<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_Confidential,]For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CustomTracks Corporation
(Name of Registrant as Specified In Its Charter)
CustomTracks Corporation
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
-----------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------
Notes:
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<PAGE>
CustomTracks Corporation
One Galleria Tower
13355 Noel Road
Suite 1555
Dallas, Texas 75240-6604
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 14, 1999
Notice is hereby given that the Annual Meeting of the Stockholders of
CustomTracks Corporation ("CustomTracks") will be held on September 14, 1999,
at 9:00 a.m. (registration to begin at 8:30 a.m.), local time, at 4200
Cityplace, 2711 North Haskell Avenue, Amphitheater, Dallas, Texas 75204-2910,
for the following purposes:
1. To consider and vote upon a proposal to elect David P. Cook, Michael
E. Keane, James S. Marston, Jack L. Martin, Antonio R. Sanchez, Jr., Dr.
Ben G. Streetman and Mark A. Tebbe as directors of CustomTracks;
2. To amend CustomTracks' Articles of Incorporation to change
CustomTracks' name to "ZixIt Corporation";
3. To amend CustomTracks' Articles of Incorporation to increase the
number of authorized shares of common stock, par value $0.01, from 30
million to 175 million shares;
4. To approve the adoption of the CustomTracks Corporation 1999
Directors' Stock Option Plan; and
5. To transact any other business that properly comes before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on July 23, 1999, are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
The stock transfer books will not be closed.
CustomTracks would like you to attend the meeting, but understands that you
may not be able to do so. For your convenience, and to ensure that your shares
are represented and voted according to your wishes, we have enclosed a proxy
card for you to use. Please sign and date the proxy card and return it to us
as soon as possible. We have provided you with a postage-paid envelope to
return your proxy card. If you attend the meeting, you may revoke your proxy
and vote in person.
By Order of the Board of Directors
Ronald A. Woessner
Secretary
Dallas, Texas
August 10, 1999
<PAGE>
CustomTracks Corporation
One Galleria Tower
13355 Noel Road
Suite 1555
Dallas, Texas 75240-6604
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 14, 1999
SOLICITATION
The Board of Directors of CustomTracks Corporation ("CustomTracks") is
soliciting your proxy in the form of the enclosed proxy card for use at the
Annual Meeting of Stockholders of CustomTracks to be held on September 14,
1999, at 9:00 a.m. (registration beginning at 8:30 a.m.), local time, at 4200
Cityplace, 2711 North Haskell Avenue, Amphitheater, Dallas, Texas 75204-2910,
as set forth in the accompanying Notice of Annual Meeting of Stockholders (the
"Notice") and at any adjournment thereof. This Proxy Statement and the
enclosed proxy card are being mailed to stockholders on or about August 10,
1999.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on July 23, 1999, will
be entitled to vote on matters presented at the meeting or any adjournment
thereof.
As of June 30, 1999, there were issued and outstanding 15,267,929 shares of
$.01 par value common stock of CustomTracks. The holders of a majority of the
shares of common stock entitled to vote at the meeting must be represented at
the meeting in person or by proxy to have a quorum for the meeting and to act
on the matters specified in the Notice. Votes withheld from any director
nominee will be counted in determining whether a quorum has been reached.
Under the Articles of Incorporation of CustomTracks, each share of common
stock is entitled to one vote on all matters brought before the meeting or any
adjournment thereof.
Assuming a quorum is present, the affirmative vote of a plurality of the
shares of common stock voted and entitled to vote for the election of
directors is required for the election of directors. Votes may be cast in
favor of, or withheld from, a director nominee. Votes that are withheld from a
particular nominee will not affect the outcome of the vote. In the election of
directors, stockholders are not entitled to cumulate their votes and are not
entitled to vote for a greater number of persons than the number of nominees
named in this Proxy Statement. The affirmative vote of at least two-thirds of
the outstanding shares of common stock entitled to vote thereon is required to
approve the amendment of CustomTracks' Articles of Incorporation to change
CustomTracks' name to "ZixIt Corporation" and to increase the number of
authorized shares of common stock, par value $0.01, from 30 million to 175
million shares. The affirmative vote of a majority of the shares of common
stock entitled to vote on, and that voted for or against or expressly
abstained with respect to, the matter is required to approve the adoption of
the proposed CustomTracks Corporation 1999 Directors' Stock Option Plan and
any other matters that properly come before the meeting.
Under applicable rules, brokers who hold shares in street name have the
authority to vote in favor of all matters specified in the Notice, if they do
not receive contrary voting instructions from beneficial owners. Under
applicable law, if a broker has not received voting instructions with respect
to certain shares and gives a proxy for those shares, but does not vote the
shares on a particular matter, those shares will not affect the outcome of the
vote with respect to that matter. Any stockholder that is present at the
meeting, either in person or by proxy, but abstains from voting, will be
counted for purposes of determining whether a quorum exists, even if the
<PAGE>
stockholder abstains from voting. An abstention will not be counted as an
affirmative or negative vote in the election of the directors. With respect to
all other matters, an abstention would have the same effect as a vote against
the proposal. The stockholders of CustomTracks have no appraisal rights under
Texas law with respect to the proposals specified in the Notice.
Any stockholder giving a proxy may revoke it at any time before it is voted
by giving written notice to CustomTracks or by attending the meeting in person
and voting such shares. Where a stockholder has appropriately specified how a
proxy is to be voted, it will be voted accordingly, and where no specific
direction is given, it will be voted FOR adoption of each of the proposals set
forth in the Notice and at the discretion of the proxy holders on any matter
proposed to come before the meeting that was not brought to the attention of
CustomTracks by June 7, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning beneficial
ownership of CustomTracks' common stock as of June 30, 1999, by (i) each
person who is known by CustomTracks to own beneficially more than five percent
of the outstanding shares of common stock, (ii) each director and executive
officer of CustomTracks and (iii) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership (1)
--------------------------------
Number of Percentage of Total
Shares Shares Outstanding (2)
--------- ----------------------
<S> <C> <C>
David P. Cook (3)............................ 2,748,140 15.33%
Michael E. Keane (4)......................... 27,500 *
Douglas H. Kramp............................. 0 *
James S. Marston (4)......................... 37,500 *
Jack L. Martin (4)........................... 25,000 *
Antonio R. Sanchez, Jr. (5).................. 1,779,276 11.63%
Dr. Ben G. Streetman (4)..................... 27,500 *
Mark A. Tebbe................................ 7,500 *
Ronald A. Woessner (6)....................... 102,319 *
Steve M. York (7)............................ 179,255 1.17%
White Rock Capital, Inc...................... 1,386,500 9.08%
3131 Turtle Creek Boulevard
Suite 800
Dallas, Texas 75219
All directors and executive officers as a
group....................................... 4,933,990 27.09%
</TABLE>
- --------
* Denotes ownership of less than 1%.
(1) Except as otherwise noted, each person has sole voting and investment
power over the common stock shown as beneficially owned, subject to
community property laws where applicable. Except as otherwise noted, the
address for each beneficial owner is c/o CustomTracks, One Galleria Tower,
13355 Noel Road, Suite 1555, Dallas, Texas 75240-6604.
(2) Shares of common stock that were not outstanding but could be acquired
upon exercise of an option within 60 days of June 30, 1999, are deemed
outstanding for the purpose of computing the percentage of outstanding
shares beneficially owned by a particular person. However, such shares are
not deemed to be
2
<PAGE>
outstanding for the purpose of computing the percentage of outstanding
shares beneficially owned by any other person.
(3) Includes 2,659,140 shares that Mr. Cook has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of June 30, 1999.
(4) This individual has the right to acquire these shares under outstanding
stock options that are currently exercisable or that become exercisable
within 60 days of June 30, 1999.
(5) Includes 131,251 shares that are owned by family members of Mr. Sanchez or
by trusts for which Mr. Sanchez serves as trustee or is a beneficiary. Of
such 131,251 shares, (i) 9,375 shares are held by family members of Mr.
Sanchez; (ii) 82,500 shares, over which Mr. Sanchez exercises voting,
investment and disposition power, are held in trusts for which Mr. Sanchez
acts as trustee for the benefit of other persons and (iii) 39,376 shares,
over which Mr. Sanchez does not have voting, investment or disposition
powers, are held in a trust for the benefit of Mr. Sanchez and certain of
his family members. Also, includes 35,000 shares that Mr. Sanchez has the
right to acquire under outstanding stock options that are currently
exercisable or that become exercisable within 60 days of June 30, 1999.
(6) Includes 59,249 shares that Mr. Woessner has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of June 30, 1999.
(7) Includes 74,800 shares that Mr. York has the right to acquire under
outstanding stock options that are currently exercisable or that become
exercisable within 60 days of June 30, 1999, and 51,700 shares that are
subject to forfeiture to CustomTracks under certain circumstances.
3
<PAGE>
MANAGEMENT
Directors, Executive Officers and Significant Employees
The following table sets forth, as of June 30, 1999, the names of the
directors, executive officers and other significant employees of CustomTracks
and their respective ages and positions with CustomTracks.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
David P. Cook (1)(3)....... 47 Director, Chairman, President and Chief
Executive Officer
Michael E. Keane (2)(4).... 43 Director
Douglas H. Kramp........... 37 Executive Vice President, Strategic Business
Development; and President, ZixMail.com, Inc.
Dr. G. Gary Liu............ 44 Vice President and Chief Technical Officer,
ZixIt Operating Corporation
James S. Marston (1)(4).... 66 Director
Jack L. Martin (2)(4)...... 45 Director
Antonio R. Sanchez, Jr. 56 Director
(1)(3)....................
Dr. Ben G. Streetman 60 Director
(2)(3)....................
Mark A. Tebbe.............. 37 Director
Ronald A. Woessner......... 42 Vice President, General Counsel and Secretary
Steve M. York.............. 48 Senior Vice President, Chief Financial Officer
and Treasurer
</TABLE>
- --------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
(4) Member of the Compensation and Stock Option Committee.
David P. Cook became a director of CustomTracks in December 1995 and was
appointed Chairman, President and Chief Executive Officer in April 1998. He
most recently served as Chairman and Chief Executive Officer of ARBImetrics
Corporation, a Dallas-based investment company that he founded. Mr. Cook
founded Amtech Corporation (now CustomTracks) and served as a director from
1984 until 1990, serving as Chairman of the Executive Committee until 1990.
Mr. Cook founded Blockbuster Entertainment Corporation and was its Chief
Executive Officer from its inception until 1987. Prior to that, he was
Chairman of Cook Data Services, Inc., a software company that he also founded.
Michael E. Keane became a director of CustomTracks in November 1997. Mr.
Keane has been Senior Vice President and Chief Financial Officer of UNOVA,
Inc. ("UNOVA") since November 1997. UNOVA comprises the former industrial
technology businesses spun off from Western Atlas, Inc. in October 1997, where
Mr. Keane was also Senior Vice President and Chief Financial Officer from
October 1996 until October 1997 and Vice President and Treasurer from March
1994 until October 1996. Prior to that, he was Corporate Director, Pensions
and Insurance, for Litton Industries, Inc. from February 1991 until March
1994.
Douglas H. Kramp joined CustomTracks in May 1999 as Executive Vice
President, Strategic Business Development. Mr. Kramp was subsequently
appointed President of ZixMail.com, Inc., a wholly-owned subsidiary of
CustomTracks. Prior to joining CustomTracks, Mr. Kramp was Executive Vice
President, Strategic Business Units, for PageMart Wireless, Inc. Mr. Kramp was
also the founder of Artificial Linguistics, Inc., a Dallas-based software
company, where he directed the release of "PowerEdit," a software program that
won PC Magazine's "Editor's Choice Award" in 1992.
4
<PAGE>
Dr. G. Gary Liu became an employee of CustomTracks in January 1999 and was
subsequently appointed Vice President and Chief Technical Officer of ZixIt
Operating Corporation, a wholly-owned subsidiary of CustomTracks. From 1997
until beginning employment with CustomTracks, Dr. Liu was President of
Securisys Corporation, a digital signature, start-up enterprise that he
founded, and for a few years prior to that, he was President of American
Advanced Technology, Inc., a privately-held telecommunications design
consulting company. Dr. Liu has a doctorate degree in physics from the
California Institute of Technology (Caltech).
James S. Marston became a director of CustomTracks in September 1991. From
September 1987 through February 1998, Mr. Marston served as a Senior, or
Executive, Vice President and the Chief Information Officer of APL Limited, a
U.S.-based intermodal shipping company. Between 1986 and 1987, Mr. Marston
served as President of AMR Technical Training Division, AMR Corporation.
Jack L. Martin became a director in August 1998. Mr. Martin is Chairman and
founder of Public Strategies, Inc., an international strategic communications
firm that specializes in advising Fortune 500 companies. Mr. Martin currently
serves as a director for the Scott and White Memorial Hospital and Scott,
Sherwood and Brindley Foundation, the Caesar Kleberg Foundation and KLRU-TV.
For many years, Mr. Martin served on former U.S. Senator Lloyd Bentsen's staff
and held the position of Executive Assistant to the Senator. He served on the
Board of Regents of the Texas State University System from 1985 to 1991 and
was elected Chairman in 1988. Mr. Martin served as the chair of the Texas
National Research Laboratory Commission, the Texas state agency that oversaw
the National Superconducting Super Collider project.
Antonio R. Sanchez, Jr. was one of the early investors in CustomTracks in
1987 and became a director of CustomTracks in February 1993. Presently, Mr.
Sanchez is Chairman and Chief Executive Officer of Sanchez Oil & Gas
Corporation. Mr. Sanchez also holds interests in banking, real estate
development, industrial parks and various other investments. Mr. Sanchez
serves as a director of International Bank of Commerce ("IBC") and as a
director and stockholder of IBC's publicly-traded holding company,
International Bancshares Corporation. Mr. Sanchez is also a member of the
Board of Regents of the Texas State University System.
Dr. Ben G. Streetman became a director in July 1998. Dr. Streetman is Dean
of the College of Engineering at The University of Texas at Austin and holds
the Dula D. Cockrell Centennial Chair in Engineering. He is a Professor of
Electrical and Computer Engineering and was the founding director of the
Microelectronics Research Center, The University of Texas at Austin, from 1984
until 1996. Dr. Streetman also serves as a director of National Instruments
Corporation and Global Marine, Inc.
Mark A. Tebbe became a director in March 1999. Mr. Tebbe is Chairman of
Lante Corporation, a privately-held Internet commerce solutions and consulting
firm. He is a contributing editor to InfoWorld, a weekly industry publication.
He is also affiliated with several technology, software and charity boards,
including COMDEX Conference, Chicago Software Association, Guru, Inc., Saranac
and Bionomics.
Ronald A. Woessner joined CustomTracks in April 1992 as General Counsel and
was subsequently appointed Vice President. He was previously a corporate and
securities attorney with the Dallas-based law firm of Johnson & Gibbs, P.C.
Steve M. York joined CustomTracks in April 1990 as Vice President, Chief
Financial Officer and Treasurer and was subsequently appointed Senior Vice
President. Mr. York, a Certified Public Accountant, previously held various
financial management positions with commercial operating companies and was
employed by Arthur Young & Co. (now Ernst & Young LLP).
Each director serves until the next annual meeting of stockholders, and
until the director's successor is duly elected and qualified, unless earlier
removed in accordance with CustomTracks' bylaws. Officers serve at the
discretion of the Board of Directors.
5
<PAGE>
See "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS--Transactions with
Management and Related Parties" for a description of transactions between
CustomTracks and certain directors and executive officers of CustomTracks.
Meeting Attendance and Committees of the Board
CustomTracks has an Audit Committee of the Board of Directors, which is
currently comprised entirely of non-employee directors. The members of the
committee are Michael E. Keane, Dr. Ben G. Streetman and Jack L. Martin. The
committee has responsibility and authority for recommending to the Board of
Directors the auditors to serve as the independent auditors of CustomTracks'
books, records and accounts; reviewing the scope of audits made by the
independent auditors; and receiving and reviewing the audit reports submitted
by the independent auditors. The committee met once during the year ended
December 31, 1998.
CustomTracks has a Compensation and Stock Option Committee, which is
currently comprised entirely of non-employee directors. The members of the
committee are James S. Marston, Michael E. Keane and Jack L. Martin. The
committee administers CustomTracks' stock option plans and executive
compensation, although any proposed compensation arrangements and option
grants for CustomTracks' corporate officers require approval of the entire
Board of Directors. The committee did not meet during the year ended December
31, 1998.
CustomTracks has a Nominating Committee, which is currently comprised of
Antonio R. Sanchez, Jr., David P. Cook and Dr. Ben G. Streetman. The committee
is responsible for recommending to the Board of Directors the director
nominees for the upcoming year. The committee will consider nominees for the
Board of Directors suggested by CustomTracks' stockholders. Stockholders
desiring to submit nominations should forward them no later than April 12,
2000, to the Secretary of CustomTracks, Ronald A. Woessner, at CustomTracks'
principal executive offices. The committee met once during the year ended
December 31, 1998.
CustomTracks has an Executive Committee, which is currently comprised of
David P. Cook, James S. Marston and Antonio R. Sanchez, Jr. The Executive
Committee has the authority to exercise the full powers of the Board of
Directors, subject to certain exceptions. The Executive Committee did not meet
during the year ended December 31, 1998.
The Board of Directors met on nine occasions during the year ended December
31, 1998. All directors, except Dr. Streetman, attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees of the Board on which the
director served. Dr. Streetman, who served on the Board of Directors for part
of the year, attended one of the two meetings that occurred during his tenure.
Section 16(a) Beneficial Ownership Reporting Compliance
During 1998, Steve York and former executive officers John Wilson and
Michael Wolpert failed to timely file one Form 4. In each case, the filing
related to one exercise of stock options held by them, which exercise was
exempt from Section 16(b) of the Securities and Exchange Act of 1934 by virtue
of Rule 16b-3 thereunder. Also during 1998, Antonio R. Sanchez, Jr. failed to
timely file one Form 4 with respect to four open market purchases made by him
during a single month. In all cases, the filings were promptly made as soon as
the oversight was discovered.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the compensation paid to the named
CustomTracks' executive officers for services rendered to CustomTracks for the
periods indicated. Immediately following the table are summaries of
employment-related contracts with these executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------
Annual Compensation Awards Payouts
-------------------------- ----------------------- -------
Other Number of
Annual Restricted Securities All Other
Name and Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary Bonus sation Award Options Payouts sation(9)
------------------ ---- ------- ------- ---------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David P. Cook(1)........ 1998 $ -- $ -- $ 3,750(1) $ -- 4,254,627 -- $ --
President, Chief 1997 -- -- 15,000(1) -- 2,500 -- --
Executive Officer and 1996 -- -- 15,000(1) -- 2,500 -- --
Chairman of the Board
Stuart M. Evans(2)...... 1998 104,953 31,486 418,948(2) 68,430(5) -- -- 371
Former President, 1997 209,042 -- -- -- -- -- 1,376
Electronic Security 1996 180,550 46,958 -- 34,500 15,000(5) -- --
Group
G. Russell 1998 50,000 -- 654,327(3) -- -- -- --
Mortenson(3)........... 1997 300,000 -- -- -- 221,838(6) -- 2,574
Former President, 1996 300,000 58,536 -- 172,500 80,000(7) -- 1,440
Chief Executive Officer
and Chairman of the
Board
Ronald A. Woessner...... 1998 150,000 50,000 -- -- 38,625 -- 5,156
Vice President, General 1997 130,000 9,100 -- -- 20,000 -- 1,820
Counsel and Secretary 1996 120,000 21,291 -- -- 5,000 -- 1,715
Michael H. Wolpert(4)... 1998 175,083 60,379 1,468,600(4) 43,750(8) -- -- 2,106
Former President, 1997 170,500 34,807 -- -- 20,000(8) -- 4,077
Cardkey Systems 1996 155,000 55,425 -- -- 10,000 -- 1,875
Steve M. York........... 1998 193,000 50,000 -- 93,750(8) -- -- 2,800
Senior Vice President, 1997 193,000 -- -- -- 25,000(8) -- 2,000
Chief Financial Officer 1996 175,000 43,162 -- 67,275 30,000(7) -- 1,440
and Treasurer
</TABLE>
- --------
(1) In February 1998, Mr. Cook became Chairman, President and Chief Executive
Officer of CustomTracks. See "Employment and Severance Contracts with
Certain Executive Officers" below for a description of the employment
arrangement with Mr. Cook. "Other Annual Compensation" and option awards
for 1997 and 1996 represent director fees and director options paid or
given prior to Mr. Cook's employment.
(2) In June 1998, in connection with the sale of a CustomTracks' subsidiary,
Mr. Evans' employment with CustomTracks ceased. "Other Annual
Compensation" for 1998 represents a cash severance payment to Mr. Evans.
Mr. Evans' compensation was paid in U.K. pound sterling and has been
translated to U.S. dollars at the applicable average rate.
(3) Mr. Mortenson's employment with CustomTracks ceased in February 1998.
"Other Annual Compensation" for 1998 represents a cash severance payment
paid to Mr. Mortenson.
(4) In November 1998, in connection with the sale of Cardkey Systems and
related entities ("Cardkey"), Mr. Wolpert's employment with CustomTracks
ceased. "Other Annual Compensation" for 1998 represents a cash incentive
payment to Mr. Wolpert for his successful efforts in concluding the sale
of Cardkey.
7
<PAGE>
(5) The "Number of Securities Underlying Options" as originally reported in
CustomTracks' 1997 Proxy Statement for Mr. Evans included 15,000 shares
which were "restricted shares" issuable for no additional consideration
when a like number of option shares were exercised and held for the
requisite period. In 1998, when the corresponding options were exercised,
these "restricted shares" were issued. They are now reflected in the table
under "Restricted Stock Award" for 1998, and the number of shares
reflected in the table under "Number of Securities Underlying Options" for
1996 has been correspondingly reduced by the number of "restricted shares"
issued.
(6) The number of shares that may be received under 1997 option grants
includes 73,946 shares that represent "restricted shares" issuable for no
additional consideration if and when a like number of option shares are
exercised and held for the requisite period.
(7) The number of shares that may be received under 1996 option grants
includes 40,000 and 15,000 shares for Messrs. Mortenson and York,
respectively, which represent "restricted shares" issuable for no
additional consideration if and when a like number of option shares are
exercised and held for the requisite period.
(8) The "Number of Securities Underlying Options" as originally reported in
CustomTracks' 1998 Proxy Statement for Messrs. Wolpert and York included
10,000 and 25,000 shares, respectively, which were "restricted shares"
issuable for no additional consideration when a like number of option
shares were exercised and held for the requisite period. In 1998, when the
corresponding options were exercised, these "restricted shares" were
issued. They are now reflected in the table under "Restricted Stock Award"
for 1998, and the number of shares reflected in the table under "Number of
Securities Underlying Options" for 1997 has been correspondingly reduced
by the number of "restricted shares" issued. The "restricted shares" can
be forfeited to CustomTracks if, during the three years following their
issuance, (i) the recipient fails to hold the shares received upon
exercise of the related stock option for the requisite period or (ii) the
recipient's employment is terminated for cause or the recipient separates
from employment with CustomTracks under certain other circumstances. The
"restricted share" awards provide for, with the consent of the Board of
Directors, lapsing of restrictions if the recipient's employment is
terminated other than for cause or if the recipient separates from
employment with CustomTracks under certain other circumstances.
(9) Represents CustomTracks' contributions to CustomTracks' 401(k) Retirement
Plan or CustomTracks' Employee Stock Purchase Plan.
Employment and Severance Contracts with Certain Executive Officers
CustomTracks and Mr. Cook are parties to an employment agreement, dated
April 29, 1998, which expires April 28, 2001. In consideration of the
employment agreement, CustomTracks issued to Mr. Cook options to acquire
4,254,627 shares of CustomTracks' common stock at an exercise price of $7.00
per share (twice the closing price of CustomTracks' common stock on the day
preceding the date of the employment agreement). The options have a five-year
term and vest quarterly over two years. The options will vest immediately in
the event of (i) a change of control (as defined in the agreement) of
CustomTracks, (ii) a change of control of any material CustomTracks subsidiary
that is engaged in the Internet transaction or secure Internet messaging
businesses or other business involving a concept primarily fostered by Mr.
Cook or (iii) Mr. Cook's employment is terminated other than for cause. Mr.
Cook will receive no salary under the employment arrangement.
CustomTracks and Messrs. Woessner and York are parties to severance
agreements, which, per the severance agreement formulas (which are based on
years of service), as of June 30, 1999, provide for the payment to Mr.
Woessner of 17 months, and to Mr. York of 18 months, of each of their base
salaries in the event each has good reason (as defined) to resign his
employment or if his employment is terminated other than for cause. The
severance agreements also provide for the payment to Mr. Woessner of two
times, and to Mr. York of three times, each of their annual base salaries in
the event his employment terminates after a change in control (as defined) of
CustomTracks. The severance agreements also contain confidentiality and non-
competition provisions.
8
<PAGE>
Option Grants Table
The following table sets forth information relating to stock option grants
made by CustomTracks to the named executive officers during the year ended
December 31, 1998.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
--------------------------------------------- -------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Per Expiration
Name Granted in 1998 Share Date 5% 10%
---------------------- ---------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
David P. Cook(1)........ 4,254,627 96.02% $7.00 04/29/2003 $ -- (1) $ -- (1)
Stuart M. Evans(2)...... -- -- -- -- -- --
G. Russell
Mortenson(2)........... -- -- -- -- -- --
Ronald A. Woessner...... 38,625(3) 0.87 3.56 04/28/2008 86,443 219,313
Michael H. Wolpert(2)... -- -- -- -- -- --
Steve M. York........... -- -- -- -- -- --
</TABLE>
- --------
(1) See "Employment and Severance Contracts with Certain Executive Officers"
for a description of the employment arrangement with Mr. Cook. The
"Potential Realizable Value at Assumed Annual Rates of Stock Price
Appreciation for Option Term" is zero since the exercise price per share
of $7.00 is greater than the $3.50 market price of the common stock on the
date of grant plus the assumed stock price appreciation.
(2) Separated from employment with CustomTracks during 1998.
(3) The options vest ratably and become exercisable over three years. In the
event of a change in control (as defined) of CustomTracks or a material
CustomTracks' subsidiary under specified circumstances, the options become
immediately exercisable.
Aggregated Option Exercises and Year-End Option Value Table
The following table sets forth information relating to the exercises of
stock options by the CustomTracks' executive officers named below during the
year ended December 31, 1998, and the value of unexercised stock options as of
December 31, 1998.
AGGREGATED OPTION EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Option Exercises Options at In-the-Money Options at
During 1998 December 31, 1998 December 31, 1998
-------------------- ------------------------- -------------------------
Number of
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David P. Cook(1)........ -- $ -- 1,093,656 3,190,971 $4,079,107 $11,766,705
Stuart M. Evans(2)...... 15,000 -- 34,000 -- 97,375 --
G. Russell
Mortenson(2)........... 73,946 277,297 -- -- -- --
Ronald A. Woessner...... -- -- 34,337 65,663 114,682 394,970
Michael H. Wolpert(2)... 60,000 254,840 -- -- -- --
Steve M. York........... 25,000 -- 61,035 28,765 182,487 91,097
</TABLE>
- --------
(1) See "Employment and Severance Contracts with Certain Executive Officers"
for a description of the employment arrangement with Mr. Cook.
(2) Separated from employment with CustomTracks during 1998.
9
<PAGE>
Compensation of Directors
For serving on CustomTracks' Board of Directors and related committees, a
"Qualifying External Director" currently receives an annual fee of $15,000.
Also, under the terms of CustomTracks' 1996 Directors' Stock Option Plan (the
"1996 Plan"), each Qualifying External Director also receives an automatic
one-time grant of options to acquire 25,000 shares of CustomTracks' common
stock at the time of initial election or appointment to the Board. A
Qualifying External Director is a non-employee director who (a) does not,
directly or indirectly, beneficially own more than five percent of
CustomTracks' common stock, or (b) is not an employee, affiliate or designee
to the Board of Directors of a person (other than a person that is a
strategic/business partner of CustomTracks) that, directly or indirectly,
beneficially owns more than five percent of CustomTracks' common stock. In
addition, under the 1996 Plan, a Qualifying External Director receives an
automatic annual grant of 2,500 options while continuing to serve on the Board
of Directors. Under share ownership guidelines adopted by the Board of
Directors, CustomTracks' non-employee directors are encouraged to own at least
10,000 shares of CustomTracks' common stock.
As noted below under "Proposal 4. Adoption of the CustomTracks Corporation
1999 Directors' Stock Option Plan," on January 28, 1999, the Board of
Directors adopted the CustomTracks Corporation 1999 Directors' Stock Option
Plan (the "1999 Plan"), subject to the approval of the stockholders of
CustomTracks at the meeting. If approved by the stockholders, the 1999 Plan
will replace the 1996 Plan, the annual $15,000 retainer fee for participating
directors and the director share ownership guidelines.
Transactions with Management and Related Parties
In May 1998, CustomTracks acquired Petabyte Corporation ("Petabyte"), a
digital data distribution start-up enterprise founded by Mr. Cook. In
consideration of the sale of Petabyte, CustomTracks paid Mr. Cook $200,000 and
agreed to pay Mr. Cook four annual payments of $200,000 each. Effective March
1999, CustomTracks returned title to a Petabyte patent covering certain
digital data distribution concepts to Mr. Cook, while retaining a use license
to the patent for a nominal payment. In connection with the return of the
patent, CustomTracks' future payments to Mr. Cook, totaling $800,000, have
been eliminated.
In February 1999, CustomTracks entered into an agreement with Lante
Corporation ("Lante"), a privately-held Internet commerce solutions and
consulting firm, to assist CustomTracks in the development of CustomTracks'
Internet transaction and secure Internet messaging systems. Mr. Tebbe, who was
subsequently elected a director of CustomTracks, is Chairman of Lante and is
its majority stockholder. In exchange for the services to be provided by
Lante, CustomTracks will pay cash for work performed at discounted rates and
has issued options to purchase 500,000 shares of CustomTracks' common stock to
Lante at an exercise price of $7.62 per share, the closing price of
CustomTracks' common stock on the date of the agreement. The options vest over
three years and expire at the end of ten years.
In April 1999, CustomTracks entered into an agreement with Public
Strategies, Inc. ("PSI"), an international strategic communications firm, to
assist in the marketing of CustomTracks' Internet transaction and secure
Internet messaging systems. Mr. Martin, a director of CustomTracks, is
Chairman of PSI. In exchange for the services to be performed by PSI,
CustomTracks will pay PSI a monthly retainer of $75,000.
Mr. Sanchez, a director of CustomTracks, is a director of the International
Bank of Commerce, Laredo, Texas ("IBC"), and a director and stockholder of
IBC's publicly-traded holding company, International Bancshares Corporation.
CustomTracks formerly had a banking relationship with IBC and maintained a
checking account and short-term investments with IBC, which terminated in June
1998. The average month-end balance during 1998 of such checking account and
short-term investments was approximately $1,074,000.
Mr. York is indebted to CustomTracks in the principal amount of $251,425,
which amount represents money loaned by CustomTracks to fund the exercise of
retention incentive options. Mr. York's indebtedness is represented by
promissory notes that bear interest at the rate of 6.61%, 5.61% and 4.66% per
annum. All notes
10
<PAGE>
are secured by the shares issued upon exercise of the retention incentive
options. The notes of Mr. York are due in May 2000, December 2001 and
September 2002 (unless becoming due earlier under certain circumstances
described in the notes).
On June 11, 1998, CustomTracks sold its Transportation Systems Group to
UNOVA, Inc. ("UNOVA"), effective as of May 31, 1998, resulting in a pre-tax
gain of $1,139,000. Mr. Keane, a director of CustomTracks, is Senior Vice
President and Chief Financial Officer of UNOVA. As consideration for the sale,
CustomTracks received $22,350,000 in cash and 2,211,900 unregistered shares of
CustomTracks' common stock that were previously purchased by UNOVA in late
1997. The shares were valued at $10,921,000.
Compensation Committee Interlocks and Insider Participation
As noted below under "REPORT OF BOARD OF DIRECTORS ON ANNUAL COMPENSATION,"
the entire Board of Directors established CustomTracks' compensation policies
in 1998. Mr. Cook, CustomTracks' President and Chief Executive Officer,
participated in deliberations of CustomTracks' Board of Directors concerning
executive compensation during the year ended December 31, 1998. Mr. Martin, a
director of CustomTracks, is Chairman of Public Strategies, Inc., a firm
engaged by CustomTracks to assist in the marketing of its Internet transaction
and secure Internet messaging systems. Mr. Keane, a director of CustomTracks,
is Senior Vice President and Chief Financial Officer of UNOVA, Inc., the
purchaser of CustomTracks' Transportation Systems Group. Mr. Sanchez, a
director of CustomTracks, is a director of the International Bank of Commerce,
Laredo, Texas, with which CustomTracks had a banking relationship. See
"COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS--Transactions with
Management and Related Parties."
REPORT OF BOARD OF DIRECTORS ON ANNUAL COMPENSATION
During 1998, CustomTracks hired a new President and Chief Executive Officer
and, in the course of transitioning to its new lines of business, sold all of
its operating units. As a result of these changes, four of the five most
highly compensated CustomTracks executive officers at the beginning of 1998
are no longer employed by CustomTracks.
Former Executive Officers
A discussion of the compensation paid to CustomTracks' executive officers
that separated from employment with CustomTracks in 1998 follows.
No bonus was paid in 1998 to Mr. Mortenson, CustomTracks' former President
and Chief Executive Officer, who separated from employment with CustomTracks
in February 1998. Pursuant to Mr. Mortenson's severance arrangement with
CustomTracks, CustomTracks reported an expense of approximately $1 million,
which included a cash payment of $654,327, with the balance being primarily
attributable to the value of certain option shares awarded to Mr. Mortenson.
Mr. Evans, the President of CustomTracks' former Electronic Security Group,
separated from employment with CustomTracks in July 1998 in connection with
the sale of CustomTracks' Cotag International business unit. Mr. Evans
received a bonus of $31,486 under the bonus plan applicable to him for the
period of time that he was employed with CustomTracks. Also, pursuant to Mr.
Evans' severance agreement with CustomTracks, CustomTracks reported an expense
of approximately $500,000, which included a cash payment of $418,948, with the
balance being attributable to the lapse of restrictions on certain restricted
stock shares held by Mr. Evans.
Mr. Wilson, the President of CustomTracks' former Transportation Systems
Group, separated from employment with CustomTracks in June 1998 in connection
with the sale of CustomTracks' Transportation Systems Group business unit. Mr.
Wilson earned a bonus of $20,400 under the bonus plan applicable to him for
11
<PAGE>
the period of time that he was employed with CustomTracks. Also, pursuant to
his separation from employment, CustomTracks reported a $60,938 expense, which
was attributable to the lapse of restrictions on certain restricted stock
shares held by Mr. Wilson.
Mr. Wolpert, the President of CustomTracks' former Cardkey Systems unit,
separated from employment with CustomTracks in November 1998 in connection
with the sale of the Cardkey Systems business unit. Mr. Wolpert received a
bonus of $60,379 under the bonus plan applicable to him for the period of time
that he was employed with CustomTracks. Also, CustomTracks paid Mr. Wolpert a
cash incentive of $1,468,600 for his successful efforts in concluding the sale
of Cardkey Systems. Furthermore, pursuant to his separation from employment,
CustomTracks reported a $66,250 expense, which was attributable to the lapse
of restrictions on certain restricted stock shares held by Mr. Wolpert.
Executive Officers at December 31, 1998
At December 31, 1998, CustomTracks' executive officers were David P. Cook,
President and Chief Executive Officer; Steve M. York, Senior Vice President
and Chief Financial Officer; and, Ronald A. Woessner, Vice President and
General Counsel.
Mr. Cook receives no salary from CustomTracks. The compensation under his
employment arrangement consists entirely of options to acquire 4,254,627
shares of CustomTracks' common stock at an exercise price of $7.00 per share.
See "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS--Employment and
Severance Contracts with Certain Executive Officers" for the terms of the
employment and option agreements. Since Mr. Cook's compensation is entirely
stock based, his interests are aligned precisely with that of CustomTracks'
stockholders. Mr. Cook's employment arrangement was approved, in principle, by
the entire Board of Directors, while the details were negotiated by an ad-hoc
committee of the Board consisting of outside directors, with the assistance of
CustomTracks' General Counsel and special outside counsel retained by
CustomTracks. The Board believes that the employment arrangement is
appropriate in light of Mr. Cook's demonstrated prior success in founding and
nurturing start-up and development stage enterprises.
Mr. York did not receive any increase in base salary for 1998, although
CustomTracks did increase the base salary for Mr. Woessner to remain
competitive with salaries being paid for comparable positions. Messrs. York
and Woessner received bonuses for 1998 in recognition of their successful
efforts in effecting the disposition of CustomTracks' operating units. Neither
Mr. York nor Mr. Woessner received any increase in base salary compensation
for 1999.
CustomTracks also uses stock option grants under CustomTracks' stock option
plans to link executive compensation to stock price performance and to provide
long-term incentives.
Internal Revenue Code (S)162(m) Compliance
Compensation in excess of $1 million per year realized by any of
CustomTracks' five most highly compensated executive officers is not
deductible by CustomTracks for federal income tax purposes unless the
compensation arrangement complies with the requirements of Section 162(m) of
the Internal Revenue Code of 1986, as amended. In 1998, none of CustomTracks'
named executive officers earned compensation that was not deductible for
federal income tax purposes except for $828,600 paid to Mr. Wolpert, which was
not deductible under the golden parachute provisions of Section 280G of the
Internal Revenue Code.
The options granted to Mr. Cook in 1998 will, during the year of exercise,
likely result in Mr. Cook realizing compensation in excess of $1 million,
depending on the number of options exercised and the price of the
CustomTracks' stock at the time. These options do not comply with the
requirements of Section 162(m), which, among other things, would have required
CustomTracks to obtain stockholder approval of the option grant. When
CustomTracks and Mr. Cook were discussing his potential employment, time was
of the essence. Seeking
12
<PAGE>
stockholder approval of his option grant would have, in the Board's opinion,
imposed an unwarranted and harmful delay in completing the employment
arrangement and Mr. Cook commencing his employment duties.
BOARD OF DIRECTORS
David P. Cook
Michael E. Keane
James S. Marston
Jack L. Martin*
Antonio R. Sanchez, Jr.
Dr. Ben G. Streetman*
Mark A. Tebbe*
- --------
* Many of the compensation decisions discussed above were made prior to
Messrs. Martin and Tebbe and Dr. Streetman being appointed to the Board.
This Report will not be deemed to be incorporated by reference in any filing
by CustomTracks under the Securities Act of 1933 (the "Securities Act") or the
Securities Exchange Act of 1934 ("Exchange Act"), except to the extent that
CustomTracks specifically incorporates this Report by reference.
13
<PAGE>
Performance Graph
The following graph shows a comparison of cumulative total returns of an
investment in (i) CustomTracks' common stock, (ii) the Center for Research in
Securities Prices ("CRSP") Total Return Index for The NASDAQ Stock Market
(U.S. companies) and (iii) the CRSP Total Return Index for NASDAQ Electronic
Component Stocks, in each case, for the period since December 31, 1993. The
comparison assumes $100 was invested on December 31, 1993, in CustomTracks'
common stock and in each of the two indices and assumes reinvestment of
dividends. A listing of the companies comprising each of the CRSP-NASDAQ
indices used in the following graph is available, without charge, upon written
request.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG CUSTOMTRACKS CORPORATION
CRSP-NASDAQ STOCK MARKET (U.S.) AND
CRSP-NASDAQ ELECTRONIC COMPONENT STOCKS
CRSP-NASDAQ
CRSP-NASDAQ ELECTRONIC
Measurement period CUSTOMTRACKS STOCK MARKET COMPONENT
(Year Covered) CORPORATION (U.S.) STOCKS
- ------------------ ------------ ----------- -----------
12/93 $100.00 $100.00 $100.00
12/94 $ 40.10 $ 97.75 $110.49
12/95 $ 21.35 $138.26 $182.99
12/96 $ 27.54 $170.01 $316.46
12/97 $ 16.67 $208.58 $331.74
12/98 $ 44.53 $293.21 $512.87
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Performance Graph (the "Graph")
will not be deemed to be incorporated by reference in any filing by
CustomTracks under the Securities Act or the Exchange Act, except to the
extent that CustomTracks specifically incorporates the Graph by reference.
14
<PAGE>
MATTERS TO BE BROUGHT BEFORE THE MEETING
Proposal 1. Election of Directors
Seven directors will be elected at the meeting. The persons named below have
been nominated for election as directors. Should any nominee become unable or
unwilling to accept nomination or election, no person will be substituted in
his stead, and the Board of Directors, in accordance with the bylaws of
CustomTracks, will by resolution reduce the number of members of the Board of
Directors accordingly. The Board of Directors has no reason to believe that
any of the nominees will be unable or unwilling to serve if elected, and to
the knowledge of the Board of Directors, each of the nominees intends to serve
the entire term for which election is sought.
<TABLE>
<CAPTION>
Name(1) Principal Occupation Director Since
------- -------------------- --------------
<S> <C> <C>
David P. Cook........... Chairman, President and Chief Executive
Officer, CustomTracks Corporation 1995(2)
Michael E. Keane........ Senior Vice President and Chief Financial
Officer, UNOVA, Inc. 1997
James S. Marston........ Private Investor 1991
Jack L. Martin.......... Chairman, Public Strategies, Inc. 1998
Antonio R. Sanchez, Chairman and Chief Executive Officer,
Jr. ................... Sanchez Oil & Gas Corporation 1993
Dr. Ben G. Streetman.... Dean, College of Engineering at The
University of Texas at Austin 1998
Mark A. Tebbe........... Chairman, Lante Corporation 1999
</TABLE>
- --------
(1) For information concerning the ages, business experience and background of
the nominees, see "MANAGEMENT--Directors, Executive Officers and
Significant Employees."
(2) Mr. Cook also served on CustomTracks' Board of Directors from 1984 to
1990.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR SET FORTH ABOVE.
Proposal 2. Amendment to the Articles of Incorporation to Change the Name of
CustomTracks to ZixIt Corporation
CustomTracks has announced two new products, ZixMail(TM) (a secure Internet
messaging system) and ZixCharge(TM) (an Internet transaction system).
Accordingly, CustomTracks proposes to amend its Articles of Incorporation to
formally change its name to ZixIt Corporation. CustomTracks believes that this
name is appropriate for its new line of technology since two of its expected
new products use the "Zix" prefix. To that end, CustomTracks has filed for
federal trademark/service mark protection for the names ZixIt, ZixMail,
ZixCharge and related marks. This amendment was approved by the Board of
Directors, and the Board recommends stockholder approval. If this proposal is
approved by the stockholders, an amendment to CustomTracks' Articles of
Incorporation will be filed to effect the name change as promptly as
practicable.
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of common stock, in person or by proxy, is required to
approve the proposal to amend CustomTracks' Articles of Incorporation to
formally change the name of CustomTracks to ZixIt Corporation.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE ADOPTION OF THIS
AMENDMENT TO CUSTOMTRACKS' ARTICLES OF INCORPORATION TO FORMALLY CHANGE THE
NAME OF CUSTOMTRACKS TO ZIXIT CORPORATION.
15
<PAGE>
Proposal 3. Amendment to the Articles of Incorporation to Increase the Number
of Authorized Shares of Common Stock
CustomTracks presently has authorized for issuance 30 million shares of
common stock, par value $0.01 per share. The Board of Directors has approved
and recommends that the stockholders of CustomTracks adopt an amendment to
CustomTracks' Articles of Incorporation to increase the number of authorized
shares of common stock from 30 million to 175 million shares. As of June 30,
1999, there were approximately 15.3 million common stock shares outstanding
and an additional approximately 5.7 million shares reserved for issuance in
connection with CustomTracks' stock option plans and options held by third
parties, for a total of approximately 21 million shares. This would leave
approximately 9 million common stock shares available for future uses.
Although the Board of Directors has no present plans, arrangements,
understandings or commitments to issue the additional authorized shares of
common stock if this proposal is adopted, the proposed increase in authorized
shares will provide CustomTracks with the capability and flexibility in its
capital structure for investments and acquisitions, stock splits or stock
dividends, stock option and other stock based incentive plans, future
financings, using stock options to compensate third-party consulting and
software development firms, and for other general corporate purposes.
Accordingly, the Board believes that the proposed amendment to increase the
number of authorized shares of common stock should be approved. If this
proposal is approved by the stockholders, an amendment to CustomTracks'
Articles of Incorporation will be filed to effect the increase in the number
of authorized shares of common stock as promptly as practicable.
The number of authorized shares of CustomTracks' preferred stock would
remain unchanged as a result of this proposal.
Authorized but unissued shares of CustomTracks' common stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate. No further authorization by vote of
the stockholders will be solicited for the issuance of the additional shares
of common stock proposed to be authorized, except as might be required by law,
regulatory authorities or rules of NASDAQ or any stock exchange on which
CustomTracks' shares may then be listed. The additional shares of common stock
to be authorized will have the same status as presently authorized common
stock. The stockholders do not have any right to purchase or subscribe for any
part of any new or additional issuance of CustomTracks' securities. To the
extent that the additional authorized shares are issued in the future, they
would decrease the existing stockholders' relative percentage ownership in
CustomTracks.
The proposed increase in authorized shares of common stock is not intended
to impede a change in control of CustomTracks, and CustomTracks is not aware
of any current efforts to acquire control of CustomTracks. However, it is
possible that the additional shares could be issued as a means of preventing
or discouraging an unsolicited change in control of CustomTracks. The issuance
of additional shares could be used to dilute the ownership of anyone seeking
to gain control of CustomTracks or could be placed with an entity opposed to a
change in control. Management has no present intention to propose any anti-
takeover measures in future proxy solicitations.
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of common stock, in person or by proxy, is required to
approve the proposal to amend CustomTracks' Articles of Incorporation to
increase the number of authorized shares of common stock from 30 million to
175 million.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE ADOPTION OF THIS
AMENDMENT TO CUSTOMTRACKS' ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK.
16
<PAGE>
Proposal 4. Adoption of the CustomTracks Corporation 1999 Directors' Stock
Option Plan
General
On January 28, 1999, the Board of Directors adopted the CustomTracks
Corporation 1999 Directors' Stock Option Plan (the "1999 Plan" or the "Plan"),
subject to approval of the stockholders of CustomTracks at the meeting. The
1999 Plan provides for the automatic grant of options to acquire shares of
CustomTracks' common stock to non-employee directors of CustomTracks, as
described below. Assuming approval by CustomTracks' stockholders, the 1999
Plan will replace CustomTracks' 1996 Directors' Stock Option Plan and
provisions in CustomTracks' other option plans that provide for the automatic
grant of options to directors. Also under the 1999 Plan, directors that are
eligible to receive the annual automatic options grants will no longer receive
the annual $15,000 retainer fee.
The maximum number of common stock shares with respect to which options may
be granted under the Plan is 750,000, subject to adjustment as described
below. The aggregate market value of these 750,000 shares was $41,953,125 as
of June 30, 1999. The 1999 Plan will become effective upon approval by the
stockholders and will expire ten years from January 28, 1999, unless
terminated earlier.
The purpose of the 1999 Plan is to strengthen the ability of CustomTracks to
attract and retain non-employee directors of high caliber through encouraging
a sense of proprietorship through stock ownership.
A copy of the 1999 Plan is attached to this Proxy Statement as Appendix A,
and the following summary is qualified in its entirety by reference to the
full text of the 1999 Plan. The following is a summary of certain provisions
of the 1999 Plan.
Automatic Grants of Options; Exercise Price
The 1999 Plan provides that on the day that a non-employee director is first
appointed or elected to the Board of Directors, such director will be granted
options to purchase 25,000 shares of CustomTracks' common stock. These options
vest six months from the grant date, and the exercise price will be 100% of
the common stock price on the grant date.
Thereafter, on the first business day of each subsequent January during the
term of the 1999 Plan, each non-employee director that has served on the Board
of Directors at least 12 consecutive months will automatically receive a
further grant of options. The number of options received by each non-employee
director in a given year will be determined according to the following
formula: 1% of the number of CustomTracks' outstanding common stock shares as
of the December 31 immediately preceding the grant date divided by the number
of then-eligible directors. However, in no event may the number of shares
granted a director in any given year exceed one-half of 1% of CustomTracks'
outstanding common stock shares. The exercise price for these options will be
120% of the common stock price on the grant date.
These annual options will be 100% vested as of the grant date. The shares
underlying the options are subject to sale restrictions that lapse annually
and pro-rata over three years from the option grant date. Thus, one-third of
the shares may be sold after one year, two-thirds after two years, and all
after three years. The sale restrictions will immediately lapse if (a) a
change in control of CustomTracks occurs or (b) the director is removed by
vote of the stockholders other than for cause.
The exercise price of all options under the 1999 Plan may not be "re-priced"
without approval of CustomTracks' stockholders (obtained in accordance with
applicable law). The options may not be exercised after the tenth anniversary
of the grant date.
17
<PAGE>
The following eligible non-employee directors received immediately vested
option grants on January 28, 1999 under the 1999 Plan to acquire the number of
shares of CustomTracks' common stock indicated below, subject to the approval
of the 1999 Plan by CustomTracks' stockholders at the meeting:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
Number of Securities
Name Dollar Value(1) Underlying Options
---- --------------- --------------------
<S> <C> <C>
Michael E. Keane.................... $2,278,449 50,308
James S. Marston.................... $2,278,449 50,308
Antonio R. Sanchez, Jr. ............ $2,278,449 50,308
</TABLE>
- --------
(1) These amounts represent the dollar value of the option grants, based upon
the exercise price of $10.65 and the closing price of $55.94 per share of
common stock on June 30, 1999.
The exercise price of these options is $10.65 per share (which is 120% of
the closing price of CustomTracks' common stock on January 28, 1999). See
"Certain Financial Reporting Consequences of Option Grants under 1999 Plan"
below for a discussion of the accounting for stock option grants issued to
non-employee directors. Under current financial accounting rules, assuming the
1999 Plan is approved at the meeting, for each of these January 28, 1999,
option shares, CustomTracks will incur a non-cash expense equal to the amount,
if any, by which the fair market value of CustomTracks' common stock on
September 14, 1999, exceeds the $10.65 per share exercise price. This expense
will occur in the third quarter of 1999. As noted above, these three directors
will also receive immediately vested options to acquire additional shares of
CustomTracks' common stock on each subsequent first business day of January
that they serve on CustomTracks' Board of Directors.
All options are "non-qualified" options since they are not qualified under
Section 422 of the Internal Revenue Code of 1986, as amended. The 1999 Plan
does not provide for the grant of any type of award other than the automatic
grant of options to acquire common stock as described above.
Amendment and Termination
The Board of Directors may amend, abandon, suspend or terminate the Plan or
any portion thereof at any time in such respects as it may deem advisable in
its sole discretion, provided that no amendment shall be made without
stockholder approval if such amendment is material or if stockholder approval
is necessary to comply with any tax or regulatory requirement. No options may
be granted under the 1999 Plan after January 27, 2009.
Certain Financial Reporting Consequences of Option Grants under 1999 Plan
Current Rules
The accounting for director stock options is presently determined by the
provisions of Accounting Principles Board Opinion No. 25 "Accounting for Stock
Issued to Employees" ("APB 25"). Under APB 25, assuming the 1999 Plan is
approved at the meeting, for each January 28, 1999, option grant share,
CustomTracks will incur a non-cash expense equal to the amount, if any, by
which the fair market value of CustomTracks' common stock on September 14,
1999, exceeds the $10.65 per share exercise price. This expense will be
charged to income in the third quarter of 1999. There would be no charge to
income for future grants under the Plan since the option exercise prices would
equal or exceed 100% of the fair market value of CustomTracks' common stock on
the date of grant.
Proposed Rules
The current rules are likely to be replaced. The Financial Accounting
Standards Board is currently considering adopting new financial accounting
rules that affect the valuation for financial reporting purposes of stock
options issued to non-employee directors. The proposed rules will require that
the fair value of non-employee director stock options be determined using an
option pricing model, such as the Black-Scholes model. Under these rules, for
the 25,000 initial grant shares, CustomTracks will incur a non-cash charge to
income equal to the fair value of the options on the date of grant. The non-
cash charge will be amortized over six months,
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<PAGE>
which is the vesting period of the options. However, from the date of grant
through the end of the six-month vesting period, the options will be revalued,
and CustomTracks will recognize a cumulative catch-up adjustment reflecting
any changes in their fair value. For the annual immediately vested options, in
the first quarter of each year CustomTracks will incur a non-cash charge to
income equal to the fair value of the options granted on January 1 of that
year. As a result, CustomTracks' future operating results could be materially
impacted by non-employee director option grants and changes in the price of
CustomTracks' common stock during the six-month vesting period (which will
affect the valuation of the stock options).
Certain Federal Income Tax Consequences
An optionee will not realize any taxable income, and CustomTracks will not
be entitled to any federal income tax deduction, at the time the option is
granted. At the time the option is exercised, however, the optionee generally
will realize ordinary income in an amount equal to the excess of the fair
market value of the common stock on the date of exercise over the option price
paid, and CustomTracks will generally be entitled to a corresponding federal
income tax deduction.
Effect of 1999 Plan on Existing Board Compensation Arrangements
If approved by CustomTracks' stockholders, the 1999 Plan will replace
CustomTracks' 1996 Directors' Stock Option Plan and all other stock option
plan provisions that provide for the automatic grant of options to directors.
Under these existing plans, a Qualifying External Director receives an option
to acquire 25,000 shares of CustomTracks' common stock upon the date of
initial election or appointment to CustomTracks' Board of Directors and 2,500
option shares on each subsequent date of re-election to the Board. The option
exercise price for both the 25,000 share grant and the 2,500 share grant is
the fair market value of CustomTracks' stock on the grant date, and the
options vest six months from the grant date.
Also, if the 1999 Plan is approved by CustomTracks' stockholders, external
directors that are eligible to receive the 1999 Plan annual option grants
(i.e., those that have served on the Board at least 12 months) will no longer
receive a directors' retainer fee (which is currently $15,000 per annum).
CustomTracks will continue to pay a retainer fee to non-employee directors
until they are eligible to receive the annual grants under the 1999 Plan.
Amendment to CustomTracks' 1995 Long-Term Incentive Plan
To decrease the potential dilution to the stockholders that might result
from the issuance of stock-based awards under CustomTracks' benefit plans,
CustomTracks' has amended its 1995 Long-Term Incentive Plan (the "1995 Plan")
to limit the types of awards available thereunder. As amended, the only types
of future awards that are permitted under the 1995 Plan are stock options.
Prior to amendment, in addition to stock options, the 1995 Plan permitted the
award of performance shares, restricted stock and other stock-based awards.
Non-employee directors of CustomTracks are not eligible to receive awards
under the 1995 Plan, as amended.
Summary
The Board of Directors believes that the 1999 Plan is in the best interest
of CustomTracks and its stockholders and is necessary to enable it to attract
and retain highly qualified non-employee directors. The affirmative vote of a
majority of the shares of common stock entitled to vote on, and that vote for
or against or expressly abstain with respect to, this matter is required to
adopt the 1999 Plan. A vote "FOR" the adoption of the 1999 Plan will,
according to the terms of the Plan, approve the grant of immediately vested
options to acquire 50,308 shares of common stock, at an exercise price of
$10.65 per share, to each of Messrs. Keane, Marston and Sanchez.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR" THE ADOPTION OF THE
CUSTOMTRACKS CORPORATION 1999 DIRECTORS' STOCK OPTION PLAN.
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DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholders intending to submit proposals to be included in the proxy
materials for the 2000 Annual Meeting of Stockholders must submit their
proposals in writing so that they will be received by CustomTracks no later
than April 12, 2000. The proposals should be directed to the Secretary of
CustomTracks, Ronald A. Woessner, CustomTracks Corporation, One Galleria
Tower, 13355 Noel Road, Suite 1555, Dallas, Texas, 75240-6604. Under Rule 14a-
8 promulgated under the Securities Exchange Act of 1934, as amended, proposals
of stockholders must conform to certain requirements as to form and may be
omitted from the proxy materials under certain circumstances. To avoid
unnecessary expenditures of time and money by stockholders and CustomTracks,
stockholders are urged to review this Rule and, if questions arise, consult
legal counsel prior to submitting a proposal to CustomTracks.
MISCELLANEOUS
The Board of Directors of CustomTracks knows of no matters other than those
described herein that will be presented for consideration at the meeting. If,
however, other matters come before the meeting, the proxy holders intend to
vote all proxies in accordance with their best judgment in the interest of
CustomTracks.
A representative of Ernst & Young LLP, independent auditors of CustomTracks,
is expected to be present at the meeting, and will be afforded an opportunity
to make a statement, if such representative so desires, and to respond to
appropriate questions.
The cost of solicitation of proxies, including the cost of preparing,
printing and mailing proxy materials and the cost of reimbursing brokers for
forwarding proxies and Proxy Statements to their principals, will be borne by
CustomTracks. CustomTracks has engaged Corporate Investor Communications, Inc.
to assist in the solicitation of proxies from stockholders at a fee of
approximately $5,000 plus reimbursement of reasonable out-of-pocket expenses.
Proxies may also be solicited without extra compensation by the officers and
employees of CustomTracks by telephone, facsimile, telegraph or personally.
Arrangements may also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of shares of common stock held of record by such persons,
and CustomTracks may reimburse them for reasonable out-of-pocket expenses
incurred by them.
PLEASE DATE, SIGN AND RETURN THE PROXY AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. A
PROMPT RETURN OF YOUR PROXY WILL BE APPRECIATED, AS IT WILL SAVE THE EXPENSE
OF FURTHER MAILINGS.
A copy of CustomTracks' 1998 Annual Report containing audited financial
statements accompanies this Proxy Statement. The Annual Report does not
constitute any part of the proxy solicitation material.
By Order of the Board of Directors
Ronald A. Woessner
Secretary
Dallas, Texas
August 10, 1999
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APPENDIX A
CUSTOMTRACKS CORPORATION
1999 DIRECTORS' STOCK OPTION PLAN
Section 1. Purpose
The purpose of the CustomTracks Corporation 1999 Directors' Stock Option
Plan (hereinafter called the "Plan") is to advance the interests of
CustomTracks Corporation, a Texas corporation (hereinafter called the
"Company"), by strengthening the ability of the Company to attract, on its
behalf, and retain External Directors (as defined below) of high caliber
through encouraging a sense of proprietorship by means of stock ownership.
Section 2. Definitions
"Adoption Date" shall mean January 28, 1999.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time-
to-time.
"Committee" shall mean the entire Board of Directors, or if the
administration of the Plan has been delegated to a committee of the Board, a
committee selected by the Board and comprised of at least two directors. To
the extent necessary to comply with the requirements of Rule 16b-3, the
Committee shall consist of two or more Non-Employee Directors.
"Common Stock" shall mean the Common Stock of the Company, par value $.01
per share.
"Date of Grant" shall mean the date on which an Option is granted under the
Plan.
"Designated Beneficiary" shall mean the beneficiary designated by the
Optionee, in a manner determined by the Committee, to receive amounts due the
Optionee in the event of the Optionee's death. In the absence of an effective
designation by the Optionee, Designated Beneficiary shall mean the Optionee's
estate.
"Eligible Director" shall mean an External Director who has served on the
Board at least 12 consecutive months as of the Date of Grant.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"External Director" shall mean a member of the Board who is not an employee
of the Company or a subsidiary.
"Fair Market Value" shall mean the closing sales price (or average of the
quoted closing bid and asked prices if there is no closing sales price
reported) of the Common Stock on the date specified as reported by the NASDAQ
Stock Market, or by the principal national stock exchange on which the Common
Stock is then listed. If there is no reported price information for such date,
the Fair Market Value will be determined by the reported price information for
Common Stock on the day nearest preceding such date.
"Grant Shares" shall mean, with respect to each Eligible Director for a
particular year, a number of shares calculated according to the following
formula: 1% of the number of the Company's outstanding Common Stock shares as
of the December 31 immediately preceding the Date of Grant divided by the
number of then-Eligible Directors. In no event, may the number of Grant Shares
in any given year to any given Eligible Director exceed one-half of 1% of the
Company's outstanding Common Stock shares.
"Non-Employee Director" shall have the meaning given such term in Rule 16b-
3.
"Option" shall mean a nonqualified option to purchase shares of the
Company's Common Stock.
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"Optionee" shall mean the person to whom an Option is granted under the Plan
or who has obtained the right to exercise an Option in accordance with the
provisions of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 of the rules and regulations under the
Exchange Act as it may be amended from time-to-time and any successor
provision to Rule 16b-3 under the Exchange Act.
Section 3. Administration
The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it
shall from time-to-time deem advisable, and to construe, interpret and
administer the terms and provisions of the Plan and the agreements thereunder.
The determinations and interpretations made by the Committee are final and
conclusive and binding on all persons.
Section 4. Eligibility
All External Directors shall be eligible to receive awards of Options under
the Plan.
Section 5. Maximum Amount Available for Awards
Subject to the provisions of Section 9, the maximum number of shares of
Common Stock in respect of which Options may be granted under the Plan shall
be 750,000 shares of Common Stock. Shares of Common Stock may be made
available from authorized but unissued shares of the Company or from shares
reacquired by the Company, including shares purchased in the open market. In
the event that an Option is terminated unexercised as to any shares of Common
Stock covered thereby, such shares shall thereafter be again available for
award pursuant to the Plan.
Section 6. Stock Options
(a) During the term of the Plan, on the day that an External Director is
first appointed or elected to the Board, such director shall be granted
nonqualified Options to purchase 25,000 shares of the Company's Common Stock.
Also, during the term of the Plan, on the first business day of January of
each year after the Adoption Date, each Eligible Director shall be granted
Options to purchase the Grant Shares. Each Eligible Director serving on the
Board on the Adoption Date shall be granted Options to purchase the Grant
Shares, effective as of the Adoption Date. Directors that receive the Grant
Shares are not eligible to receive a directors' retainer cash payment,
although they are eligible to be reimbursed for expenses related to Board
activities.
(b) All Options granted under the Plan prior to shareholder approval of the
Plan shall be subject to the approval of the Plan by the shareholders of the
Company.
(c) The exercise price of the 25,000 share option grants shall be 100% of
the Fair Market Value of the Common Stock on the Date of Grant. The exercise
price for the Grant Shares shall be 120% of the Fair Market Value of the
Common Stock on the Date of Grant. The exercise price of any outstanding
Options may not be repriced without the approval of the Company's shareholders
(obtained in accordance with applicable law), given in each specific instance.
(d) Each Option hereunder shall be evidenced in writing, delivered to the
Optionee, and shall be exercisable at such times and subject to such terms and
conditions as specified in the applicable grant and agreement, subject to the
following principles:
(1) the 25,000 share option grants shall vest six months from the Date of
Grant, while the Grant Shares option grants shall be 100% vested as of
the Date of Grant;
(2) the Grant Shares are subject to the following transfer restrictions:
100% of the shares may not be transferred for one year from the Date of
Grant, 66% of the shares may not be transferred for two
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years, and 33% may not be transferred for three years; and the sale
restrictions will immediately lapse if (a) a change in control of
CustomTracks occurs or (b) the director is removed by vote of the
shareholders other than for cause; and
(3) the Options may not be exercised after the tenth anniversary of the
Date of Grant.
The Committee may impose such conditions with respect to the exercise of
Options (that are consistent with the foregoing principles), including without
limitation, any relating to the application of federal or state securities
laws, as it may deem necessary or advisable.
(e) No shares shall be delivered pursuant to any exercise of an Option until
cash payment in full of the option price therefor is received by the Company.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, any Option may be exercised by a
broker-dealer acting on behalf of an Optionee if (a) the broker-dealer has
received from the Optionee instructions signed by the Optionee requesting the
Company to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Optionee and specifying the account into which
such shares should be deposited, (b) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise, and
(c) the broker-dealer and the Optionee have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor provision. The
Company shall have the right to deduct from all amounts paid to an Optionee in
cash (whether under the Plan or otherwise) any taxes the Company withholds in
respect of Options under the Plan.
(f) The Company shall not be required to issue any fractional shares upon
the exercise of any Options granted under the Plan. No Optionee or such
Optionee's legal representatives, legatees or distributees, as the case may
be, will be, or will be deemed to be, a holder of any shares subject to an
Option unless and until said Option has been exercised and the purchase price
of the shares in respect of which the Option has been exercised has been paid.
Unless otherwise provided in the agreement applicable thereto, an Option shall
not be exercisable except by the Optionee or by a person who has obtained the
Optionee's rights under the Option by will or under the laws of descent and
distribution or pursuant to a "qualified domestic relations order" as defined
in the Code, and no right or interest of any Optionee shall be subject to any
lien, obligation or liability of the Optionee.
Section 7. Plan Amendments
The Board may amend, abandon, suspend or terminate the Plan or any portion
thereof at any time in such respects as it may deem advisable in its sole
discretion, provided that no amendment shall be made without shareholder
approval if such amendment is material or if shareholder approval is necessary
to comply with any tax or regulatory requirement.
Section 8. Restrictions on Issuance of Options and Option Shares
The Company shall not be obligated to issue any shares upon the exercise of
any Option granted under the Plan unless: (1) the shares pertaining to such
Option have been registered under applicable securities laws or are exempt
from such registration; (2) if required, the prior approval of such sale or
issuance has been obtained from any state regulatory body having jurisdiction;
and (3) in the event the Common Stock has been listed on any exchange, the
shares pertaining to such Option have been duly listed on such exchange in
accordance with the procedure specified therefor. The Company shall be under
no obligation to effect or obtain any listing, registration, qualification,
consent or approval with respect to shares pertaining to any Option granted
under the Plan. If the shares to be issued upon the exercise of any Option
granted under the Plan are intended to be issued by the Company in reliance
upon the exemptions from the registration requirements of applicable federal
and state securities laws, the recipient of the Option, if so requested by the
Company, shall furnish to the Company such evidence and representations,
including an opinion of counsel satisfactory to it as the Company may
reasonably request.
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The Company shall not be liable for damages due to a delay in the delivery
or issuance of any stock certificates for any reason whatsoever, including,
but not limited to, a delay caused by listing, registration or qualification
of the shares of Common Stock pertaining to any Option granted under the Plan
upon any securities exchange or under any federal or state law or the
effecting or obtaining of any consent or approval of any governmental body.
The Committee may impose such other restrictions on the ownership and
transfer of shares issued pursuant to the Plan as it deems desirable; any such
restrictions shall be set forth in the agreement applicable thereto.
Section 9. Adjustment to Shares
In the event that the Committee shall determine that any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase
Common Stock at a price substantially below Fair Market Value or other similar
corporate event affects the Common Stock such that an adjustment is required
in order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall adjust appropriately any or
all of (a) the number and kind of shares that thereafter may be optioned under
the Plan, (b) the number and kind of shares subject of Options and (c) the
exercise price with respect to any of the foregoing and/or, if deemed
appropriate, make provision for cash payment to an Optionee or a person who
has an outstanding Option; provided, however, that the number of shares
subject to any Option shall always be a whole number.
Section 10. Effective Date; Term; Effect on 1996 Plan
Subject to the approval of the shareholders of the Company, the Plan shall
be effective as of the Adoption Date. No Options may be granted under the Plan
after January 27, 2009; however, all previously granted Options that have not
expired under their original terms or will not then expire at the time the
Plan expires will remain outstanding. The Plan supersedes the Company's 1996
Directors' Stock Option Plan, effective upon the approval of the Plan by the
Company's shareholders.
Section 11. General Provisions
(a) Neither the Plan nor any Option granted hereunder is intended to confer
upon any Optionee any rights with respect to continuance of the utilization of
his or her services by the Company, nor to interfere in any way with his or
her right or that of the Company to terminate his or her services at any time
(subject to the terms of any applicable contract, law, regulation, and the
articles and bylaws of the Company).
(b) No Optionee or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she has become the holder thereof.
(c) The validity, construction, interpretation, administration and effect of
the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of the State of Texas
(without giving effect to its conflicts of laws rules) and, to the extent
applicable, federal law.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its
behalf as of the 28th day of January 1999.
CustomTracks Corporation
By: _________________________________
Title: ______________________________
Date: _______________________________
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CUSTOMTRACKS CORPORATION
Board of Directors Proxy for the Annual Meeting
Of Stockholders at 9:00 a.m. (registration at 8:30 a.m.), September 14, 1999
The undersigned stockholder of CustomTracks Corporation ("CustomTracks")
hereby appoints David P. Cook and Steve M. York, or either of them, as proxies,
each with full power of substitution, to vote the shares of the undersigned at
the above-stated meeting and at any adjournment thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
ACCORDING TO YOUR DIRECTIONS MADE ON THE REVERSE SIDE. IF YOU DO NOT VOTE ON A
PARTICULAR ITEM (OTHER THAN ITEM (5) ), THIS PROXY WILL BE VOTED "FOR" THAT
ITEM. THE PROXY HOLDERS WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER
REFERRED TO IN ITEM (5). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
(Please sign on the reverse side.)
<PAGE>
(Continued from reverse side)
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
INSTRUCTION: To withhold authority to vote for an individual nominee, write
that nominee's name on the following line.
(1) Election of Directors: FOR all nominees listed below (Except as provided
to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees below
David P. Cook, Michael E. Keane, James S. Marston, Jack L. Martin, Antonio R.
Sanchez, Jr., Dr. Ben G. Streetman and Mark A. Tebbe.
[_] FOR[_] WITHHOLD[_] FOR ALL EXCEPT
---------
Nominee
Exception
(2) Change of CustomTracks' name to "ZixIt Corporation":
[_] FOR[_] AGAINST[_] ABSTAIN
(3) Increase number of authorized shares of common stock from 30 million to 175
million:
[_] FOR[_] AGAINST[_] ABSTAIN
(4) Adoption of the CustomTracks Corporation 1999 Directors' Stock Option Plan:
[_] FOR[_] AGAINST[_] ABSTAIN
(5) On any other business that properly comes before the meeting or any
adjournment thereof.
[_] FOR[_] AGAINST[_] ABSTAIN
The undersigned revokes
any proxies given prior
to the date hereof.
Receipt herewith of
CustomTracks' 1998
Annual Report and Notice
of Annual Meeting and
Proxy Statement, dated
August 10, 1999, is
hereby acknowledged.
Dated: ___________ , 1999
-------------------------
-------------------------
(Signature of
Stockholder(s))
(Joint owners must EACH
sign. Please sign
EXACTLY as your name(s)
appear(s) on this card.
When signing as
attorney, trustee,
executor, administrator,
guardian or corporate
officer, please give
your FULL title.)
