SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
Computer Concepts Corp.
(Name of Registrant as Specified in its Charter)
Computer Concepts Corp.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)3.
[ ] 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:
______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
[ ] 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) Dated Filed: _________________________________________________________
<PAGE>
COMPUTER CONCEPTS CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 23, 1998
To the Stockholders of:
COMPUTER CONCEPTS CORP.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Computer
Concepts Corp. will be held at the Omni Jacksonville Hotel, 245 Water Street,
Jacksonville, Florida 32202, on Wednesday, December 23, 1998, at 8:30 a.m., or
at any adjournment thereof (the "Annual Meeting"), for the following purposes:
1. To elect five directors to the Board of Directors.
2. To ratify the appointment by the Board of Directors of Hayes & Co. as the
Company's independent certified public accountants for fiscal/calendar year
1998.
3. To consider and act upon such other business as may properly come before
this meeting or any adjournment thereof.
The above matters are set forth in the Proxy Statement attached to this
Notice to which your attention is directed.
You are cordially invited to attend the Annual Meeting of Stockholders, as
well as a shareholder information meeting being held on December 22, 1998, at
11:00am, at the Grand Hyatt New York, Park Avenue and Grand Central Station, New
York, New York. Only stockholders of record on the books of the Company at the
close of business on November 23, 1998, will be entitled to vote at the Annual
Meeting of Stockholders or at any adjournment thereof. Whether or not you plan
to attend the meeting, it is important that your shares be represented.
Accordingly, you are requested to sign, date and return the enclosed Proxy in
the enclosed envelope which requires no postage if mailed in the United States,
at your earliest convenience in order that your shares may be voted for you as
specified.
Dated November 23, 1998 By Order of the Board of Directors,
Bohemia, New York
DANIEL DELGIORNO, JR.
Chief Executive Officer
YOUR VOTE IS IMPORTANT
To ensure your vote is being counted, you are requested to complete, sign and
date the enclosed Proxy card as promptly as possible and mail it in the enclosed
envelope. You should carefully review the materials attached hereto, including
the attached Proxy Statement and the exhibits attached to the Proxy Statement,
before casting your vote.
<PAGE>
COMPUTER CONCEPTS CORP.
80 Orville Drive
Bohemia, New York 11716
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, December 23, 1998
---------------
The Annual Meeting of Stockholders of Computer Concepts Corp. (the
"Company") will be held on Wednesday, December 23, 1998, at the Omni
Jacksonville, 245 Water Street, Jacksonville, Florida 32202, at 8:30 a.m. for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. (The Company is also holding a shareholder information meeting on
December 22, 1998, at the Grand Hyatt New York, Park Avenue and Grand Central
Station, New York, New York at 11:00am).
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Computer Concepts Corp. for use at the Annual Meeting of Stockholders. The
approximate date on which this proxy statement and the enclosed proxy are
anticipated to be first mailed to stockholders is November 25, 1998.
The Company's 1997 Annual Report, a copy of which is also enclosed
herewith, contains the Company's financial statements for its fiscal year ended
December 31, 1997. A copy of the Company's most recent quarterly report
(unaudited) for the period ended September 30, 1998, is also enclosed herewith.
The Annual Report and quarterly report are not to be regarded as proxy
soliciting material.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the Company or in person at the Annual Meeting.
Voting Rights
Only stockholders of record on November 23, 1998 (the "Record Date") will
be entitled to vote at the Annual Meeting or any adjournment thereof. The
Company has outstanding at the Record Date one class of voting capital stock,
namely 150,000,000 shares of Common Stock, $.0001 par value per share, of which
19,129,340 shares are outstanding and entitled to vote. Stockholders are
entitled to one vote for each share registered in their names at the close of
business on the Record Date. The affirmative vote of a majority of the votes
cast at the Annual Meeting is required for approval of each matter to be
submitted to a vote of the shareholders.
For purposes of determining whether proposals have received a majority
vote, abstentions will not be included in the vote totals and, in instances
where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not returned a proxy (so called "broker non- votes"),
those votes will not be included in the vote totals. Therefore, abstentions and
broker non-votes will have no effect on the vote, but will be counted in the
determination of a quorum. The cost of the solicitation will be borne by the
Company. In addition to solicitation by mail, proxies may be solicited in person
or by telephone or electronic means by officers, directors or employees of the
Company without additional compensation.
If a preference is not indicated as to any particular proposal on a signed
and dated Proxy delivered by any stockholder, the Proxy will be counted as FOR
such Proposals.
<PAGE>
A form of proxy is enclosed. If properly executed and received in time for
voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of
Common Stock For the election of the nominee for directorship hereinafter named
and For the approval of the each of the other proposals being voted upon.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the meeting: (i)
matters which the Company's Board of Directors does not know, a reasonable time
before proxy solicitation, are to be presented; (ii) approval of the minutes of
a prior meeting of shareholders, if such approval does not constitute
ratification of the action taken at that meeting; (iii) the election of any
person to any office for which a bona fide nominee is unable to serve or for
good cause will not serve; (iv) any proposal omitted from this proxy statement
and the form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities
Exchange Act of 1934, as amended; and (v) matters incidental to the conduct of
the Annual meeting.
The Board of Directors currently is not aware of any matters (other than
procedural matters) which will be brought before the meeting and which are not
referred to in the enclosed meeting notice. If any such matters are properly
brought before the meeting, the persons named in the enclosed proxy will act or
vote in accordance with their best judgment.
Any shareholder who executes and returns a proxy may revoke it by
submitting written revocation to the Secretary of the Company at any time before
the proxy is exercised, by submitting another duly executed proxy with a later
date, or by appearing and voting in person at the Annual Meeting.
SECURITY OWNERSHIP
The following table sets forth as of November 20, 1998 certain information
with regard to ownership of the Company's Common Stock by (i) each beneficial
owner of 5% or more of the Company's Common Stock, to the knowledge of the
Company based upon filings with the Securities and Exchange Commission; (ii)
each current and proposed director and the current executive officers named in
the "Summary Compensation Table" below:
<TABLE>
<CAPTION>
Common Stock % of Outstanding
Name of Beneficial Owner Beneficially Owned(1) Shares (2)
- ------------------------ --------------------- -----------------
<S> <C> <C>
Daniel DelGiorno, Sr. (3)(5) 353,100 1.85%
Daniel DelGiorno, Jr. (3)(4) 740,509 3.87%
Russell Pellicano (3)(6) 68,100 *
Jack S. Beige (3) 41,944 *
Augustin Medina (3) 24,764 *
George Aronson(3)(7) 245,000 1.28
Ed Warman(3)(8) 176,500 *
<FN>
* Less than 1%
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly, may
include securities owned by or for, among others, the wife and/or minor
children of the individual and any other relative who has the same home as
such individual, as well as other securities as to which the individual has
or shares voting or investment power or has the right to acquire within 60
days after the Record Date. The same shares may be beneficially owned by
more than one person. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) Based on 19,129,340 shares outstanding as of November 20, 1998.
(3) The address of the holder is 80 Orville Drive, Suite 200, Bohemia, New York
11716.
(4) Daniel DelGiorno, Jr. has majority control of Tech Marketing Group which
owns 10,179 shares and 418,100 options (exercisable at $2.00 per share),
and 60,000 options (exercisable at $.10).
(5) Includes 258,100 options (exercisable at $2.00 per share), and 60,000
options (exercisable at $.10).
(6) Includes 10,000 options (exercisable at $2.00 per share).
(7) Includes 150,000 options (exercisable at $2.00 per share) and 2,500 options
(exercisable at $.10).
(8) Includes 53,000 options (exercisable at $2.00 per share).
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
The Company's Bylaws provides for a Board of Directors consisting of not
less than three nor more than seven directors. The Company's Board of Directors
now consists of five directors as set forth below:
<TABLE>
<CAPTION>
Director
Name Position Held Since:
---- -------------- ---------
<S> <C> <C>
Daniel DelGiorno, Sr. Chief Executive Officer, Director 1989
Daniel DelGiorno, Jr. President, Treasurer and Director 1989
Russell Pellicano (1) Secretary, Director 1989
Jack S. Beige, Esq. (1) Director 1996
Augustin Medina (1) Director 1996
- ------
<FN>
(1) Member of the Audit and Compensation Committees, established in January,
1996.
</FN>
</TABLE>
Directors will be elected to hold office until the next annual meeting of
shareholders or until his successor is chosen and qualified. In the event that
any nominee at the time of election shall be unable or unwilling to serve or is
otherwise unavailable for election (which contingency is not now contemplated or
foreseen), and in consequence other nominees shall be nominated, the persons
named in the form of Proxy shall have the discretion or authority at this Annual
Meeting to vote or refrain from voting in accordance with the direction of the
Board of Directors on such other nominations. The Board of Directors has no
reason to believe that any of the nominees will be unavailable, or, if elected,
will decline to serve.
The Board of Directors held 14 meetings during the Company's year ended
December 31, 1997. Each director attended or participated in at least 75% of
such meetings of the Board of Directors. The Company's Audit Committee's
functions involve discussions with the Company's independent public accountants
with respect to the year end audited financial statements, and the Compensation
Committee' functions involve making recommendations for executive compensation
including the granting of stock or options to key employees.
Principal Occupations of Directors
The following is a brief account of the business experience for the past
five years of the Company's directors:
Daniel DelGiorno, Sr. is Chairman, (Chief Executive Officer to October,
1997), Assistant Secretary and a director of the Company since April 1989, and
is the father of Daniel DelGiorno, Jr., the Company's President and also a
director. During the period 1987 to April 1989, Mr. DelGiorno, Sr. together with
Mr. Pellicano (director of the Company) was engaged in the research and
development of d.b.Express . Prior thereto, during the period 1985 to May 1987,
Mr. DelGiorno, Sr. was the Chief Executive Officer of Myotech, Inc. ("Myotech"),
a privately held corporation which produced computerized muscle testing
equipment for chiropractors and physical therapists. Myotech was sold to
Hemodynamics, Inc. in May 1987 and later became a public corporation. Mr. Del
Giorno, Sr. was a practicing chiropractor for many years and had founded a
chiropractic clinic employing 4 chiropractors and 6 technicians in addition to
administrative personnel. He also successfully collaborated with Mr. Pellicano
in connection with the design and development of medical equipment for
comparative muscle testing. A patent has been granted to Mr. Pellicano and Mr.
DelGiorno, Sr. in connection therewith. In addition, Mr. DelGiorno, Sr. is the
holder of a patent for a digital myograph for the testing of muscles by
computer.
<PAGE>
Daniel DelGiorno, Jr., the Company's President. Chief Executive Officer,
Treasurer and a director, is the son of Daniel DelGiorno, Sr. and has been with
the Company since April 1989. Prior to joining the Company and during the period
1987 to 1989 Mr. DelGiorno, Jr. was involved in providing the management and
financial support for and collaborated with Mr. DelGiorno, Sr. and Russell
Pellicano in connection with the development of d.b.Express . During the period
1984 to May 1987, he was the President of Myotech, a privately held Company
producing muscle testing equipment. He is also the President and principal
shareholder of Tech Marketing Group Corp., a privately held corporation which is
a shareholder of the Company.
Russell Pellicano is a director and Secretary of the Company since April,
1989 and served as Vice President since April 1989 through February 1994. Mr.
Pellicano was the original founder and principal of RAMP Associates Inc.
("RAMP"), which was acquired by the Company in October 1990, through which he
has engaged in consulting to major corporations and others for the design of
software and hardware for computers. A major customer of RAMP since its
inception has been Grumman Corporation. Mr. Pellicano, through RAMP, has been
consulting for Grumman and other corporations. He is the chief architect and
designer of d.b.Express and has been involved in designing and developing
computer software and hardware for the past 30 years. Among many noteworthy
projects for which he was responsible at Grumman was the design and installation
of the Orbiting Astronomical Observatory Space Craft Ground Station, and he was
a member of the launch team at Cape Kennedy in conjunction therewith. He was
also Senior Systems Analyst for Grumman in connection with the test
instrumentation for the forward sweep wing (X29) experimental aircraft on-board
computer system, and the F-14D and the A-6E production aircraft. Mr. Pellicano
is a graduate of C. W. Post College in 1973 with a degree in Electrical
Engineering.
Jack S. Beige, D.C., J. D. has been a director since January, 1996, and was
appointed as a member of the Audit Committee and the Compensation Committee,
also effective January, 1996. Mr. Beige received his Juris Doctor degree in 1993
and has been a practicing attorney, primarily in business related matters, on
Long Island, New York, since then. Prior thereto, Mr. Beige practiced
chiropractic medicine, was President of BSJ Realty Corporation, President of All
Travel, Ltd. and was President of Comp Consulting, Inc. During his practice as a
chiropractic doctor, he was elected a Fellow of the International College of
Chiropractors, was appointed as Chairman of the New York State Worker's
Compensation Board, Chiropractic Practice Committee and was elected President of
the New York State Chiropractic Association in 1987. Mr. Beige is admitted to
the New York State Bar and is a member of the New York State Bar Association,
the Nassau and Suffolk County Bar Associations and is a member of the American
Arbitration Association.
Augustin Medina has been a director since January, 1996, and was appointed
as a member of the Audit Committee and the Compensation Committee, also
effective January, 1996. During the last five years and previously, Mr. Medina
has been an independent business broker associated with the Montecristi
Corporation, Gallagher Associates and Anderson Credit and Leasing, on Long
Island, New York. Mr. Medina's business background includes advising and
assisting businesses in computer and non-computer related businesses in their
development and structuring of sales and marketing programs.
MANAGEMENT
The following sets forth information concerning each executive officer of
the Company who is not also a candidate nominated for election as a director.
The officers of the Company serve at the pleasure of the Board of Directors or
until their successors are chosen and qualify.
<TABLE>
<CAPTION>
Position Held
Name Age With the Company
- ---- --- ----------------
<S> <C> <C>
Daniel Del Giorno, Sr. 65 Chairman, Assistant Secretary,
Director
Daniel Del Giorno, Jr. 43 President and CEO, Treasurer,
Director
Russell Pellicano 57 Secretary, Director
Jack S. Beige 54 Director
Augustin Medina 58 Director
George Aronson 49 Chief Financial Officer
Edward Warman 55 Executive Vice President, Prod/Services
</TABLE>
<PAGE>
George Aronson, C.P.A., has been the Chief Financial Officer of the Company
since August, 1995. From March, 1989, to August, 1995, he was the Chief
Financial Officer of Hayim & Co., an importer/distribution organization. Mr.
Aronson graduated from Long Island University with a major in accounting in
1972, receiving a Bachelor of Science degree and is a Certified Public
Accountant.
Edward Warman joined the Company in September 1993 as Vice President of
Products and Services. From 1989 to 1993, he served as Vice President, Product
Development for Comdisco Disaster Recovery Services, Inc. where he was
responsible for the design and implementation of a new product line of disaster
recovery software. From 1984 to 1989, Mr. Warman was Vice President of Research
and Development at Intersolv, Inc., with responsibility for a software
development staff exceeding 100 people. Prior to 1984, he served in various
software development management positions at organizations including Cincom
Systems, Inc., Computer Resources, and Monsanto. Mr. Warman possesses degrees in
systems analysis, economics and chemical engineering.
Compensation of Directors
Directors of the Company are not compensated for their services as
directors, however, outside directors receive a formula award annually pursuant
to the Outside Directors Stock Option Plan approved by the shareholders of the
Company in 1996. Further, it has been the policy of the Company not to pay its
directors for attending Board or committee meetings, but the Company may
reimburse directors for travel expenses incurred in attending such meetings. No
other director fees or expense reimbursements were paid or reserved for payment
to the Company's directors in 1997.
Executive Compensation
Compensation Committee Interlocks and Insider Participation
The Company has had Audit and Compensation Committees since 1996. The audit
and compensation committees which meet at varying intervals consist of Russell
Pellicano, Secretary of the Company, who served without compensation during 1994
and 1995, and Jack S. Beige, Esq. and Augustin Medina, neither of whom has any
relationship requiring disclosure in this Proxy Statement, except as otherwise
noted. The Audit Committee provides oversight of the Company's accounting
methods and internal controls and assists in reviewing recommendation made by
the Company's independent public accountants. The Audit Committee held two
meetings in 1997. The compensation of the Company's executives has historically
been determined by the Board of Directors, which includes the Company's senior
executives, however, the Compensation Committee now provides recommendations on
structuring compensation arrangements and incentive plans for action by the
entire Board. The Compensation Committee held four meetings in 1997. See Board
of Directors Report on Executive Compensation.
Employment Agreements
The Company does not have employment agreements with any of the senior
management of the Company. The Company does have employment agreements with
certain of the officers of its majority owned subsidiary, Softworks, Inc.,
including Judy Carter, President and CEO and four other subsidiary officers,,
however, such officers are not involved with establishing significant policies
of the Company.
<PAGE>
Incentive Stock Plans
1993 and 1995 Stock Option Plans
The Company has had two shareholder approved plans. The first was the 1993
Non-Qualified Stock Option Plans for directors, officers, consultants and
employees of the Company, which authorized the Board of Directors to make a one
time grant of an unspecified number of shares or options in regard to past
services, and to grant annually up to ten percent of the outstanding shares at
prices equal to or above market prices and up to an additional ten percent at
prices below market. This plan was terminated in conjunction with the adoption
of the 1995 Stock Option Plan as approved by the shareholders of the Company in
1996. At December 31, 1997, no options had been granted at prices below market
under the plan, and an aggregate of 1,270,250 options were granted with exercise
prices at or above market at prices from $5.00 to $46.30, of which approximately
105,647 have been exercised (63,326 by non-affiliates and 42,321 by employees)
and 153,252 have terminated without exercise. 420,000 of the options previously
granted under the plan were repriced to $5.00 per share in 1995, when the
Company's market price was $2.80 per share and 242,500 of those options were
repriced to $.10 in 1997, when the Company's market price was $5.00 per share.
In 1995, the Chief Executive Officer and President were each granted 30,000
shares and 18,000 options exercisable at $5.00 and 60,000 options exercisable at
$15.00 per share (repriced to $.10 per shares in 1997), which issuances were
given shareholder approval in 1996. As of December 31, 1997, under the 1995
Stock Option Plan (approved by the shareholders in 1996) 881,350 shares and
options to purchase 15,900 shares had been granted under the Plan with exercise
prices from $5.00 to $18.00, none of which have been exercised or terminated. As
of December 31, 1997, 1,500,954 options and/or warrants had been granted outside
of the Plans, at prices ranging between $2.50 and $46.30 per share, of which
162.437 have been exercised (by non-affiliates) and 114,994 have terminated
without exercise. At December 31, 1997, an aggregate of 1,545,000 options and/or
warrants were outstanding, of which 802,785 are outstanding as of November 20,
1998.
Stock Option Repricing
As discussed in the Compensation Committee Report, and as previously
reported in the Company's Form 10-Q for the period ended June 30, 1997, in June,
1997, the Company repriced certain outstanding stock options with exercise
prices lower than the terms of the original grants. This action was taken in
order to provide an appropriate incentive to these individuals. The following
table sets forth certain of information concerning the repricing of options for
the specified executive officers of the Company in 1997, and within the previous
ten years. (The Company has not issued any SARs.)
<TABLE>
<CAPTION>
Ten-Year Options Repricings(1)
Length of Original
Number of Securities Market Price of Exercise Price Option Term
Underlying Stock at Time at Time of New Remaining at Date
Options of Repricing or Repricing or Exercise of Repricing or
Name Date Repriced or Awarded Amendment Amendment Price Amendment (Yrs.)
- ---- ----- -------------------- ----------------- --------------- --------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel DelGiorno, Sr. 6/27/97 60,000 $5.00 $15.00 $ .10 1.5
Daniel DelGiorno, Jr. 6/27/97 60,000 5.00 15.00 .10 1.5
George Aronson 6/27/97 2,500 5.00 15.00 .10 1.5
Daniel DelGiorno, Sr. 5/01/95 50,000 2.80 12.50 5.00 4.0
Daniel DelGiorno, Jr. 5/01/95 50,000 2.80 12.50 5.00 4.0
Ed Warman 5/01/95 8,000 2.80 12.50 5.00 4.0
Daniel DelGiorno, Sr. 8/25/94 50,000 11.87 25.60 12.50 4.7
Daniel DelGiorno, Jr. 8/25/94 50,000 11.87 25.60 12.50 4.7
Ed Warman 8/25/94 8,000 11.87 25.60 12.50 4.7
<FN>
(1) For discussion regarding the repricing, see "Compensation Committee
Report - Stock Option Repricing."
</FN>
</TABLE>
<PAGE>
Certain Transactions
Since the inception of the Company, the Company has from time to time
borrowed from or advanced funds to Messrs. Daniel DelGiorno, Sr. and Daniel
DelGiorno, Jr. At December 31, 1997, the loan balance due from these officers
was approximately $1,070,000. Effective January, 1997, these advances became
interest bearing at the rate of 7% per annum.
In accordance with rules promulgated by the Securities and Exchange Commission,
the information included under the captions "Compensation Committee Report on
Executive Compensation" and "Performance Graph" will not be deemed to be filed
or to be proxy soliciting material or incorporated by reference in any prior or
future filings by the Company under the Securities Act of 1933 or the Securities
Exchange Act.
Compensation Committee Report On Executive Compensation
The three members of the Compensation Committee of the Company's Board of
Directors is responsible for annually and/or periodically upon request of the
Board, recommending to the Board of Directors the cash and/or other compensation
for the Company's executive office. Such compensation will generally be
determined by the Board of Directors based on the recommendation of the
Compensation Committee, subject to applicable employment agreements. The
majority of the members of the Compensation Committee are directors who are not
employees of the Company or any of its affiliates. Set forth below is the
Committee's report on the compensation policies for 1997 as they affected
executive officers of the Company.
With regard to executive compensation, it is the philosophy of the Company
to provide a program which attracts and retains executive officers and other key
employees critical to the Company's success, and to reward executive officers
for corporate, group and individual performance. Executive compensation,
including the Chairman and CEO, is evaluated by the Committee using the
aforementioned subjective criteria and is not based solely on specific objective
criteria such as profitability of the corporation or market value of its stock,
however, it is noted that management has followed a policy of granting
compensation which is largely tied to shareholder values by the issuance of
restricted stock and/or stock options whereby the value to the parties receiving
such grants is thereby tied directly to increases in all shareholders' market
values. The Chief Executive Officer also makes recommendations to the Committee
regarding the total compensation payable to the executives named in the Summary
Compensation Table, other than himself, for each fiscal year, which
recommendations the Committee has the discretion to accept or modify as it deems
appropriate. The Committee sets the compensation payable to the Chief Executive
Officer relying on similar factors, however, to date, Mr. DelGiorno, Jr. has not
accepted the recommendation of the Committee that he be paid a cash salary,
preferring to directly align himself with the interests of the shareholders
through the receipt of stock or options. Of the three senior officers of the
Company, Daniel DelGiorno, Sr., Daniel DelGiorno, Jr., and Russell Pellicano,
none of them received cash compensation during 1994, only Daniel DelGiorno, Sr.
received cash compensation in 1995, and only Daniel DelGiorno, Sr. and Russell
Pellicano in 1996 and 1997. The Company anticipates that until such time as the
Company has generated significant cash reserves from operations from which to
pay cash compensation, the compensation committee will continue a policy of
compensation primarily through stock or options, thereby tying executive
compensation to increases in shareholder market values without depletion of the
Company's cash resources. The Company's compensation programs are intended to
enable the Company to attract, motivate, reward and retain the management talent
required to achieve aggressive corporate objectives in a rapidly changing
industry, and thereby increase stockholder value. It is the Company's policy to
provide incentives to its senior management to achieve both short-term and
long-term objectives and also to reward exceptional performance and
contributions to the development of the Company's business. To attain these
objectives, the Company's executive compensation program includes a competitive
base salary, coupled with executive bonus arrangements which are "at risk" based
on the performance of the Company's business, primarily as reflected in the
achievement of certain revenue, earnings and growth goals, as well as standard
company benefit programs such as health insurance and a 401k plan. The Company's
employees and consultants, including its executive officers, may also be granted
stock and/or stock options and other awards periodically in order to more
directly align their interests with the long-term financial interests of the
Company's stockholders.
<PAGE>
Base Salary
Each year the Committee examines the salaries of the officers of the
Company. Except for the senior executives of the Company's Softworks subsidiary,
the executive officers do not have employment agreements which provide for a
base salary, however, the Committee has recommended that the Board consider
entering into employment agreements with all of its key personnel. The Committee
provides recommendations for salary levels based on information available about
salaries in the Company's industry, inflation and the performance of the
individuals. In 1997, no increases in base salary occurred. It is noted that
Daniel DelGiorno, Jr. has continued not to accept or draw a salary. See Summary
Compensation Table, below.
Stock and/or Stock Options
Stock and /or stock options are awarded to executives in order to encourage
future management actions aimed at improving the Company's sales efforts, client
development and service quality, revenues and ultimately profitability. If the
Company is successful in improving these areas, it is anticipated that these
actions will generate a positive impact on the value of the Company's common
stock for all stockholders, and the individuals will be given the opportunity to
share in the increased value of the results of their efforts. In 1997, 10,000
and 140,000 restricted shares were granted to Daniel DelGiorno, Sr. and Jr.,
respectively. The Committee also recommended and the Board adopted a repricing
of certain previously issued options. The Committee noted that the grants and
repricing continued to align management and shareholder interests while also
providing meaningful performance incentives to the recipients in conjunction
with the realities of the market price of the Company's securities. See Stock
Option Repricing, above. The Committee and Board believe that these grants are
in appropriate amounts in light of the contributions to, and sacrifices made on
behalf of, the Company, and provide an incentive for management to maximize
long-term shareholder value.
Chief Executive Officer Compensation
In establishing Mr. DelGiorno, Jr.'s compensation level, consideration is
given to his individual performance level as well as to factors discussed above
for all executive officers. Although the Committee has recommended a base
salary, he has not accepted the recommendation, requesting instead that he
continue to be compensated through stock or options which directly align his
interests and potential rewards with the stockholders of the Company.
Section 162(m) of the Federal Income Tax Code
Generally, Section 162(m) denies deduction to any publicly held company
such as the Company for certain compensation exceeding $1,000,000 paid to the
chief executive officer and the four other highest paid executive officers,
excluding among other things certain performance-based compensation. The
Compensation Committee and Board intend that the stock options issued qualify
for the performance-based exclusion under Section 162(m). The Compensation
Committee will continually evaluate to what extent Section 162 will apply to its
other compensation programs.
Respectively submitted,
The Compensation Committee
R. Pellicano
A. Medina
J. S. Beige
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the annual and long-term compensation
with respect to the Chairman and Chief Executive Officer and each of the other
executive officers of the Company who earned more than $100,000 for services
rendered for the years ended December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------------------ -----------------------------------
Securities All
Other Restricted Underlying Other
Name and Fiscal Annual Stock Option Options/ Compen-
Principal Position Year Salary Bonus Compensation Awards (4) SARS(#) sation
- ------------------ ------ ------ ----- ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel DelGiorno, Sr., (1) 1997 $260,000 $327,000 - - - -
Chief Executive Officer 1996 259,000 232,000 - - - -
Director 1995 240,000 84,000 - 128,000 128,000 -
Daniel DelGiorno, Jr.(1) 1997 - 753,000 - - - -
Director 1996 - 232,000 - - - -
President, Treasurer 1995 - 84,000 - 128,000 128,000 -
Russell Pellicano(2) 1997 199,000 - - - -
Secretary 1996 195,000 - - -
Director 1995 - - - 10,000 10,000 -
George Aronson (3) 1997 157,000 233,000 - - - -
Chief Financial Officer 1996 144,000 187,000 - - - -
1995 31,000 - - 2,500 2,500 -
Ed Warman(4) 1997 148,000 - - - -
Vice President of Products 1996 116,000 53,000 - - - -
& Services 1995 117,000 - - 20,000 20,000 -
- -----------
<FN>
(1) 50,000 Stock options had an original exercise price of $25.60
per share, their fair market value at date of grant, and were repriced to
reflect an above market exercise price of $5.00 per share effective May
1995, when the market price was $2.80 per share. D. DelGiorno, Sr., and D.
DelGiorno, Jr. were each granted an aggregate of 30,000 shares of stock and
18,000 options exercisable at $5.00 and 60,000 options exercisable at
$15.00 in May and November 1995 and the 60,000 were repriced to $.10 in
June, 1997.)
(2) R. Pellicano was granted 10,000 options exercisable at $15.00 in November,
1995.
(3) Mr. Aronson joined the Company in September, 1995 as Chief Financial
Officer and was granted 2,500 options exercisable at $15.00 in November,
1995, which were repriced to $.10 in June, 1997.
(4) Mr. Warman was granted the rights to 8,000 options in 1994 which vested @
2,000 per year in 1994, 1995, 1996 and 1997, exercisable at $25.60 which
were repriced in 1995 to $5.00, and 20,000 options in 1995 exercisable at
$15.00, and 20,000 shares of Common Stock in November, 1996.
</FN>
</TABLE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
No options or stock appreciation rights (SAR) were granted to named
officers or directors in 1997.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Shares Unexercised Options at Options at Fiscal
Acquired On Value Fiscal Year End Year End
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ -------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Daniel DelGiorno, Sr. 0 N/A 128,100/128,100 $294,000
Daniel Del Giorno, Jr. 0 N/A 128,100/128/100 294,000
George Aronson 0 N/A 2,500/2,500 12,250
Ed Warman 0 N/A 28,000/28/000 0
</TABLE>
Compliance with Sections 10(b) and 16 of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers, directors and persons who own more than ten percent of a
registered class of the Company's equity securities ("Reporting Persons") to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. (which operates the National Association of Securities
Dealers Automated Quotation system) (the "NASDAQ"). These Reporting Persons are
required by SEC regulation to furnish the Company with copies of all Forms 3, 4
and 5 they file with the SEC and the NASDAQ. Based solely upon the Company's
review of the copies of the forms it has received, none of the named parties has
sold any of the Company's securities, however through an oversight, the
DelGiorno's, Mr. Pellicano and Mr. Aronson each failed to timely file a report
of one stock grant received, and as to Mr. Del Giorno, Sr. and Mr. Pellicano, of
gift transfers.
In order to assist officers, directors and beneficial owners of more
than ten percent of any class of equity securities of the Company ("Insiders"),
the Company has adopted a policy statement that it will distribute annually to
the Insiders with the request that they sign a certificate regarding compliance
with the policy statement. The policy statement suggests the circumstances under
which insiders may trade and conduct transactions involving equity securities of
the Company so as to comply with Sections 10(b) and 16 of the Securities
Exchange Act of 1934.
The policy statement recommends that transactions be made either
through participation in a periodic investment program where individual
investment decisions are outside the insider's direct control or, if this is not
practicable, that insiders refrain from purchase or sale of Company securities
where a development of major importance is expected in the next several weeks,
and prior to press releases. It recommends that insiders purchase or sell
Company securities only during the thirty days commencing at least one day after
the annual or quarterly report has been issued or otherwise broadly circulated,
where such report adequately reports corporate developments; only during a
period of relatively stable demand for the Company's securities; and only when
there has been wide dissemination of information concerning the status of the
Company and its current operating results.
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the cumulative total return to the Company's
stockholders during the period indicated as well as an overall stock market
index (S & P 500 Index) and the Company's peer group index (S & P Computer
Software & Services):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG COMPUTER CONCEPTS CORPORATION, THE S & P 500 INDEX
AND THE S & P COMPUTERS (SOFTWARE & SERVICES) INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------------------------
12/93 12/94 12/95 12/96 12/97 10/98
<S> <C> <C> <C> <C> <C> <C>
COMPUTER CONCEPTS CORPORATION 100.00 16.03 55.13 11.54 10.26 4.74
S&P 500 100.00 101.32 139.40 171.41 228.59 262.02
S&P COMPUTERS (SOFTWARE & SERVICES) 100.00 118.21 166.13 258.26 359.77 510.34
*$100 INVESTED ON 12/31/93 IN STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
</TABLE>
Historical stock performance during this period may not be indicative of future
stock performance.
<PAGE>
* * *
1. PROPOSAL TO ELECT FIVE DIRECTORS
The Board of Directors has proposed and recommended to its stockholders a
proposal for the election of the following five individuals as the directors of
the Company: Daniel DelGiorno, Sr., Daniel DelGiorno, Jr., Russell Pellicano,
Jack S. Beige and Augustin Medina.
Board Position and Required Vote
The Board of Directors believes that the proposed amendment is in the best
interests of the Company and its stockholders and unanimously recommends its
adoption.
Each outstanding share of Common Stock will be entitled to one vote for or
against each proposed nominee as listed on the Proxy card. Each director will be
elected only if a quorum is present at the Annual Meeting and he receives the
affirmative vote of a majority of the outstanding shares present. The Board
urges that you vote FOR the proposed nominees. Proxies received will be voted in
favor of the proposed nominees unless otherwise instructed.
2. Appointment of Independent Public Accountants
The Board of Directors recommends that the shareholders approve the
appointment of Hayes & Co. as the Company's independent public accountants to
examine the financial statements of the Company for the fiscal/calendar year
ending December 31, 1998.
A representative of Hayes & Co. plans to be present at the Annual Meeting
with the opportunity to make a statement, if he desires to do so, and will be
available to respond to appropriate questions.
Board Position and Required Vote
The affirmative vote of the holders of a majority of the outstanding Common
Stock present at the meeting in person or by proxy is necessary for ratification
of the appointment of Hayes & Co. as the Company's independent public
accountants.
The Board of Directors recommends a vote FOR the ratification of the
appointment.
Each outstanding share of Common Stock will be entitled to one vote for or
against each the proposal as listed on the Proxy card. The proposal will be
approved only if a quorum is present at the Annual Meeting and the proposal
receives the affirmative vote of a majority of the outstanding shares present at
the meeting. The Board urges that you vote FOR the proposal. Proxies received
will be voted in favor of the proposal unless otherwise instructed.
BOARD OF DIRECTORS' DISCRETION AND RESERVATION OF RIGHTS
The Board of Directors reserves the right, notwithstanding Stockholders'
approval and without further action by the Stockholders, to elect not to proceed
with any of the proposed actions, if at any time prior to filing the Company's
Amended Certificate of Incorporation with the Secretary of State of the State of
Delaware, the Board of Directors, in its sole discretion determines that the
proposed action is no longer in the best interests of the Company and its
Stockholders. Pursuant to Section 242(c) of the General Corporation Law of
Delaware, the reservation by the Board of Directors of this right to abandon a
proposed amendment of the Company's Certificate of Incorporation is set forth in
the resolutions adopting the Amendments.
<PAGE>
Under each of the Proposals for amendments to the Company's Articles of
Incorporation, the Board reserves the right to delay the filing of the Amendment
for up to nine months following the meeting date.
INDEPENDENT PUBLIC ACCOUNTANTS
Hayes & Co. acted as the Company's independent public accountants for the
period ended December 31, 1997. Hayes & Co. has been retained to act as the
Company's independent public accountants for the fiscal year ended December 31,
1998.
FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1997, including the Company's Form 10-K for said period, and
the Company's Quarterly Report on Form 10-Q for the three and nine-month periods
ended September 30, 1998, has been provided to all stockholders as of the Record
Date. Stockholders are referred to the report for financial and other
information about the Company, but such report, is not incorporated in this
proxy statement and is not a part of the proxy soliciting material.
MISCELLANEOUS INFORMATION
As of the date of this Proxy Statement, the Board of Directors does not
know of any business other than that specified above to come before the meeting,
but, if any other business does lawfully come before the meeting, it is the
intention of the persons named in the enclosed Proxy to vote in regard thereto
in accordance with their judgment.
The Company will provide without charge to any stockholder as of the Record
Date, copies of the Company's Annual Report on Form 10-K and any of the
Company's Quarterly Reports on Form 10-Q, including the financial statements and
financial statement schedules included therein, upon written request delivered
to George Aronson, Chief Financial Officer, at the Company's offices at 80
Orville Drive, Suite 200, Bohemia, New York 11716.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit proxies by telephone, telegraph or
personal interview. The Company may also request brokerage houses and other
custodians, and, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of stock held of record by such persons, and may make
reimbursement for payments made for their expense in forwarding soliciting
material to such beneficial owners.
Stockholder proposals with respect to the Company's next Annual Meeting of
Stockholders must be received by the Company no earlier than April 20, 1999, and
no later than May 15, 1999 to be considered for inclusion in the Company's next
Proxy Statement.
By Order of the Board of Directors,
DANIEL DELGIORNO, JR.
Chief Executive Officer
Dated: Bohemia, New York
November 23, 1998
<PAGE>
Computer Concepts Corp.
----------------------------------
PROXY
COMPUTER CONCEPTS CORP.'S TRANSFER AGENT, MANHATTAN TRANSFER REGISTRAR CO.,
MUST RECEIVE A DULY EXECUTED, PROPERLY DATED COPY OF THIS PROXY ON OR BEFORE THE
LAST BUSINESS DAY IMMEDIATELY PRECEDING THE DATE ON WHICH THE ANNUAL
SHAREHOLDERS' MEETING IS HELD, AT THE FOLLOWING ADDRESS:
Manhattan Transfer Registrar Co.
Post Office Box 361
Holbrook, New York 11741
Delivery of this Proxy to an address other than as set forth will not
constitute a valid delivery. Telephone inquiries concerning this Proxy and the
applicable procedures may be addressed to Mr. Hector Cruz, of Manhattan Transfer
Registrar Co., at (516) 585-7341.
The undersigned acknowledges receipt of the Proxy Statement dated November
20, 1998 (the "Proxy Statement") of Computer Concepts Corp. (the "Company") and
this form of Proxy, which together constitute the solicitation (the
"Solicitation") by the Company of the proxy of the holders (the "Stockholders")
of the issued and outstanding shares of Common Stock of the Company to the
matters described in the Solicitation. Whether or not a Stockholder wishes to
give his proxy for voting on the proposals described in the Proxy Statement,
such Stockholder is requested to carefully read this Proxy and the Proxy
Statement. The Solicitation will expire on the last business day immediately
preceding the date on which the Annual Shareholders' Meeting is held. Other
capitalized terms used but not defined herein have the meaning given such terms
in the Proxy Statement.
The undersigned has completed, executed and delivered this Proxy to
indicate the action the undersigned desires to take with respect to the
proposals described in the Proxy Statement. The undersigned hereby appoints
Daniel Del Giorno, Sr., Daniel Del Giorno, Jr. and Russell Pellicano and each of
them as my proxies, with power of substitution, to vote and act for me in my
name on all matters which may be presented, including the election of directors,
at the annual meeting on December 23, 1998, or any adjournment thereof. The
persons named as my proxies and each of them, are authorized to exercise all
powers I would possess if personally present at such meetings. I revoke all
proxies previously given by me for use at any meeting of the Company's
shareholders. This proxy may be revoked by a subsequently dated proxy or by the
shareholder's vote in person at the Annual Shareholders Meeting.
The Board of Directors recommends a vote FOR each of the following
proposals ( IF NO DIRECTION IS MADE, THIS SIGNED PROXY WILL CONSTITUTE A VOTE
FOR THE PROPOSALS SET FORTH BELOW AND DESCRIBED IN THE PROXY STATEMENT.):
1. For the election of the following nominees as members of the Board of
Directors of the Company, as set forth in the Proxy Statement:
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY to vote for
(except as marked to the contrary) all nominees listed below
Daniel Del Giorno, Sr. Daniel Del Giorno, Jr. Russell Pellicano
Jack S. Beige Augustin Medina
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
------------------------------------------------------------------------
2. To ratify the appointment by the Board of Directors of Hays & Co. as
the Company's independent certified public accountants for fiscal
1998.
___ FOR ___ AGAINST ___ ABSTAIN
------------------------------------------------------------------------
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL CONSTITUTE A VOTE IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS CONSENT WILL CONSTITUTE A VOTE
FOR THE PROPOSALS SET FORTH ABOVE AND DESCRIBED IN THE PROXY STATEMENT.
PLEASE DATE, SIGN, AND RETURN THIS PROXY TO THE ADDRESS SET FORTH ABOVE IN THE
ENCLOSED ENVELOPE.
DATED: __________, 1998 ______________________________________[L.S.]
______________________________________[L.S.]
(Note: Please sign exactly as your name
appears hereon. Executors, administrators,
trustees, etc. should so indicate when
signing, giving full title as such. If signer
is a corporation, execute in full corporate
name by authorized officer. If shares are
held in the name of two or more persons, all
should sign.)
