<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
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 Rule 14a-11(c) or
Rule 14a-12
ADAM.COM. INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid:
------------------------------------------------------------
2) Form, Schedule or Registration Statement no.:
------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------
4) Date Filed:
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</TABLE>
<PAGE>
[LOGO]
------------------------
ADAM.COM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 13, 2000
---------------------
The Annual Meeting of Shareholders of adam.com, Inc. (the "Company") will be
held at the Crowne Plaza Hotel, 6345 Powers Ferry Road, N.W., Atlanta,
Georgia 30339, on Tuesday, June 13, 2000 at 9:00 a.m., local time, for the
following purposes:
(1) To elect two directors to serve until the 2003 Annual Meeting of
Shareholders and one director to serve until the 2001 Annual Meeting of
Shareholders;
(2) To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000; and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only the holders of record of common stock, par value $.01, of the Company
at the close of business on May 19, 2000 are entitled to notice of and to vote
at the Annual Meeting of Shareholders and any adjournment thereof. A list of
shareholders as of the close of business on May 19, 2000 will be available at
the Annual Meeting of Shareholders for examination by any shareholder, his agent
or his attorney.
Your attention is directed to the Proxy Statement provided with this Notice.
By Order of the Board of Directors,
[SIG]
Robert S. Cramer, Jr.
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
Atlanta, Georgia
May 23, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
[LOGO]
May 23, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of adam.com, Inc. to be held on June 13, 2000 at the Crowne Plaza Hotel,
6345 Powers Ferry Road, N.W., Atlanta, Georgia 30339. The meeting will begin
promptly at 9:00 a.m., local time, and we hope that it will be possible for you
to attend.
The items of business are listed in the following Notice of Annual Meeting
and are more fully addressed in the Proxy Statement provided herewith.
Please date, sign and return your proxy card in the enclosed envelope at
your convenience to assure that your shares will be represented and voted at the
Annual Meeting even if you cannot attend. If you attend the annual meeting, you
may vote your shares in person even though you have previously signed and
returned your proxy.
On behalf of your Board of Directors, thank you for your continued support
and interest in adam.com, Inc.
Sincerely,
[SIG]
Robert S. Cramer, Jr.
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER AND CO-FOUNDER
<PAGE>
ADAM.COM, INC.
1600 RiverEdge Parkway, Suite 800
Atlanta, Georgia 30328
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 13, 2000
------------------------
The 2000 Annual Meeting of Shareholders (the "Annual Meeting") of
adam.com, Inc. (the "Company") will be held on June 13, 2000, for the purposes
set forth in the Notice of Annual Meeting of Shareholders attached hereto. The
enclosed form of proxy is solicited by the Board of Directors of the Company
(the "Board" or "Board of Directors") and the cost of the solicitation will be
borne by the Company. When the proxy is properly executed and returned, the
shares it represents will be voted as directed at the Annual Meeting or any
adjournment thereof or, if no direction is indicated, such shares will be voted
in favor of the proposals set forth in the Notice of Annual Meeting of
Shareholders attached hereto. Any shareholder giving a proxy has the power to
revoke it at any time before it is voted. All proxies delivered pursuant to this
solicitation are revokable at any time at the option of the persons executing
them by giving written notice to the Secretary of the Company, by delivering a
later-dated proxy or by voting in person at the Annual Meeting.
RECORD DATE
Only shareholders of record as of the close of business on May 19, 2000 (the
"record date") will be entitled to vote at the Annual Meeting. As of that date,
the Company had outstanding 5,414,627 shares of common stock, $.01 par value
("Common Stock"). Shareholders of record as of the close of business on May 19,
2000 are entitled to one vote for each share of Common Stock held. No cumulative
voting rights are authorized and dissenters' rights for shareholders are not
applicable to the matters being proposed. It is anticipated that this Proxy
Statement and the accompanying proxy will first be mailed to shareholders of the
Company on or about May 23, 2000.
VOTING AND PROXIES
The presence in person or by proxy of holders of a majority of the shares of
Common Stock outstanding on the record date will constitute a quorum for the
transaction of business at the Annual Meeting or any adjournment thereof. The
affirmative vote of a plurality of the shares present in person or by proxy and
entitled to vote is required to elect directors. With respect to any other
matter that may properly come before the Annual Meeting, the approval of any
such matter would require a greater number of votes cast in favor of the matter
than the number of votes cast opposing such matter. Shares held by nominees for
beneficial owners will be counted for purposes of determining whether a quorum
is present if the nominee has the discretion to vote on at least one of the
matters presented even if the nominee may not exercise discretionary voting
power with respect to other matters and voting instructions have not been
received from the beneficial owner (a "broker non-vote"). Broker non-votes will
not be counted as votes for or against matters presented for shareholder
consideration. Abstentions with respect to a proposal are counted for purposes
of establishing a quorum. If a quorum is present, abstentions have no effect on
the outcome of any vote.
ELECTION OF DIRECTORS
(ITEM 1)
Under the Bylaws of the Company, the number of directors constituting the
Board is fixed at no greater than nine. The Bylaws divide the Board into three
classes with the directors in each class serving a term of three years. There
are two directors, Linda B. Davis and Francis J. Tedesco who have been nominated
to stand for reelection as directors until the annual meeting of shareholders in
2003. Daniel S. Howe has been nominated to stand for reelection as a director
until the annual meeting of
<PAGE>
shareholders in 2001. In addition to the three nominees, there are two directors
continuing to serve on the Board whose terms expire in 2002.
Except as otherwise provided herein, the proxy solicited hereby cannot be
voted for the election of a person to fill a directorship for which no nominee
is named in this Proxy Statement. The Board has no reason to believe that any of
the nominees for the office of director will be unavailable for election as a
director. However, if at the time of the Annual Meeting any of the nominees
should be unable to serve or, for good cause, will not serve, the persons named
in the proxy will vote as recommended by the Board to elect substitute nominees
recommended by the Board. In no event, however, can a proxy be voted to elect
more than four directors.
The following list sets forth the names of the two nominees for election to
the Board to serve until the annual meeting of shareholders in 2003 and the
nominee for election to serve until the annual meeting of shareholders in 2001,
or until their successors are duly elected and qualified. Such list also
contains, as to each nominee and incumbent director, certain biographical
information, a brief description of principal occupation and business experience
during the past five years and certain other information, which information has
been furnished by the respective individuals.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR LINDA B. DAVIS AND FRANCIS J.
TEDESCO TO HOLD OFFICE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 2003 AND
DANIEL S. HOWE TO HOLD OFFICE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 2001
OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
NOMINEES FOR ELECTION TERM EXPIRING IN 2000
LINDA B. DAVIS. (Age 56) Ms. Davis has been a Director of the Company since
September 1998. Ms. Davis is the General Manager of the Science and Nursing
Division of Addison Wesley Longman, a publisher of educational materials, a
position she has held since September 1997. She joined Addison Wesley in 1990 as
Vice President of Product Development and was subsequently promoted to Vice
President and Editorial Director of the Math, Physics and Statistics Division.
Previously, Ms. Davis was Vice President and Director of Development at W.H.
Freeman/Scientific American Books from 1986 to 1990.
DANIEL S. HOWE. (Age 38) Mr. Howe has been a Director of the Company since
December 1996. Mr. Howe is President of DSH Enterprises, Inc., a real estate
development and investment company, and has served in that capacity since
January 1990.
FRANCIS J. TEDESCO. (Age 55) Dr. Tedesco has been a Director of the Company
since July 1996. He has served as Chief Executive Officer of Health Sciences
University and as President of the Medical College of Georgia ("MCG") since
1988, and has been a Professor of Medicine at MCG since 1981. He also is a
consultant to Dwight David Eisenhower Medical Center--Fort Gordon, Georgia;
Veterans Administration Medical Center--Augusta, Georgia and Walter Reed Army
Medical Center--Washington, D.C. Prior to coming to MCG in 1978, Dr. Tedesco
held academic appointments beginning in 1971 at the Hospital of the University
of Pennsylvania; Washington University School of Medicine, St. Louis, Missouri;
and University of Miami School of Medicine. Dr. Tedesco currently serves on the
Board of Directors and is Vice President of the Georgia Division of the American
Cancer Society, and he is a director of URO Health, a medical products
manufacturer.
DIRECTORS CONTINUING IN OFFICE UNTIL 2002
ROBERT S. CRAMER, JR. (Age 39) Mr. Cramer, a co-founder of the Company, has
served as Chairman of the Board and a Director since the Company's inception in
March 1990, and Chief Executive Officer since September 1996, and, since 1999,
Mr. Cramer has been an Executive Officer
2
<PAGE>
and Board Member of the Port.com, an Internet technology company. From 1987 to
1992, he served as Chairman of the Board of Directors of MLI. In 1989,
Mr. Cramer served as an Executive Editor and Co-Publisher of Atlanta Computer
Spectrum, a regional technology publication he helped to create. Also, since
1994 Mr. Cramer has served as Chairman of the Board of the Atlanta Task Force
for the Homeless, a community-wide non profit organization working with and on
the behalf of homeless people.
JOHN W. MCCLAUGHERTY. (Age 39) Mr. McClaugherty, a co-founder of the
Company, has served as a Director of the Company since its inception in
March 1990. Currently, Mr. McClaugherty serves as President of PriTherapy.com,
Inc., a behavioral health company. He has served as its president since its
inception in September 1999. Prior thereto, Mr. McClaugherty served as President
of J.S.K., Inc., a medical illustration company. He served as its president from
1994 to 1999. Mr. McClaugherty served as Chief Executive Officer of the Company
from its inception until March 1994.
MEETINGS OF THE BOARD OF DIRECTORS
During the nine months ended December 31, 1999, the Board held six meetings.
Each incumbent director that served during the nine months ended December 31,
1999 attended at least 75% of all Board meetings and meetings held by committees
on which the individual director served in the nine months ended December 31,
1999, except for Linda B. Davis who only attended two meetings during the nine
months ended December 31, 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Stock Repurchase and Compensation/Stock Option
Committees that assist it in discharging its responsibilities. These committees,
their members and functions are discussed below.
The Audit Committee, which held one meeting during the nine months ended
December 31, 1999, is responsible for recommending independent accountants,
reviewing with the accountants the scope and results of the audit engagement,
and consulting with independent accountants and management with regard to
adam.com's accounting methods and control procedures. As of the date hereof, the
Board has not adopted a written charter for the Audit Committee. Each member of
the Audit Committee is an "independent director" as such term is defined in the
Rule 4200(a)(14) of the National Association of Securities Dealers' listing
standards. The Audit Committee is composed of Messrs. McClaugherty and Howe
(Chairman).
The Stock Repurchase Committee, which held no meetings during the nine
months ended December 31, 1999, is responsible for adam.com's repurchase of its
own shares pursuant to the Stock Repurchase Program. The Stock Repurchase
Committee is composed of Messrs. Cramer (Chairman) and Howe.
The Compensation/Stock Option Committee, which held one meeting during the
nine months ended December 31, 1999, is responsible for reviewing
recommendations from the Chairman of the Board of Directors with regard to the
compensation of officers of adam.com and reporting to the Board of Directors its
recommendations with regard to such compensation and is responsible for
operating and administering adam.com's 1991 Employee Stock Option Plan and its
Amended and Restated 1992 Stock Option Plan. The Compensation/Stock Option
Committee is composed of Mr. Howe and Dr. Tedesco (Chairman).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the nine months ended December 31, 1999 our Compensation Committee
consisted of Dr. Tedesco and Mr. Howe. During the nine months ended
December 31, 1999 , we did not engage in
3
<PAGE>
any transactions with the members of the Compensation Committee. No member of
the Compensation Committee was an officer or employee of adam.com or any of our
subsidiaries during the nine months ended December 31, 1999 or any time prior
thereto.
COMPENSATION OF DIRECTORS
During the nine months ended December 31, 1999, directors did not receive
cash compensation for their services as directors of adam.com. On April 12,
1999, each non-employee director of adam.com was awarded an option to purchase
3,000 shares of Common Stock. Such options have a term of five years from the
date of grant and vest one year from the date of grant. Each option has an
exercise price of $7.94 per share.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed PricewaterhouseCoopers LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 2000 ("fiscal
2000"), subject to ratification of this appointment by the shareholders of the
Company. PricewaterhouseCoopers LLP has served as independent auditors of the
Company for many years and is considered by management of the Company to be well
qualified. The Company has been advised by PricewaterhouseCoopers LLP that
neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. One or more
representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if he or she desires to do
so and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2000. PROXIES RECEIVED BY THE BOARD
OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
4
<PAGE>
COMMON STOCK OWNERSHIP BY MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of shares of Common
Stock as of May 19, 2000 for (1) directors of adam.com, (2) the Named Executive
Officers, (3) the directors and executive officers of adam.com as a group and
(4) each shareholder of adam.com holding more than a 5% interest in adam.com.
Unless otherwise indicated in the footnotes, all of such interests are owned
directly, and the indicated person or entity has sole voting and disposition
power. The number of shares represents (a) the number of shares of Common Stock
the person beneficially owns plus (b) the number of shares issuable upon
exercise of options and warrants that become exercisable prior to July 19, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED PERCENT OF CLASS(2)
- --------------------------------------- ------------------ -------------------
<S> <C> <C>
Robert S. Cramer(3)......................................... 816,190 15.1%
Gregory M. Swayne(4)........................................ 192,520 3.6
Neal Alen(5)................................................ 21,998 *
Linda B. Davis.............................................. -- --
Daniel S. Howe(6)........................................... 30,333 *
John W. McLaugherty(7)...................................... 6,202 *
Francis J. Tedesco, M.D..................................... -- --
Addison Wesley Longman...................................... 700,000 12.9
All executive officers and directors as a group
(7 persons)(8)............................................ 1,067,243 19.7%
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise indicated, the addresses of the persons listed is c/o
adam.com, 1600 River Edge Parkway, Suite 800, Atlanta, Georgia 30328.
(2) Based on 5,414,627 shares outstanding. Except as indicated in the footnotes
set forth below, the persons named in the table, to adam.com's knowledge,
have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them. The number of shares shown as
owned by, and the voting power of, individual shareholders include shares
which are not currently outstanding but which such shareholders are entitled
to acquire or will be entitled to acquire within 60 days. Such shares are
deemed to be outstanding for the purpose of computing the percentage of
outstanding Common Stock owned by the particular shareholder, but are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
(3) Includes 253,833 shares issuable upon exercise of outstanding options.
(4) Includes 212,333 shares issuable upon exercise of outstanding options.
(5) Represents shares issuable upon exercise of outstanding options.
(6) Represents 12,333 shares issuable upon exercise of outstanding options.
(7) Includes 6,000 shares issuable upon exercise of outstanding options.
(8) Includes 506,464 shares issuable upon exercise of outstanding options.
5
<PAGE>
EXECUTIVE OFFICERS
MICHAEL S. FISHER. Mr. Fisher joined adam.com in September 1993 as
Controller, became Vice President of Finance and Administration in
February 1997 and was appointed Corporate Secretary in March 1997. From
June 1990 through August 1993 he served as Controller for Morgan Medical
Holdings, Inc., a publicly held medical diagnostic services firm, and was
responsible for all financial functions. Previously thereto, he served two years
as an accountant with BDO/Seidman. Mr. Fisher is a CPA licensed in the state of
New York.
NEAL ALEN. Mr. Alen has been Vice President of Sales for adam.com since
January 2000. Prior to that time he served as adam.com's Vice President, CD ROM
unit from January 1999 to December 1999 and as adam.com's Director of Sales from
April 1996 to December 1999. From December 1994 to December 1996 Mr. Alen was
Director of Sales and Marketing at Edutech, Inc., a reseller of education
products based in Monterey, California.
KEVIN S. NOLAND. Mr. Noland joined adam.com in November 1994 and currently
serves as Vice President of Marketing and Corporate Communications. From
September 1996 to April 1999 Mr. Noland was adam.com's Director of Marketing,
and from November 1994 to September 1996 he served as adam.com's Product
Manager.
CYNTHIA L. LOGAN. Ms. Logan joined adam.com in January 1999 as
Manager--NIST Advanced Technology Project, and since October 1999, she has
served as adam.com's Vice President of Operations. From January 1995 to
December 1998, Ms. Logan worked at AT&T, a global telecommunications company, as
a consultant on telemedicine and internet health management issues.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth certain information relating to the compensation
earned during the nine months ended December 31, 1999 and the fiscal years ended
March 31, 1999 and March 31, 1998 by our Chief Executive Officer and each of the
other highest paid executive officers whose total annual salary and bonus
exceeded $100,000 during the nine months ended December 31, 1999 (collectively,
the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
----------------------
SECURITIES ALL
UNDERLYING OTHER
NAME AND PRINCIPAL POSITIONS PERIOD(1) SALARY($) OPTIONS(#) COMPENSATION($)
- ---------------------------- --------- --------- ---------- ---------------
<S> <C> <C> <C> <C>
Robert S. Cramer, Jr........................ TP99 $140,082 40,000 1,906(2)
Chief Executive Officer FY99 164,000 225,000(3) 1,906(2)
FY98 155,000 120,000(4) 2,111(2)
Gregory M. Swayne........................... TP99 130,272 30,000 203,414(5)
Vice Chairman FY99 159,000 220,000(3) 2,039(2)
FY98 155,000 120,000(4) 2,257(2)
Neal Alen................................... TP99 155,577 12,000 --
Vice President of Sales FY99 124,717 12,000 --
FY98 127,455 25,500 --
</TABLE>
- ------------------------
(1) "TP99" represents the nine months ended December 31, 1999. "FY99" represents
the twelve months ended March 31, 1999. "FY98" represents the twelve months
ended March 31, 1998.
(2) Represents life insurance premiums paid on behalf of such executive
officers.
6
<PAGE>
(3) Includes 195,000 shares subject to previously granted options repriced and
reissued on January 14, 1999.
(4) Options to purchase these shares were repriced and reissued on January 14,
1999.
(5) Includes $201,375 accrued under the terms of a termination agreement dated
December 31, 1999 and $2,039 in life insurance premiums paid on behalf of
Mr. Swayne.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding stock options granted to
the Named Executive Officers during the nine months ended December 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF
----------------------------------------------------- STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS OPTION TERM (1)
UNDERLYING GRANTED TO EXERCISE OR ---------------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARE)(1) DATE 5%($) 10%($)
- ---- ---------- ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cramer, Jr......... 40,000 5.9% $7.94 04/11/09 $517,200 $823,600
Gregory M. Swayne............ 30,000 4.4 7.94 04/11/09 387,900 617,700
Neal Alen.................... 12,000 1.8 7.94 04/11/09 155,160 247,080
</TABLE>
- ------------------------
(1) The potential realizable value illustrates value that might be realized upon
exercise of the options immediately prior to the expiration of their term,
assuming the specified compounded rates of appreciation on the Common Stock
over the term of the options. These numbers do not take into account plan
provisions providing for termination of the options following termination of
employment or nontransferability.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table shows the number and value of exercisable and
unexercisable options held by adam.com's Named Executive Officers as of
December 31, 1999. No stock appreciation rights were outstanding during the nine
months ended December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE MONEY
AT FISCAL YEAR-END (#) OPTIONS/SARS AT FISCAL YEAR-END ($)
----------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(2)
- ---- ------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Robert S. Cramer, Jr. (1)......... 36,500 290,600 $275,125 1,856,100
Gregory M. Swayne................. 666 249,001 5,162 1,809,480
Neal Alen......................... 17,998 46,500 185,959 221,597
</TABLE>
- ------------------------
(1) Does not include warrants to purchase 48,375 shares of Common Stock issued
in December 1999.
(2) The closing price of our Common Stock on December 31, 1999 was $12.75.
We have not awarded stock appreciation rights to any employee, we have no
long-term incentive plans, as that term is defined in SEC regulations, and we
have no defined benefit or actuarial plans covering any of our employees.
COMPENSATION OF DIRECTORS
During the nine months ended December 31, 1999, directors did not receive
cash compensation for their services as directors of adam.com. On April 12,
1999, each non-employee director of
7
<PAGE>
adam.com was awarded an option to purchase 3,000 shares of adam.com Common
Stock. Such options have a term of five years from the date of grant and vest
one year from the date of grant. Each option has an exercise price of $7.94 per
share.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement with Mr. Cramer that is currently
scheduled to expire on December 31, 2001 (the "Expiration Date") and is
automatically renewable for successive one-year periods unless written notice of
non-renewal is given by either party. This agreement also may be terminated by
us with or without cause or upon Mr. Cramer's death or inability to perform his
duties on account of a disability for a period of twelve consecutive months or
by Mr. Cramer. If the agreement is terminated prior to the Expiration Date for
any reason, except by Mr. Cramer, by us for cause or upon Mr. Cramer's death or
disability, we must continue to pay Mr. Cramer's base salary and bonus either
(1) for the period from the date of termination through the Expiration Date if
the agreement is terminated prior to the first anniversary thereof or (2) for
the two year period following the date of termination if the agreement is
terminated after the first anniversary thereof. If the agreement is terminated
because of the death or disability of Mr. Cramer, we must pay Mr. Cramer or his
beneficiaries his base salary and bonus for a period of one year following the
date of termination; provided, however, that, in the case of termination for
disability, we may elect, in lieu of making such payments, to provide
Mr. Cramer with disability insurance coverage. The agreement provides for a
minimum base salary of $120,000 for each of and for annual discretionary
bonuses. The agreement also contains a two year noncompetition, customer and
employee nonsolicitation and confidentiality provision. We have executed
Employee Confidentiality, Nondisclosure and Noncompetition Agreements with all
of our employees.
We entered into a Termination of Employment Agreement with Mr. Swayne on
December 31, 1999. Under the terms of the agreement, Mr. Swayne resigned as an
officer and employee of the Company and accepted the termination of his previous
Employment Agreement dated December 19, 1994 in exchange for $201,375 to be paid
out over the 13.5 months from December 31, 1999. Mr. Swayne will, at the request
of the Chief Executive Officer, also provide up to 30 hours of consulting
services for the Company each month. Stock options previously granted to
Mr. Swayne will continue to vest pursuant to their terms through April 22, 2000,
at which time all further unvested stock options will terminate. At the end of
the term of the agreement, the parties have agreed to a mutual release of all
claims against each other.
CERTAIN TRANSACTIONS
During December 1999, adam.com issued a note payable in the amount of
$500,000 to Robert S. Cramer, Chief Executive Officer and Chairman of the Board
of adam.com. This note bears interest at 10%, payable upon the maturity date.
This note payable included warrants to purchase 25,000 shares of Common Stock at
an exercise price of $11.11 per share. This note payable is scheduled to mature
on December 31, 2000, however, the term may be extended to June 30, 2001, at the
option of the holder.
During the nine month period ended December 31, 1999, adam.com sold
approximately $6,000 of product to Addison Wesley Longman, a shareholder in
adam.com. During the period ended December 31, 1999, adam.com sold approximately
$6,000 of product to Benjamin/Cummings, a subsidiary of a shareholder of
adam.com. adam.com earned royalty revenues of approximately $218,000 related to
Benjamin/Cummings during the period ended December 31, 1999. Additionally,
adam.com purchased approximately $10,000 of product from Benjamin/Cummings
during the period ended December 31, 1999 and paid royalty expenses to
Benjamin/Cummings of approximately $164,000. Linda B. Davis, a director of
adam.com, is the General Manager of the Science and Nursing division of Addison
Wesley.
8
<PAGE>
As of December 31, 1999, Mr. Cramer held warrants to purchase 23,375 shares
of Common Stock which were granted in connection with various debt and equity
financings. adam.com received approximately $356,000 during the nine months
ended December 31, 1999 from the exercise of warrants to purchase 44,438 shares
of Common Stock issued in connection with these financing transactions.
It is our policy that all future transactions, if any, with affiliated
parties will be approved by the disinterested members of our Board of Directors,
a committee of the Board or by the shareholders of adam.com.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation/Stock Option Committee (the "Compensation Committee"),
which is composed of two non-employee directors, is responsible for developing
and making recommendations to the Board with respect to the Company's
compensation plans and policies for the Company's executive officers as well as
the Board of Directors. In carrying out this responsibility, the Compensation
Committee approves the design of all compensation plans applicable to executive
officers and directors, reviews and approves performance goals, establishes
award opportunities, oversees the ongoing operation of the various plans and
makes recommendations to the Board regarding certain of these matters. In
addition, the Compensation Committee, pursuant to authority delegated by the
Board, determines on an annual basis the base salaries to be paid to the Chief
Executive Officer and each of the other executive officers. The Compensation
Committee also, in conjunction with the Board, reviews compensation policies
applicable to executive officers as well as directors and considers the
relationship of corporate performance to that compensation.
EXECUTIVE OFFICER COMPENSATION PHILOSOPHY
The objectives of the Company's executive compensation program are to:
(1) support the achievement of desired Company performance; and (2) provide
compensation that will attract and retain superior talent and reward
performance. In carrying out these objectives, the Compensation Committee
considers current corporate performance, the potential for future performance
gains, whether shareholder value has been or will be enhanced, and competitive
market conditions for executives in similar positions at local, regional and
national software companies having similar revenues and number of employees.
Those factors are evaluated and considered for each officer on an annual basis,
including consideration of the contribution made by each officer over the prior
fiscal year. The Company's compensation package for its officers includes both
short-term and long-term features in the form of base salary, variable
compensation keyed to Company performance and stock options which are granted
periodically at the discretion of the Compensation Committee. As a result, the
Company's executive compensation provides an overall level of compensation
opportunity that is competitive with companies in our industry of comparable
size and complexity. The Compensation Committee will use its discretion to set
executive compensation at a level that, in its judgment, is warranted by
external, internal or individual circumstances. The Compensation Committee also
believes that stock ownership by management and stock-based performance
compensation arrangements are beneficial in aligning management's and
shareholders' interests in the enhancement of shareholder value.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation is comprised of base salary,
grants under the Amended and Restated 1992 Stock Option Plan, and various
benefits, including medical plans which are generally available to employees of
the Company.
9
<PAGE>
BASE SALARY. The salaries for executive officers are reviewed annually and
are approved by the Compensation Committee. In determining base salaries, the
Compensation Committee takes into consideration individual experience and
performance as well as other circumstances particular to the Company.
VARIABLE COMPENSATION. Variable compensation is keyed to Company
performance for officers and is based on achievement of pre-established targets
relative to the Company's budget which includes sales growth, expense control
and profitability and the timely development and market reception of new
products.
STOCK OPTION PROGRAM. The grant of stock options is designed to align the
interests of executive officers with those of shareholders in the Company's
long-term performance. Options granted under the plans have an exercise price
equal to at least 100% of the fair market value of the Company's Common Stock on
the date of grant and expire not later than ten years from the date of grant. It
has generally been the practice of the Committee to grant stock options which
vest ratably over a three-year period from the date of the grant. The Committee
and the Board of Directors, however, maintain discretion to make other types of
grants. Option awards for officers other than the Chief Executive Officer are
based on recommendations made by the Chief Executive Officer and on the
Committee's assessment of how the respective individual contributes to the
Company. The factors considered in this assessment are identical to those set
forth under the headings, Base Salary and Variable Compensation.
OTHER BENEFITS. The Company provides medical benefits to executive
officers. These benefits are comparable to those generally available to Company
employees. The Company also funds life insurance policies on the behalf of
Mr. Cramer. The amount funded under policies and the amount of insurance
provided to the executive is commensurate with the executive's salary and level
of responsibility.
COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Mr. Cramer serves as the Chairman of the Board and Chief Executive Officer
under an employment contract, dated December 21, 1994, which was approved by the
Compensation Committee. Under the employment contract, Mr. Cramer's compensation
is principally composed of a minimum base salary of $120,000 and annual
discretionary bonuses. On November 15, 1999, the Board approved a base salary
for Mr. Cramer for fiscal 2000 of $250,000. During the nine months ended
December 31, 1999, the Company made contributions to a life insurance policy on
behalf of Mr. Cramer. The value of the benefit related to such policy was
estimated to be $2,000,000.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT. The Omnibus Budget
Reconciliation Act of 1993 placed certain limits on the deductibility of
non-performance based executive compensation for a company's employees, unless
certain requirements are met. The Compensation/Stock Option Committee does not
believe that there is a risk of losing deductions under the new law. However, in
the future, the Compensation/Stock Option Committee intends to consider
carefully any plan or compensation arrangement that might result in the
disallowance of compensation deductions that may be lost versus the broader
interests of the Company to be served by paying adequate compensation for
services rendered, before adopting any plan or compensation arrangement. The
Compensation Committee believes that its compensation philosophies are suited to
retaining and rewarding executives who contribute to the success of the Company
in achieving its business objectives and increasing stockholders value. The
Company further believes that the program strikes an appropriate balance among
the interests and needs of the Company, its shareholders and its executives.
The Committee/Stock Option Committee
Daniel S. Howe
John W. McClaugherty
10
<PAGE>
THE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION SHALL NOT BE
DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE ACTS EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACT.
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the market performance
of the Company's Common Stock to the Nasdaq Stock Market--U.S. and the
Hambrecht & Quist Technology Index. The stock price performance graph assumes an
investment of $100 in the Company and the Hambrecht & Quist Technology Index on
November 10, 1995 and an investment of $100 in the Nasdaq Stock Market--U.S. on
October 31, 1995 and further assumes the reinvestment of all dividends. Stock
price performance, presented monthly for the period from November 10, 1995
through December 31, 1999 is not necessarily indicative of future results.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ADAM SOFTWARE, INC H&O TECHNOLOGY NASDAQ STOCK MARKET US
<S> <C> <C> <C>
Nov-95 100 100 100
Dec-95 54.17 93.4 101.8
Mar-96 41.67 95.2 106.57
Jun-96 25 101.98 115.25
Sep-96 29.17 108.26 119.36
Dec-96 21.88 116.08 125.26
Mar-97 16.67 110.65 118.46
Jun-97 19.27 133.18 140.17
Sep-97 24.48 161.41 163.88
Dec-97 23.96 136.1 153.48
Mar-98 23.96 164.79 179.62
Jun-98 28.13 168.71 184.56
Sep-98 21.88 149.97 166.7
Dec-98 25.26 211.69 216.27
Jun-99 120.83 273.05 264.65
Dec-99 106.25 472.77 390.66
</TABLE>
THE STOCK PRICE PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE
BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO
ANY FILING UNDER THE ACTS EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACT.
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires executive officers and directors
of the Company and persons who beneficially own more than ten percent of the
Company's Common Stock to file with the Securities and Exchange Commission
certain reports, and to furnish copies thereof to the Company, with respect to
each such person's beneficial ownership of the Company's equity securities.
Based solely upon a review of the copies of such reports furnished to the
Company and certain representations of such persons, all such persons have
complied with the applicable reporting requirements.
11
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has audited the accounts of the Company and its
subsidiaries for the nine months ending December 31, 1999 and has been appointed
by the Board of Directors to continue in that capacity for the Company's fiscal
year ending December 31, 2000. A representative of PricewaterhouseCoopers LLP
will be present at the Annual Meeting, will have the opportunity to make a
statement and will be available to respond to appropriate questions.
REPORT TO SHAREHOLDERS FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
The Report of the Company for the nine months ending December 31, 1999,
including audited financial statements, accompanies this Proxy Statement. This
Report does not form any part of the material for the solicitation of proxies.
TRANSITION REPORT ON FORM 10-K/A
THE COMPANY WILL PROVIDE WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY
SHAREHOLDER OF RECORD AS OF THE CLOSE OF BUSINESS ON MAY 19, 2000, A COPY OF THE
COMPANY'S TRANSITION REPORT ON FORM 10-K/A FOR THE NINE MONTHS ENDED
DECEMBER 31, 1999, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT THE
EXHIBITS THERETO. The Company will provide copies of the exhibits, should they
be requested by eligible shareholders, and the Company may impose a reasonable
fee for providing such exhibits. Request for copies of the Company's Annual
Report on Form 10-K/A should be mailed to:
adam.com, Inc.
1600 RiverEdge Parkway, Suite 800
Atlanta, Georgia 30328
Attention: Corporate Secretary
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 2001
Annual Meeting of Shareholders must be received by the Company on or before
February 14, 2001 to be eligible for inclusion in the proxy statement and form
of proxy to be distributed by the Board of Directors in connection with such
meeting. In general, any shareholder proposal to be considered at next year's
annual meeting but not included in the proxy statement must be submitted in
writing to the principal executive offices of the Company, not less than 60 days
prior to the 2001 annual meeting. However, if the Company sends out notice or
publicly discloses the date of the 2001 annual meeting of the shareholders
within forty days prior to such meeting, then a shareholder will be able to
submit a proposal for consideration within ten days of the notice or public
announcement of such meeting. Any notification to bring any proposal before the
2001 annual meeting of the shareholders must comply with the requirements of the
Company's bylaws. You may obtain a copy of the relevant bylaw provisions by
contacting the Company's Corporate Secretary.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting.
12
<PAGE>
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the meeting as possible, special
solicitation of proxies may, in certain instances, be made personally or by
telephone, telegraph or mail by one or more employees of the Company. The
Company also will reimburse brokers, banks, nominees and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy material to
their principals who are beneficial owners of the Company's Common Stock.
By Order of the Board of Directors,
/s/ Robert S. Cramer, Jr.
Robert S. Cramer, Jr.
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
Atlanta, Georgia
May 23, 2000
13
<PAGE>
ADAM.COM, INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON JUNE 13, 2000
The undersigned hereby appoints Robert S. Cramer, Jr. and Michael S. Fisher
and each of them, proxies, with full power of substitution and resubstitution,
for and in the name of the undersigned, to vote all shares of common stock of
adam.com, Inc. which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders to be held on Tuesday, June 13,
2000, at 9:00 a.m., local time, at the Crowne Plaza Hotel, 6345 Powers Ferry
Road, N.W., Atlanta, GA 30339, or at any adjournment thereof, upon the matters
described in the accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement, receipt of which is hereby acknowledged, and upon any other business
that may properly come before the Annual Meeting of Shareholders or any
adjournment thereof. Said proxies are directed to vote on the matters described
in the Notice of Annual Meeting of Shareholders and Proxy Statement as follows,
and otherwise in their discretion upon such other business as may properly come
before the Annual Meeting of Shareholders or any adjournment thereof.
1. To elect three (3) directors to serve until the Annual Meeting of
Shareholders indicated below:
/ / FOR all nominees listed (except as marked below to the contrary)
To serve until the 2003 Annual Meeting of Shareholders:
Linda B. Davis
Francis J. Tedesco
To serve until the 2001 Annual Meeting of Shareholders:
Daniel S. Howe
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
/ / WITHHOLD AUTHORITY to vote for all nominees listed.
<PAGE>
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for fiscal 2000.
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE ABOVE-STATED PROPOSALS.
--------------------------------------
Date: ________, 2000
Please sign exactly as your name or
names appear hereon. For more than one
owner as shown above, each should
sign. When signing in a fiduciary or
representative capacity, please give
full title. If this proxy is submitted
by a corporation, it should be
executed in the full corporate name by
a duly authorized officer, if a
partnership, please sign in
partnership name by authorized person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ON JUNE 13, 2000.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
