TRACK DATA CORPORATION
56 PINE STREET
NEW YORK, NY 10005
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 7, 1996
TO THE STOCKHOLDERS OF TRACK DATA CORPORATION:
The Annual Meeting of Stockholders of Track Data Corporation (the
"Company") will be held at 56 Pine Street, New York, New York 10005, Second
Floor Conference Room, at 11:00 A.M. on Thursday, November 7, 1996, for the
following purposes:
(1) To elect eight Directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their successors have been duly
elected and qualified;
(2) To approve the 1996 Stock Option Plan authorizing the Company to issue
options to acquire up to 800,000 shares of Common Stock to officers,
directors, employees and consultants;
(3) To ratify the selection and appointment by the Company's Board of
Directors of Grant Thornton LLP, independent auditors, as auditors for the
Company for the year ended December 31, 1996; and
(4) To consider and transact such other business as may properly come before
the meeting or any adjournments thereof.
A Proxy Statement, form of Proxy, the Financial Report to Stockholders of
the Company for the year ended December 31, 1995 and for the six months ended
June 30, 1996 and 1995 are enclosed herewith. Only holders of record of
Common Stock of the Company at the close of business on October 1, 1996 will
be entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. A complete list of the stockholders entitled to vote
will be available for inspection by any stockholder during the meeting; in
addition, the list will be open for examination by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting at the office of the Secretary of
the Company, located at 95 Rockwell Place, Brooklyn, New York 11217.
New York, New York By Order of the Board of Directors,
October 3, 1996
Martin Kaye
Secretary
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO
NOT EXPECT TO BE PRESENT, PLEASE SIGN AND DATE THE ENCLOSED FORM OF PROXY AND
RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES. ANY PERSON GIVING A PROXY HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND IF PRESENT AT THE MEETING MAY
WITHDRAW IT AND VOTE IN PERSON. ATTENDANCE AT THE MEETING IS LIMITED TO
STOCKHOLDERS, THEIR PROXIES AND INVITED GUESTS OF THE COMPANY.
<PAGE>
TRACK DATA CORPORATION
56 PINE STREET
NEW YORK, NEW YORK 10005
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Track Data Corporation (the "Company") of proxies in
the form enclosed. Such Proxies will be voted at the Annual Meeting of
Stockholders of the Company to be held at 56 Pine Street, New York, New York
10005, Second Floor Conference Room, at 11:00 A.M. on Thursday, November 7,
1996 (the "Meeting") and at any adjournments thereof for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement and accompanying Proxy are being mailed on or about
October 3, 1996 to all stockholders of record on October 1, 1996 (the "Record
Date").
Any stockholder giving a Proxy has the power to revoke the same at any
time before it is voted. The cost of soliciting Proxies will be borne by the
Company. The Company has no contract or arrangement with any party in
connection with the solicitation of proxies. Following the mailing of the
Proxy materials, solicitation of Proxies may be made by officers and employees
of the Company by mail, telephone, telegram or personal interview. Properly
executed Proxies will be voted in accordance with instructions given by
stockholders at the places provided for such purpose in the accompanying
Proxy. Unless contrary instructions are given by stockholders, it is intended
to vote the shares represented by such Proxies FOR the election of the eight
nominees for director named herein, FOR the 1996 Stock Option Plan and FOR the
selection of Grant Thornton LLP as independent auditors. The current members
of the Board of Directors presently hold voting authority for Common Stock
representing an aggregate of 12,128,500 votes, or approximately 81.6% of the
total number of votes eligible to be cast at the Annual Meeting. The members
of the Board of Directors have indicated their intention to vote affirmatively
on all of the proposals.
VOTING SECURITIES
Stockholders of record as of the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting or any adjournments
thereof. On the Record Date there were 14,866,872 outstanding shares of
common stock, par value $.01 per share (the "Common Stock"). Each holder of
Common Stock is entitled to one vote for each share held by such holder. The
presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Meeting. Proxies submitted which contain abstentions or broker non-votes will
be deemed present at the Meeting in determining the presence of a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of September 15, 1996, information
regarding the beneficial ownership of the Company's Common Stock based upon
the most recent information available to the Company for (i) each person known
by the Company to own beneficially more than five (5%) percent of the
Company's outstanding Common Stock, (ii) each of the Company's officers and
directors and (iii) all officers and directors of the Company as a group.
Unless otherwise indicated, each stockholder's address is c/o the Company, 56
Pine Street, New York, New York 10005.
SHARES OWNED BENEFICIALLY (1)
-----------------------------
NAME NO. OF SHARES % OF CLASS
Barry Hertz (2) 12,155,666 81.4%
Morton Mackof (3) 288,405 1.9%
Stanley Stern (4) 33,434 *
Alan Schnelwar (5) 35,666 *
Martin Kaye (6) 8,750 *
David Hubbard (7) 44,312 *
Todd Solomon (8) 15,250 *
Jack Spiegelman (9) 6,000 *
E. Bruce Fredrikson (10)
Syracuse University
School of Management
Syracuse, NY 13244 21,000 *
All Officers and Directors as a Group
(nine persons)(2)(3)(4)(5)(6)(7)(8)(9)(10) 12,608,483 84.0%
- --------------
* = less than 1%
1. Except as noted otherwise, all shares are owned beneficially and of
record. Based on 14,866,272 shares outstanding.
2. Consists of 12,000,000 shares owned by Mr. Hertz, and 89,000 shares
which are owned by the Track Data Corporation Employee 401K Savings Plan
("Plan"), of which Mr. Hertz is trustee. Mr. Hertz disclaims beneficial
ownership of the shares owned by the Plan. Also includes 66,666 options which
are presently exercisable from aggregate grants to purchase 140,000 shares of
Common Stock granted to Mr. Hertz under the Company's Stock Option Plans.
3. Consists of 30,000 shares owned of record, 2,000 shares issuable upon
the exercise of presently exercisable options granted under the Company's
Stock Option Plans and 256,405 shares held in the Track Data Phantom Unit
Trust (the "TDC Trust") to be released upon his termination of employment, or
earlier with approval of the Board of Directors.
4. Consists of 2,000 shares issuable upon the exercise of presently
exercisable options granted under the Company's Stock Option Plans and 31,434
shares held in the TDC Trust to be released upon his termination of
employment, or earlier with approval of the Board of Directors.
5. Consists of 6,000 shares owned of record, 27,166 shares issuable upon
the exercise of presently exercisable options granted under the Company's
Stock Option Plans and 2,500 shares exercisable pursuant to warrants.
6. Consists of 500 shares owned of record, 8,000 shares issuable upon the
exercise of presently exercisable options granted under the Company's Stock
Option Plans and 250 shares exercisable pursuant to warrants.
7. Consists of 500 shares owned of record, 1,000 shares issuable upon the
exercise of presently exercisable options granted under the Company's Stock
Option Plans, 250 shares exercisable pursuant to warrants and 42,562 shares
held in the TDC Trust to be released upon his termination of employment, or
earlier with approval of the Board of Directors.
8. Consists of 1,500 shares owned of record, 13,000 shares issuable upon
the exercise of presently exercisable options granted under the Company's
Stock Option Plans and 750 shares exercisable pursuant to warrants.
9. Consists of 1,000 shares owned by his wife as to which Mr. Spiegelman
disclaims beneficial interest and 5,000 shares issuable upon the exercise of
presently exercisable options granted under the Company's Stock Option Plans.
10. Consists of 1,000 shares owned of record and 20,000 shares issuable
upon presently exercisable options granted under the Company's Stock Option
Plans.
ITEM I. ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form of Proxy,
unless such form of Proxy specifies otherwise, to nominate and to vote the
shares represented by such Proxy FOR the election of Barry Hertz, Morton
Mackof, Stanley Stern, Alan Schnelwar, Martin Kaye, Dr. E. Bruce Fredrikson,
Todd Solomon and Jack Spiegelman to hold office until the next Annual Meeting
of Stockholders or until their respective successors shall have been duly
elected and qualified. All of the nominees are presently directors of the
Company. The Company has no reason to believe that any of the nominees will
become unavailable to serve as directors for any reason before the Annual
Meeting. However, in the event that any of them shall become unavailable, the
person designated as proxy reserves the right to substitute another person of
his choice when voting at the Annual Meeting.
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
NAME AGE POSITION
- ---------------------------- --- ----------------------------
Barry Hertz 46 Chairman of the Board, Chief
Executive Officer
Morton Mackof 48 President and Director
Stanley Stern 46 Executive Vice President and Director
Alan Schnelwar 57 Senior Vice President and Director
Martin Kaye 49 Vice President - Finance, Secretary
and Director
David Hubbard 39 Chief Technology Officer
E. Bruce Fredrikson 58 Director
Todd Solomon 34 Director
Jack Spiegelman 57 Director
On March 31, 1996, Track Data Corporation ("Track") merged (the "Merger")
into Global Market Information, Inc. ("Global"). Upon consummation of the
merger the name Global was changed to Track Data Corporation ("TDC" or the
"Company").
BARRY HERTZ has served as the Company's Chairman and Chief Executive
Officer since its inception. In April 1994 he was elected Secretary of the
Company and served until August 1994. Mr. Hertz also founded Track in 1981.
He was Track's sole owner and its Chief Executive Officer until its merger
with Global. He holds a Masters degree in Computer Science from New York
University (1973), and a B.S. degree in Mathematics from Brooklyn College
(1971). Mr. Hertz is also Chairman and CEO of Innodata Corporation
("Innodata"), a public company co-founded by Mr. Hertz of which TDC is a
principal stockholder and which is engaged in the data entry and conversion
business.
MORTON MACKOF has been a Director of the Company since April 1994 and
became its President in March 1996 upon the Merger. He was Executive Vice
President of Track since February 1991 and was elected its President in
December 1994. From 1986 to 1991, he was President of Medical Leasing of
America, Inc. He holds a B.S. degree in electrical engineering from
Rensselaer Polytechnic Institute (1970) and did graduate work in computer
science. He is also a director of Innodata.
STANLEY STERN has been a Director of the Company since April 1994 and
became its Executive Vice President upon the Merger. Mr. Stern has served as
Chief Operating Officer of Track and in predecessor positions, for more than
five years. Mr. Stern holds a B.B.A. from Baruch College (1973). He is also
a director of Innodata.
ALAN SCHNELWAR has been a Vice President of Track in charge of the
Dial/Data service since 1988, and was elected President of the Company in
August 1994. He served as President until March 1996 and became its Senior
Vice President upon the Merger. He holds a B.S. degree in Civil Engineering
from the City University of New York (1967).
MARTIN KAYE has been Vice President-Finance and Director of the Company
since April 1994. He was elected Secretary of the Company in August 1994.
Mr. Kaye is a certified public accountant and has served as Chief Financial
Officer of Innodata since October 1993 and was appointed as a Director in
March 1995. He had been an audit partner with Deloitte & Touche LLP for more
than five years until his resignation in 1993. Mr. Kaye holds a B.B.A. in
accounting from Baruch College (1970).
DAVID HUBBARD has served as Chief Technology Officer of Track and in
predecessor positions for more than five years and as Chief Technology Officer
of the Company since the Merger.
DR. E. BRUCE FREDRIKSON has been a Director of the Company since June
1994. He is currently a professor of finance at Syracuse University School of
Management where he has taught since 1966 and has previously served as
chairman of the finance department. Dr. Fredrikson has a B.A. in economics
from Princeton University and a M.B.A. and a Ph.D. in finance from Columbia
University. He is an independent general partner of Fiduciary Capital
Partners, L.P. and Fiduciary Capital Pension Partners, L.P. He is also a
director of Innodata.
TODD SOLOMON has been a Director of the Company since September 1994.
Mr. Solomon has also been President and a Director of Innodata since its
founding in 1988. Since August 1995, Mr. Solomon has been the Chief Executive
Officer of Innodata. Mr. Solomon holds an A.B. in history and physics from
Columbia University (1986).
JACK SPIEGELMAN has been a Director of the Company since April 1996.
Since February 1996 he has been a registered representative of J. W. Charles
Securities, Inc. and prior thereto for more than five years was a registered
representative of Fahnestock & Company, Inc. Mr. Spiegelman holds a B.A. in
economics from Brooklyn College (1963).
First Hanover Securities, Inc., the underwriter of the Company's initial
public offering, is entitled to designate one member of the Board of Directors
for five years ending August 10, 1999. To date no such member has been
designated. Directors are elected to serve until the next annual meeting of
stockholders and until their successors are elected and qualified. Officers
serve at the discretion of the Board. There are no family relationships among
directors or officers.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during the year ended December
31, 1995. Each director attended at least 75% of all of the meetings of the
Board of Directors held during the period in 1995 such person served as
director.
The Company's Audit Committee is comprised of Dr. Fredrikson and Mr.
Spiegelman. The function of the Audit Committee is to make recommendations
concerning the selection each year of independent auditors of the Company, to
review the effectiveness of the Company's internal accounting methods and
procedures, and to determine through discussions with the independent auditors
whether any instructions or limitations have been placed upon them in
connection with the scope of their audit or its implementation. The Audit
Committee did not meet separately during 1995. The Board of Directors does
not have a Compensation or Nominating Committee. The Board of Directors has
designated Messrs. Fredrikson and Spiegelman to serve as administrators of the
Company's 1995 Stock Option Plan.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
All reports required to be filed pursuant to Section 16(a) of the
Securities Exchange Act of 1934 during the year ended December 31, 1995 were
filed on a timely basis.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation
paid by the Company or its predecessors for services to it during the three
fiscal years ended December 31, 1995 to the Company's Chief Executive Officer
and to the executive officers whose aggregate cash and cash equivalent
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
NUMBER OF
FISCAL ANNUAL STOCK OPTIONS
NAME AND POSITION YEAR SALARY BONUS TOTAL AWARDED
- ------------------ ------ -------- ------- -------- -------------
Barry Hertz 1995 $ - $ - $ - 100,000(A)
Chairman, CEO 1994 - - - 100,000
1993 - - - -
Alan Schnelwar 1995 $170,000 $ - $170,000 40,000(A)
President 1994 140,000 - 140,000 40,000
1993 100,000 64,400 164,400 -
Howard Tenenbaum 1995 $105,000 $ - $105,000 20,000(A)
Vice President (B) 1994 105,000 - 105,000 20,000
1993 - - - -
(A) Options granted in 1994 and repriced in 1995
(B) Resigned in March 1996
The above table does not include certain insurance and other personal
benefits, the total value of which does not exceed $50,000 or 10% of such
person's cash compensation.
To date, Barry Hertz, the Company's Chief Executive Officer, has not been
paid any compensation by the Company. In connection with the Merger, Mr.
Hertz agreed to be compensated at an annual rate of $350,000 for 1996 and
1997.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
PERCENT
OF TOTAL
OPTIONS
GRANTED POTENTIAL REALIZED
TO VALUE AT ASSUMED
NUMBER EMPLOYEES ANNUAL RATES OF
OF IN STOCK APPRECIATION
OPTIONS FISCAL EXERCISE EXPIRATION FOR OPTION TERM
NAME GRANTED YEAR PRICE DATE 5% 10%
- ---------------- ---------- ------ -------- ---------- ------------------
Barry Hertz 100,000(A) - $3.00 4/99 $83,000 $183,000
Alan Schnelwar 40,000(A) - $3.00 4/99 $33,200 $ 73,200
Howard Tenenbaum 20,000(A) - $3.00 4/99 $16,600 $ 36,600
(A) Options repriced during 1995, granted in 1994
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR;
FISCAL YEAR END OPTION VALUES
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END AT FISCAL YEAR END
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE UNEXERCISABLE UNEXERCISABLE
- ---------------- ----------- ----------------- ----------------------
Barry Hertz - 33,333/66,667 $141,665/$283,335
Alan Schnelwar - 13,333/26,667 $56,665/$113,335
Howard Tenenbaum - 6,666/13,334 $28,331/$56,670
There are no employment agreements, stock appreciation rights or long-term
incentive plans.
DIRECTORS COMPENSATION
Dr. E. Bruce Fredrikson and Mr. Spiegelman are compensated at the rate of
$1,000 per month, plus out-of-pocket expenses for each meeting attended. No
other director is compensated for his services as director.
Messrs. Fredrikson and Spiegelman will each receive options to purchase
5,000 shares annually under the 1995 Disinterested Directors' Stock Option
Plan as compensation for their services as administrators of the 1995 Stock
Option Plan.
REPRICING OF OPTIONS
The Board believes that stock options are an important component of
executive compensation. These options usually vest over three years and
expire after five years. The value of the stock options is directly tied to
the value of a share of the Company's common stock. In view of the Company's
accomplishments in 1994, including the successful spinoff of Dial/Data and
Track OnLine services and integration with the InfoVest services, the growth
in revenues during 1994 and continuing in 1995 and the acquisition of AIQ, the
Global Board deemed it appropriate to reward management. As the market price
of the Company's common stock declined, to provide further incentive to
management and employees and to stimulate their efforts on behalf of the
Company, it was determined to reprice existing options. Accordingly, options
outstanding for Mr. Hertz and all other officers and directors were repriced
by reducing the exercise price by $2.00 which the Board believes is a
meaningful amount, while not fully reduced to the then current market price of
$2.875.
OPTION REPRICING
LENGTH OF
MARKET ORIGINAL
PRICE OPTION
NUMBER OF OF EXERCISE TERM
SECURITIES STOCK PRICE REMAINING
UNDERLYING AT TIME AT TIME NEW AT DATE
OPTIONS OF RE- OF RE- EXERCISE OF
NAME DATE REPRICED PRICING PRICING PRICE REPRICING
- ---------------- ------- ---------- ------- -------- -------- ----------
Barry Hertz 5/16/95 100,000 $2-7/8 $5.00 $3.00 4 years
Alan Schnelwar 5/16/95 40,000 $2-7/8 $5.00 $3.00 4 years
Howard Tenenbaum 5/16/95 20,000 $2-7/8 $5.00 $3.00 4 years
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the Company's fiscal year ended December 31, 1995, Messrs. Hertz,
Mackof, Stern, Schnelwar and Kaye were officers of the Company and were
members of the Board of Directors (there is no compensation committee). Mr.
Hertz is Chairman of Innodata Corporation and Mr. Solomon, a director of the
Company, is President and a director of Innodata Corporation. Mr. Kaye is
chief financial officer and a director of Innodata Corporation. Messrs. Mackof
and Stern are also directors of Innodata Corporation.
BOARD REPORT ON EXECUTIVE COMPENSATION
The following is the Board's compensation policy: The Board of Directors
(the "Board") is responsible for determining the annual salary, short-term and
long-term incentive compensation, stock awards and other compensation of the
executive officers. In its deliberations regarding compensation of executive
officers for 1995 and thereafter, the Board considered the following factors:
(a) Company performance, both separately and in relation to similar companies,
(b) the individual performance of each executive officer, (c) compensation and
stock award information disclosed in the proxy statements of other companies,
(d) historical compensation levels and stock awards at the Company, (e) the
overall competitive environment for executives and the level of compensation
necessary to attract and retain executive talent and (f) the recommendations
of management.
STOCK OPTION PLANS
The Company adopted, with stockholder approval, the 1994 and 1995 Stock
Option Plans (the "1994 Plan," "1995 Plan" and the "1995 DD Plan") which
provide for the granting of options to purchase not more than an aggregate of
300,000, 500,000 and 50,000 shares of common stock, respectively, subject to
adjustment under certain circumstances. Such options may be incentive stock
options ("ISOs") within the meaning of the Internal Revenue Code of 1986, as
amended, or options that do not qualify as ISOs ("Non-Qualified Options").
The 1995 Plan is intended to meet the qualifying requirements of Rule 16b-3 in
effect at the time the Plan was adopted and, accordingly, is administered by
disinterested directors as defined in Rule 16b-3. The 1995 DD Plan is solely
for the disinterested directors who administer the 1995 Plan. Each
administrator presently receives 5,000 options per annum.
The option exercise price per share for a Non-Qualified Option may not be
less than 85% of the fair market value per share of common stock on the date
of grant and for an ISO may not be less than the fair market value per share
of common stock on the date of grant (110% of such fair market value for an
ISO, if the grantee owns stock possessing more than 10% of the combined voting
power of all classes of the Company's stock). Options may be granted under
the Stock Option Plan to all officers, directors and employees of the Company
and, in addition, Non-Qualified Options may be granted to other parties who
perform services for the Company. No options may be granted under the 1994
Plan after March 31, 2004 and under the 1995 Plan and 1995 DD Plan, after May
15, 2005.
The Stock Option Plans may be amended from time to time by the Board of
Directors of the Company. However, the Board of Directors may not, without
stockholder approval, amend the Stock Option Plans to increase the number of
shares of common stock which may be issued under the Stock Option Plans
(except upon changes in capitalization as specified in the Stock Option
Plans), decrease the minimum exercise price provided in the Plans or change
the class of persons eligible to participate in the Plans.
The following is a summary of stock option transactions:
PRICE PER
SHARES SHARE
-------- -------------
1994
Options granted and balance December 31, 1994 488,750 $4.75-$5.0625
1995
Options cancelled (44,334) $ 5.00
Repriced options* 444,416 $3.00-$5.0625
Options granted 75,000 $ 5.00-$6.00
Balance December 31, 1995 519,416 $ 3.00-$6.00
Options exercisable - December 31, 1995 239,746 $ 3.00-$6.00
Options becoming exercisable during year ending
December 31,
1996 133,997 $3.00-$5.0625
1997 124,005 $3.00-$5.0625
1998 21,668 $5.00
* In May 1995, the Company reduced the exercise price for a majority of
option holders to $3.00 per share, the market price at date of adjustment.
The options have a term of five years. No options have been exercised to
date. The above table includes options to purchase 225,000 shares which were
not granted pursuant to any plan, but contain the same conditions as those
provided in the Plans.
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the cumulative total return
(assuming reinvestment of dividends) of an investment of $100 in Track Data
Corporation on August 11, 1994 (initial public offering date) through its
fiscal years ended December 31, 1994 and 1995 to the Nasdaq Market Index and
the Industry Index for SIC Code 7375, Information Retrieval Services.
(GRAPH)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995 Track made cash advances to Mr. Hertz, without interest, and
to three real estate partnerships owned by Mr. Hertz and members of his
family, with interest at 6% per annum. The loans were unsecured and totaled
approximately $873,000 in the aggregate. These amounts were transferred to
Mr. Hertz in partial satisfaction of a dividend declared prior to the Merger
in accordance with the terms of the Merger Agreement. TDC guarantees
mortgages on two real estate partnerships owned by Mr. Hertz and members of
his family. At December 31, 1995, such mortgages provided for interest at 10%
per annum and had balances of $2,048,000 due May 2000 and $1,083,000 due June
1998. Track also made cash advances with interest principally at 1% over
prime (9.25% at December 31, 1995) and performed certain services for
Newsware, Inc., a company in the business of delivering and processing
real-time news, which is controlled by Mr. Hertz and Morton Mackof, President
of TDC. Newsware has incurred losses since its inception. TDC provides
facilities management and other services to Newsware. Track provided such
services to Newsware without charge in 1995. Such services have an estimated
value of $100,000. The cash advances made by Track were approximately
$185,000 during 1995. At December 31, 1995, Newsware was indebted to Track
for approximately $633,000, including accrued interest. The advances made in
1995 and an additional $315,000 in 1996 were made pursuant to a note due
December 1997, bearing interest at 9%, which is convertible to a 25% common
stock interest in Newsware.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Deloitte & Touche LLP ("D&T") was the principal auditor of the Company
from its inception through the December 31, 1993 fiscal year. During this
period, D&T also served as the principal auditor for Track Data Corporation
("Track"), the Company's principal stockholder prior to the Merger. In
August, 1994, Track dismissed D&T as its principal auditor. On September 9,
1994, D&T resigned as principal auditor of the Company. D&T orally advised
the Company that it was declining to audit the Company unless D&T were the
principal auditor for Track.
D&T's reports on the financial statements of the Company for the two
years ended December 31, 1993 contained no adverse opinion, disclaimer of
opinion, modification, or qualification. During the two years ended December
31, 1993 and the six months ended June 30, 1994, there were no disagreements
with D&T on any matter of accounting principles and practices, financial
statement disclosure, or audit scope and procedure, which disagreement, if not
resolved to the satisfaction of D&T, would have caused it to make reference to
the subject matter of the disagreement in connection with its report.
On January 10, 1995, the Company elected Grant Thornton LLP as its
auditors for the fiscal year ended December 31, 1994.
ITEM II. APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN
The Board of Directors has determined that the Company should adopt a new
Stock Option Plan in order to make options available to employees, officers,
directors and others who render services to the Company. Accordingly, the
Board has adopted the 1996 Stock Option Plan (the "1996 Plan") which is to be
administered by the Board of Directors of the Company. The Board recommends to
the stockholders that the 1996 Plan be approved.
SUMMARY OF THE 1996 STOCK OPTION PLAN
The purpose of the Plan is to provide additional incentive to the
officers, employees, and others who render services to the Company, who are
responsible for the management and growth of the Company, or otherwise
contribute to the conduct and direction of its business, operations and
affairs. It is intended that Options granted under the Plan strengthen the
desire of such persons to join and remain in the employ of the Company and
stimulate their efforts on behalf of the Company.
The Company may grant to its officers, key employees and others who
render services to the Company, options ("Options") to purchase up to 800,000
shares of the Company's Common Stock, subject to adjustment under certain
circumstances, at a price which may not be less than the fair market value per
share on the date of the granting of the Option. The closing price of the
Common Stock on September 4, 1996 was $1 .
Payment of the exercise price shall be made in cash, or, with the consent
of the Board of Directors, in whole or in part, in shares of Common Stock or
with a full recourse interest bearing promissory note of the Optionee secured
by a pledge of the shares received upon exercise of such Option. If an Option
granted under the 1996 Plan shall expire, terminate or be cancelled for any
reason without being exercised in full, the corresponding number of
unpurchased shares shall again be available for the purposes of the 1996 Plan.
Options may be granted in the form of incentive stock options within the
meaning of the Internal Revenue Code of 1986, as amended, or options which do
not qualify for treatment as incentive stock options.
The 1996 Plan will be administered by the Board of Directors or a
committee (the "Committee") appointed by the Board of Directors. The Board of
Directors determine the persons who are to be granted Options and the number
and terms of such Options based upon the contribution of such persons to the
management and growth of the Company. The 1996 Plan contains no preset
criteria determining the identity or amount of Options to be granted to any
person or group of persons. Therefore, no determinations can be made at the
present time as to the benefits or amounts that will be or would have been
issued to any specific person or groups of persons under the 1996 Plan. No
Option may be exercised after the expiration of 10 years from the date of the
grant. No Option may be granted under the 1996 Plan after July 8, 2006.
Incentive stock options are subject to the following limitations: (i) The
aggregate fair market value (determined at the time an option is granted) of
stock with respect to which incentive stock options are exercisable for the
first time by an optionee during any calendar year (under all such plans of
the Company, its parent or subsidiary) shall not exceed $100,000, and (ii) if
the individual to whom the incentive stock options were granted is considered
as owning stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, then (A) the option price at the time of
grant may not be less than 110% of the fair market value per share for such
Common Stock and (B) the option period must be no more than five years from
the date of grant.
The Board of Directors shall determine for each Option the extent, if
any, to which such Option shall be exercisable in the event of the termination
of an Optionee's employment with or rendering of services to the Company.
However, any such Option which is an ISO shall in all events lapse unless
exercised by the Optionee within a sixty-day (60) period, or if termination is
by reason of death, within the twelve month period after such termination, and
then only if and to the extent that such Option was exercisable at the date of
termination of employment.
The Board of Directors may, at any time, alter, suspend or terminate the
1996 Plan, except that the Board of Directors may not, without further
approval of the stockholders, (1) increase the maximum number of shares for
which Options may be granted under the 1996 Plan, (2) decrease the minimum
purchase price for shares of Common Stock to be issued upon exercise of
Options or (3) change the class of persons eligible to receive Options. Except
in limited circumstances, the Board of Directors may not make any change which
would have a material adverse affect upon any Option previously granted unless
the consent of the Optionee is obtained. No person may be divested of
ownership of shares already issued under the 1996 Plan.
The foregoing summary of the 1996 Plan is qualified in its entirety by,
and reference is hereby made to, the 1996 Plan, a copy of which is attached
hereto as Exhibit A.
The grant or exercise of an incentive stock option will not generally
cause recognition of income by the Optionee; however, the amount by which the
fair market value of a share of Common Stock at the time of exercise of an
incentive stock option exceeds the option price, is a "tax preference item"
for purposes of the alternative minimum tax. In the event of a sale of the
shares received upon exercise of an incentive stock option more than two years
from the date of grant and more than one year from the date of exercise, any
appreciation of the shares received above the exercise price should qualify as
long-term capital gain. However, if shares of Common Stock acquired pursuant
to the exercise of an incentive stock option are sold by the Optionee before
the completion of such holding periods so much of the gain as does not exceed
the difference between the option price and the lesser of the fair market
value of the shares at the date of exercise or the fair market value at the
date of disposition will be taxable as ordinary income for the taxable year in
which the sale occurs. Any additional gain realized on the sale should qualify
as a capital gain.
The grant of an Option that is not an incentive stock option (a
"non-qualified option") should not result in recognition of income by the
Optionee. Upon exercise of a non-qualified option, the excess of the fair
market value of the shares at the exercise date over the option price should
be considered compensation taxable as ordinary income. In the event of a sale
of the shares, any appreciation after the date of the exercise should qualify
as capital gain.
In connection with incentive stock options and non-qualified options, the
Company will be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the ordinary income recognized by the
employee provided any Federal income tax withholding requirements are
satisfied.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE 1996 STOCK OPTION PLAN
ITEM III. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to approval by the stockholders, the Board of Directors has
appointed Grant Thornton LLP as the independent auditors to audit the
financial statements of the Company for the fiscal year ending December 31,
1996. Grant Thornton LLP also served as the Company's auditors for the fiscal
years ended December 31, 1995 and 1994. It is expected that a representative
of Grant Thornton LLP will be present at the Annual Meeting with the
opportunity to make a statement if he desires to do so and to be available to
respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP
AS INDEPENDENT AUDITORS
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the Annual
Meeting, assuming a quorum is present, is required to elect directors, to
approve the adoption of the 1996 Stock Option Plan and to approve the
selection of auditors. Abstentions will not be counted as affirmative votes.
The current members of the Board of Directors presently hold voting authority
for Common Stock representing an aggregate of approximately 12,128,500 votes,
or approximately 81.6% of the total number of votes eligible to be cast at the
Annual Meeting. The members of the Board of Directors have indicated their
intention to vote affirmatively on all of the proposals.
EXPENSE OF SOLICITATION
The cost of soliciting proxies, which also includes the preparation,
printing and mailing of the Proxy Statement, will be borne by the Company.
Solicitation will be made by the Company primarily through the mail, but
regular employees of the Company may solicit proxies personally, by telephone
or telegram. The Company will request brokers and nominees to obtain voting
instructions of beneficial owners of the stock registered in their names and
will reimburse them for any expenses incurred in connection therewith.
PROPOSALS OF STOCKHOLDERS
Stockholders of the Company who intend to present a proposal for action
at the next Annual Meeting of Stockholders of the Company must notify the
Company's management of such intention by notice in writing received at the
Company's principal executive offices on or before June 7, 1997 in order for
such proposal to be included in the Company's Proxy Statement and form of
proxy relating to such Meeting. Stockholders who wish to present a proposal
for action at the next Annual Meeting are advised to contact the Company as
soon as possible in order to permit the inclusion of any proposal in the
Company's proxy statement.
OTHER MATTERS
The Company knows of no items of business that are expected to be
presented for consideration at the Annual Meeting which are not enumerated
herein. However, if other matters properly come before the Meeting, it is
intended that the person named in the accompanying Proxy will vote thereon in
accordance with his best judgement.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE
IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT
WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
New York, New York By Order of the Board of Directors
October 3, 1996
Martin Kaye, Secretary
<PAGE>
EXHIBIT A
TRACK DATA CORPORATION
1996 STOCK OPTION PLAN
There is hereby established a 1996 Stock Option Plan (the "Plan"). The Plan
provides for the grant to certain employees and others who render services to
Track Data Corporation or its subsidiaries (the "Company") of options
("Options") to purchase shares of common stock of the Company ("Common
Stock").
1. Purpose: The purpose of the Plan is to provide additional incentive to
the officers, employees, and others who render services to the Company, who
are responsible for the management and growth of the Company, or otherwise
contribute to the conduct and direction of its business, operations and
affairs. It is intended that Options granted under the Plan strengthen the
desire of such persons to join and remain in the employ of the Company and
stimulate their efforts on behalf of the Company
2. The Stock: The aggregate number of shares of Common Stock which may be
subject to Options shall not exceed 800,000. Such shares may be either
authorized and unissued shares, or treasury shares. If any Option granted
under the Plan shall expire, terminate or be cancelled for any reason without
having been exercised in full, the corresponding number of unpurchased shares
shall again be available for the purposes of the Plan.
3. Types of Options: Options granted under the Plan shall be in the form
of (i) incentive stock options ("ISO's"), as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or (ii) non-statutory
options which do not qualify under such Section ("NSO's"), or both, in the
discretion of the Board of Directors or any committee appointed by the Board
(each, the "Committee"). The status of each Option shall be identified in the
Option Agreement.
4. Eligibility:
(a) ISO's may be granted to such employees (including officers and
directors who are employees) of the Company as the Committee shall select from
time to time.
(b) NSO's may be granted to such employees (including officers and
directors) of the Company, and to other persons who render services to the
Company, as the Committee shall select from time to time.
5. General Terms of Options:
(a) Option Price. The price or prices per share of Common Stock to be
sold pursuant to an Option (the "exercise price") shall be fixed by the
Committee but shall in any case not be less than:
(i) the fair market value per share for such Common Stock on the
date of grant in the case of ISOs other than to a 10% Stockholder,
(ii) 110% of the fair market value per share for such Common Stock
on the date of grant in the case of ISOs to a 10% Stockholder, and
(iii)the fair market value on the date of grant in the case of
NSO's.
A "10% Stockholder" means an individual who within the meaning of
Section 422(b)(6) of the Code owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or of
its parent or any subsidiary corporation.
(b) Period of Option Vesting. The Committee shall determine for each
Option the period during which such Option shall be exercisable in whole or in
part, provided that no ISO to a 10% Stockholder shall be exercisable more than
five years after the date of grant.
(c) Special Rule for ISO's. The aggregate fair market value
(determined at the time the ISO is granted) of the stock with respect to which
ISOs are exercisable for the first time by an Optionee during any calendar
year (under all such plans of the Company, its parent or subsidiary) shall not
exceed $100,000, and any excess shall be considered an NSO.
(d) Effect of Termination of Employment.
(i) The Committee shall determine for each Option the extent, if
any, to which such Option shall be exercisable in the event of the termination
of the Optionee's employment with or rendering of other services to the
Company.
(ii) However, any such Option which is an ISO shall in all events
lapse unless exercised by the Optionee:
(A) prior to the 60th day after the date on which employment
terminated, if termination was other than by reason of death; and
(B) within the twelve-month period next succeeding the death
of the Optionee, if termination is by reason of death.
(iii)The Committee shall have the right, at any time, and from time
to time, with the consent of the Optionee, to modify the lapse date of an
Option and to convert an ISO into an NSO to the extent that such modification
in lapse date increases the life of the ISO beyond the dates set forth above
or beyond dates otherwise permissible for an ISO.
(e) Payment for Shares of Common Stock. Upon exercise of an Option,
the Optionee shall make full payment of the Option Price:
(i) in cash, or,
(ii) with the consent of the Committee and to the extent permitted
by it:
(A) with Common Stock of the Company valued at fair market
value on date of exercise, but only if held by the Optionee for a period of
time sufficient to prevent a pyramid exercise that would create a charge to
the Company's earnings,
(B) with a full recourse interest bearing promissory note of
the Optionee, secured by a pledge of the shares of Common Stock received upon
exercise of such Option, and having such other terms and conditions as
determined by the Committee,
(C) by delivering a properly executed exercise notice together
with irrevocable instructions to a broker to sell shares acquired upon
exercise of the Option and promptly to deliver to the Company a portion of the
proceeds thereof equal to the exercise price, or
(D) any combination of any of the foregoing.
(f) Option Exercises. Options shall be exercised by submitting to the
Company a signed copy of notice of exercise in a form to be supplied by the
Company. The exercise of an Option shall be effective on the date on which
the Company receives such notice at its principal corporate offices. The
Company may cancel such exercise in the event that payment is not effected in
full, subject to the terms of Section 5(e) above.
(g) Non-Transferability of Option. No Option shall be transferable by
the Optionee or otherwise than by will or by the laws of descent and
distribution. During the Optionee's lifetime, such Option shall be exercisable
only by such Optionee. If an Optionee should die while in the employ of the
Company, the Option theretofore granted to the Optionee, to the extent then
otherwise exercisable, shall be exercisable only by the estate of the Optionee
or by a person who acquired the right to exercise such Option by bequest or
inheritance or otherwise by reason of the death of the Optionee.
Notwithstanding the foregoing, if so provided in an agreement between the
Company and the Optionee, an Optionee may transfer his or her Options to
immediate family members or trusts for their benefit or partnerships in which
immediate family members are the only partners, without consideration, and
subject to the same terms and conditions as were applicable to the Options
immediately prior to their transfer.
6. Other Plan Terms:
(a) Number of Options which may be Granted to, and Number of Shares of
Common Stock which may be Acquired by Employees.
(i) The Committee may grant more than one Option to an individual,
and, subject to the requirements of Section 422 of the Code, with respect to
ISOs, such Option may be in addition to, in tandem with, or in substitution
for, Options previously granted under the Plan or of another corporation and
assumed by the Company.
(ii) The Committee may permit the voluntary surrender of all or a
portion of any Option granted under the Plan or otherwise to be conditioned
upon the granting to the employee of a new Option for the same or a different
number of shares of Common Stock as the Option surrendered, or may require
such voluntary surrender as a condition precedent to a grant of a new Option
to such employee. Such new Option shall be exercisable at the price, during
the period, and in accordance with any other terms or conditions specified by
the Committee at the time the new Option is granted, all determined in
accordance with the provisions of the Plan without regard to the price, period
of exercise, or any other terms or conditions of the Option surrendered.
(b) Period of Grant of Options. Options may be granted at any time
under the Plan, provided that Options which are granted before the Plan has
been approved by the stockholders of the Company shall be exercisable only
after the Plan is approved by such stockholders. However, no Option shall be
granted under the Plan after July 8, 2006.
(c) Effect of Change in Common Stock. In the event of a
reorganization, recapitalization, liquidation, stock split, stock dividend,
combination of shares, merger or consolidation, or the sale, conveyance, lease
or other transfer by the Company of all or substantially all of its property,
or any change in the corporate structure or shares of Common Stock of the
Company, pursuant to any of which events the then outstanding shares of the
common stock are split up or combined or changed into, become exchangeable at
the holder's election for, or entitle the holder thereof to other shares of
common stock, or in the case of any other transaction described in Section
424(a) of the Code, the Committee may change the number and kind of shares of
Common Stock available under the Plan and any outstanding Option (including
substitution of shares of common stock of another corporation) and the price
of any Option and the fair market value determined under this Plan in such
manner as it shall deem equitable in its sole discretion.
(d) Optionees not Stockholders. An Optionee or a legal representative
thereof shall have none of the rights of a stockholder with respect to shares
of Common Stock subject to Options until such shares shall be issued or
transferred upon exercise of the Option.
7. Option Agreement: The Company shall effect the grant of Options under
the Plan, in accordance with determinations made by the Committee, by
execution of instruments in writing in a form approved by the Committee. Each
Option shall contain such terms and conditions (which need not be the same for
all Options, whether granted at the same time or at different times) as the
Committee shall deem to be appropriate and not inconsistent with the
provisions of the Plan, and such terms and conditions shall be agreed to in
writing by the Optionee.
8. Certain Definitions:
(a) Fair Market Value. As used in the Plan, the term "fair market
value" shall mean as of any date:
(i) if the Common Stock is not traded on any over-the-counter
market or on a national securities exchange, the value determined by the
Committee using the best available facts and circumstances,
(ii) if the Common Stock is traded in the over-the-counter market,
based on most recent closing prices for the Common Stock on the date the
calculation thereof shall be made, or
(iii)if the Common Stock is listed on a national securities
exchange, based on the most recent closing prices for the Common Stock of the
Company on such exchange.
(b) Subsidiary and Parent. The term "subsidiary" and "parent" as used
in the Plan shall have the respective meanings set forth in Sections 424(f)
and (e) of the Internal Revenue Code.
9. Not an Employment Contract: Nothing in the Plan or in any Option or
stock option agreement shall confer on any Optionee any right to continue in
the service of the Company or any parent or subsidiary of the Company or
interfere with the right of the Company to terminate such Optionee's
employment or other services at any time.
10. Withholding Taxes:
(a) Whenever the Company proposes or is required to issue or transfer
shares of Common Stock under the Plan, the Company shall have the right to
require the Optionee to remit to the Company an amount sufficient to satisfy
any Federal, state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Alternatively,
the Company may, in its sole discretion from time to time, issue or transfer
such shares of Common Stock net of the number of shares sufficient to satisfy
the withholding tax requirements. For withholding tax purposes, the shares of
Common Stock shall be valued on the date the withholding obligation is
incurred.
(b) In the case of shares of Common Stock that an Optionee receives
pursuant to his exercise of an Option which is an ISO, if such Optionee
disposes of such shares of Common Stock within two years from the date of the
granting of the ISO or within one year after the transfer of such shares of
Common Stock to him, the Company shall have the right to withhold from any
salary, wages, or other compensation for services payable by the Company to
such Optionee, amounts sufficient to satisfy any withholding tax obligation
attributable to such disposition.
(c) In the case of a disposition described in Section (b), the Optionee
shall give written notice to the Company of such disposition within 30 days
following the disposition, which notice shall include such information as the
Company may reasonably request to effectuate the provisions hereof.
11. Agreements and Representations of Optionees:
As a condition to the exercise of an Option, unless counsel to the
Company opines that it is not necessary under the Securities Act of 1933, as
amended, and the pertinent rules thereunder, as the same are then in effect,
the Optionee shall represent in writing that the shares of Common Stock being
purchased are being purchased only for investment and without any present
intent at the time of the acquisition of such shares of Common Stock to sell
or otherwise dispose of the same.
12. Administration of the Plan:
(a) The Plan shall be administered by the Board of Directors or a
Committee of the Board of Directors of the Company (the "Committee")
consisting of not less than two Directors.
(b) Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine the individuals to receive
Options, the times when they shall receive them and the number of shares of
Common Stock to be subject to each Option, and other terms relating to the
grant of Options.
(c) Subject to the express provisions of the Plan, the Committee shall
have authority to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements (which
need not be identical) and, as specified in this Plan, the fair market value
of the common stock, and to make all other determinations necessary or
advisable for administering the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
option agreement in the manner and to the extent it shall deem expedient to
carry it into effect, and it shall be the sole and final judge of such
expediency. The determinations of the Committee on the matters referred to in
this Section 12 shall be conclusive.
(d) The Committee may, in its sole discretion, and subject to such terms
and conditions as it may adopt, accelerate the date or dates on which some or
all outstanding Options may be exercised.
(e) The Committee may require that any Option Shares issued be legended
as necessary to comply with applicable federal and state securities laws.
13. Amendment and Discontinuance of the Plan:
(a) The Board of Directors of the Company may at any time alter, suspend
or terminate the Plan, but no change shall be made which will have a material
adverse effect upon any Option previously granted, unless the consent of the
Optionee is obtained; provided, however, that the Board of Directors may not
without further approval of the stockholders, (i) increase the maximum number
of shares of Common Stock for which Options may be granted under the Plan or
which may be purchased by an individual Optionee, (ii) decrease the minimum
option price provided in the Plan, or (iii) change the class of persons
eligible to receive Options.
(b) The Company intends that Options designated by the Committee as
ISO's shall constitute ISOs under Section 422 of the Code. Should any
provision in this Plan for ISO's not be necessary in order to so comply or
should any additional provisions be required, the Board of Directors of the
Company may amend the Plan accordingly without the necessity of obtaining the
approval of the stockholders of the Company.
14. Other Conditions: If at any time counsel to the Company shall be of
the opinion that any sale or delivery of shares of Common Stock pursuant to an
Option granted under the Plan is or may in the circumstances be unlawful under
the statutes, rules or regulations of any applicable jurisdiction, the Company
shall have no obligation to make such sale or delivery, and the Company shall
not be required to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or otherwise
with respect to shares of Common Stock or Options under the Plan, and the
right to exercise any such Option may be suspended until, in the opinion of
said counsel, such sale or delivery shall be lawful.
At the time of any grant or exercise of any Option, the Company may, if
it shall deem it necessary or desirable for any reason connected with any law
or regulation of any governmental authority relative to the regulation of
securities, condition the grant and/or exercise of such Option upon the
Optionee making certain representations to the Company and the satisfaction of
the Company with the correctness of such representations.
15. Approval; Effective Date; Governing Law: The Plan was adopted by the
Board of Directors on July 8, 1996 and is to be submitted to stockholders for
their approval at the first meeting of stockholders following such date. The
Plan shall terminate if not approved by stockholders. The Plan shall be
interpreted in accordance with the internal laws of the State of New York.
