TOTAL RESEARCH CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON DECEMBER 8, 1999.
The undersigned stockholder of Total Research Corporation (the
"Company") acknowledges receipt of Notice of Annual Meeting of Stockholders and
the Proxy Statement each dated November 8, 1999 and the undersigned revokes all
prior proxies and appoints Jane B. Giles, Patti Hoffman, or either of them, as
proxies for the undersigned, with full power of substitution to each, to vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote at the Company's Annual Meeting of Stockholders to be held at the Marriott
Hotel, Forrestal Center, 201 Village Boulevard, Princeton, New Jersey, at 11:00
a.m., local time, on December 8, 1999 and at any postponement(s) or
adjournment(s) thereof, and the undersigned authorizes and instructs said
proxies or their substitutes to vote as follows:
<PAGE>
1. AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR A CLASSIFIED
BOARD OF DIRECTORS: To amend the Company's Certificate of Incorporation to
create a classified board of directors with three classes:
FOR |_| AGAINST |_| ABSTAIN |_|
2. ELECTION OF DIRECTORS: To elect the nominees listed below to the Board of
Directors:
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the contrary below) |_| to vote for all nominees listed
below |_|
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE BOX TO THE RIGHT OF THE NOMINEE'S NAME IN THE LIST BELOW.)
ALBERT ANGRISANI |_| DAVID BRODSKY |_|
JOHN P. FREEMAN |_| GEORGE LINDEMANN |_|
HOWARD SHECTER |_| J. EDWARD SHRAWDER |_|
LORIN ZISSMAN |_|
3. AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK: To amend the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock of the
Company from 20,000,000 to 50,000,000:
FOR |_| AGAINST |_| ABSTAIN |_|
4. APPROVAL OF AMENDMENTS TO THE 1995 STOCK INCENTIVE PLAN AS AMENDED AND
RESTATED EFFECTIVE SEPTEMBER 23, 1998: To increase the number of shares of
Common Stock of the Company that may be issued under the 1995 Stock Incentive
Plan and to increase the maximum number of shares that may be issued as options
to any individual employee:
FOR |_| AGAINST |_| ABSTAIN |_|
5. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS: To ratify the Company's
appointment of Ernst & Young LLP as independent auditors for the fiscal year
ending June 30, 2000:
FOR |_| AGAINST |_| ABSTAIN |_|
and in their discretion, upon any other matters that may properly come before
the meeting or any adjournments thereof.
(Continued and to be dated and signed on the other side.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED FOR AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR A
CLASSIFIED BOARD OF DIRECTORS, FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR,
FOR AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK TO 50,000,000 SHARES, FOR AMENDMENT TO THE
1995 STOCK INCENTIVE PLAN AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 23, 1998,
FOR RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS AND, IN ACCORDANCE
WITH THE JUDGMENT OF THE PROXIES, FOR OR AGAINST ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY POSTPONEMENT(S) OR
ADJOURNMENT(S) THEREOF.
Receipt of the Notice of Annual Meeting and of the Proxy Statement and
the Annual Report of the Company accompanying the same is hereby acknowledged.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: _____________________________, 1999
------------------------------------------
(Signature of Stockholder)
-----------------------------------------
(Signature of Stockholder)
Please sign exactly as your name(s) appears
on your stock certificate. If signing as
attorney, executor, administrator, trustee or
guardian, please indicate the capacity in which
signing. When signing as joint tenants, all
parties to the joint tenancy must sign. When the
proxy is given by a corporation, it should be
signed by an authorized officer.
TOTAL RESEARCH CORPORATION
5 Independence Way
Princeton, New Jersey 08543
November 8, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Total Research Corporation to be held on Wednesday, December 8, 1999, at
11:00 a.m. at the Marriott Hotel, Forrestal Center, 201 Village Boulevard,
Princeton, New Jersey.
We hope that you will attend in person. If you plan to do so, please
indicate in the space provided on the enclosed proxy. Whether you plan to attend
the Annual Meeting or not, we urge you to sign, date, and return the enclosed
proxy as soon as possible in the postage-paid envelope provided. This will
ensure representation of your shares in the event that you are unable to attend
the Annual Meeting.
The matters expected to be acted upon at the Annual Meeting are
described in detail in the attached Notice of Annual Meeting and Proxy
Statement.
The directors and officers of Total Research Corporation look forward
to meeting with you.
Sincerely,
David Brodsky
Chairman of the Board
<PAGE>
TOTAL RESEARCH CORPORATION
5 INDEPENDENCE WAY
PRINCETON, NEW JERSEY 08543
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date and Time: December 8, 1999, 11:00 a.m., Eastern Standard Time
Place: Marriott Hotel
Forrestal Center
201 Village Boulevard
Princeton, New Jersey 08540
Purpose: 1. Approve an amendment to the Company's Certificate of
Incorporation (the "Certificate of Incorporation")
to provide for a classified board of directors.
2. Elect directors.
3. Approve an amendment to the Company's Certificate
of Incorporation to increase the number of
authorized shares of Common Stock of the Company
from 20,000,000 to 50,000,000.
4. Approve amendments to the 1995 Stock Incentive
Plan as Amended and Restated Effective September
23, 1998.
5. Ratify appointment of independent accountants. 6.
Conduct other business if properly raised.
Who may vote: Only stockholders of record on November 1, 1999.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
JANE B. GILES
Secretary
November 8, 1999
<PAGE>
TOTAL RESEARCH CORPORATION
5 INDEPENDENCE WAY
PRINCETON, NEW JERSEY 08543
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
Page
----
General Information........................................................ 1
Board of Directors Proposal No. 1
Approval of Classified Board of Directors................................ 2
Board of Directors Proposal No. 2
Election of Directors.................................................... 3
Board Committees........................................................ 5
Director Compensation................................................... 5
Director and Executive Officer Stock Ownership.......................... 5
Information Concerning Executive Officers............................... 7
Report of the Compensation Committee on Executive Compensation.......... 8
Executive Compensation.................................................. 10
Stock Performance Graph................................................. 11
Certain Relationships and Related Transactions.......................... 11
Board of Directors Proposal No. 3
Approval of Increase in Number of Authorized Shares of Common Stock...... 12
Board of Directors Proposal No. 4
Approval of Amendments to 1995 Stock Incentive Plan ..................... 13
Board of Directors Proposal No. 5
Ratification of Appointment of Independent Auditors ..................... 17
Fiscal Year 1999 Annual Report and Form 10-K............................... 18
Additional Information..................................................... 18
Other Business............................................................. 19
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IMPORTANT: STOCKHOLDERS ARE REQUESTED TO DATE, SIGN AND MAIL THE ENCLOSED PROXY.
A POSTAGE PAID ENVELOPE IS PROVIDED.
- - - --------------------------------------------------------------------------------
<PAGE>
TOTAL RESEARCH CORPORATION
5 INDEPENDENCE WAY
PRINCETON, NEW JERSEY 08543
PROXY STATEMENT
GENERAL INFORMATION
Who may vote
Stockholders of Total Research Corporation ("Total Research" or the "Company"),
as recorded in our stock register on November 1, 1999, may vote at the Annual
Meeting.
How to vote
You may vote in person at the Annual Meeting or by proxy. We recommend that you
vote by proxy even if you plan to attend the Annual Meeting. You can always
change your vote at the Annual Meeting.
How proxies work
The Company's Board of Directors (the "Board") is asking for your proxy. Giving
us your proxy means you authorize us to vote your shares at the Annual Meeting
in the manner you direct. You may vote for all, some, or none of our director
candidates. You may also vote for or against the other proposals or abstain from
voting.
If you sign and return the enclosed proxy card but do not specify how to vote,
we will vote your shares IN FAVOR of our director candidates and IN FAVOR of
each of the management proposals.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are covered by one card. The
Company's employees receive a separate card for any shares held in the Company's
Employee Stock Purchase Plan. If you hold shares through someone else, such as a
stockbroker, you may get material from them asking how you want to vote.
Revoking a proxy
You may revoke a proxy before it is voted by submitting a new proxy with a later
date; by voting in person at the Annual Meeting; or by notifying the Company's
Secretary in writing at the address listed under "Additional Information -
Questions" on page 18.
Confidential voting
Independent inspectors count the votes. Your individual vote is kept
confidential from us unless special circumstances exist. For example, a copy of
your proxy will be sent to us if you write comments on the card.
Quorum
In order to carry on the business of the Annual Meeting, we must have a quorum.
This means at least a majority of the outstanding shares eligible to vote must
be represented at the Annual Meeting, either by proxy or in person. Shares owned
by Total Research are not voted and do not count for this purpose.
Votes needed
Election as a director requires a plurality of the votes eligible to be cast by
the Common Stock present in person or represented by proxy at the Annual Meeting
and entitled to vote on the subject matter. The proposed amendments to the
Certificate of Incorporation require the affirmative vote of a majority of the
outstanding stock entitled to vote thereon. For the other proposals to be voted
upon at the Annual Meeting,
<PAGE>
the affirmative vote of a majority of the votes eligible to be cast by the
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the matter is required.
The inspectors of election will treat abstentions and broker non-votes (i.e.,
shares held by brokers or nominees that the broker or nominee does not have
discretionary power to vote on a particular matter and as to which instructions
have not been received from the beneficial owners or persons entitled to vote)
as shares that are present and entitled to vote for purposes of determining a
quorum. With regard to the election of directors, votes may be cast in favor of
or withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on proposals other than the
election of directors and will be counted as present for purposes of the item on
which the abstention is noted. Therefore, such abstentions will have the effect
of a negative vote. The inspectors of election will treat broker non-votes as
shares that are unvoted and not present on such proposals. Because amending the
Certificate of Incorporation requires the majority vote of all shares
outstanding and entitled to vote thereon, broker non-votes will have the effect
of a negative vote regarding the proposed amendments. With regard to proposals
other than the election of directors and amendments to the Certificate of
Incorporation, such broker non-votes will have no effect on the outcome.
Attending in person
Only stockholders, their proxy holders, and the Company's guests may attend the
Annual Meeting.
If you hold your shares through someone else, such as a stockbroker, bring proof
of your ownership to the Annual Meeting. Acceptable proof could include an
account statement showing that you owned Total Research shares on November 1,
1999.
Cost of proxy
The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others who forward solicitation
material to beneficial owners of common stock.
PROPOSAL NO. 1:
AMENDMENT OF COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE FOR A
CLASSIFIED BOARD OF DIRECTORS
(Item 1 on the proxy card)
The Board of Directors has unanimously approved and recommended for
stockholder approval an amendment to the Certificate of Incorporation to add a
new Article 11 providing for a classified Board of Directors, the text of which
is set forth in Exhibit A to this Proxy Statement (the "Classified Board
Amendment"). Under Delaware law, the amendment would become effective upon
stockholder approval and filing of the amendment to the Certificate of
Incorporation.
The Classified Board Amendment provides that, at the 1999 Annual Meeting,
the Company's Board of Directors will be divided into three classes (denominated
Class I, Class II and Class III) which shall be as nearly equal in number as
possible. The directors in each class will hold office following their initial
classification for terms of one year, two years and three years, respectively.
Thus, the term of office of the Class I Directors will expire at the year 2000
Annual Meeting of Stockholders, the term of office of the Class II Directors
will expire at the year 2001 Annual Meeting of Stockholders, and the term of
office of the Class III Directors will expire at the year 2002 Annual Meeting of
Stockholders. Thereafter, the successors to each class of directors shall be
elected for three-year terms. If Proposal 1 is not approved, directors will be
elected to serve for a term of one year and until their successors are elected
and qualified.
Under Delaware law, a director of a corporation with a classified board of
directors may be removed by the stockholders only for cause unless the
corporation's certificate of incorporation provides otherwise. The Company's
Certificate of Incorporation does not provide otherwise. Therefore, if Proposal
1 is approved, the holders of a majority of the outstanding voting shares would
be able to remove a director during his or her elected term only for "cause." In
this context, "cause" is not defined by statute. If a vacancy occurs during the
term of any director, under Delaware law the majority of the Board of Directors
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<PAGE>
may fill the vacancy, and the director so appointed will hold office until the
next election of the class to which he or she was appointed.
Classification of the Board of Directors will promote continuity and
stability in the Company's management and policies since a majority of the
Company's directors at any given time will have prior experience with the
Company. The Board of Directors further believes that such continuity and
stability will facilitate long-range planning and will have a beneficial effect
on employee loyalty and customer confidence. Currently, the entire Board of
Directors must stand for election each year. Accordingly, it is possible that
all or a majority of the current directors could be replaced at any given Annual
Meeting. If Proposal 1 is approved, the Board of Directors will be divided into
three classes effective with the 1999 Annual Meeting, only one of which classes
will stand for election at each Annual Meeting thereafter.
In addition, classification of the Board of Directors may have the effect
of delaying, deferring or preventing a change of control of the Company since
only one-third of the directors are up for election each year and directors may
not be removed, except for cause. The Board of Directors believes that increased
management stability and continuity fostered by the classified Board of
Directors will enhance the capacity of the Board of Directors to defend against
undesirable takeover attempts and, in the event of the sale of the Company,
would enhance the Board of Directors' ability to negotiate a transaction that is
in the stockholders' best interest. The proposed classification of the Board of
Directors is not being recommended in response to a pending or threatened
attempt to acquire control of the Company.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required for approval of the amendment to the Certificate of Incorporation to
provide for a classified Board of Directors.
The Board recommends that you vote FOR this proposal.
PROPOSAL NO. 2:
ELECTION OF DIRECTORS
---------------------
(Item 2 on the proxy card)
The Board has nominated the director candidates named below.
The Company's By-laws provide that the number of directors shall be as fixed
from time to time by resolution duly adopted by the Board of Directors. The
number is currently set at seven. The Company's directors hold office until
their successors are duly elected and qualified or until their earlier death,
disqualification, resignation or removal.
At the Annual Meeting, seven directors will be elected. The shares represented
by the enclosed proxy will be voted in favor of the persons nominated, unless a
vote is withheld from any or all of the individual nominees. While management
has no reason to believe that the nominees will not be available as candidates,
should such a situation arise, proxies may be voted for the election of such
other persons as the holders of the proxies may, in their discretion, determine.
Directors are elected by a plurality of the votes cast at the Annual Meeting,
either in person or by proxy. Votes that are withheld will be excluded entirely
from the vote and will have no effect.
The Board of Directors oversees the management of the Company on your behalf.
The Board reviews the Company's long-term strategic plans and exercises direct
decision-making authority in essential areas. The Board chooses the Chief
Executive Officer, sets the scope of his authority to manage the Company's
day-to-day business and evaluates his performance.
Of the slate of directors proposed by Total Research, three out of seven
nominees are not employees of the Company. The table below sets forth the names,
ages, current positions with the Company and personal information of each of the
nominees for director. It also indicates the class to which such director will
belong if the proposal to amend the Certificate of Incorporation to provide for
a classified Board of Directors is adopted. See "Proposal 1 -- Amendment of
Company's Certificate of Incorporation to Provide for a Classified Board of
Directors." If Proposal 1 is not approved, directors will be elected to serve
for a term of one year and until their successors are duly elected and
qualified.
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<PAGE>
The Board recommends you to vote FOR each of the nominees:
Albert Angrisani................. Mr. Angrisani has been President and Chief
Age 50 Executive Officer since July 1998. Prior
Director since 1994 to July 1998, Mr. Angrisani was a
Class I consultant to the Company. From January
1993 to April 1998, Mr. Angrisani was
the President of the Princeton-Potomac
Management Company, a consulting and
financial services firm.
David Brodsky.................... Mr. Brodsky has been Chairman of the
Age 62 Board of Directors of the Company since
Director since July 1998 past July 1998. He has been a private
Class III investor during the six years. He is
directly involved in the Company's
e-Commerce business initiatives. See the
section on "Certain Relationships and
Related Transactions".
John P. Freeman.................. Mr. Freeman is a Senior Vice President,
Age 40 Capital Markets and a founder of Emerging
Director Nominee Growth Equities, Ltd., an investment
Class II banking and institutional research
brokerage firm. Mr. Freeman also is the
founder and President and CEO of Covenant
Partners, a hedge fund focused on
investing in the direct marketing
industry. From November 1992 to May 1996,
Mr. Freeman was the Director of Investor
Relations and Strategic Planning and
Development for DiMark, Inc. Prior to
his employment at DiMark, he was the
Director of Investor Relations for
ADVANTA, a direct marketer of consumer
financial services products, from 1990 to
1992.
George Lindemann................. Mr. Lindemann has been Chairman and
Age 63 Chief Executive Officer of Southern Union
Director since July 1998 Company since February 1990. He is also
Class III Chairman & Chief Executive Officer of
Activated Communications, Inc. He was the
founder, Chairman and Chief Executive
Officer of Metro Mobile CTS, Inc. from
1982 to 1992 when it merged with Bell
Atlantic Corporation. During the same
period, he was President and Chief
Executive Officer of Metro Mobile
Communications, Inc.
Howard Shecter................... Mr. Shecter is a senior partner with the
Age 56 law firm of Morgan, Lewis & Bockius LLP
Director since July 1998 and has been with such firm since 1968.
Class II Mr. Shecter served as a managing partner
of Morgan, Lewis, & Bockius LLP from 1979
to 1983 and was the Chairman of the
Executive Committee of that firm in 1985.
Mr. Shecter is also a director of
Safeskin Corporation, Ashbridge
Corporation, and Heintz Investment
Company. He is directly involved in the
Company's corporate development
initiatives. See the section on "Certain
Relationships and Related Transactions".
J. Edward Shrawder............... Mr. Shrawder has been the Chief Financial
Age 58 Officer of Kent Research, a marketing
Director since 1993 research firm located in Illinois, since
Class I 1993. From 1987 to 1990, he was President
of Elrick & Lavidge, a major marketing
research firm.
Lorin Zissman.................... Mr. Zissman, founder of the Company,
Age 69 become Chairman Emeritus of the Board of
Director since 1975 Directors in April 1998. Mr. Zissman
Class III served as Chairman of the Board of
Directors and Chief Executive Officer of
the Company from its founding in 1975 to
April 1998.
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<PAGE>
BOARD COMMITTEES
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board appoints committees to help carry out its duties. In particular,
committees work on key issues in greater detail than would be possible at Board
meetings. Each committee reviews the results of its meetings with the full
Board.
The Board of Directors of the Company has an Audit Committee, a Compensation
Committee and an Executive Committee. In fiscal 1999, the Board of Directors met
three times and acted by unanimous written consent on four occasions, the
Compensation Committee met once, the Audit Committee met once and the Executive
Committee met four times.
The Audit Committee reviews the adequacy of internal controls, the results and
scope of annual audits and other services provided by the Company's independent
auditors. In fiscal 1999, the Audit Committee was compsed of Mr. Lindemann
(Chairman) and Mr. Brodsky.
The Compensation Committee establishes salaries, bonuses, and other forms of
compensation for executives of the Company and such other employees of the
Company as assigned thereto by the Board. In fiscal 1999, the Compensation
Committee was comprised of Messrs. Brodsky (Chairman), Shecter and Angrisani. In
April 1999, Messrs. Brodsky and Shecter began to work for the Company as
consultants on a part-time basis. As a result of their becoming employee
directors, the Compensation Committee will be reconstituted for fiscal 2000.
The Executive Committee has broad power to act on behalf of the Board. This
committee was established in July 1998. The Executive Committee consists of
Messrs. Brodsky (Chairman), Angrisani, Shecter and L. Zissman.
The Company does not have a nominating committee. The functions customarily
performed by a nominating committee are performed by the Board of Directors as a
whole. Any stockholder who wishes to make a nomination at an annual or special
meeting for the election of directors must do so in compliance with the
applicable procedures set forth in the Company's By-laws. The Company will
furnish copies of such By-law provisions upon written request to the Corporate
Secretary at the Company's principal executive offices, 5 Independence Way,
Princeton, NJ 08543.
During the period in which each person served as a director, each director
attended at least 75% of the aggregate number of meetings of the Board of
Directors and the committees of the Board on which such person served.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Non-employee directors are reimbursed for
their out-of-pocket expenses in attending Board meetings. Each non-employee
director receives 50,000 stock options upon joining the Board of Directors and
10,000 stock options at the end of each year of service on the Board of
Directors. See also "Certain Relationships and Related Transactions - Agreements
with Other Employee Directors."
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
The following table sets forth information, as of October 1, 1999,
concerning the Common Stock of the Company beneficially owned by (i) each
director and nominee of the Company, (ii) the Company's Chief Executive Officer
and its other four most highly compensated Executive Officers during the fiscal
year ended June 30, 1999 (collectively, the "Named Executive Officers") and all
executive officers and directors as a group, and (iii) each stockholder known by
the Company to be the beneficial owner of more than 5% of the outstanding Common
Stock.
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<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OF
OUTSTANDING SHARES
<S> <C> <C>
Albert Angrisani(1) 46,500 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
David Brodsky (2) 685,626 5.7%
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Theresa Flanagan(3) 152,457 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
John P. Freeman 257,000 2.2%
c/o Covenant Partners
500 N. Gulph Road, Suite
King of Prussia, PA 19406
Anthony Galli(4) 53,000 *
c/o Galli Associates
P.O. Box 7175
Princeton, New Jersey 08543
Jane B. Giles 1,700 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Patti Hoffman(5) 157,957 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
George L. Lindemann 193,050 1.6%
c/o Southern Union Company
767 Fifth Avenue, 50th Floor
New York, New York 10153
Mark Nissenfeld, Ph.D.(6) 153,299 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Howard Shecter(7) 249,158 1.8%
c/o Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
J. Edward Shrawder(8) 122,111 *
c/o Kent Research
1716 Livingston Street
Evanston, Illinois 60201
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<PAGE>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OF
OUTSTANDING SHARES
Eric Zissman(9) 231,661 *
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Lorin Zissman 1,438,124 12.2%
c/o Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
All directors and executive officers as a group (13 3,741,643 26.6%
persons) (10)
--------------------
* Less than 1%
</TABLE>
(1) Includes 20,000 shares subject to options exercisable within 60 days.
(2) Includes 16,665 shares subject to options exercisable within 60 days.
(3) Includes 123,457 shares subject to options exercisable within 60 days.
(4) Includes 836 shares subject to options exercisable within 60 days.
(5) Includes 123,457 shares subject to options exercisable within 60 days.
(6) Includes 123,457 shares subject to options exercisable within 60 days.
(7) Includes 36,108 shares subject to options exercisable within 60 days and
20,000 shares owned jointly, with his spouse.
(8) Includes 33,333 shares subject to options exercisable within 60 days.
(9) Includes 123,457 shares subject to options exercisable within 60 days.
(10) Includes an aggregate of 600,770 shares subject to options exercisable
within 60 days.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of David Brodsky, Howard Shecter and Al
Angrisani. Mr. Angrisani, in addition to being a director, is also Chief
Executive Officer. In April 1999, Messrs. Brodsky and Shecter began to work for
the Company as consultants on a part-time basis. As a result of their becoming
employee directors, the Compensation Committee will be reconstituted for fiscal
2000. No executive officer of the Company served on the compensation committee
of another entity or on any other committee of the board of directors of another
entity performing similar functions during the last fiscal year.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who
beneficially own more than ten percent of the Company's Common Stock to report
their ownership of and transactions in the Company's Common Stock to the
Securities and Exchange Commission and The Nasdaq National Stock Market. Copies
of these reports are also required to be supplied to the Company. The Company
believes, based solely on a review of the copies of such reports received by the
Company, that all applicable Section 16(a) reporting requirements were complied
with during 1999.
INFORMATION CONCERNING EXECUTIVE OFFICERS
The following table provides certain information as of October 1, 1999,
about each of the Company's executive officers.
NAME POSITION(S) WITH COMPANY
---- ------------------------
Albert Angrisani President, Chief Executive Officer and Director
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<PAGE>
NAME POSITION(S) WITH COMPANY
---- ------------------------
Doug Berdie Division President - Strategic Marketing Services
Theresa Flanagan Division President - Customer Loyalty Division
Jane B. Giles Corporate Secretary
William Guerin Vice President of Business Development
Kristy Hedberg President and Chief Operating Officer of Blinke(TM), Inc.
Patti Hoffman Chief Administrative Officer
Chris Kuever Senior Vice President and Director of Global
Operations
Mark Nissenfeld, Ph.D. Division President - Global Life Sciences Division
President - The Idea Farm, Inc.
Eric Zissman Chief Financial Officer and Treasurer
The business experience, principal occupation, employment and certain
other information concerning each of the Company's executive officers is set
forth below. Information regarding the business experience of Messrs. Angrisani,
Brodsky and Shecter is set forth above under the caption "Election of
Directors".
Doug Berdie has been President of Strategic Marketing Services since
November 1998. He joined the Company in February 1989 and served as Director of
Research from 1989 to 1998.
Theresa Flanagan became President of the Customer Loyalty division of
the Company in July 1996. Ms. Flanagan joined the Company in 1983 and served as
Senior Vice President from June 1993 to July 1996.
Jane B. Giles has been Corporate Secretary since July 1, 1999. She
joined the Company in April 1997 as Human Resources Manager. Prior to joining
the Company she had been with Mobil Oil Corporation for 20 years as a Human
Resources Specialist.
William Guerin joined the Company in July 1999 as Vice President of
Business Development. Prior to opening his own consulting firm in August 1998,
he served as Manager of Sales Performance for Pennsylvania Power and Light
Company, Inc. from 1996 to 1998.
Kristy Hedberg joined the Company in June 1999 as President and Chief
Operating Officer of Blinke(TM), Inc., a wholly owned subsidiary of the Company.
Prior to joining the Company she was sole proprietor of Kristy Hedberg, Inc. a
new media company.
Patti Hoffman assumed the position of Chief Administrative Officer
effective July 1, 1999. Since June 1996 she had been President of the U .S.
Regional Offices division of the Company. Ms. Hoffman joined the Company in
February 1995 as Vice President-Human Resources. Prior to that time, Ms. Hoffman
was an independent human resources consultant.
Chris Kuever became Senior Vice President and Director of Global
Operation in January 1999. He joined the Company March 1989 and most recently
was Vice President and Director of Data Processing.
Mark Nissenfeld, Ph.D., became President of the Global Life Sciences
division of the Company in July 1996. Dr. Nissenfeld joined the Company in June
1993 as Research Director of the Company and Managing Director of the Life
Sciences division. Effective April 1999 he assumed the additional responsibility
as President of The Idea Farm, Inc. a wholly owned subsidiary of the Company.
Eric Zissman, the son of Lorin Zissman, has been Chief Financial
Officer and Treasurer of the Company since October 1996. He has taken on the
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additional responsibility of Corporate Development Officer. Mr. Zissman joined
the Company in 1988 and served as Vice President - Accounting from June 1993 to
October 1996.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and approves the compensation of executives
of the Company and such other employees of the Company as assigned thereto by
the Board and makes recommendations to the Board with respect to standards for
setting compensation levels.
The Compensation Committee adopted the Report on Executive Compensation set
forth below.
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation for fiscal 1999 consisted of two
primary components: base salary and bonus. The base salary and bonus of the
Named Executive Officers, as well as Kristy Hedberg, is established in such
officer's employment agreement.
See "Certain Relationships and Related Transactions - Employment Agreements".
The salary and bonus components of the Company's executive compensation
are together designed to facilitate fulfillment of the following compensation
objectives: (i) retaining competent management; (ii) rewarding management for
the attainment of short and long term accomplishments; (iii) aligning the
interests of management with those of the Company's stockholders; and (iv)
relating executive compensation to the achievement of the Company's goals and
financial performance.
Base Salary. The base salary of each of the Named Executive Officers
in fiscal 1999 was paid in accordance with the terms of their respective
employment agreements.
Bonuses. The Compensation Committee believes that the awarding of
annual bonuses provides an incentive and reward for short-term financial success
and long-term Company growth. The bonus component of the long-term employment
agreements of each of the Executive Officers is intended to link compensation in
significant part to the Company's financial performance and the attainment of
the Company's goals. The bonus earned by each of the Executive Officers was
calculated in accordance with a formula set forth in such officer's employment
agreement which entitles such officer to a bonus based on their business unit
and/or Company's financial performance for each fiscal year. See "Certain
Relationships and Related Transactions - Employment Agreements".
Incentive Stock Options. The Company uses incentive stock options
as a long-term, non-cash incentive and to align the long-term interests of
executive officers and stockholders of the Company. Stock options are awarded
based upon the market price of the Common Stock on the date of grant and are
linked to future performance of the Company's stock because they do not become
valuable to the holder unless the price of the Company's stock increases above
the price on the date of grant. The number of options granted to an executive
officer as a form of non-cash compensation is determined by the following
factors: (i) the number of stock options previously granted to an Executive
Officer; (ii) the Executive Officer's remaining options exercisable; and (iii)
the value of those remaining stock options as compared to the anticipated value
that an Executive Officer will add to the Company in the future. The
Compensation Committee approved and recommended to the Board that certain
outstanding stock options which were originally issued inadvertently as
non-qualified options be classified as incentive stock options, which was the
Committee's original intent. The Board approved this recommendation as well as
the extension of the vesting period of these incentive stock options to more
closely conform to and support the Company's long-term financial goals.
Compensation of the Chief Executive Officer. The compensation package
of Mr. Angrisani, the Company's President and Chief Executive Officer, consists
primarily of base salary and bonus components. The levels of base salary and
bonus, as well as the factors considered in determining such levels, are
established by Mr. Angrisani's Employment Agreement and the Compensation
Committee.
In fiscal 1999, Mr. Angrisani earned a base salary of $175,000 and an
estimated bonus of $125,000. In addition, pursuant to his Employment Agreement,
Mr. Angrisani receives certain other customary perquisites and benefits. As of
October 1, 1999, Mr. Angrisani beneficially owned 520,000 options subject to
certain forfeiture and performance contingencies, and 430,000 incentive stock
options
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were granted to Mr. Angrisani on April 6, 1999. The vesting of the additional
430,000 options is contingent upon meeting designated performance goals.
Albert Angrisani, David Brodsky
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation earned, whether paid or
deferred, by each Named Executive Officer for services rendered in all
capacities to the Company during the fiscal years ended June 30, 1997, 1998 and
1999.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Awards All Other
------ ---------
Annual Compensation Securities Underlying Compensation
------------------- --------------------- ------------
Name and Principal Position Year Salary ($) Bonus ($) Options (#) ($)
- - - --------------------------- ---- ---------- --------- ----------- ---
<S> <C> <C> <C> <C> <C>
Albert Angrisani......... 1999 175,000 125,000 430,000(3) 12,000(4)
President and Chief 1998 175,000(2) 43,900 - -
Executive Officer (1) 1997 120,000(2) 40,000 335,000(5) -
Eric Zissman............. 1999 140,000 46,563 - 10,140 (6)
Chief Financial Officer 1998 120,000 32,900 - 17,066(7)
and
Treasurer 1997 100,000 40,000 250,000(5) 4,075(8)
Patti Hoffman............ 1999 140,000 40,000 - 10,140(6)
Chief Administrative 1998 120,000 32,800 - 4,140(8)
Officer
Offices division 1997 100,000 40,000 250,000(5) 4,229(8)
Mark Nissenfeld, Ph.D.... 1999 155,847 0 - 12,000(6)
President - Global 1998 120,000 32,000 - 4,140(8)
Health Care division 1997 110,000 40,000 250,000(5) 4,750(8)
Theresa Flanagan......... 1999 134,480 44,300 - 10,034(6)
President - Customer 1998 120,000 6,000 - 3,695(8)
Loyalty division 1997 100,000 40,000 250,000(5) 4,218(8)
</TABLE>
----------------------------
(1) Mr. Angrisani assumed the responsibilities of President and Chief
Executive Officer of the Company on July 1, 1998. Prior to July 1998,
Mr. Angrisani was a consultant to the Company.
(2) Represents fees paid to Mr. Angrisani in his capacity as a consultant
to the Company.
(3) Represents Incentive Stock Options granted to Mr. Angrisani. See
"Report on Executive Compensation - Compensation of the Chief Executive
Officer."
(4) Represents Mr. Angrisani's car allowance.
(5) The Company granted 250,000 stock options to each of Mr.Angrisani, Mr.
Zissman, Ms. Hoffman, Dr. Nissenfeld, and Ms. Flanagan upon the
execution of their respective employment agreements with the Company
during fiscal 1997. See "Report on Executive Compensation - Incentive
Stock Options".
(6) Represents Company's match on employee 401(k) contributions and car
allowance.
(7) Represents the Company's match on employee 401(k) contributions and
payment for accrued but unused vacation days.
(8) Represents Company match on 401(k) plan contributions.
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<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND VALUE OF OPTIONS AT FISCAL YEAR END
<CAPTION>
Number of Value of
--------- --------
Securities Unexercised
---------- -----------
Number of Underlying in-the-money
--------- ---------- ------------
Shares Unexercised Options at
------ ----------- ----------
Acquired on Value Options at Fiscal Year-End Fiscal Year-End (1)
----------- ----- -------------------------- -------------------
Name Exercise Realized (Exercisable/Unexercisable) (Exercisable/Unexercisable)
---- -------- -------- --------------------------- ---------------------------
($) (#) ($)
<S> <C> <C> <C> <C>
Angrisani, Albert - - 20,000/930,000 26,250/2,121,250
Flanagan, Theresa - - 123,457/126,543 378,087/387,538
Hoffman, Patti 27,889 108,070 123,457/126,543 378,087/387,538
Nissenfeld, Mark 23,842 68,546 123,457/126,543 378,087/387,538
Zissman, Eric 19,433 55,870 123,457/126,543 378,087/387,538
- - - -----------------------
</TABLE>
(1) Market value of underlying shares of Common Stock, based on the average
of the high and low sales price ($3.875), on June 30, 1999, minus the
aggregate exercise price.
PERFORMANCE GRAPH
The following graph depicts the cumulative total return on the
Company's Common Stock compared to the cumulative total return for the Nasdaq
Composite Index and the Nasdaq Industrial Index. The graph assumes an investment
of $100 on June 30, 1994. Reinvestment of dividends is assumed in all cases.
[Performance Graph]
The comparisons on the graph above are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Albert Angrisani, pursuant to which
he serves as President and Chief Executive Officer of the Company for a three
year term ending June 30, 2001, at an annual salary of $175,000, subject to
adjustment by the Executive Committee of the Board of Directors in fiscal years
2000 and 2001. Mr. Angrisani is also entitled to receive a bonus of up to
$125,000 per annum based upon the Company's financial performance. If Mr.
Angrisani's employment is terminated by the Company for any reason other than
Cause (as defined
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<PAGE>
therein) or disability or following a Change in Control (as defined therein), or
Mr. Angrisani terminates his employment for Good Reason (as defined therein),
then the Company is obligated to pay him a lump sum cash severance payment of
$1,000,000, in addition to continuing to provide all employee benefits to Mr.
Angrisani and his family for the remainder of the Term (as defined therein) and
all options held by Mr. Angrisani would vest immediately. Mr. Angrisani has
agreed not to engage in a Competing Business (as defined therein) during the
Term and for a period of one year thereafter, subject to certain exceptions. Mr.
Angrisani's employment agreement provides for three non-collateralized annual
loans of $100,000 each from the Company. The entire principal and interest on
such loans is due on June 30, 2001; provided, that the entire amount may
forgiven under certain circumstances described in Mr. Angrisani's employment
agreement.
The Company has entered into an employment agreement with each of Eric Zissman,
Theresa Flanagan, Patti Hoffman, and Mark Nissenfeld, pursuant to which each
serves as an executive officer of the Company for a two and one-half year term
ending June 30, 2000. Each of such executive officers is entitled to participate
in all benefit plans and performance bonuses offered by the Company. Each such
executive officer has agreed not to solicit any of the Company's clients or
employees for a period of one year following the termination of his or her
respective employment agreement. Each such executive officer was granted 250,000
stock options made pursuant to the original employment agreement.
Agreements with Other Employee Directors
The Company has employment agreements with certain of its executive officers.
See "Report on Executive Compensation". In addition, Messrs. Brodsky and Shecter
have employment agreements for the period of April 1, 1999 through June 30,
2000, for $75,000 and $50,000, respectively, to compensate them for their active
participation in specific aspects of the Company's business. Additionally,
Messrs. Brodsky and Shecter were granted 300,000 and 250,000 incentive stock
options, respectively. The vesting of these options is contingent upon meeting
certain designated performance goals. Mr. Brodsky is involved in developing the
Company's e-commerce business through Blinke(TM), Inc. (a new wholly owned
subsidiary of the Company) and Mr. Shecter directs the Company's corporate
development program.
PROPOSAL NO. 3:
AMENDMENT OF COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(Item 3 on the proxy card)
The Board of Directors has unanimously approved and recommended for
stockholder approval an amendment to the Certificate of Incorporation to
increase the number of shares of Common Stock, $.001 par value, which the
Company is authorized to issue, from 20,000,000 shares to 50,000,000 shares, the
text of which is set forth in Exhibit B hereto (the "Common Stock Amendment").
Under Delaware law, the amendment will become effective upon stockholder
approval and filing of the amendment to the Certificate of Incorporation.
The Company at present has authorized capital stock consisting of
20,000,000 shares of Common Stock, $.001 par value per share. On October 1,
1999, 11,788,185 shares of Common Stock were issued.
On July 1, 1998, the Company closed an agreement with a number of
investors, pursuant to which the investors purchased an aggregate of 1,000,000
shares of the Company's Common Stock at a price of $2.25 per share, and the
Company issued options, exercisable at any time within five (5) years from the
issuance thereof, to purchase an aggregate of 250,000 shares of the Company's
Common Stock at an exercise price of $2.25 per share.
As a result of this transaction, the number of authorized, non-reserved
shares of Common Stock available for issuance by the Company in the future has
been reduced. Hence, the Company's flexibility with respect to possible future
stock splits, equity financings, stock-for-stock acquisitions, stock dividends
or other transactions that involve the issuance of Common Stock of the Company
has been reduced. The proposed amendment to increase the number of authorized
shares of Common Stock will, if adopted, preserve the Company's ability to take
such actions. The Company has no current plans or proposals for the issuance of
additional shares of Common Stock. Subject to compliance with applicable laws
and regulations, the Board of Directors in most instances could authorize the
issuance of all or part of such shares at any time for any proper corporate
purpose without further stockholder action, although certain
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<PAGE>
large issuances of shares may require stockholder approval to maintain the
listing of the Common Stock under the Nasdaq listing provisions.
The availability for issuance of the additional shares of Common Stock
and any issuance thereof, or both, could render more difficult or discourage an
attempt to obtain control of the Company by means of a tender offer or proxy
contest directed at the Company. Thus, the amendment could be characterized as
having an anti-takeover effect.
The affirmative vote of the holders of a majority of the issued
and outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required for approval of the amendment to the Certificate of Incorporation to
increase the number of authorized shares of Common Stock to 50,000,000.
The Board of Directors unanimously recommends you vote FOR this
proposal.
PROPOSAL NO. 4:
APPROVAL OF AMENDMENTS TO
1995 STOCK INCENTIVE PLAN
(Item 4 on the proxy card)
At the Annual Meeting, the stockholders will be asked to approve two
amendments to the Company's 1995 Stock Incentive Plan as Amended and Restated
Effective September 23, 1998, the text of which is set forth on Exhibit C hereto
(the "1995 Plan"). The Company's Board of Directors resolved to increase,
effective April 6, 1999, the maximum number of shares of common stock of the
Company ("Common Stock") that may be issued under the 1995 Plan from 2,500,000
to 4,000,000, and to increase, effective April 6, 1999, the maximum number of
shares that may be issued under options granted to any individual employee from
250,000 over the life of the 1995 Plan to 450,000 over any one-year period. The
Board of Directors amended the 1995 Plan effective April 6, 1999, in order to
(i) reflect the increase in the maximum number of shares that may be issued
under the 1995 Plan to 4,000,000; and (ii) provide that the maximum number of
shares that may be issued under options granted to any individual employee under
the 1995 Plan over a one-year period is 450,000. Approval of these amendments to
the 1995 Plan requires the affirmative vote of the holders of a majority of the
shares present, in person or by proxy, at the Annual Meeting and entitled to
vote.
The Board of Directors believes that the 1995 Plan as amended is
necessary for the Company to attract and retain the services of selected
employees and officers (collectively, "Key Employees") and directors and
consultants (together with Key Employees, "Eligible Individuals") and to
motivate them to exercise their best efforts on behalf of the Company and any
subsidiary or parent of the Company (a "Related Corporation"). The 1995 Plan
provides for the issuance of restricted stock and the granting of incentive
stock options ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), non-qualified stock options ("NQSOs"),
stock bonuses, and stock appreciation rights ("SARs") to Eligible Individuals of
the Company and any Related Corporation.
The Company has two additional plans which provide for the granting of
options: (i) a plan established in 1986 for the granting of ISOs and NQSOs to
Key Employees, non-employee directors, and consultants of the Company (the "1986
Plan"); and (ii) a plan established effective August 1996 for the issuance of
restricted stock and the granting of ISOs, NQSOs, stock bonuses, and SARs to Key
Employees, non-employee directors, and consultants of Total Research, Ltd., the
Company's London affiliate. The 1995 Plan supplements the 1986 and the Ltd.
Plans for the following reasons: (i) the 1986 Plan, by its terms, does not
permit options to be granted after June 30, 1996; and (ii) awards under the Ltd.
Plan may only be made to certain foreign employees of the Company.
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<PAGE>
SUMMARY OF THE 1995 PLAN
The following description of the 1995 Plan is intended merely as a
summary of its principal features and is qualified in its entirety by reference
to the provisions of the 1995 Plan itself:
1. Stock Available Under Plan. The 1995 Plan authorizes up to an
aggregate of 4,000,000 shares of the Company's Common Stock for the granting of
ISOs, NQSOs, restricted stock, and stock bonus awards. No more than 450,000
shares of Common Stock are available for options granted to any one Key Employee
under the 1995 Plan over any one-year period. (A Key Employee or an Eligible
Individual who receives an option grant is hereinafter referred to as an
"Optionee.") Authorized but unissued shares or reacquired shares may be issued
under the 1995 Plan, and the Company may purchase shares required for this
purpose, from time to time, if it deems such purchase to be advisable.
The closing price of a share of Company Common Stock on the NASDAQ SmallCap
Market on September 30, 1999, was $3.41.
2. Administration. The 1995 Plan is administered by the
Compensation Committee (the "Committee"), whose members are designated by the
Company's Board of Directors. The Committee must consist of at least two
directors who are "non-employee" directors within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
addition, each member of the Committee must also be an "outside director" within
the meaning of Treasury Regulation ss.1.162-27(e)(3) or any successor provision.
If the Committee does not consist solely of two or more non-employee directors
(within the meaning of Rule 16b-3), each option must be approved by the full
Board. The Committee has the authority to (i) select the Eligible Individuals to
be granted awards under the 1995 Plan; (ii) grant options, SARs, stock bonuses,
and issue restricted stock on behalf of the Company; and (iii) set the date of
grant and other terms of awards made under the 1995 Plan, including the times
and the price at which options will be granted. The Committee has no discretion
with respect to NQSOs granted to non-employee directors under the formula
discussed below.
3. Eligibility. Only employees of the Company and/or a related
corporation are eligible to receive ISOs under the 1995 Plan. NQSOs may be
granted to all Eligible Individuals. As of June 30, 1999, there were
approximately 220 employees eligible to receive ISOs and approximately 220
individuals eligible to receive NQSOs. Non-employee directors of the Company are
eligible to receive NQSOs under the 1995 Plan in accordance with a formula
discussed below. As of June 30, 1999, there were approximately three
non-employee directors eligible for participation in the 1995 Plan. Consultants
to the Company are also eligible to receive awards under the 1995 Plan. As of
June 30, 1999, no consultants were eligible to participate in the 1995 Plan.
4. Options Granted to Employees and Consultants. The exercise
price of options granted to employees and consultants under the 1995 Plan is
determined by the Committee, and must be at least equal to the fair market value
of the shares of Common Stock on the date of grant (110% of fair market value
for an ISO granted to a more than 10% shareholder).
Options granted to employees and consultants under the 1995 Plan may
not extend for more than ten years from the date of grant, and become
exercisable in such installments and on such dates as the Committee may specify,
but not earlier than six months from the date of grant, except in limited
circumstances. Options generally terminate no more than three months after the
termination of the Optionee's termination of employment or consultancy, unless
such termination is as a result of death or disability, in which case options
remain exercisable for up to 12 months thereafter. The Committee also has
discretion under the 1995 Plan to accelerate the exercisability of all or part
of the unvested portion of an Optionee's options.
The exercise price of an option is payable in cash. The Committee, in
its discretion, may also permit an employee or consultant to pay the exercise
price by surrendering shares of Common Stock or through a so-called
broker-financed transaction. The 1995 Plan also permits the withholding of
shares issuable upon the exercise of options or the delivery of previously
acquired shares of Common Stock to satisfy withholding taxes.
Options may be evidenced by a written option document containing
provisions consistent with the 1995 Plan and such other provisions as the
Committee deems appropriate.
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<PAGE>
Each ISO and, unless otherwise determined by the Committee, each NQSO
granted under the Plan is not transferable other than by will or pursuant to the
laws of descent and distribution.
5. Options Granted to Non-Employee Directors. The 1995 Plan
provides for the grant of NQSOs to non-employee directors. Non-employee
directors may receive two types of NQSO grants under the 1995 Plan. A
non-employee director will receive an initial grant of an NQSO to purchase
50,000 shares of Common Stock on the date he or she first becomes a non-employee
director. In addition, on the day of the Company's regular annual meeting of its
shareholders, each non-employee director will receive an additional annual grant
of an NQSO to purchase 10,000 shares of the Company's Common Stock.
An initial grant of an NQSO to a non-employee director shall be
exercisable in increments of 33 1/3% of such NQSO on each of the first through
the third anniversaries of the date of grant. An annual grant of an NQSO to a
non-employee director shall be immediately exercisable for 33 1/3% of the total
number of shares covered by the option, and shall become exercisable as to an
additional 2.778% of the option shares on the first day of each of the next
following 24 months. The exercise price of NQSOs granted to non-employee
directors is the fair market value of the shares of Common Stock on the date of
grant. The exercise price may be paid in cash or by surrendering shares of
Common Stock previously acquired by the non-employee director. NQSOs granted to
non-employee directors expire on the earlier of (i) five years from the date of
grant, or (ii) 30 days after the last day the Optionee served as a director (12
months in the event of death).
NQSOs granted to non-employee directors are not transferable or
assignable, other than by will or pursuant to the laws of descent and
distribution.
6. Stock Bonus Awards. The 1995 Plan provides for the award of
shares of Common Stock as stock bonuses. Shares awarded as a bonus shall be
subject to any terms, conditions, and restrictions determined by the Committee,
such as restrictions regarding the transferability and the forfeiture of the
shares awarded. The Committee may require the recipient of a stock bonus award
to sign an agreement as a condition of the award. The agreement may contain any
terms, conditions, restrictions, representations, and warranties required by the
Committee.
7. Restricted Stock. The 1995 Plan also provides for the issuance
of shares of Common Stock subject to restrictions. The Committee may issue
shares of restricted stock for consideration that may be less than the fair
market value of the shares at the time of issuance. Shares of restricted stock
issued under the 1995 Plan shall be subject to any terms, conditions, and
restrictions required by the Committee, and shall be issued pursuant to a
purchase agreement executed by the Company and the prospective recipient of the
shares prior to the delivery of certificates representing such shares.
8. Stock Appreciation Rights ("SARs"). The Committee may also
issue SARs under the 1995 Plan. Each SAR shall entitle the holder, upon
exercise, to receive an amount equal to the excess of the fair market value on
the date of exercise of one share of the Company's Common Stock over its fair
market value on the date of grant (or, in the case of an SAR granted in
connection with an option, the excess of the fair market value of one share of
Common Stock over the option price per share under the option to which the SAR
relates), multiplied by the number of shares covered by the SAR (or the option)
that is surrendered.
An SAR shall be exercisable only at the time or times established by
the Committee. The Committee may withdraw any SAR granted under the 1995 Plan at
any time and may impose conditions upon the exercise of an SAR or adopt rules
and regulations affecting the rights of holders of SARs.
9. Effective Date; Duration. The 1995 Plan, as amended and
restated, became effective on September 23, 1998. The 1995 Plan automatically
terminates on April 15, 2006, and no further awards may be made under the 1995
Plan thereafter. The 1995 Plan may be amended, suspended or terminated at any
time by the Board, provided that, without shareholder approval, no such
amendment may (i) change the class of persons eligible to receive ISOs, (ii)
increase the maximum number of shares of Common Stock authorized for issuance of
ISOs, or (iii) extend the duration of the 1995 Plan with respect to any ISOs
granted thereunder. Requisite shareholder approval is also required for any
amendment that
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would require shareholder approval under Section 162(m) of the Code, or under
the rules of the market on which the Company's Common Stock is listed.
10. Option Grants Under the 1995 Plan. The Aggregated Option
Exercises in Last Fiscal Year and Fiscal Year End Option table on Page 10 sets
forth the benefits received by or allocated to each of the Named Executive
Officers under the 1995 Plan for the last completed fiscal year of the Company.
11. Registration Statement on Form S-8. If the proposal to
approve the amendments to the 1995 Plan are approved, the Company intends to
file with the Securities and Exchange Commission an amendment to the Company's
Registration Statement on Form S-8 relating to the 1995 Plan as amended and
restated to register the additional shares of Common Stock that may be issued
pursuant to the 1995 Plan.
FEDERAL INCOME TAX TREATMENT OF OPTIONS AND SARS
Based on the advice of counsel, the Company believes that, under
present federal tax laws and regulations, the principal federal income tax
consequences to the Company and to the Eligible Individuals receiving ISOs,
NQSOs and SARs pursuant to the 1995 Plan will be as follows.
Upon the grant or exercise of an ISO, no income will be realized by the
Optionee for federal income tax purposes (although the excess of the fair market
value of the shares over the exercise price will generally be included in the
Optionee's alternative minimum taxable income), and the Company will not be
entitled to any deduction. If the shares received on the exercise of an ISO are
not disposed of within one year following the date of the transfer of such
shares to the Optionee, or within two years following the date of grant of the
option, any profit realized by the Optionee upon the disposition of such shares
will generally be taxed as long-term capital gain. In such event, no deduction
will be allowed to the Company.
Upon the grant of an NQSO, no income will be realized by the Optionee
for federal income tax purposes. Upon the exercise of an NQSO, the amount by
which the fair market value of the shares at the time of exercise exceeds the
exercise price will be taxed as ordinary income to the Optionee, and the Company
will be entitled to a corresponding deduction.
Upon the grant of an SAR, no income will be realized by the recipient
for federal income tax purposes, and the Company will not be entitled to a
deduction. Upon the exercise of an SAR granted in connection with an option, the
Optionee recognizes ordinary income as of the date of exercise in an amount
equal to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price of the option to which such SAR relates. Upon
the exercise of an SAR not granted in connection with an option, the Optionee
recognizes ordinary income as of the date of exercise in an amount equal to the
excess of the fair market value of one share of Common Stock on the date of
exercise over its fair market value on the date of grant, multiplied by the
number of shares covered by the SAR that are exercised.
Section 162(m) of the Code limits the extent to which the remuneration
paid to the Chief Executive Officer and the four highest compensated executives
(other than the Chief Executive Officer) (collectively, the "Covered Employees")
is deductible by a corporation when the annual remuneration for any of these
officers exceeds $1,000,000 in a calendar year. Remuneration for purposes of
Section 162(m) includes cash compensation and noncash benefits paid for services
(including, with respect to NQSOs, the difference between the exercise price and
the market value of the stock at the time of exercise), subject to certain
exclusions. A limitation on the maximum number of shares of Company Common Stock
with respect to which options may be granted to an Eligible Individual who is an
employee of the Company or a Related Corporation is provided in the 1995 Plan so
that (i) the spread upon exercise of NQSOs would not be treated as remuneration
for purposes of Section 162(m), and (ii) if any remuneration paid to any of the
Covered Employees exceeds $1,000,000 in the future, any compensation recognized
upon the exercise of NQSOs granted under the 1995 Plan would be deductible by
the Company. This limitation on the maximum number of shares of Common Stock
with respect to which options may be granted to an employee over a one-year
period is 450,000 shares of Common Stock. However, the exemption from the
deduction limit of Section 162(m) of the Code will be available only with
respect to options granted while the Plan (i) is administered by a Committee
consisting of at least two directors, all of whom are "outside directors" within
the meaning of Treasury Regulation ss.1.162-27(e)(3) or any successor thereto,
and (ii)
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satisfies the stockholder approval requirements of Treasury Regulation
ss.1.162-27(e) or any successor thereto.
Various additional tax consequences apply to the granting and
exercise of SARS and options and to the disposition of shares acquired
thereunder, but such consequences are beyond the scope of this summary. The
foregoing does not purport to be a complete summary of the effect of federal
income taxation upon holders of options or SARs or upon the Company. It also
does not reflect provision of the income tax laws of any municipality, state, or
foreign country in which an Optionee may reside.
VOTE REQUIRED FOR APPROVAL
Approval of the amendments to the 1995 Plan requires the approval of
the holders of a majority of the Company's Common Stock present, in person or by
proxy, at the Annual Meeting and entitled to vote.
The Board of Directors unanimously recommends you vote FOR this
proposal.
PROPOSAL NO. 5:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Item 5 on the proxy card)
The Board of Directors has appointed Ernst & Young LLP ("Ernst &
Young") as independent auditors to audit the financial statements of the Company
for the fiscal year ending June 30, 2000, subject to ratification by the
Company's stockholders at the Annual Meeting. Ernst & Young began to serve as
independent auditors for Total Research following the Company's dismissal of
Amper, Politzimer & Mattia ("APM"), effective on October 22, 1998. If the
stockholders reject the appointment, the Board will reconsider its selection. If
the stockholders ratify the appointment, the Board, in its sole discretion, may
still direct the appointment of new independent auditors at any time during the
year if the Board believes that such a change would be in the best interests of
the Company. The Company has been advised that a representative of Ernst & Young
will be present at the Annual Meeting, will have the opportunity to make a
statement if he or she wishes, and is expected to be available to respond to
appropriate questions.
DISMISSAL OF FORMER ACCOUNTANT
Effective on October 22, 1998, Total Research Corporation (the "Company")
dismissed Amper, Politzimer & Mattia as the Company's principal independent
accountants. The decision to change independent accountants was recommended by
the Audit Committee of the Company's Board of Directors.
The reports of APM on the Company's financial statements as of and for each of
the fiscal years ended June 30, 1997 and 1998 did not contain an adverse opinion
or disclaimer of opinion, nor were such reports qualified or modified as to
uncertainty, audit scope or accounting principles. In connection with audits of
the financial statements of the Company for the years ended June 30, 1997 and
1998 and during the interim period through the date of APM's dismissal, there
were no disagreements between the Company and APM on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which, if not resolved to APM's satisfaction, would have caused APM
to make reference to such matter in its reports. Further, during such periods,
there were no events of the type required to be reported pursuant to Item
304(a)(1)(iv) of Regulation S-K.
ENGAGEMENT OF NEW ACCOUNTANT
On or about the date of the dismissal of APM, the Company appointed Ernst &
Young as the Company's new independent accountants.
During the Company's two most recent fiscal years or any subsequent interim
period prior to engaging Ernst & Young, neither the Company nor anyone on its
behalf consulted Ernst & Young regarding (i) the application of accounting
principles to any transaction; or the type of audit opinion that might be
rendered on the Company's financial statements, or (ii) any matter that was
either the subject of a disagreement or an event required to be reported
pursuant to Item 304(a)(1)(iv) of Regulation S-K.
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The Board recommends that you vote FOR this proposal.
FISCAL YEAR 1999
ANNUAL REPORT AND FORM 10-K
A copy of the Fiscal Year 1999 Annual Report accompanies this Proxy Statement.
The Company's Annual Report on Form 10-K for the year ended June 30, 1999, as
filed with the Securities and Exchange Commission, contains detailed information
concerning the Company and its operations. The Company will provide to any
stockholder a copy of the Form 10-K, without charge, upon written request to
Total Research Corporation, 5 Independence Way, Princeton, New Jersey, 08543,
ATTN: Investor Relations.
ADDITIONAL INFORMATION
Other business
The Board does not expect any business to come up for stockholder vote
at the Annual Meeting other than the items raised in this Proxy Statement. If
other business is properly raised, your proxy card authorizes the people named
as proxies to vote as they think best.
People with disabilities
We can provide reasonable assistance to help you participate in the
Annual Meeting if you tell us about your disability and your plan to attend the
Annual Meeting. Please call or write the Secretary at least two weeks before the
Annual Meeting at the number or address under the section titled "Questions?"
below.
Outstanding shares
On October 1, 1999, 11,788,185 shares of Common Stock were outstanding.
Each share has one vote.
How we solicit proxies
In addition to mailing, Total Research employees may solicit proxies
personally, electronically, or by telephone. Total Research pays the costs of
soliciting this proxy.
Stockholder proposals for next year
Any stockholder proposal which is intended to be presented at the
Company's 2000 Annual Meeting of Stockholders must be received at the Company's
principal executive offices, 5 Independence Way, Princeton, NY 08543, Attention:
Corporate Secretary, by no later than July 12, 2000, if such proposal is to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to such meeting, which meeting the Company expects will be held in
December 2000. Any such proposals must comply in all respects with the rules and
regulations of the Commission. Stockholders of the Company who intend to bring
business before the Annual Meeting must also comply with the applicable
procedures set froth in the Company's By-laws. The Company will furnish copies
of such By-law provisions upon written request to the Secretary's Office at the
aforementioned address.
Questions?
If you have questions or need more information about the Annual Meeting, write
to:
Corporate Secretary
Total Research Corporation
5 Independence Way
Princeton, New Jersey 08543
Attn: Corporate Secretary
or call us at (609) 520-9100.
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OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the Notice which
accompanies this Proxy Statement. The Board is not presently aware of business
to be transacted at the Annual Meeting other than as set forth in the Notice.
By Order of the Board of Directors,
/s/ David Brodsky
David Brodsky
Chairman of the Board
Princeton, New Jersey
November 8, 1999
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Total Research Corporation
List of Exhibits
Exhibit A Proposed New Article 11 of the Certificate of Incorporation
of Total Research Corporation
Exhibit B Proposed New Article 4 of the Certificate of Incorporation
of Total Research Corporation
Exhibit C Amendment No. 1 to the Total Research Corporation 1995 Stock
Incentive Plan
EXHIBIT A
PROPOSED NEW ARTICLE 11 OF THE
CERTIFICATE OF INCORPORATION OF TOTAL RESEARCH CORPORATION
11. The property, business and affairs of the corporation shall be
managed and controlled by the board of directors. The number of directors of the
corporation shall be initially fixed at seven and may thereafter be changed from
time to time by action of not less than a majority of the members of the board
then in office.
The board of directors shall be divided into three classes, with the
term of office of one class expiring each year. At the annual meeting of
stockholders in 1999, two directors of the first class shall be elected to hold
office for a term expiring at the next succeeding annual meeting, two directors
of the second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and three directors of the third class shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. Subject to the following, at each annual meeting of stockholders the
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting.
Any vacancies in the board of directors for any reason and any newly
created directorships resulting from any increase in the number of directors
shall be filled by the board of directors, acting by not less than a majority of
the directors then in office, although less than a quorum. Any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until their successors shall be elected and
qualified. No decrease in the number of directors shall shorten the term of any
incumbent director.
Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, this Certificate of
Incorporation or the By-laws of the corporation), any director or the entire
board of directors may be removed only with cause and only by the affirmative
vote of the holders of a majority of the outstanding shares of capital stock of
the corporation entitled to vote generally in the election of directors.
EXHIBIT B
PROPOSED NEW ARTICLE 4 OF THE
CERTIFICATE OF INCORPORATION OF TOTAL RESEARCH CORPORATION
4. The total number of shares which the Company shall have authority to
issue is fifty million (50,000,000), all of which shall be designated Common
Stock, par value $.001 per share.
EXHIBIT C
AMENDMENT NO. 1
TO THE
TOTAL RESEARCH CORPORATION
1995 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 23, 1998)
WHEREAS, Total Research Corporation (the "Company") established the Total
Research Corporation 1995 Stock Incentive Plan (the "Plan"), effective April 16,
1996;
WHEREAS, the Company most recently amended and restated the Plan effective
September 23, 1998;
WHEREAS, Section 15 of the Plan provides that, subject to certain
limitations, the Board of Directors of the Company may amend the Plan at any
time; and
WHEREAS, the Company desires to amend the Plan to (i) increase the number
of shares that are available under the Plan from 2,500,000 to 4,000,000; (ii)
increase the maximum number of shares that may be granted to any Key Employee
under the Plan; (iii) provide that no incentive stock option granted under the
Plan shall be exercisable after the expiration of ten years from the date of
grant of said option; and (iv) clarify the effective date of the Plan.
NOW, THEREFORE, effective April 6, 1999, and subject to the approval of the
shareholders of the Company, the Plan is hereby amended as follows:
1. The first sentence of Section 3 of the Plan ("Shares Subject to the
Plan") is hereby amended by changing the reference to "2,500,000" to
"4,000,000."
2. The first sentence of subsection (a)(ii) of Section 7.1 of the Plan
("Option Grants") is hereby amended to read as follows:
No Key Employee shall receive Options for more than 450,000 shares of
the Company's Common Stock over any one-year period, subject to
adjustment as hereinafter provided.
3. Subsection (c) of Section 7.2 of the Plan ("Duration of ISOs") is
hereby amended by changing the reference to "five years" to "ten years."
4. The first sentence of Section 17 of the Plan ("Termination of
Plan") is hereby amended to read as follows:
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00
midnight on April 15, 2006, which date is within ten (10) years after
the date the Plan was approved by the shareholders of the Company, and
no Options hereunder shall be granted thereafter.
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