
1. To elect five (5) persons to the Company's Board of Directors
to hold office until their terms shall expire and until their
successors are duly elected and qualified.
2. To approve the adoption of the Company's 1999 Stock Option
Plan.
3. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
Unless contrary instructions are indicated on the enclosed Proxy, all
shares represented by valid Proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted for the election of the five nominees for director named below. In
the event a stockholder specifies otherwise by means of the enclosed Proxy,
those shares will be voted in accordance with the specification so made.
1
<PAGE> 4
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 28, 1999 as
the record date (the "Record Date") for determining stockholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 6,401,774 shares of the Company's $.01 par value Common Stock issued
and outstanding, all of which are entitled to vote at the Annual Meeting. Only
stockholders of record at the close of business on the Record Date are entitled
to vote at the meeting or any adjournment thereof, each share being entitled to
one (1) vote on each matter to be voted on at the Annual Meeting. All shares of
Common Stock will vote as a single class and there are no cumulative voting
rights.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. If less than a majority of outstanding shares
entitled to vote are represented at the Annual Meeting, a majority of the shares
represented may adjourn the Annual Meeting to another date, time or place, and
notice need not be given of the new date, time or place if the new date, time or
place is announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting, but
will not be counted as votes cast for or against any given matter.
The inspector or inspectors of election will treat shares referred to
as "broker or nominee non-votes" (shares held of record by brokers or nominees
as to which instructions have not been received from the beneficial owners or
persons entitled to vote and which the broker or nominee has not voted because
it does not have discretionary voting power on a particular matter) as shares
that are present for purposes of determining the presence of a quorum. For
purposes of determining the outcome of any matter as to which the proxies
reflect broker or nominee non-votes, shares represented by such proxies will be
treated as not entitled to vote on that matter and therefore will not be
considered by the inspectors when counting votes cast on the matter (even though
those shares are considered present for quorum purposes and may be entitled to
vote on other matters).
Directors will be elected by a plurality of the votes cast by holders
of shares of Common Stock present in person or represented by proxy at the
Annual Meeting. Thus, any abstentions or broker or nominee non-votes will have
no effect on the outcome of the election of directors. The affirmative vote of
the holders of a majority of the shares of Common Stock present or represented
and entitled to vote on the matter at the Annual Meeting is required to approve
the adoption of the Company's 1999 Stock Option Plan. Thus, any broker or
nominee non-votes will have the effect of reducing the number of votes required
to approve the proposal, and the number of votes required to block such
approval. Any abstentions will have the effect of votes against the proposal.
2
<PAGE> 5
SECURITY OWNERSHIP
The following table sets forth, as of May 28, 1999, information with
respect to the beneficial ownership of the Common Stock of the Company by (a)
the Company's Chief Executive Officer and each of the other "Named Executive
Officers" (as defined below in "Executive Compensation - Summary Compensation
Table"), (b) each person known by the Company to own beneficially 5% or more of
such outstanding Common Stock, (c) each director or nominee who owns any shares,
and (d) all current executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner (1) Beneficial Ownership of Class (2) Percent
- ---------------------------------------- --------------------------------- --------
<S> <C> <C>
Harry W. Margolis 2,497,177 (3) 37.1
Dana E. Margolis 28,217 (4) (5)
D. Bruce Walter 167,939 (6) 2.6
Bruce E. Staffin 352,810 5.5
Gerald D. Harris 12,000 (7) (5)
Kenneth R. Nicholas 28,000 (8) (5)
William Harris Investors, Inc. (9) 463,100 7.2
Two North LaSalle Street
Suite 505
Chicago, IL 60602-3703
All current directors and executive 2,994,513 (10) 42.4
officers (11 persons) as a group
</TABLE>
- -----------------------
(1) Unless otherwise indicated, each person's address is 222 Municipal
Drive, Richardson, TX 75080.
(2) Unless otherwise indicated, each person has sole voting and investment
power with respect to such shares.
(3) Includes 333,000 shares Mr. Margolis has the right to acquire through
the exercise of options. Mr. Margolis may be deemed to be the
beneficial owner of the shares owned by his wife, Dana E. Margolis.
(4) Dana E. Margolis may be deemed to be the beneficial owner of the shares
owned by her husband, Harry W. Margolis.
(5) Beneficial ownership is less than one percent (1%) of the Company's
outstanding shares.
(6) Includes 112,000 shares Mr. Walter has the right to acquire through the
exercise of options.
(7) Represents 12,000 shares Mr. Harris has the right to acquire through
the exercise of options.
(8) Includes 18,000 shares Mr. Nicholas has the right to acquire through
the exercise of options.
(9) Information obtained from a Schedule 13G filed with the Company by the
beneficial owner dated February 14, 1999. The Schedule 13G states that
the holder is an investment advisor that shares with its clients voting
power, and has sole dispositive power, with respect to all the shares.
(10) Includes 657,591 shares the directors and executive officers have the
right to acquire through the exercise of options.
3
<PAGE> 6
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulations to furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company during the Company's last fiscal year, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners have been complied with.
ELECTION OF DIRECTORS
Directors are to be elected at the Annual Meeting to hold office until
the next Annual Meeting of Stockholders and until their successors have been
duly elected and qualified. The Company's Articles of Incorporation provide that
the number of directors constituting the Company's Board of Directors shall not
be less than two, but will be fixed as determined in the manner provided by the
Company's Bylaws. The Company's Bylaws provide that the number of directors
shall be fixed from time to time by action of the Company's Board of Directors.
The Board of Directors has fixed the number of directors at five for the ensuing
year. The Board of Directors currently consists of five persons.
It is intended that the shares represented by the Proxies will be voted
for the election of the Company's nominees except where authority to so vote is
withheld. Each of the five current members of the Board of Directors has been
nominated by the Company to be reelected as a director at the Annual Meeting.
All of the nominees for directorship have agreed to serve if elected. Should any
of such nominees become unwilling or unable to accept nomination or election,
the shares represented by the Proxies solicited hereby will be voted for any
substitute nominee or nominees designated by the present Board of Directors or
the number of directors will be reduced accordingly.
The Board of Directors recommends that you vote FOR the election of
each of the five nominees to the Board of Directors.
4
<PAGE> 7
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company at May 28, 1999 are
as follows:
<TABLE>
<CAPTION>
Position(s) Held
Name Age With the Company
- ---- --- ----------------
<S> <C> <C>
Harry W. Margolis 56 Chairman of the Board & Chief Executive Officer
Dana E. Margolis 54 Secretary, Treasurer & Director
D. Bruce Walter 56 President & Director
Roger P. Young 37 General Manager - Operations
Deborah S. Greening 48 Vice President - Sales & Marketing
Lynda K. Thomas 53 Vice President - Administration
David D. Hester 43 Vice President - CT Labs
Irwin S. Arnstein 40 Vice President - LFMS Support and Development
Michael R. Mueller 47 Vice President - LFMS for Windows Development
Kenneth R. Nicholas 57 Director
Gerald D. Harris 43 Director
</TABLE>
HARRY W. MARGOLIS is a co-founder of the Company and has served as
Chairman of the Board of the Company since its organization in 1977. After
graduating from U.C.L.A. in 1964 with a degree in Political Science, Mr.
Margolis attended Southern Methodist University Law School and upon graduation
in 1967, placed first in the Bar Examination administered in the State of Texas.
Mr. Margolis founded his own law firm in 1967, which increased to eight members
through internal growth and by merger with an older firm, and practiced law
until the Company was organized in 1977.
DANA E. MARGOLIS, a director since 1983, served as office manager of
the Company performing its accounting and purchasing functions from 1980 until
1983. In January 1984, Mrs. Margolis assumed the responsibilities of Secretary
and Treasurer of the Company. Mrs. Margolis attended San Diego State University
and is the wife of Harry W. Margolis.
D. BRUCE WALTER was elected to the Board of Directors in July, 1998,
and has served as the Company's President since January, 1999. He is also the
Chairman of the Board of Radiomail Corporation, a wireless internet company
headquartered in San Mateo, California. Mr. Walter previously held the position
of Chief Executive Officer at Radiomail Corporation from October 1994 to July
1997. He was President and Chief Executive Officer of CoActive Computing
Corporation, located in California, from July 1993 until October 1994. Mr.
Walter was at Grid Systems Corporation, also located in California, from June
1983 to June 1993, where he was President and Chief Executive Officer from 1991
to 1993. Prior to 1983, Mr. Walter spent sixteen years in various
management-level positions at Xerox Corporation. He is a 1965 graduate of
Waynesburg College.
ROGER P. YOUNG was named General Manager - Operations in June, 1998,
previously holding the title of Director of Operations since 1996. In his
current position, Mr. Young is responsible for the daily management of
operations for the company. He joined CompuTrac in 1991 as Production Manager
and held subsequent management positions in finance and accounting. His previous
experience includes production and operations management positions for Westcott
Communications, Inc. and Sarkes Tarzian, Inc. Mr. Young currently serves on the
Board of Directors of Richardson Development Center for Children.
DEBORAH S. GREENING was named Vice President - Sales and Marketing in
1998, previously holding the title of Vice President - Operations since 1995.
Ms. Greening joined the Company in 1983 as Regional Sales Manager and has held
subsequent management positions in marketing, sales, support and product
development. Her previous experience included product marketing, support and
sales of word processing equipment at Xerox Corporation and Phillips Information
Systems. Ms. Greening is currently on the Board of Directors of Richardson
Development Center for Children and served as its President during 1995. She
attended the University of Wisconsin.
5
<PAGE> 8
LYNDA K. THOMAS was elected Vice President of Administration in
December 1987. Ms. Thomas joined the Company in September 1981 as Executive
Assistant to the President and served as the Company's Business Manager from
August 1983 until her election to Vice President. Previously, she was a
corporate officer and director of public relations for Republic Gypsum Company,
a Dallas based manufacturer and supplier of building materials. She attended the
University of North Texas in Denton, Texas majoring in education. Ms. Thomas
currently serves on the Board of Directors of Altrusa International of Collin
County.
DAVID D. HESTER has served as the Company's senior computer programmer
since June 1979 and has been responsible for the Company's major software
research and development efforts. He was elected Vice President of the Company's
CT Labs department in April 1996. Previously he served as an assembly-language
programmer for General Computer Systems, a division of Telex. Mr. Hester
attended the University of Texas at Arlington and is an honor graduate of
Control Data Institute.
IRWIN S. ARNSTEIN was elected Vice President of LFMS Support and
Development of the Company in May 1996 and is responsible for the design,
implementation and support of the Company's Law Firm Management System product
line. Mr. Arnstein holds a 1981 Bachelor of Arts of Computer Science degree from
the University of Texas. Mr. Arnstein began his career with the Company 16 years
ago as a Software Engineer and has served as a Project Leader on several
significant software projects leading up to his 1995 promotion to Director of
LFMS Development.
MICHAEL R. MUELLER joined the Company in October 1984 as a support
programmer and was elected Vice President of Law Firm Management Systems
Development in May 1996. He has been involved in the development of four of the
Company's six generations of Law Firm Management Systems. Prior to joining the
Company, Mr. Mueller graduated from Texas A&M University majoring in Computer
Science with a minor in Accounting.
KENNETH R. NICHOLAS, a director of the Company since 1995, has been the
Managing Director of Nicholas, Flanagan & Bard, P.C., a Certified Public
Accounting firm in Dallas, Texas since January, 1987. Prior to that time, Mr.
Nicholas spent 22 years with Deloitte Haskins & Sells (now Deloitte & Touche),
including over ten years as a partner and seven years as partner-in-charge of
the Dallas tax practice. Mr. Nicholas graduated from Southern Methodist
University in 1964.
GERALD D. HARRIS, a director of the Company since 1994, is the owner
and operator of Harris Typesetting Services, a graphics design and printing
business located in Plano, Texas. Prior to beginning his business in 1990, Mr.
Harris was the head golf professional at the prestigious Stonebriar Country Club
in Frisco, Texas. Mr. Harris attended the University of Oklahoma majoring in
finance.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended January 31, 1999, the Board of Directors
held one meeting and acted by unanimous written consent two times. No director
attended less than 75% of the aggregate of (a) the number of Board meetings held
during the fiscal year, and (b) the number of meetings of committees of the
Board held during the period he served on such committees.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has standing Compensation and Audit
Committees. The Compensation Committee consists of Messrs. Harris and Nicholas.
The Compensation Committee administers the Company's 1990 Stock Option and Stock
Purchase Plans, and makes recommendations to the Board with respect to changes
in officers' compensation and similar matters. The Compensation Committee met
once during fiscal year 1999.
The Company's Audit Committee consists of Messrs. Harris and Nicholas.
The Audit Committee reviews the Company's significant accounting policies and
operating controls, recommends independent external auditors, and reviews audit
reports prepared by the external auditors. The Audit Committee met one time
during fiscal year 1999.
The Company does not have a standing nominating committee.
6
<PAGE> 9
DIRECTOR COMPENSATION
The Company pays directors who are not executive officers of the
Company $750.00 for attendance at each meeting of the Board of Directors and
$300.00 for each committee meeting attended. Directors who are also executive
officers of the Company do not receive any meeting fees or other remuneration
for their services as directors.
Directors are also eligible to be granted stock options under the
Company's 1990 Stock Option Plan. The plan provides for the grant of options to
employees and directors of the Company covering an aggregate of 800,000 shares
of Common Stock of the Company. Such options may be incentive or nonqualified
stock options, except that options granted to directors who are not also
employees of the Company may not be incentive stock options. Options granted to
directors under the plan may contain such terms as may be determined by the
Compensation Committee, except that (i) the maximum term of any option is 10
years, (ii) no director may be granted options in any calendar year for a number
of shares exceeding 10% of the total number of shares for which options may be
granted under the plan, (iii) shares acquired by a director upon exercise may
not be sold for six months after the date of grant, and (iv) the exercise price
of any option granted to a director may not be less than the fair market value
of the Common Stock on the date of grant. The exercise period of any option
begins and ends on such dates as may be determined by the Compensation
Committee, provided that an option will terminate upon the termination of the
holder's service as an employee or director, subject to certain grace periods.
The vesting of outstanding options is also subject to acceleration in the
discretion of the Compensation Committee or upon the occurrence of certain
change-in-control events. During fiscal 1999, Mr. Nicholas was granted stock
options under the plan as follows: October 7, 1998, 8,000 shares at $.375 per
share (of which 5,000 shares were exercised on November 12, 1998) and December
4, 1998, 3000 shares at $1.00 per share.
If the Company's 1999 Stock Option Plan is approved by the stockholders
at the Annual Meeting, the 1990 Stock Option Plan will terminate. Directors will
be eligible to be granted options under the 1999 Stock Option Plan. See
"Proposal to Approve the Adoption of the 1999 Stock Option Plan."
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate compensation paid to the
Company's Chief Executive Officer and the only other officer whose total annual
salary and bonus for the 1999 fiscal year was $100,000 or more (the "Named
Executive Officers"), with respect to each of the three fiscal years in the
period ended January 31, 1999.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation (1) Compensation Awards
---------------- -------------------
Number of Securities All Other
Fiscal Underlying Options Compensation
Name and Principal Position Year Salary ($) Granted ($)
- ---------------------------- ----- ---------- -------------------- ------------
<S> <C> <C> <C> <C>
Harry W. Margolis 1999 546,000 621,000 (2) 6,156 (3)
Chairman of the Board and 1998 542,250 - 5,948
Chief Executive Officer 1997 528,300 - 5,756
George P. McGraw (4) 1999 114,576 - -
President 1998 125,362 - 1,800 (5)
1997 113,526 - 4,018
</TABLE>
- ------------------------
(1) The columns for "Bonus" and "Other Annual Compensation" have been
omitted because there is no compensation required to be reported in
such column. The aggregate amount of perquisites and other personal
benefits provided to the Company's Chief Executive Officer is less than
the lesser of $50,000 or 10% of the total of annual salary and bonus of
the officer.
(2) Of the options granted, 108,000 were cancelled November 14, 1998 in
connection with an option grant of 333,000 shares on the same date.
(3) Represents the economic value of split-dollar life insurance policies
paid for by the Company naming Mr. Margolis' estate as the beneficiary.
(4) Mr. McGraw resigned his position with the Company effective June, 1998.
(5) Amount represents the Company's contribution to Mr. McGraw for Company
Common Stock purchases during the fiscal year pursuant to the Company's
Employee Stock Purchase Plan.
OPTION GRANTS TABLE
The following table sets forth information regarding stock options
granted to the Named Executive Officers during fiscal 1999.
<TABLE>
<CAPTION>
Percentage of
Total Options
Number of Granted to Exercise
Securities Underlying Employees in or Base
Name Options Granted (#) Fiscal Year Price ($/Sh) Expiration Date
- ---------------- --------------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
Harry W. Margolis 108,000 (1) 12.8% $0.90 06/30/2003
180,000 (2) 21.4% $0.50 12/14/1998
333,000 (3) 39.6% $0.55 06/30/2003
</TABLE>
- ------------------------
(1) The options were cancelled November 14, 1998 in connection with the
option grant of 333,000 shares on the same date.
(2) The options were granted and exercised on November 14, 1998. The
exercise price was equal to the fair market value of the Common Stock
on that date.
(3) The options were granted November 14, 1998 and vested with respect to
181,818 shares on the date of grant and the remaining 151,182 shares
on January 1, 1999. The exercise price is equal to 110% of the fair
market value of the Common Stock on the date of grant.
8
<PAGE> 11
OPTION EXERCISES AND AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning option
exercises by the Named Executive Officers during the fiscal year and unexercised
stock options held by the Named Executive Officers as of the end of the 1999
fiscal year.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at 1999 Fiscal In-the-Money Options
Acquired Value Year-End Exercisable (E) at 1999 Fiscal
Name On Exercise (#) Realized ($) (1) Unexercisable (U) Year-End ($) (2)
- ---------------- --------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Harry W. Margolis 180,000 - 333,000 (E)/-0-(U) $108,225
</TABLE>
- ------------------------
(1) Represents the market value of underlying securities at the exercise
date, minus the aggregate exercise price of the options. The market
price of the Common Stock on the date of exercise of the option shown
in the table did not exceed the exercise price.
(2) Represents the market value of the Common Stock at January 31, 1999
minus the exercise price of the option, multiplied by the number of
shares exercisable under the option.
REPORT ON REPRICING OF OPTIONS
On November 14, 1998, the Compensation Committee and the Board of
Directors approved a resolution canceling incentive stock options previously
granted to Mr. Margolis entitling him to purchase 225,000 shares of Common Stock
at an exercise price of $1.52 per share and 108,000 shares of Common Stock at an
exercise rice of $.90 per share. Concurrently, Mr. Margolis was granted a new
incentive stock option covering 333,000 shares of Common Stock with an exercise
price of $0.55 per share, which was equal to 110% of the fair market value of
the Common Stock on the date of grant. The repricing of the stock options
granted Mr. Margolis were done in connection with a voluntary restructuring of
his compensation, based on the Board's determination that a larger percentage of
Mr. Margolis' compensation should be represented by incentive awards and a
smaller percentage by his annual salary. The Compensation Committee believes the
cancellation of the old options and grant of the new options to Mr. Margolis was
in the best interests of the Company and its stockholders because it provides
additional incentive to Mr. Margolis to use his best efforts to improve the
value of the Company's stock.
Submitted by: The Compensation Committee
Kenneth R. Nicholas
Gerald D. Harris
9
<PAGE> 12
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive or pension plans.
EMPLOYMENT AGREEMENTS
On January 1, 1998, the Company entered into an Employment Agreement
with Harry W. Margolis, its Chairman of the Board and Chief Executive Officer,
which expires on December 31, 2002. On November 14, 1998, the Employment
Agreement was modified to reduce Mr. Margolis' base salary by $30,000 and
$200,000 for calendar years 1998 and 1999, respectively. Pursuant to the
Employment Agreement in effect during fiscal year 1999, Mr. Margolis was paid an
annual base salary of $546,000 and is entitled to a base salary of $390,000 plus
a cost of living adjustment during calendar 1999. Under the current Employment
Agreement, Mr. Margolis is entitled to receive minimum annual raises equivalent
to any annual increase in the Consumer Price Index for Dallas, Texas during the
previous year. In addition, at the discretion of the Compensation Committee of
the Board of Directors of the Company, Mr. Margolis may be considered for an
annual bonus in an amount that does not exceed his salary. No bonuses were
granted to Mr. Margolis during fiscal 1999. Additionally, the Company furnishes
Mr. Margolis with certain fringe benefits, including the use of an automobile
and a membership in a country club. The Company is obligated to provide Mr.
Margolis and his family with health and dental benefits and has purchased
split-dollar life insurance policies insuring Mr. Margolis' life and naming his
estate as the beneficiary. In the event that Mr. Margolis becomes disabled or is
otherwise incapacitated, the Company will be entitled to reduce his pay to 50%
of his base salary (less certain insurance proceeds) for the remainder of the
term of the Employment Agreement or until such earlier time that he is able to
resume his full duties under the agreement. In the event of Mr. Margolis' death,
his estate or designated beneficiary is entitled to receive 50% of his annual
salary, less any insurance payments made to the estate or designated beneficiary
from the above-referenced life insurance policies, for the remaining term of the
agreement. Mr. Margolis is subject to certain restrictive covenants under the
agreement, including a noncompetition clause which extends eighteen months
beyond any termination of his employment other than termination by Mr. Margolis
for "Good Reason" (as defined in the agreement) or termination due to the
expiration of the agreement. The Company may at any time terminate the
Employment Agreement for "Cause" (as defined in the agreement) with thirty days
written notice, and, in the event that the Company fails to earn a certain
specified minimum rate of return on equity for any fiscal years ending on or
after January 31, 1999, the Company's Board of Directors may reduce the term of
the agreement to a date which is no earlier than one year from the date Mr.
Margolis receives written notice of such term reduction. If Mr. Margolis'
employment is terminated (a) other than for Cause, disability, death or the
expiration of the agreement, including a termination attributable to a "Change
in Control" (as defined in the agreement), or (b) by Mr. Margolis for Good
Reason, including any intentional failure by the Company to comply with the
agreement, Mr. Margolis will be entitled to (i) a lump sum payment of three
times (or two times if termination occurs during the last year of the agreement)
the sum of his base salary and highest bonus paid during either of the prior two
years, (ii) all compensation earned or deferred through the date of termination
(including a pro-rated bonus, determined as a percentage of the prior year's
bonus) and (iii) continue to participate in the Company's benefit plans for the
remainder of the term of the agreement, as if the agreement had not terminated.
10
<PAGE> 13
PROPOSAL TO APPROVE THE ADOPTION OF
THE 1999 STOCK OPTION PLAN
GENERAL
The 1999 Stock Option Plan (the "Plan") was adopted by the Board of
Directors on June 4, 1999, subject to stockholder approval at the 1999 annual
meeting. The complete text of the Plan, as adopted by the Board of Directors, is
attached hereto as Exhibit A. The material features of the plan are discussed
below, but the description is subject to and qualified in its entirety by the
full text of the Plan. The purpose of the Plan is to advance the interests of
the Company by providing additional incentive to attract and retain qualified
and competent employees, officers and directors, upon whose efforts and judgment
the success of the Company is largely dependent, through the encouragement of
stock ownership in the Company by such persons. The affirmative vote of the
holders of a majority of the shares of Common Stock present or represented and
entitled to vote at the 1999 annual meeting is required to approve the proposal
to approve the Plan. See "Outstanding Voting Securities and Voting Rights"
above.
The Company's 1990 Stock Option Plan (the "1990 Plan") is currently in
effect and is not scheduled to terminate until May 30, 2020. However, the 1990
Plan provides that no incentive stock option may be granted under the 1990 Plan
more than ten years after May 30, 1990. The 1990 Plan, as amended, provides for
the grant of options covering an aggregate of 800,000 shares of Common Stock.
However, as of May 31, 1999, there were only 39,603 shares remaining available
for grant under the 1990 Plan. The Company may grant incentive stock options or
nonstatutory stock options covering such shares, except that incentive stock
options may not be granted after May 30, 2000. If the stockholders approve the
Plan at the annual meeting, the 1990 Plan will terminate and no further options
may be granted thereunder. The 1990 Plan will remain in effect, however, to the
extent that its provisions govern outstanding options previously granted under
the 1990 Plan.
If the Plan is approved by the stockholders at the annual meeting, the
employees, officers and directors of the Company eligible to participate in the
Plan may receive more benefits under the Plan than are currently available to
them.
If the Plan is not approved by the stockholders at the annual meeting,
the 1990 Plan will not be terminated. No options have yet been granted under the
Plan.
DESCRIPTION OF THE PLAN
The material features of the Plan are described below:
GENERAL. The Plan provides for the grant of (i) incentive stock options
under Section 422 of the Code and (ii) nonstatutory stock options. The Plan
provides that an aggregate of 500,000 shares of Common Stock may be issued upon
exercise of stock options and that options may be granted to any regular
employee of the Company, including officers, and to any director, whether or not
an employee, of the Company, except that incentive stock options may not be
granted to a director who is not also an employee of the Company or a
subsidiary. The maximum number of shares for which options may be granted under
the Plan to any one person during a calendar year is 350,000 shares. No
incentive stock option may be granted under the Plan more than ten years after
the effective date of the Plan, and no nonstatutory stock option may be granted
after the expiration of the Plan. The Plan will expire on June 4, 2029 or at
such earlier date as the Board of Directors or a duly authorized committee
thereof may determine, and any option outstanding on such date will remain
outstanding until it has either expired or has been exercised. Authorized but
unissued or reacquired shares may be issued upon exercise of options pursuant to
the Plan.
In the event that any outstanding stock option terminates, expires or
is cancelled or surrendered without having been exercised in full, the shares of
Common Stock not purchased under the stock option are again available for
purposes of the Plan. The Plan also contains anti-dilution provisions which
provide in certain events for proportionate adjustments in the number of shares
of Common Stock subject to, and the exercise prices of, outstanding options and
the number of shares of Common Stock which may be offered under the Plan.
ADMINISTRATION. The Plan is administered by the Compensation Committee
of the Board of Directors, or another committee of the Board of Directors
designated to administer the Plan (the "Committee"). The Committee
11
<PAGE> 14
must consist of two or more members of the Board of Directors, all of whom are
both a "non-employee director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, and an "outside director" within the meaning of
Section 162(m) of the Code and the regulations thereunder. The members of the
Committee are appointed from time to time by, and serve at the discretion of,
the Board of Directors.
Subject to the provisions of the Plan, the Committee has discretion to
grant incentive stock options or nonstatutory stock options under the Plan and
to determine the directors and employees to whom each grant is made and the
number of shares covered thereby. In granting options, the Committee considers
the contribution the person has made to the success of the Company or a
subsidiary and such other factors as the Committee determines, which may include
the recommendations of officers or other Company personnel. As of May 31, 1999,
the Company had 62 employees.
The Committee also has the power to interpret the Plan and to prescribe
such rules and regulations as it deems necessary and advisable for carrying out
the purposes of the Plan.
TERMS OF STOCK OPTIONS. The exercise price for each stock option is
determined by the Committee, provided that (i) the exercise price of all
nonstatutory and incentive stock options granted pursuant to the Plan may not be
less than 100% of the fair market value (as defined) of the Common Stock on the
date of grant and (ii) the option price of an incentive stock option granted to
an employee who owns more than 10% of the total combined voting power of all
classes of stock of the Company or any subsidiary (a "Ten Percent Employee") may
not be less than 110% of such fair market value. As of May 28, 1999, the closing
sales price of a share of Common Stock of the Company as reported on the
American Stock Exchange (the "Exchange") was $1 1/16.
No stock option may be exercised after the expiration of ten years from
the date of grant (five years in the case of an incentive stock option granted
to a Ten Percent Employee). Stock options may be exercised in whole or in part
at such time, in such amounts and subject to such restrictions as are determined
by the Committee in its discretion. The Committee may in its discretion
accelerate the vesting of any outstanding option.
The exercise price for each stock option is payable in full at the time
of exercise and, unless further limited by the Committee in connection with any
individual option, the exercise price may be paid in cash, by certified or
official bank check, by money order, by delivery of already owned shares of
Common Stock having a fair market value equal to the exercise price or (in the
discretion of the Committee) by delivery of a personal check by the optionee, or
by a combination of the foregoing. In addition, the Company in its sole
discretion may, on an individual basis or pursuant to a general program, lend
money to an optionee, guaranty a loan to an optionee or otherwise assist an
optionee in obtaining funds necessary to exercise all or a portion of an option
or to pay any tax liability attributable to the exercise of the option. Any
promissory note of an optionee accepted in whole or partial payment of the
exercise price of an option must provide for full recourse to the maker, be
collateralized by a pledge of the shares purchased upon exercise of the option,
bear interest at a market rate and contain such other terms as the Board of
Directors may require.
Options otherwise qualifying as incentive stock options under the Plan
will be treated as nonstatutory stock options to the extent that the aggregate
fair market value (determined as of the time the incentive stock options are
granted) of the shares of Common Stock with respect to which incentive stock
options are exercisable for the first time by an individual during any calendar
year exceeds $100,000.
Options granted under the Plan terminate upon termination of the
optionee's employment or service as a director, except that the vested portion
of options may continue to be exercisable during specified grace periods
following termination of employment or service in certain circumstances.
No incentive stock option granted under the Plan is transferable other
than by will or by the laws of descent and distribution, and a stock option may
be exercised during an optionee's lifetime only by the optionee. Nonstatutory
stock options are transferable by an optionee, but only (i) by will or the laws
of descent and distribution upon the death of the optionee; (ii) by gift or a
domestic relations order to certain family members of the optionee, including
certain trusts, foundations and other entities controlled by such family
members; or (iii) to an entity in which more than 50% of the voting interests
are owned by the optionee or the optionee's family members in exchange for an
interest or interests in such entity. Each permitted transferee of a
nonstatutory stock option is required to execute an agreement satisfactory to
the Company agreeing to be bound by the terms and provisions of the Plan and the
optionee's original option agreement relating to the option.
12
<PAGE> 15
MISCELLANEOUS. The Board of Directors may at any time suspend,
terminate, amend or modify the Plan, in whole or in part. However, no amendment
or modification of the Plan will become effective without the approval by the
stockholders of the Company if the Company, on the advice of counsel, determines
that stockholder approval is necessary or desirable. Upon termination of the
Plan, the terms and provisions of the Plan will continue to apply to options
granted prior to the termination. No suspension, termination, amendment or
modification of the Plan will adversely affect in any material way any option
previously granted under the Plan, without the written consent of the optionee
(except that consent of the optionee will not be required for certain
tax-related amendments or modifications to an option).
The Plan contains no provision prohibiting the grant of stock options
by the Committee upon the condition that outstanding stock options granted at a
higher option price be surrendered for cancellation. Certain outstanding stock
options granted under the Plan may from time to time have option prices in
excess of the market price per share of the Common Stock. The Committee has
granted under the 1990 Plan, and may grant under the Plan stock options with
exercise prices established in accordance with the Plan on the condition that
outstanding stock options with a higher exercise price be surrendered for
cancellation.
ADDITIONAL RIGHTS IN CERTAIN EVENTS. The Plan provides for immediate
acceleration of the exercisability of all outstanding options upon the
occurrence of one or more events described in Section 8 of the Plan ("Section 8
Events"). A Section 8 Event is deemed to have occurred when (i) there occurs any
transaction or series of transactions that results in the stockholders of the
Company immediately before such transaction or transactions ceasing to own at
least 51% of the voting stock of the Company (or of the surviving entity in the
transaction, if other than the Company); (ii) the stockholders of the Company
approve a plan of merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive (unless the approved
transaction is subsequently abandoned); or (iii) the stockholders of the Company
approve a plan for the sale or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently abandoned).
The Committee, in its sole discretion, may by giving written notice cancel,
effective upon the date of consummation of any corporate transaction approved as
described in clause (ii) or (iii) above, any option that remains unexercised on
the date of such consummation. The Committee also may change the option prices
or the number of shares subject to outstanding options, or both, if, in its sole
discretion, it deems such changes appropriate by reason of a Section 8 Event
described in clause (ii) or (iii) above.
POSSIBLE ANTI-TAKEOVER EFFECT. The provisions of the Plan providing for
the acceleration of the exercise date or the change in the terms of outstanding
options upon the occurrence of a Section 8 Event could make it more difficult
for a third party to acquire control of the Company and, therefore, may be
deemed to benefit the current directors and officers of the Company.
13
<PAGE> 16
GRANTS TABLE
The table below sets forth options granted under the Company's 1990 Stock
Option Plan during the fiscal years 1998 through 1999. Options granted are
incentive stock options with exercise prices equal to the fair market value of
the Common Stock on the date of grant, except as indicated below.
<TABLE>
<CAPTION>
OPTIONS GRANTED UNDER
THE 1990 STOCK OPTION PLAN
PER SHARE
NAME GRANT DATE NUMBER OF SHARES EXERCISE PRICE
- ---- ---------- ---------------- --------------
<S> <C> <C> <C>
Harry W. Margolis 07/01/1998 108,000 (1) $0.90
11/14/1998 333,000 (2) $0.55
D. Bruce Walter 07/16/1998 12,000 (3) $0.88
10/07/1998 10,000 (4) $0.38
01/04/1999 100,000 $0.88
Kenneth R. Nicholas 10/07/1998 3,000 (3) $0.38
10/07/1998 5,000 (4) $0.38
12/04/1998 3,000 (3) $1.00
All Current Executive
Officers as a Group (5) 1999 589,500 (6) $0.67
1998 - -
All Employees Who Are
Not Executive Officers, as
a Group (5) 1999 70,791 (7) $0.47
1998 11,000 $1.14
</TABLE>
(1) The option granted to Mr. Margolis was cancelled November 14,
1998 in connection with the option grant of 333,000 shares on
the same date.
(2) The option granted to Mr. Margolis, the Chief Executive
Officer and a greater than 10% stockholder of the Company, is
an incentive stock option granted in replacement of two
options previously granted to Mr. Margolis under the Plan and
has an exercise price equal to 110% of the closing sales price
of the common stock on November 13, 1998. The option expires
June 30, 2003.
(3) The options are non-statutory stock options.
(4) The options were exercised on November 12, 1998, the
expiration date of the grant.
(5) For the indicated groups, reflects all options granted to
members of the group during the years specified and the
average exercise prices of such options.
(6) Includes options for a total of 26,000 shares that were
exercised on November 12, 1998, the expiration date of the
grant.
(7) Includes options for a total of 52,791 shares that were
exercised on November 12, 1998, the expiration date of the
grant.
In addition to options granted under the 1990 Plan, Mr. Margolis was
granted an option to purchase 180,000 shares at an exercise price of $0.50 per
share on November 14, 1998. This option was granted in connection with a
restructuring of Mr. Margolis' compensation, which included a voluntary
reduction by Mr. Margolis in his annual cash compensation.
14
<PAGE> 17
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an analysis of the Code as
currently in effect, existing laws, judicial decisions, administrative rulings,
regulations and proposed regulations, all of which are subject to change.
Moreover, the following is only a summary of U.S. federal income tax
consequences, and the consequences to employees and directors may be either more
or less favorable than those described below depending on their particular
circumstances.
INCENTIVE STOCK OPTIONS. No income will be recognized by an optionee
for federal income tax purposes upon the grant or exercise of an incentive stock
option. The basis of shares transferred to an optionee pursuant to the exercise
of an incentive stock option is the price paid for the shares. If the optionee
holds the shares for at least one year after transfer of the shares to the
optionee and two years after the grant of the option, the optionee will
recognize capital gain or loss upon sale of the shares received upon the
exercise equal to the difference between the amount realized on the sale and the
basis of the stock. Generally, if the shares are not held for that period, the
optionee will recognize ordinary income upon disposition in an amount equal to
the excess of the fair market value of the shares on the date of exercise over
the option price of such shares, or if less (and if the disposition is a
transaction in which loss, if sustained, would be recognized), the gain on
disposition. Any additional gain or loss realized by the optionee upon such
disposition will be a capital gain or loss.
The excess of the fair market value of shares received upon the
exercise of an incentive stock option over the option price for the shares is an
item of adjustment for the optionee for purposes of the alternative minimum tax.
The Company is not entitled to a deduction upon the exercise of an
incentive stock option by an optionee. If the optionee disposes of the shares
received pursuant to such exercise prior to the expiration of one year following
transfer of the shares to the optionee or two years after grant of the option,
however, the Company may deduct an amount equal to the ordinary income
recognized by the optionee upon disposition of the shares at the time such
income is recognized by the optionee.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under an incentive stock option, the resulting tax
consequences will depend upon whether the already owned shares of Common Stock
are "statutory option stock", and, if so, whether such statutory option stock
has been held by the optionee for the applicable holding period referred to in
Section 424(c)(3)(A) of the Code. In general, statutory option stock (as defined
in Section 424(c)(3)(B) of the Code) is any stock acquired through the exercise
of an incentive stock option or an option granted pursuant to an employee stock
purchase plan, but not stock acquired through the exercise of a nonstatutory
stock option. If the stock is statutory option stock with respect to which the
applicable holding period has been satisfied, no income will be recognized by
the optionee upon the transfer of such stock in payment of the exercise price of
an incentive stock option. If the stock is not statutory option stock, no income
will be recognized by the optionee upon the transfer of the stock unless the
stock is not substantially vested within the meaning of the regulations under
Section 83 of the Code (in which event it appears that the optionee will
recognize ordinary income upon the transfer equal to the amount by which the
fair market value of the transferred shares exceeds their basis). If the stock
used to pay the exercise price of an incentive stock option is statutory option
stock with respect to which the applicable holding period has not been
satisfied, the transfer of such stock will be a disqualifying disposition
described in Section 421(b) of the Code which will result in the recognition of
ordinary income by the optionee in an amount equal to the excess of the fair
market value of the statutory option stock at the time the incentive stock
option covering such stock was exercised over the option price of such stock.
Under the present provisions of the Code, it is not clear whether all shares
received upon the exercise of an incentive stock option with already owned
shares will be statutory option stock or how the optionee's basis will be
allocated among such shares.
NONSTATUTORY STOCK OPTIONS. No income will be recognized by an optionee
for federal income tax purposes upon the grant of a nonstatutory stock option.
Upon exercise of a nonstatutory stock option, the optionee will recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares on the date of exercise over the amount paid for such shares. Income
recognized by an employee upon the exercise of nonstatutory stock options will
be considered compensation subject to withholding at the time the income is
recognized, and, therefore, the Company must make the necessary arrangements
with such optionee to ensure that the amount of the tax required to be withheld
is available for payment. Nonstatutory stock options are designed to provide the
Company with a deduction equal to the amount of ordinary income recognized by
the optionee at the time of such recognition by the optionee.
15
<PAGE> 18
The basis of shares transferred to an optionee pursuant to exercise of
a nonstatutory stock option is the price paid for such shares plus an amount
equal to any income recognized by the optionee as a result of the exercise of
the option. If an optionee thereafter sells shares acquired upon exercise of a
nonstatutory stock option, any amount realized over the basis of the shares will
constitute capital gain to the optionee for federal income tax purposes.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under a nonstatutory stock option, the number of
shares received pursuant to the option which is equal to the number of shares
delivered in payment of the exercise price will be considered received in a
nontaxable exchange, and the fair market value of the remaining shares received
by the optionee upon such exercise will be taxable to the optionee as ordinary
income. If the already owned shares of Common Stock are not statutory option
stock or are statutory option stock with respect to which the applicable holding
period referred to in Section 424(c)(3)(A) of the Code has been satisfied, the
shares received pursuant to the exercise of the nonstatutory stock option will
not be statutory option stock and the optionee's basis in the number of shares
received in exchange for the shares delivered in payment of the exercise price
will be equal to the basis of the shares delivered in payment. The basis of the
remaining shares received upon such exercise will be equal to the fair market
value of such shares. However, if the already owned shares of Common Stock are
statutory option stock with respect to which the applicable holding period has
not been satisfied, it is not presently clear whether such exercise will be
considered a disqualifying disposition of the statutory option stock, whether
the shares received upon such exercise will be statutory option stock, or how
the optionee's basis will be allocated among the shares received.
LIMITATION ON THE COMPANY'S COMPENSATION DEDUCTION. Section 162(m) of
the Code limits the deduction which a publicly traded company may take for
otherwise deductible compensation payable to certain executive officers of the
Company to the extent that compensation paid to such officers for such year
exceeds $1 million, unless such compensation is performance-based, is approved
by the Company's stockholders and meets certain other criteria. Compensation
attributable to a stock option is deemed to satisfy the requirements for
performance-based compensation only if (i) the grant is made by a committee
composed of two or more outside directors; (ii) the plan states the maximum
number of shares with respect to which options may be granted during a specified
period to any employee; and (iii) under the terms of the option, the amount of
compensation the employee could receive is based solely on an increase in the
value of the stock after the date of the option grant. The Plan has been
designed to enable option grants to qualify as performance-based compensation
for purposes of Section 162(m) of the Code.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
ADOPTION OF THE 1999 STOCK OPTION PLAN. Proxies solicited by the Board of
Directors will be voted in favor of approval of the Plan unless stockholders
specify otherwise.
16
<PAGE> 19
OTHER MATTERS
STOCKHOLDER PROPOSALS
Any stockholder intending to present any proposal for inclusion in the
proxy statement for the 2000 Annual Meeting of Stockholders must submit such
proposal in writing to the Company at its principal executive offices on or
before February 7, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Grant Thornton LLP served as independent public accountants
in connection with the audit of the Company's financial statements for the
fiscal year ended January 31, 1999 and has been selected to serve in that
capacity for the fiscal year ending January 31, 2000. A representative of the
firm is expected to be present during the annual meeting. Such representative
will be afforded an opportunity to make a statement at the meeting if he so
desires and will be available to answer appropriate questions.
OTHER BUSINESS
The Board of Directors does not intend to present and does not have any
reason to believe that others in attendance will present at the Annual Meeting
any item of business other than those mentioned in the Notice of Annual Meeting.
If, however, any other business should properly come before the Annual Meeting,
the persons named in the accompanying Proxy will vote the Proxy as in their
discretion they may deem appropriate, unless they are directed by the Proxy to
do otherwise.
By Order of the Board of Directors
Dana E. Margolis
Secretary and Treasurer
Richardson, Texas
June 7, 1999
THE COMPANY'S FORM 10-KSB ANNUAL REPORT, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, PROVIDES CERTAIN ADDITIONAL INFORMATION ABOUT THE
COMPANY. A COPY OF THIS REPORT MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN
REQUEST TO: INVESTOR RELATIONS, COMPUTRAC, INC., 222 MUNICIPAL DRIVE,
RICHARDSON, TEXAS 75080 OR VIA THE COMPANY'S WEBSITE AT: WWW.COMPUTRAC.COM
17
<PAGE> 20
EXHIBIT A
COMPUTRAC, INC.
1999 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the interests of
CompuTrac, Inc., a Texas corporation (the "Company"), and its
Subsidiaries by providing an additional incentive to attract and retain
qualified and competent persons who provide management and director
services and upon whose efforts and judgment the success of the Company
and its Subsidiaries is largely dependent, through the encouragement of
stock ownership in the Company by such persons.
2. Definitions. As used herein, the following terms shall have the meaning
indicated:
a) "Board" shall mean the Board of Directors of the Company.
b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
c) "Committee" shall mean the Compensation Committee of the
Board, or such other committee of the Board as may be
designated by the Board to administer the Plan; provided that
the Committee shall consist of two or more directors of the
Company, all of whom are both a "Non-Employee Director" within
the meaning of Rule 16b-3 under the Exchange Act and an
"outside director" within the meaning of the definition of
such term as contained in Treasury Regulation Section
1.162-27(e)(3) interpreting Section 162(m) of the Code, or any
successor definitions adopted. The members of the Committee
shall be appointed from time to time by, and shall serve at
the discretion of, the Board.
d) "Company" shall mean CompuTrac, Inc., a Texas corporation, or
any successor thereto.
e) "Director" shall mean a member of the Board.
f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and
successor provisions and rules thereto.
g) "Fair Market Value" of a Share on any date of reference shall
be the Closing Price of the Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"), on the business
day immediately preceding such date, unless the Committee in
its sole discretion shall determine otherwise in good faith.
For this purpose, the "Closing Price" of the Common Stock on
any business day shall be (i) if the Common Stock is listed or
admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on
a consolidated transaction reporting system, the last reported
sale price of Common Stock on such exchange or reporting
system, as reported in any newspaper of general circulation,
(ii) if the Common Stock is quoted on the National Association
of Securities Dealers Automated Quotations System ("NASDAQ"),
or any similar system of automated dissemination of quotations
of securities prices in common use, the mean between the
closing high bid and low asked quotations for such day of
Common Stock on such system, or (iii) if neither clause (i) or
(ii) is applicable, the mean between the high bid and low
asked quotations for the Common Stock as reported by the
National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and asked quotations
for Common Stock on at least five of the ten preceding days.
h) "Incentive Stock Option" shall mean an incentive stock option
as defined in Section 422 of the Code.
i) "Non-Statutory Stock Option" shall mean an Option which is not
an Incentive Stock Option.
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<PAGE> 21
j) "Option" (when capitalized) shall mean any option granted
under this Plan.
k) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the
rights of such person under this Plan by reason of the death
of such person.
l) "Plan" shall mean this CompuTrac, Inc. 1999 Stock Option Plan.
m) "Share(s)" shall mean a share or shares of the Common Stock.
n) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with
the Company if, at the time of the granting of the Option,
each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one
of the other corporations in such chain.
3. Shares and Options. The Company may grant to Optionees from time to
time Options to purchase an aggregate of up to Five Hundred Thousand
(500,000) Shares from the authorized and unissued Shares of the Company
or Shares reacquired by the Company at the time; provided, however,
that the maximum number of Shares for which Options may be granted
under the Plan to any one person during a calendar year is Three
Hundred Fifty Thousand (350,000). If any Option granted under the Plan
shall terminate, expire, or be canceled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares. An
Option granted hereunder shall be either an Incentive Stock Option or a
Non-Statutory Stock Option as determined by the Committee at the time
of grant of such Option and shall clearly state whether it is an
Incentive Stock Option or a Non-Statutory Stock Option. All Incentive
Stock Options shall be granted within 10 years of the effective date of
this Plan.
4. Dollar Limitation. Options otherwise qualifying as Incentive Stock
Options hereunder will be treated as Non-Statutory Stock Options to the
extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares, with respect to which Options meeting
the requirements of Section 422(b) of the Code are exercisable for the
first time by any individual during any calendar year (under all plans
of the Company and its parent and subsidiary corporations), exceeds
$100,000.00.
5. Conditions for Grant of Options.
a) Each Option shall be evidenced by a written option agreement
between the Company and the Optionee that may contain any term
deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable
law. In the event of a conflict between an option agreement
and the Plan, the terms of the Plan shall govern. Optionees
shall be those persons selected by the Committee from the
class of all regular employees of the Company and its
Subsidiaries and all Directors, whether or not employees;
provided, however, that no Incentive Stock Option shall be
granted to a Director who is not also an employee of the
Company or a Subsidiary. Any person who files with the
Committee, in a form satisfactory to the Committee, a written
waiver of eligibility to receive any Option under this Plan
shall not be eligible to receive an Option under this Plan for
the duration of such waiver.
b) In granting Options, the Committee shall take into
consideration the contribution the person has made to the
success of the Company or its Subsidiaries and such other
factors as the Committee shall deem to be appropriate. The
Committee shall also have the authority to consult with and
receive recommendations from officers and other personnel of
the Company and its Subsidiaries with regard to these matters.
The Committee may from time to time in granting Options under
the Plan prescribe such other terms and conditions concerning
such Options as it deems appropriate, including, without
limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option
rights accrue or become exercisable in installments over a
period of years, or upon the attainment of stated goals or
both, or (iii) relating an Option to the continued employment
of the Optionee for a specified period of time, provided that
such terms and conditions are not more favorable to an
Optionee than those expressly permitted in the Plan.
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<PAGE> 22
c) Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other
benefits related to their employment with the Company or its
Subsidiaries. Neither the Plan nor any Option granted under
the Plan shall confer upon any person any right to employment
or continuance of employment by the Company or its
Subsidiaries.
6. Exercise Price. The price at which a Share may be purchased upon
exercise of an Option shall be determined by the Committee, but such
exercise price shall not be less than 100% of the Fair Market Value of
a Share on the effective date of the Option's grant.
7. Exercise of Options.
a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with
the terms of the Option, (ii) full payment of the aggregate
exercise price of the Shares as to which the Option is
exercised has been made, and (iii) arrangements that are
satisfactory to the Committee in its sole discretion have been
made for the Optionee's payment to the Company of the amount
that is necessary for the Company or Subsidiary employing the
Optionee to withhold in accordance with applicable Federal or
state tax withholding requirements.
b) Unless further limited by the Committee in any Option, the
exercise price of any Shares purchased shall be paid in cash,
by certified or official bank check, by money order, with
Shares or by a combination of the above; provided, however,
that the Committee in its sole discretion may accept a
personal check in full or partial payment of any Shares. If
the exercise price is paid in whole or in part with Shares,
the value of the Shares surrendered shall be their Fair Market
Value on the date the Option is exercised. The Company in its
sole discretion may, on an individual basis or pursuant to a
general program established in connection with this Plan, lend
money to an Optionee, guarantee a loan to an Optionee, or
otherwise assist an Optionee to obtain the cash necessary to
exercise all or a portion of an Option granted hereunder or to
pay any tax liability of the Optionee attributable to such
exercise. If the exercise price is paid in whole or part with
Optionee's promissory note, such note shall (i) provide for
full recourse to the maker, (ii) be collateralized by the
pledge of the Shares that the Optionee purchases upon exercise
of such Option, (iii) bear interest at the prime rate of the
Company's principal lender, and (iv) contain such other terms
as the Board in its sole discretion shall reasonably require.
c) No Optionee shall be deemed to be a holder of any Shares
subject to an Option unless and until a stock certificate or
certificates for such Shares are issued to such person(s)
under the terms of the Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights
for which the record date is prior to the date such stock
certificate is issued, except as expressly provided in Section
10 hereof.
8. Exercisability of Options. Any Option shall become exercisable in such
amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 8.
a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an
Option be exercisable after the expiration of 10 years from
the date of grant of the Option.
b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable:
(i) if there occurs any transaction (which shall include
a series of transactions occurring within 60 days or
occurring pursuant to a plan), that has the result
that stockholders of the Company immediately before
such transaction cease to own at least 51 percent of
the voting stock of the Company or of an entity that
results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or
any other form of corporate transaction;
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<PAGE> 23
(ii) if the stockholders of the Company shall approve a
plan of merger, consolidation, reorganization,
liquidation or dissolution in which the Company does
not survive (unless the approved merger,
consolidation, reorganization, liquidation or
dissolution is subsequently abandoned); or
(iii) if the stockholders of the Company shall approve a
plan for the sale, lease, exchange or other
disposition of all or substantially all the property
and assets of the Company (unless such plan is
subsequently abandoned).
c) The Committee may in its sole discretion accelerate the date
on which any Option may be exercised and may accelerate the
vesting of any Shares subject to any Option or previously
acquired by the exercise of any Option.
9. Termination of Option Period.
a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time
of the earliest to occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated (or, in the case of a
non-employee Director, the date on which the Optionee
ceases to be a Director) for any reason other than by
reason of (A) Cause, which, for purposes of this
Plan, shall mean the termination of the Optionee's
employment (or, in the case of a non-employee
Director, the removal of the Optionee as a Director)
by reason of the Optionee's wilful misconduct or
gross negligence, (B) a mental or physical disability
as determined by a medical doctor satisfactory to the
Committee, or (C) death;
(ii) immediately upon the termination of the Optionee's
employment (or, in the case of a non-employee
Director, the removal of the Optionee as a Director)
for Cause;
(iii) one year after the date on which the Optionee's
employment is terminated (or, in the case of a
non-employee Director, the date the Optionee is
removed as a Director) by reason of a mental or
physical disability (within the meaning of Section
22(e) of the Code) as determined by a medical doctor
satisfactory to the Committee;
(iv) (A) twelve months after the date of termination of
the Optionee's employment (or, in the case of a
non-employee Director, the removal of the Optionee as
a Director) by reason of death of the employee, or
(B) three months after the date on which the Optionee
shall die if such death shall occur during the one
year period specified in Subsection 9(a)(iii) hereof.
b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date
of the consummation of any corporate transaction described in
Subsections 8(b)(ii) or (iii) hereof, any Option that remains
unexercised on such date. Such cancellation notice shall be
given a reasonable period of time prior to the proposed date
of such cancellation and may be given either before or after
stockholder approval of such corporate transaction.
10. Adjustment of Shares.
a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or
decrease in the number of issued and outstanding Shares
through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares available for grant under the Plan,
so that the same percentage of the Company's issued
and outstanding Shares shall continue to be subject
to being so optioned; and
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<PAGE> 24
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then
subject to an outstanding Option, so that the same
percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same
aggregate exercise price.
b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with
respect to the exercise price or the number of Shares subject
to the Options, or both, when, in the Committee's sole
discretion, such adjustments become appropriate by reason of a
corporate transaction described in Subsections 8(b)(ii) or
(iii) hereof.
c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any
class, either in connection with direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the
number of or exercise price of Shares then subject to
outstanding Options granted under the Plan.
d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall
not affect in any manner the right or power of the Company to
make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger
or consolidation of the Company; (iii) any issue by the
Company of debt securities, or preferred or preference stock
that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company;
(v) any sale, transfer or assignment of all or any part of the
assets or business of the Company; or (vi) any other corporate
act or proceeding, whether of a similar character or
otherwise.
11. Transferability of Options. Each Incentive Stock Option shall provide
that such Option shall not be transferable by the Optionee otherwise
than by will or the laws of descent and distribution, and each
Incentive Stock Option shall be exercisable during the Optionee's
lifetime only by the Optionee. Each Non-Statutory Stock Option shall
provide that such Option shall be exercisable only by the Optionee or
by a person or entity to which the Optionee is permitted to transfer
the Option in accordance with this Section 11. A Non -Statutory Stock
Option granted under the Plan shall be transferrable by the Optionee
only as follows:
(a) By will or the laws of descent and distribution upon the death
of the Optionee;
(b) By gift or a domestic relations order to a "family member" of
the Optionee, as such term is defined in the instructions to
Form S-8 under the Securities Act of 1933, as amended,
including without limitation trusts in which family members of
the Optionee have more than 50% of the beneficial interest,
foundations in which such family members control the
management of assets, and any other entity in which such
family members or the Optionee own more than 50% of the voting
interests; or
(c) To an entity in which more than 50% of the voting interests
are owned by the Optionee or the Optionee's family members in
exchange for an interest or interests in that entity.
Each permitted transferee will execute an agreement satisfactory to the
Company agreeing to be bound by the terms and provisions of this Plan
and the Optionee's original option agreement relating to the Option.
12. Issuance of Shares. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Committee may require such agreements
or undertakings, if any, as the Committee may deem necessary or
advisable to assure compliance with any such law or regulation
including, but not limited to, the following:
a) a representation and warranty by the Optionee to the Company,
at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view
to, or for sale in connection with, the distribution of any
such Shares; and
22
<PAGE> 25
b) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary
or appropriate to comply with the provisions of any securities
law deemed by the Committee to be applicable to the issuance
of the Shares and are endorsed upon the Share certificates.
In addition and notwithstanding anything contained in the Plan to the
contrary, the Company shall have no obligation to issue or deliver
Shares under the Plan prior to (a) the obtaining of any approval from
any governmental agency which the Company shall, in its sole
discretion, determine to be necessary or advisable, (b) the admission
of such shares to listing on the stock exchange or stock market on
which the Common Stock may be listed and (c) the completion of any
registration of any governmental body which the Company shall, in its
sole discretion, determine to be necessary or advisable.
13. Administration of the Plan.
a) The Plan shall be administered by the Committee, which shall
consist of one or more members of the Board. The Committee
shall have all of the powers of the Board with respect to the
Plan. Any member of the Committee may be removed at any time,
with or without cause, by resolution of the Board and any
vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.
b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The
determinations and the interpretation and construction of any
provision of the Plan by the Committee shall be final and
conclusive.
c) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the
Committee at a meeting or (ii) without a meeting by the
unanimous written approval of the members of the Committee.
14. Options for 10% Shareholders. Notwithstanding any other provisions of
the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through
attribution under Section 424(d) of the Code) at the date of grant,
stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (or of its parent or subsidiary as
defined in Section 424 of the Code at the date of grant) unless the
exercise price of such Option is at least 110% of the Fair Market Value
of the Shares subject to such Option on the date the Option is granted,
and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
15. No Fractional Shares. No fractional shares of Common Stock shall be
issued pursuant to any Option granted under the Plan, and no payment or
other adjustment shall be made in respect of any such fractional share.
16. Withholding Taxes. The Company shall be entitled to deduct from any
payment made under the Plan, regardless of the form of such payment,
the amount of all applicable income and employment taxes required by
law to be withheld with respect to such payment and may require the
Optionee to pay to the Company such withholding taxes prior to and as a
condition of the making of any payment or the issuance or delivery of
any shares of Common Stock under the Plan. In addition, the Company or
Subsidiary employing the Optionee shall be entitled to deduct from any
other compensation payable to the Optionee any withholding obligations
with respect to Options under the Plan.
17. Binding Effect. The obligation of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from
the merger, consolidation or other reorganization of the Company, or
upon any successor corporation or organization succeeding to all or
substantially all of the assets and business of the Company. The terms
and conditions of the Plan shall be binding upon each Optionee and his
or her heirs, legatees, distributees and legal representatives.
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<PAGE> 26
18. Interpretation.
a) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the Plan will qualify as
Incentive Stock Options under section 422 of the Code. If any
provision of the Plan should be held invalid for the granting
of Incentive Stock Options or illegal for any reason, such
determination shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced
as if such provision had never been included in the Plan.
b) This Plan shall be governed by the laws of the State of Texas.
c) Headings contained in this Agreement are for convenience only
and shall in no manner be construed as part of this Plan.
d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
19. Amendment and Discontinuation of the Plan. The Board may at any time
suspend, terminate, amend or modify the Plan, in whole or in part;
provided, however, that no amendment or modification of the Plan shall
become effective without the approval of such amendment or modification
by the stockholders of the Company if the Company, on the advice of
counsel, determines that such stockholder approval is necessary or
desirable. Upon termination of the Plan, the terms and provisions of
the Plan shall, notwithstanding such termination, continue to apply to
Options granted prior to such termination. No suspension, termination,
amendment or modification of the Plan shall adversely affect in any
material way any Option previously granted under the Plan, without the
consent of the Optionee holding such Option (except that such consent
shall not be required in the case of an amendment or modification
required following a change in law or interpretation thereof to cause
the Options under the Plan to continue to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code).
20. Effective Date and Termination Date. The Plan shall be effective as of
June ___, 1999, the date of its adoption by the Board, provided it is
duly approved by the holders of at least a majority of the Shares of
Common Stock present or represented and entitled to vote at a meeting
of the shareholders of the Company duly held in accordance with
applicable law within twelve months after the date of adoption of the
Plan by the Board. If the Plan is not so approved, the Plan shall
terminate and any Option granted hereunder shall be null and void. If
approved, the Plan shall terminate on the 30th anniversary of the
effective date, unless earlier terminated by the Board in accordance
with Section 16 hereof.
IN WITNESS WHEREOF, this Plan has been executed this ____ day of June,
1999.
COMPUTRAC, INC.
By:
-----------------------------------
Name:
----------------------------
Title:
--------------------------
<PAGE> 27
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COMPUTRAC, INC. * 222 MUNICIPAL DRIVE * RICHARDSON, TX 75080
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of CompuTrac, Inc., a Texas corporation (the
"Company"), hereby appoints Harry W. Margolis, Dana E. Margolis and Roger P.
Young, and each of them, with power of substitution, as proxies of the
undersigned, to vote the shares of stock of the Company held of record by the
undersigned as of the close of business on May 28, 1999, at the Annual Meeting
of Stockholders to be held on July 15, 1999, and all adjournments thereof.
(1) [ ] FOR all nominees for [ ] WITHHOLD AUTHORITY to vote for
Directors listed below all nominees listed below
(except as marked to the
contrary below)
Harry W. Margolis, Dana E. Margolis, D. Bruce Walter, Gerald D. Harris and
Kenneth R. Nicholas
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
(2) To approve the adoption of the Company's 1999 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon any other matter which may properly come before the Annual Meeting in
their discretion.
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EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER
SPECIFIED HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS AND
FOR THE APPROVAL OF THE OTHER PROPOSAL LISTED ON THE REVERSE
HEREOF.
PLEASE SIGN AND RETURN PROMPTLY
Receipt of the Notice of Annual
Meeting and Proxy Statement is
hereby acknowledged.
Dated:___________________, 1999
_______________________________
Signature
_______________________________
Signature
IMPORTANT - Joint owners must
EACH sign. When signing as
attorney, trustee, executor,
administrator, guardian or
corporate officer, please give
your FULL title.
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