TRACK DATA CORPORATION
56 PINE STREET
NEW YORK, NY 10005
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 5, 1998
TO THE STOCKHOLDERS OF TRACK DATA CORPORATION:
The Annual Meeting of Stockholders of Track Data Corporation (the
"Company") will be held at 95 Rockwell Place, Brooklyn, New York, 11217, Fifth
Floor Conference Room, at 10:00 A.M. on Thursday, November 5, 1998, for the
following purposes:
(1) To elect six 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 1998 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, 1998; 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 Annual Report to Stockholders of the
Company for the year ended December 31, 1997 and for the six months ended June
30, 1998 and 1997 are enclosed herewith. Only holders of record of Common Stock
of the Company at the close of business on October 1, 1998 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 5, 1998
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 95 Rockwell Place, Brooklyn, New York,
11217, Fifth Floor Conference Room, at 10:00 A.M. on Thursday, November 5, 1998
(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 5, 1998 to all stockholders of record on October 1, 1998 (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 six nominees for director
named herein, FOR the 1998 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 11,669,050 votes, or approximately 80% 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 14,584,683 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 August 31, 1998, 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.
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES OWNED BENEFICIALLY (1)
-----------------------------
NAME NO. OF SHARES % OF CLASS
- -------------------------------------- ------------- -----------
Barry Hertz (2) 11,781,645 80.0%
Morton Mackof (3) 256,405 1.8%
Alan Schnelwar (4) 25,000 *
Martin Kaye (4) 20,000 *
Jack Spiegelman (5) 11,000 *
E. Bruce Fredrikson (4)
Syracuse University
School of Management
Syracuse, NY 13244 12,000 *
All Officers and Directors as a Group
(six persons)(2)(3)(4)(5) 12,106,050 81.8%
---------------
<FN>
* = less than 1%
(1) Except as noted otherwise, all shares are owned beneficially and of
record. Based on 14,584,683 shares outstanding.
(2) Consists of 11,198,745 shares owned by Mr. Hertz and 442,900 shares
owned by Trusts established in the names of Mr. Hertz's children. Also includes
140,000 options which are presently exercisable under the Company's Stock Option
Plans.
(3) Consists of 26,405 shares owned of record and 230,000 shares held in the
Track Data Phantom Unit Trust to be released upon his termination of association
with the Company, or earlier with approval of the Board of Directors.
(4) Consists of shares issuable upon the exercise of presently exercisable
options granted under the Company's Stock Option Plans.
(5) Consists of 1,000 shares owned by his wife as to which Mr. Spiegelman
disclaims beneficial interest and 10,000 shares issuable upon the exercise of
presently exercisable options granted under the Company's Stock Option Plans.
</TABLE>
<PAGE>
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, Alan
Schnelwar, Martin Kaye, Dr. E. Bruce Fredrikson, Morton Mackof 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:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGE POSITION
- ------------------- --- ------------------------------------------------
Barry Hertz 48 Chairman of the Board, Chief Executive Officer
Alan Schnelwar 59 Senior Vice President and Director
Martin Kaye 51 Vice President - Finance, Secretary and Director
E. Bruce Fredrikson 60 Director
Morton Mackof 50 Director
Jack Spiegelman 59 Director
</TABLE>
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 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.
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).
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
serves as director of Eagle Finance Corp., a company which acquires and services
non-prime automobile installment sales contracts. He is also an independent
general partner of Fiduciary Capital Partners, L.P. and Fiduciary Capital
Pension Partners, L.P. He is also a director of Innodata.
MORTON MACKOF has been a Director of the Company since April 1994. He is
President and CEO of Third Millennium Technology Inc., a company involved in
information technology consulting and software development. Mr. Mackof became
President of the Company in March 1996 upon the Merger and resigned in November
1996. 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.
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 four meetings during the year ended December
31, 1997. Each director attended at least 75% of all of the meetings of the
Board of Directors held during the period in 1997 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 1997. 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
The Company believes that during the period from January 1, 1997 through
December 31, 1997 all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation
paid by the Company or its predecessors, Track and Global, for services to it
during the three fiscal years ended December 31, 1997 to the Company's Chief
Executive Officer and to the executive officers whose aggregate cash and cash
equivalent compensation exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
<S> <C> <C> <C> <C> <C>
NUMBER
OF STOCK
FISCAL ANNUAL OPTIONS
NAME AND POSITION YEAR SALARY BONUS TOTAL AWARDED
- --------------------- -------- ---------- -------- ---------- -------
Barry Hertz 1997 $ 350,000 $ - $ 350,000 -
Chairman, CEO 1996 350,000 - 350,000 40,000
1995 1,173,000 - 1,173,000 100,000(A)
Alan Schnelwar 1997 $ 180,000 $ - $ 180,000 25,000
Senior Vice President 1996 165,000 - 165,000 25,500
1995 170,000 - 170,000 40,000(A)
<FN>
(A) Options granted in 1994 and repriced in 1995
</TABLE>
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.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Individual Grants
<S> <C> <C> <C> <C> <C>
PERCENT POTENTIAL REALIZED
OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES
NUMBER GRANTED TO OF STOCK
OF EMPLOYEES APPRECIATION
OPTIONS IN FISCAL EXERCISE EXPIRATION FOR OPTION TERM
NAME GRANTED YEAR PRICE DATE 5% 10%
- -------------- --------- ---------- -------- ---------- ------ -------
Alan Schnelwar 25,000 10.3% $2.00 5/2002 $5,750 $20,500
</TABLE>
<TABLE>
<CAPTION>
Aggregate Option Exercises In Last Fiscal Year;
Fiscal Year End Option Values
<S> <C> <C> <C>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT
SHARES YEAR END FISCAL YEAR END
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE UNEXERCISABLE UNEXERCISABLE
- -------------- ----------- ----------------- -------------------
Barry Hertz - 140,000/-0- $-0-/$-0-
Alan Schnelwar - 65,500/25,000 $-0-/$-0-
</TABLE>
There are no employment agreements, stock appreciation rights or long-term
incentive plans.
DIRECTORS COMPENSATION
Dr. Fredrikson and Mr. Spiegelman are compensated at the rate of $1,250 and
$1,000 per month, respectively, 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
7,000 and 5,000 shares annually, respectively, under the 1995 Disinterested
Directors' Stock Option Plan as compensation for their services as
administrators of the 1995 Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the Company's fiscal year ended December 31, 1997, Messrs. Hertz,
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. Kaye is chief financial officer and a director of
Innodata Corporation. Messrs. Mackof and Fredrikson 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 1997 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, 1995 and 1996
Stock Option Plans (the "1994 Plan," "1995 Plan," "1995 DD Plan" and the "1996
Plan") which provide for the granting of options to purchase not more than an
aggregate of 300,000, 500,000, 50,000 and 800,000 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 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, under the 1995 Plan and 1995 DD Plan after May 15, 2005, and
under the 1996 Plan after July 8, 2006.
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 options have a term of five years. No options have been exercised to
date. The above table includes options to purchase 286,250 shares which were not
granted pursuant to any plan, but contain the same conditions as those provided
in the Plans. Also, see Note K to the Company's financial statements included in
the Company's annual report on Form 10-K for the year ended December 31, 1997.
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, 1995, 1996 and 1997 to the Nasdaq Market Index
and the Industry Index for SIC Code 7375, Information Retrieval Services.
[GRAPHIC]
INFORMATION PROVIDED BY MEDIA GENERAL FINANCIAL SERVICES.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company guaranteed mortgages on two real estate partnerships owned by
Mr. Hertz and members of his family. At December 31, 1997, such mortgages
provided for interest at 10% per annum and had balances of $1,750,000 due May
2000, and another mortgage for $997,000 which was repaid in 1998.
On November 7, 1997, Barry Hertz, Chairman and principal stockholder of the
Company, transferred his 100% ownership in Newsware, Inc. ("NW") to the Company
for no consideration. NW owed Mr. Hertz approximately $1,025,000, which was
contributed to capital prior to this transaction, and NW owed the Company
approximately $1,200,000, net of reserves, at the time of this transaction. NW
is a provider of on-line news information services.
The Company's corporate headquarters are located at 56 Pine Street, New
York, New York. The Company maintains office space and data centers at locations
in New York, NY, Brooklyn, NY and Chicago, IL. The Brooklyn, NY location is
leased from a family partnership controlled by the Company's Chairman and Chief
Executive Officer. The annual rental of approximately 36,000 square feet is
approximately $480,000. The Company believes that the terms of this lease are at
least as favorable to it as terms which it would have obtained in a comparable
transaction with unaffiliated persons. The Company leased its New York, NY
property from another family partnership until the sale of that property in
February 1998.
ITEM II. APPROVAL OF THE COMPANY'S 1998 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 1998 Stock Option Plan (the "1998 Plan") which is to be
administered by the Board of Directors of the Company. The Board recommends to
the stockholders that the 1998 Plan be approved.
SUMMARY OF THE 1998 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 , 1998 was $[ ].
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 1998 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 1998 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 1998 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 1998 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 1998 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 1998 Plan after July 9, 2008.
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
1998 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 1998 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 1998 Plan.
The foregoing summary of the 1998 Plan is qualified in its entirety by, and
reference is hereby made to, the 1998 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 1998 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, 1998. Grant
Thornton LLP also served as the Company's auditors for the fiscal years ended
December 31, 1997, 1996 and 1995. 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 1998 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 11,669,050 votes, or approximately
80% 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, 1999 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 5, 1998
Martin Kaye, Secretary
<PAGE>
A-7
<PAGE>
EXHIBIT A
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TRACK DATA CORPORATION
1998 STOCK OPTION PLAN
There is hereby established a 1998 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. 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 9, 2008.
(c) EFFECT OF CHANGE IN COMMEON 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 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 dat:
(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 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. WITHHODING 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 9, 2008 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.
<PAGE>
FORM OF PROXY
TRACK DATA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned Stockholder of Common Stock of Track Data Corporation (the
"Company") hereby revokes all previous proxies, acknowledges receipt of the
Notice of the Meeting of Stockholders to be held on Thursday, November 5, 1998,
and hereby appoints Barry Hertz and Martin Kaye, and each of them, as proxies of
the undersigned, with full power of substitution, to vote and otherwise
represent all of the shares of the undersigned in the Company at said meeting
and at any adjournments thereof with the same effect as if the undersigned were
present and voting the shares. The shares represented by this proxy shall be
voted on the following matters and, in their discretion, upon any other business
which may properly come before said meeting.
1. Election of Directors:
/ / For all nominees listed below / / Withhold authority
(except as indicated) to vote for all
nominees listed below
To withhold authority for any individual nominee, strike through that nominee's
name in the list below.
Barry Hertz Martin Kaye Jack Spiegelman
Alan Schnelwar E. Bruce Fredrikson Morton Mackof
2. Approval of the 1998 Stock Option Plan:
/ / For / / Against / / Abstain
3. Ratification of the selection of Grant Thornton LLP as independent auditors:
/ / For / / Against / / Abstain
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF EACH OF THE ABOVE NOMINEES,
FOR APPROVAL OF THE 1998 STOCK OPTION PLANS FOR SELECTION OF GRANT THORNTON LLP
AS INDEPENDENT AUDITORS, AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING AS THE PROXYHOLDERS DEEM ADVISABLE.
Dated: , 1998
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Signature(s) of Stockholder
---------------------------
(Title, if appropriate)
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This proxy should be signed by the Stockholder(s) exactly as his or her name
appears hereon. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, each owner should
sign. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE
THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
