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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Open Market, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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OPEN MARKET, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Open
Market, Inc., a Delaware corporation (the "Corporation"), will be held on
Wednesday, May 12, 1999 at 10:00 a.m. at Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109 (the "Meeting") for the purpose of considering and
voting upon the following matters:
1. To elect two Class III Directors for the ensuing three years;
2. To approve amendments to the Corporation's 1996 Director Option Plan to
(a) increase the number of shares of Common Stock authorized for
issuance under such plan from 100,000 to 200,000 and (b) provide that
all options granted on or after May 12, 1999 under such plan shall be
fully exercisable on the date of grant, as set forth in the accompanying
Proxy Statement under "Approval of Amendments to 1996 Director Option
Plan;"
3. To ratify the selection by the Board of Directors of Arthur Andersen LLP
as the Corporation's independent public accountants for the fiscal year
ending December 31, 1999; and
4. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Friday, March 19,
1999 as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting and at any adjournments thereof. The list
of the Corporation's stockholders entitled to vote at the Meeting will be
available for examination by any stockholder, for any purpose germane to the
Meeting, during ordinary business hours for ten days prior to the Meeting at
the principal executive offices of the Corporation, One Wayside Road,
Burlington, Massachusetts 01803, and at the place of the Meeting.
A copy of the Corporation's Annual Report to Stockholders for the year ended
December 31, 1998, which contains consolidated financial statements and other
information of interest to stockholders, accompanies this Notice of Meeting
and the enclosed Proxy Statement.
By Order of the Board of Directors,
/s/ Eric J. Pyenson
Eric J. Pyenson, Secretary
April 9, 1999
Burlington, Massachusetts
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ACCOMPANYING ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
OPEN MARKET, INC.
One Wayside Road
Burlington, Massachusetts 01803
PROXY STATEMENT
For Annual Meeting of Stockholders
To Be Held May 12, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Open Market, Inc. (the "Corporation") for
use at the Annual Meeting of Stockholders to be held on Wednesday, May 12,
1999 at 10:00 a.m. at Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109 and at any adjournment thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the
Corporation or by voting in person at the Meeting. Attendance at the Meeting
will not itself be deemed to revoke a Proxy unless the stockholder gives
affirmative notice at the Meeting that the stockholder intends to revoke the
Proxy and vote in person.
On March 19, 1999, the record date for determination of stockholders
entitled to notice of and to vote at the Meeting, there were outstanding and
entitled to vote an aggregate of 35,751,802 shares of Common Stock of the
Corporation, $.001 par value per share (the "Common Stock"). Each share
entitles the record holder to one vote on each of the matters to be voted upon
at the Meeting.
The Notice of Meeting, this Proxy Statement, the enclosed Proxy and the
Corporation's Annual Report to Stockholders for the year ended December 31,
1998 are being mailed to stockholders on or about April 9, 1999. The
Corporation will, upon written request of any stockholder, furnish without
charge a copy of its Annual Report for the year ended December 31, 1998, as
filed with the Securities and Exchange Commission, without exhibits. Please
address all such requests to the Corporation, Attention: Investor Relations,
One Wayside Road, Burlington, Massachusetts 01803. Exhibits will be provided
upon written request and payment of an appropriate processing fee.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 19, 1999 with
respect to the beneficial ownership of shares of Common Stock by (i) each
person known to the Corporation to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) the directors and director nominees
of the Corporation, (iii) the Chief Executive Officer and the other executive
officers listed in the Summary Compensation Table below (the "Named Executive
Officers"), and (iv) the directors and executive officers of the Corporation
as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership(2)
----------------------------
Name and Address Number Percent
of Beneficial Owner(1) of Shares of Class
---------------------- --------------- ------------
<S> <C> <C>
David Gifford(3)............................ 2,072,500 5.80%
26 Pigeon Hill Road
Weston, MA 02493
Shikhar Ghosh(4)............................ 3,417,800 9.52%
Gulrez Arshad(5)............................ 1,251,029 3.50%
Thomas H. Bruggere(6)....................... 10,078 *
Gary B. Eichhorn(7)......................... 1,258,752 3.42%
William S. Kaiser(8)........................ 179,538 *
Brian J. Knez(9)............................ 1,002,667 2.80%
Eugene F. Quinn(10)......................... 1,300 *
Thomas A. Nephew(11)........................ 18,125 *
Gregory Pope(12)............................ 37,112 *
Regina O. Sommer(13)........................ 161,875 *
Peter Y. Woon, Ph.D.(14).................... 31,875 *
All directors and executive officers as a
group (14 persons)(15)..................... 7,398,968 19.87%
</TABLE>
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* Less than 1%
(1) The address of each person in the table other than David Gifford is c/o
Open Market, Inc., One Wayside Road, Burlington, Massachusetts, 01803.
(2) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of March 19, 1999
through the exercise of any stock option or other right. The inclusion
herein of such shares, however, does not constitute an admission that the
named stockholder is a direct or indirect beneficial owner of such shares.
Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares such power with his
spouse) with respect to all shares of capital stock listed as owned by
such person or entity.
(3) Includes 400,000 shares of Common Stock held in an irrevocable trust for
Mr. Gifford's minor children as to which Mr. Gifford disclaims beneficial
ownership.
(4) Includes 150,000 shares of Common Stock issuable to Mr. Ghosh within 60
days of March 19, 1999 upon exercise of stock options. Also includes
600,000 shares held in a trust for the benefit of Mr. Ghosh's minor
children as to which Mr. Ghosh disclaims beneficial ownership.
(5) Includes 800 shares of Common Stock issuable to Mr. Arshad within 60 days
of March 19, 1999 upon exercise of stock options. Also includes 122,200
shares of Common Stock held in two revocable trusts of which Mr. Arshad's
children are beneficiaries and 513,629 shares of Common Stock held by
Nuland & Arshad, Inc. Mr. Arshad has shared investment and voting power
with respect to the shares held by Nuland
2
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& Arshad, Inc. Mr. Arshad, who may be deemed to be the beneficial owner of
the shares held by Nuland & Arshad, Inc., disclaims beneficial ownership of
such shares. Also includes 61,100 shares of Common Stock held in an
irrevocable trust of which Mr. Arshad's child is a beneficiary as to which
Mr. Arshad disclaims beneficial ownership.
(6) Includes 4,500 shares of Common Stock issuable to Mr. Bruggere within 60
days of March 19, 1999 upon exercise of stock options.
(7) Includes 1,103,752 shares of Common Stock issuable to Mr. Eichhorn within
60 days of March 19, 1999 upon exercise of stock options and 120,000 shares
of Common Stock held by Mr. Eichhorn's spouse.
(8) Includes 800 shares of Common Stock issuable to Mr. Kaiser within 60 days
of March 19, 1999 upon exercise of stock options.
(9) Represents 1,000,000 shares of Common Stock held by KO Corporation, a
subsidiary of Harcourt General, Inc. Mr. Knez is a director and officer of,
and member of a group holding more than a 10% interest in, Harcourt
General, Inc. Mr. Knez disclaims beneficial ownership of such shares,
except to the extent of his interest in Harcourt General, Inc. Also
includes 2,667 shares of Common Stock issuable to Mr. Knez within 60 days
of March 19, 1999 upon the exercise of stock options. Mr. Knez received
these options in connection with his role as a director of the Corporation
and assigned his economic interest in these options to Harcourt General,
Inc. Mr. Knez resigned from the Board of Directors of the Corporation
effective April 1, 1999.
(10) Includes 1,300 shares of Common Stock issuable to Mr. Quinn within 60 days
of March 19, 1999 upon exercise of stock options.
(11) Consists of 18,125 shares of Common Stock issuable to Mr. Nephew within 60
days of March 19, 1999 upon exercise of stock options.
(12) Includes 22,931 shares of Common Stock issuable to Mr. Pope within 60 days
of March 19, 1999 upon exercise of stock options.
(13) Includes 136,875 shares of Common Stock issuable to Ms. Sommer within 60
days of March 19, 1999 upon exercise of stock options.
(14) Consists of 31,875 shares of Common Stock issuable to Mr. Woon within 60
days of March 19, 1999 upon exercise of stock options.
(15) Includes 1,635,829 shares of Common Stock held by entities affiliated with
certain directors as described in notes 5 and 9 above and 1,489,813 shares
of Common Stock issuable to all directors and executive officers as a
group within 60 days of March 19, 1999 upon exercise of stock options.
3
<PAGE>
Votes Required
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented at the Meeting) will be
counted for purposes of determining whether a quorum exists at the Meeting.
The affirmative vote of the holders of a plurality of the shares voting on
the matter is required for the election of directors (Proposal 1). The
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented by proxy and voting on the matter is required for
approval of the amendments to the Corporation's 1996 Director Option Plan
(Proposal 2) and for the ratification of Arthur Andersen LLP as the
Corporation's independent public accountants for the year ending December 31,
1999 (Proposal 3).
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a
particular matter ("broker non-votes"), will not be counted as shares voted in
favor of such matter and will not be counted as shares voting on such matter.
Accordingly, abstentions and "broker non-votes" will have no effect on the
voting on a matter that requires the affirmative vote of a certain percentage
of the shares voting on a matter.
PROPOSAL 1
ELECTION OF DIRECTORS
The Corporation has a classified Board of Directors consisting of two Class
I Directors, two Class II Directors, and two Class III Directors. The Class I,
Class II and Class III Directors will serve until the annual meeting of
stockholders to be held in 2000, 2001 and 1999, respectively, and until their
respective successors are elected and qualified. At each annual meeting of
stockholders, directors are elected for a full term of three years to succeed
those whose terms are expiring.
The persons named in the enclosed proxy will vote to elect, as Class III
Directors, Shikhar Ghosh, the current Chairman of the Board, and Eugene F.
Quinn, the two Class III director nominees named below, unless the proxy is
marked otherwise. Messrs. Ghosh and Quinn are currently directors of the
Corporation.
Each Class III director will be elected to hold office until the 2002 annual
meeting of stockholders and until his successor is elected and qualified. Each
nominee has indicated his willingness to serve, if elected; however, if either
nominee should be unable to serve, the person acting under the proxy may vote
the proxy for a substitute nominee. The Board of Directors has no reason to
believe that either of the nominees will be unable to serve if elected.
For each member of the Board of Directors, including those who are nominees
for election as Class III Directors, there follows information given by each
concerning his principal occupation and business experience for the past five
years, the names of other publicly held companies of which he serves as a
director and his age and length of service as a director of the Corporation.
4
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation, Other Business
Experience During Past Five
Name Age Years and Other Directorships
---- --- ------------------------------------
<C> <C> <S>
Nominees for Terms Expiring in 2002 (Class III Directors)
Shikhar Ghosh............. 41 Mr. Ghosh, a founder of the Corporation, has
served as a director of the Corporation since
June 1994. Since December 1995, Mr. Ghosh has
served as the Chairman of the Board of
Directors of the Corporation, and from June
1994 to December 1995, Mr. Ghosh served as
the Corporation's President and Chief
Executive Officer. Since November 1998, Mr.
Ghosh has served as Chairman and Chief
Executive Officer of iBelong Networks, Inc.,
an internet company providing services for
non-profit organizations. From 1992 to 1994,
Mr. Ghosh served as Vice President of EDS
Communications Industry Group, a systems
integration company.
Eugene F. Quinn(1)........ 45 Mr. Quinn has served as a director of the
Corporation since April 1995. In March 1997,
Mr. Quinn was named Senior Vice President of
Online and Interactive Services of MTV
Networks, a division of Viacom, Inc. From
September 1994 through February 1997, Mr.
Quinn was General Manager of Tribune
Interactive Network Services of Tribune
Corporation, a publishing corporation. From
September 1991 to September 1994, Mr. Quinn
served as General Manager of Chicago Online,
an interactive service of The Chicago Tribune
Company. Mr. Quinn is a director of Checkfree
Corporation, a financial services and
software company.
Directors Whose Terms Expire in 2000 (Class I Directors)
Thomas H. Bruggere(1)(2).. 53 Mr. Bruggere has served as a director of the
Corporation since December 1997. Since 1994,
he has been a private investor and
consultant. In 1996, Mr. Bruggere was a
candidate for the U.S. Senate. From 1981 to
1994, he was chairman and Chief Executive
Officer of Mentor Graphics Corporation.
William S. Kaiser(2)...... 43 Mr. Kaiser has served as a director of the
Corporation since June 1994. Mr. Kaiser has
been employed by Greylock Management
Corporation, a venture capital firm, since
May 1986. He has been a general partner of
Greylock Limited Partnership since 1990, of
Greylock Equity Limited Partnership since
1994 and of Greylock IX Limited Partnership
since 1997. Mr. Kaiser is a director of
Clarus Corporation, a financial and human
resources software company.
Directors Whose Terms Expire in 2001 (Class II Directors)
Gary B. Eichhorn.......... 44 Mr. Eichhorn joined the Corporation as its
President and Chief Executive Officer in
December 1995. He has served as a director of
the Corporation since December 1995. From
September 1991 to November 1995, Mr. Eichhorn
was employed at Hewlett-Packard Company, a
computer company, and served in a variety of
positions, including Vice President and
General Manager of Workstation Systems Group
and, most recently, as Vice President and
General Manager of the Medical Products
Group. From 1975 to 1991, Mr. Eichhorn held
various sales and management positions at
Digital Equipment Corporation.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation, Other Business
Experience During Past Five
Name Age Years and Other Directorships
---- --- ------------------------------------
<C> <C> <S>
Gulrez Arshad(2).. 52 Mr. Arshad has served as a director of the Corporation
since June 1994. Since January 1990, Mr. Arshad has
served as Chairman of Nuland & Arshad, Inc., an
investment management firm.
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
For information relating to shares of Common Stock owned by each of the
directors, see "Security Ownership of Certain Beneficial Owners and
Management."
Board and Committee Meetings
The Board of Directors met 15 times (including by telephone conference)
during 1998.
The Board of Directors has a Compensation Committee, which reviews and
approves salaries and incentive compensation for executive officers of the
Corporation. In addition, the Compensation Committee reviews and approves
elements of various broad-based, compensation programs and stock option plans.
The Compensation Committee held five meetings during 1998. The current members
of the Compensation Committee are Messrs. Arshad, Bruggere and Kaiser.
The Board of Directors has an Audit Committee, which reviews the results and
scope of the audit and other services provided by the Corporation's
independent public accountants. The Audit Committee held three meetings during
1998. The current members of the Audit Committee are Messrs. Bruggere and
Quinn.
The Corporation has no nominating committee of the Board of Directors. In
1998, all directors attended at least 75% of the total number of meetings of
the Board of Directors and of the committees on which they serve.
Director Compensation
All of the directors are reimbursed for their expenses incurred in
connection with their attendance at Board and committee meetings. The
Corporation currently does not pay fees to the directors for attendance at
Board and committee meetings.
Outside directors are entitled to participate in the Corporation's 1996
Director Option Plan (the "Director Plan") which provides for automatic grants
of nonstatutory stock options to directors who are not employees or founders
of the Corporation or any subsidiary of the Corporation (an "Eligible
Director"). The Director Plan currently provides for the automatic grant of
options to purchase 20,000 shares of Common Stock to each person who first
becomes an Eligible Director after May 20, 1998. The Director Plan also
provides for the grant of options to purchase 6,000 shares of Common Stock on
the date of each Annual Meeting of Stockholders of the Corporation to each
Eligible Director, provided such Eligible Director continues to serve on the
Board of Directors of the Corporation following such Annual Meeting. Each
option currently vests in 16 equal quarterly installments, with the first
installment exercisable three months after the date of grant. The
exercisability of these options will be accelerated upon the occurrence of
certain changes in control. The exercise price of options
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granted under the Director Plan will equal the lesser of (i) the last reported
sale price per share of Common Stock on the date of grant (if no such price is
reported on such date, such price on the nearest preceding date on which such
a price is reported) or (ii) the average of the last reported sale price per
share of Common Stock as published in The Wall Street Journal for a period of
ten consecutive trading days prior to such date. For information relating to
two proposed amendments to the Director Plan, see "Proposal 2: Approval of
Amendments to 1996 Director Option Plan."
Compensation of Executive Officers
Summary Compensation Table
The following table sets forth the compensation for the fiscal years ended
December 31, 1998, 1997 and 1996 for the Corporation's Chief Executive Officer
and its four most highly compensated executive officers (other than the Chief
Executive Officer) whose total annual salary and bonus exceeded $100,000 in
each of the last three fiscal years (the Chief Executive Officer and such
other executive officers are hereinafter referred to as the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual
Compensation Securities
Name and ----------------- Underlying All Other
Principal Position Year Salary Bonus Options/SARs Compensation
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gary B. Eichhorn(1).......... 1998 $297,083 $101,541 45,000 $ --
President, Chief Executive 1997 230,000 115,000 100,000 --
Officer and Director 1996 207,500 600,000 130,000 --
Gregory Pope(2).............. 1998 219,186 47,402 100,000 32,754
Vice President, Worldwide
Sales 1997 210,138 85,691 70,000 --
1996 181,575 4,596 10,000 --
Regina O. Sommer(3).......... 1998 178,667 19,472 35,000 --
Senior Vice President, 1997 148,000 28,714 60,000 --
Chief Financial Officer and
Secretary 1996 113,910 -- -- --
Peter Y. Woon(4)............. 1998 163,333 17,741 30,000 --
Senior Vice President,
Engineering 1997 149,667 29,185 30,000 --
1996 134,500 -- 30,000 34,238
Thomas A. Nephew............. 1998 147,167 16,010 -- --
Vice President, Services 1997 128,000 29,339 30,000 --
1996 115,128 -- 20,000 --
</TABLE>
- --------
(1) See "Employment Agreement" below regarding Mr. Eichhorn's bonus payments.
(2) Mr. Pope's other compensation in 1998 represents reimbursement for certain
relocation costs of $17,575 and commissions earned of $15,179.
(3) Effective April 1, 1999, Ms. Sommer resigned from her positions as Senior
Vice President, Chief Financial Officer and Secretary of the Corporation.
(4) Mr. Woon's other compensation in 1996 represents reimbursement for certain
relocation costs.
7
<PAGE>
Other Executive Officers
Jeffrey Bussgang, age 29, became Vice President, Marketing of the
Corporation in October 1998. Mr. Bussgang served as Vice President,
Professional Services of the Corporation from May 1998 to October 1998 and as
Director, Product Management of the Corporation from July 1997 to April 1998.
After completing business school in 1995, Mr. Bussgang served as Product
Manager of the Corporation from June 1995 to July 1997.
James Keller, age 38, joined the Corporation in December 1998 as Vice
President, Professional Services. From October 1996 to April 1998, Mr. Keller
served as Vice President, Outsourcing Services Division of Genesys Software
Systems, a human resource management technologies company. From February 1995
to September 1996, Mr. Keller served as a consulting manager of Hyperion
Software Corporation, a financial software company. From June 1993 to February
1995, Mr. Keller served as a client services manager for Pillar Corporation, a
financial software company acquired by Hyperion Software Corporation.
Michael S. Messier, age 36, joined the Corporation in December 1997 as its
Vice President, Human Resources. From November 1996 to December 1997, Mr.
Messier served as Director, Human Resources of Rational Software Corporation,
a software tools company. From April 1991 to November 1996, Mr. Messier served
as Director, Human Resources of Stratus Computer, Inc., a computer systems
manufacturer.
Thomas A. Nephew, age 46, joined the Corporation in August 1995 as its Vice
President, Services. From March 1994 to August 1995, Mr. Nephew served as
Director of Technical Services of Progress Software Corporation, a software
company, and from July 1993 to March 1994, Mr. Nephew served as Director of
Information Services of Phoenix Technologies, Ltd., a software company. From
1989 to 1993, Mr. Nephew served as the Director of MIS and more recently as
the Director of Customer Service of Proteon, Inc., a networking company.
Gregory Pope, age 49, became the Corporation's Vice President, Worldwide
Sales in July 1998. From January 1998 to July 1998, Mr. Pope served as Vice
President, Americas Sales of the Corporation. Mr. Pope joined the Corporation
in November 1995 as Vice President, International Sales. From March 1993 to
November 1995, Mr. Pope was Vice President, Operations (Europe, Middle East
and Africa) of Stratus Computer, Inc., a computer systems manufacturer.
Peter Y. Woon, age 64, joined the Corporation in December 1995 as its Vice
President, Engineering. In January 1999, Mr. Woon became a Senior Vice
President of the Corporation. From July 1994 to December 1995, Dr. Woon was
President and Chief Executive Officer of Communications Solutions, a
telecommunications consulting company. From January 1991 to July 1994, Dr.
Woon served as the Senior Vice President of Engineering at Centigram
Communications Corp., a communications technology company.
Employment Agreement
The Corporation has an employment agreement with Mr. Eichhorn under which
Mr. Eichhorn serves as the President and Chief Executive Officer of the
Corporation. The agreement provides for (i) a signing bonus of $1,000,000;
(ii) an initial annual salary of $200,000; (iii) an option to purchase
1,275,000 shares of the Corporation's Common Stock at an exercise price of
$.25 per share; and (iv) an annual bonus in the amount of $100,000. The
Corporation paid Mr. Eichhorn the signing bonus in two installments of
$500,000 each in November 1995 and February 1996. The stock option is
exercisable as follows: (i) 125,000 shares from and after December 7, 1995,
(ii) 64,063 shares from and after March 7, 1996, (iii) 125,000 shares from and
after December 7, 1996, (iv) 510,937 shares from and after May 28, 1996 and
(v) the remaining 450,000 shares in fifteen equal
8
<PAGE>
quarterly installments commencing on June 7, 1996. The option is subject to
earlier exercise in certain circumstances. The Corporation has the right to
terminate the employment agreement with Mr. Eichhorn at any time. In the event
the Corporation terminates Mr. Eichhorn's employment agreement other than for
cause or total and permanent disability or Mr. Eichhorn terminates his
employment agreement for good reason, Mr. Eichhorn is entitled to receive a
severance payment equal to (a) his annual base salary in effect on the
termination date plus (b) (i) his annual bonus for the employment year which
ended immediately preceding such termination date or (ii) one-half of his
highest annual bonus, depending on certain circumstances; provided, however,
if Mr. Eichhorn terminates his employment agreement by reason of a change of
control of the Corporation, such severance payments will only be required to
be made if Mr. Eichhorn terminates his employment within one year of the date
on which the change of control occurs.
Executive Retention Agreements
In November 1997, the Board of Directors of the Corporation approved
Executive Retention Agreements (the "Agreements") for each of the
Corporation's current and future executive officers subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each, an
"Executive").
The purpose of the Agreements is to assure that the Corporation will have
the continued dedication of the Executives, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in the Agreements). In
the event of a Change of Control, and the termination of the Executive's
employment by the Corporation at any time within the 12-month period
thereafter (other than for cause, disability or death) or by the Executive for
Good Reason (as defined in the Agreements), the Executive shall be eligible to
receive a one-time cash severance payment equal to (i) any unpaid portion of
the Executive's annual base salary earned through the termination date, (ii)
the Executive's Highest Annual Bonus (as defined in the Agreement) for the
current fiscal year earned through the termination date, (iii) a payment equal
to the sum of one-half the Executive's annual base salary and Highest Annual
Bonus, and (iv) any deferred compensation or accrued vacation pay to which the
Executive is entitled. The Executive is also entitled to any amounts or
benefits required to be paid or provided to the Executive or which the
Executive is eligible to receive following the Executive's termination under
any plan, program, policy, practice, contract or agreement of the Corporation.
Except in certain circumstances, all of the Executive's outstanding options at
the time of such termination shall accelerate and become immediately
exercisable. In addition, for a period of six months after termination, the
Corporation shall continue to provide the Executive with certain benefits
(excluding any benefits under any of the Corporation's savings and/or
retirement plans) that are provided to other peer executives of the
Corporation. However, if the Executive becomes employed with another employer
during the six month period after termination and is eligible to receive
benefits, the Corporation's benefits shall be secondary to those provided by
the new employer. Good Reason is defined to include, among other things, a
material reduction in employment responsibilities, compensation or benefits.
9
<PAGE>
Stock Option Grants
The following table sets forth certain information concerning grants of
stock options made during the year ended December 31, 1998 to each of the
Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Option Grants Option Term(2)
----------------------------------------- -----------------------
Percentage
of Total
Number of Options
Securities Granted to Exercise
Underlying Employees Price
Options in Fiscal Per Expiration
Granted Year Share Date(1) 5% 10%
---------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gary B. Eichhorn........ 45,000 .994% $12.00 08/17/08 $ 339,603 $ 860,621
Gregory Pope............ 30,000 .663% 12.00 08/17/08 226,402 573,747
70,000 1.54% 6.13 10/27/08 269,639 683,317
Regina O. Sommer........ 35,000 .773% 12.00 08/17/08 264,136 669,372
Peter Y. Woon........... 30,000 .663% 12.00 08/17/08 226,402 573,747
Thomas A. Nephew........ -- -- -- -- -- --
</TABLE>
- --------
(1) All options were granted with an exercise price equal to the fair market
value as determined by the Board of Directors of the Company on the date
of the grant. The expiration date of an option is the tenth anniversary of
the date on which the option was originally granted. Options granted after
July 1998 become exercisable with respect to one quarter of the shares
subject to the option on the first anniversary of the option grant date.
Thereafter, the options vest quarterly over the next three years. Options
granted prior to July 1998 typically vest annually over four years.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10%, compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock, the
optionholders' continued employment through the option period, and the
date on which the options are exercised.
10
<PAGE>
Option Exercises and Year-End Option Table
The following table sets forth certain information concerning each exercise
of a stock option during the year ended December 31, 1998 by each of the Named
Executive Officers and the number and value of the securities underlying
unexercised options held by each of the Named Executive Officers on December
31, 1998:
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercisable
Number of Options at Fiscal Year In-The-Money Options at
Shares End Fiscal Year End(1)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary B. Eichhorn........ 45,000 $733,600 1,070,877 256,623 $10,844,847 $1,456,887
Gregory Pope............ 18,750 257,968 21,056 160,194 34,806 462,288
Regina O. Sommer........ 35,000 454,416 130,000 96,250 1,276,835 189,952
Peter Y. Woon........... 74,063 898,242 21,562 95,625 98,736 369,525
Thomas A. Nephew........ 28,375 439,461 13,438 39,687 21,281 142,377
</TABLE>
- --------
(1) Based on the fair market value of the Common Stock as of December 31, 1998
($11.69 per share), less the option exercise price, multiplied by the
number of shares underlying the options.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Corporation's Board of Directors (the
"Committee") establishes compensation policies for the Corporation's executive
officers, and determines awards under the Corporation's stock-based
compensation plans. Each member of the Committee is a non-employee director
within the meaning of Rule 16b-3 under the Exchange Act and an outside
director within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). This report summarizes the Corporation's
compensation policies for 1998 and their effect on the Chief Executive Officer
and the other four executive officers who, for 1998, were the Named Executive
Officers.
Compensation Policies
The Compensation Committee's executive compensation policies are designed to
provide compensation opportunities that are approximately equivalent to those
for similar executives in comparable peer companies, to reward executives
based on the Corporation's performance, to recognize individual performance
and responsibility, to underscore the importance of shareholder value
creation, and to assist the Corporation in attracting and retaining qualified
executives. The principal elements of compensation employed by the Committee
to meet these objectives are base salaries, cash incentive opportunities, and
long-term stock-based incentives. All compensation decisions are determined
following a detailed review of many factors that the Committee believes are
relevant, including external competitive data, the Corporation's achievements
over the past year, the individual's contributions to the Corporation's
success, any significant changes in role or responsibility, and the internal
equity of pay relationships.
11
<PAGE>
Total compensation opportunities provided to the Named Executive Officers
are designed to approximate median levels of competitive compensation for
executives with corresponding responsibilities in comparably sized peer firms.
Total compensation opportunities for the Named Executive Officers are adjusted
over time as necessary to meet this objective. Actual compensation earned by
each of the Named Executive Officers will vary with the success of the
Corporation, their individual contributions to that success, and the
shareholder value created.
The competitiveness of the Corporation's total compensation program is
assessed periodically during the year. Data for external comparisons is drawn
from a number of sources, including the publicly available disclosures of
selected companies of comparable size and similar products, and national
compensation surveys of information technology companies of similar size.
Base Salary
Base salaries for all Named Executive Officers, including the Chief
Executive Officer, are reviewed by the Committee on an annual basis. In
determining appropriate base salaries, the Committee considers external
competitiveness, the roles and responsibilities of the individual, the
internal equity of pay relationships, and the contributions of the individuals
to the Corporation's success.
Cash Incentive Opportunities
The Corporation believes that executives should be rewarded for their
contributions to the success of the business and, as such, has a cash
incentive plan (the "Plan"). Incentives under the Plan are linked to the
achievement of predetermined quarterly financial performance objectives. All
Named Executive Officers, including the Chief Executive Officer, are eligible
to participate in the Plan.
Long-Term Stock-Based Incentives
The Committee also believes that it is essential to link executive and
shareholder interests. As such, from time to time the Committee grants stock
options to Named Executive Officers and other employees under the
Corporation's 1994 Stock Incentive Plan. In determining awards, the Committee
considers competitive norms, the contributions of the individual to the
success of the Corporation, and the number and terms of unvested options held
by such individual. All Named Executive Officers, including the Chief
Executive Officer, as well as all other employees of the Corporation, are
eligible to participate in this program.
Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation in excess of $1,000,000 paid to its chief executive
officer and four other most highly compensated officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The 1994 Incentive Plan limits the number of
shares subject to stock options which may be granted to the Corporation's
employees in a manner intended to comply with the performance-based
requirements of Section 162(m). The Committee will continue to monitor the
impact of Section 162(m) on the Corporation.
The Committee's policy regarding the compensation of other executive
officers of the Corporation is consistent with the foregoing approach.
12
<PAGE>
Executive Retention Agreements
In November 1997, the Board of Directors approved Executive Retention
Agreements for all of the Company's current and future Executives. The purpose
of the Agreements is to assure that the Corporation will have the continued
dedication of the Executives, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined in the Agreements). See
"Executive Retention Agreements."
1998 Compensation
Base salaries paid in 1998 reflect the Committee's review of external
competitiveness, the roles and responsibilities of the individuals, the
internal equity of pay relationships, the contractual obligation of the
Corporation to the Chief Executive Officer, and the contributions of the
individual.
Short-term incentive compensation was paid to the Named Executive Officers
for the first and second quarters of 1998 based on performance against Plan
criteria and the Committee's assessment of the Corporation's performance. No
incentives were paid in the third and fourth quarter of 1998, with the
exception of a payment to Mr. Pope in the third quarter, as the Corporation's
performance failed to meet the minimum threshold required for payment as
stated in the Plan. The payment made to Mr. Pope in the third quarter was
based on performance against the criteria set forth in the compensation plan
applicable to him in his former capacity as Vice President, Americas Sales.
COMPENSATION COMMITTEE
Gulrez Arshad
Thomas H. Bruggere
William S. Kaiser
Compensation Committee Interlocks and Insider Participation
The current members of the Corporation's Compensation Committee are Messrs.
Arshad, Bruggere and Kaiser. During 1998, Ray Stata also served as a member of
the Compensation Committee until his resignation from the Board of Directors
of the Corporation in March 1998. No executive officer of the Corporation has
served as a director or member of the compensation committee (or other
committee serving an equivalent function) of any other entity whose executive
officers served as a director of or member of the Compensation Committee of
the Corporation.
Certain Transactions
Since January 1, 1998, the Corporation has entered into or engaged in the
following transactions with the following directors, officers and stockholders
who beneficially own more than 5% of the outstanding Common Stock of the
Corporation ("5% Stockholders"), and affiliates of such directors, officers
and 5% Stockholders:
In June 1998, the Corporation and Clearview Technologies, Inc.
("Clearview"), an Internet software startup company of which Mr. Gifford is a
co-founder and director, entered into a transaction whereby (i) Clearview
licensed the Corporation's Transact software, (ii) the Corporation assigned to
Clearview rights to a pending
13
<PAGE>
patent application for an invention by Mr. Gifford (the "Patent Rights"),
(iii) Clearview granted the Corporation a paid-up, royalty-free license to the
Patent Rights, and (iv) Clearview issued the Corporation 291,667 shares of
Series A Convertible Preferred Stock of Clearview, representing 3% of
Clearview's fully diluted common shares.
In July 1996, the Corporation entered into a software license agreement with
Harcourt Brace & Company ("Harcourt"), a subsidiary of Harcourt General.
Pursuant to the agreement, the Corporation granted to Harcourt a nonexclusive
license to use certain of the Corporation's software and provided certain
related services to Harcourt. Under these agreements, the Corporation
recognized an aggregate of $138,500 in related service fees from Harcourt in
1998. Mr. Knez, President and Co-Chief Operating Officer of Harcourt General,
Inc., resigned as a director of the Corporation effective April 1, 1999.
Pursuant to a severance agreement dated December 14, 1998 and effective as
of December 31, 1998, Shikhar Ghosh terminated his employment with the
Corporation. Under the terms of the severance agreement, Mr. Ghosh will
receive (i) continuation of his salary and other variable compensation earned
by him in 1998 for one year for an aggregate amount equal to $270,161, and
(ii) health benefits through December 31, 1999. Mr. Ghosh will continue to
serve as Chairman of the Board of the Corporation.
In April 1998, the Corporation approved a loan of up to $300,000 to Mr. Pope
in connection with his relocation to the United States, pursuant to a secured
promissory note having a term of two years and an interest rate of prime plus
1% per annum. As of June 1998, Mr. Pope had fully repaid all of the
outstanding principal and interest on the loan.
For a description of certain employment and other arrangements between the
Corporation and its executive officers, see "Compensation of Executive
Officers" above. For a description of stock options granted to certain
directors of the Corporation, see "Director Compensation" above.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
The Corporation is not aware of any failure by its officers, directors and
holders of 10% of the Corporation's Common Stock to comply in a timely manner
during fiscal 1998 with Section 16(a) filing requirements, other than Mr.
Eichhorn, who filed a Form 4 reporting the disposition of shares of Common
Stock held indirectly after the required filing date, and Mr. Bruggere, who
filed a Form 5 reporting the acquisition of shares of Common Stock after the
required filing date.
14
<PAGE>
Stock Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock of the Corporation between May 23, 1996 (the date the
Corporation's Common Stock commenced public trading) and December 31, 1998
with the cumulative total return of (i) the CRSP Total Return Index for the
Nasdaq Stock Market (U.S.) (the "Nasdaq Stock Market--US Index") and (ii) the
Hambrecht & Quist Growth Index, over the same period. This graph assumes the
investment of $100.00 on May 23, 1996 in the Corporation's Common Stock, the
Nasdaq Stock Market--US Index and the Hambrecht & Quist Growth Index, and
assumes any dividends are reinvested.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
May 23, December 31, December 31, December 31,
------ ----------- ----------- -----------
1996 1996 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Open Market, Inc.......................... $100 $ 75 $ 53 $ 65
Nasdaq Stock Market - US Index............ 100 108 133 187
Hambrecht & Quist Growth Index............ 100 88 90 130
</TABLE>
15
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENTS TO 1996 DIRECTOR OPTION PLAN
The Board of Directors believes that the future growth and success of the
Corporation depends, in large part, on its ability to attract and retain
qualified non-employee ("outside") directors and that stock option grants
under the Corporation's 1996 Director Option Plan (the "Director Plan") have
provided and will continue to provide outside directors with an important
incentive to continue as directors of the Corporation. Accordingly, on March
19, 1999, the Board of Directors voted, subject to stockholder approval, to
amend the Director Plan (i) to increase the number of shares authorized for
issuance under the Director Plan from 100,000 to 200,000; and (ii) to provide
that all options granted on or after May 12, 1999 under such plan shall be
fully exercisable on the date of grant. The Director Plan currently provides
that options granted to outside directors pursuant to the Director Plan vest
in 16 equal quarterly installments, with the first installment exercisable
three months after the date of grant.
This proposed change in the vesting schedule is in response to a proposed
change in the accounting treatment of options granted to directors which would
impact charges to earnings of the Corporation. Previously, outside directors
were treated as employees for the purpose of determining the charge to
earnings recorded upon the grant of options to outside directors. The
Financial Accounting Standards Board has announced that outside directors will
no longer be treated as employees for this purpose. Accordingly, under
Statement of Financial Accounting Standards 123, the Corporation must value
all outside director options and record a charge to earnings at their fair
value. In order to minimize the charge relating to these options grants, the
Board of Directors of the Corporation has approved an amendment modifying the
vesting terms of the options granted pursuant to the Director Plan. If the
Corporation does not change the vesting terms of these options to provide that
they shall be fully exercisable on the date of grant, then due to the
volatility of the Corporation's stock price, the Corporation will be subject
to an undeterminable and variable charge in the Corporation's statement of
operations relating to these options as they vest.
The Board of Directors believes that the amendments to the Director Plan are
in the best interests of the Corporation and its stockholders and recommends a
vote FOR this proposal.
The following is a brief summary of the provisions of the Director Plan.
1996 Director Option Plan
The Director Plan was adopted by the Board of Directors and approved by the
stockholders of the Corporation in April 1996. Each option granted under the
Director Plan becomes exercisable in 16 equal quarterly installments beginning
three months after the date of the grant. The exercisability of these options
will be accelerated upon the occurrence of a Change in Control (as defined in
the Director Plan). The option exercise price of options granted under the
Director Plan equals the lesser of (i) the last reported sale price per share
of Common Stock thereon on the date of grant (if no such price is reported on
such date, such price on the nearest preceding date on which such a price is
reported) or (ii) the average of the last reported sales price per share of
Common Stock as published in The Wall Street Journal for a period of ten
consecutive trading days prior to such date.
Options granted under the Director Plan are not transferrable by the
optionee except by will or by the laws of descent and distribution. In the
event an optionee ceases to serve as a director, each option may be exercised
16
<PAGE>
by the optionee for the portion then exercisable within 60 days after the
optionee ceases to serve as a director; provided, however, that in the event
that the optionee ceases to serve as a director due to his death or
disability, then the optionee, or his or her administrator, executor or heirs
may exercise the exercisable portion of the option for up to 180 days
following the date the optionee ceased to serve as a director. No option is
exercisable after the expiration of ten years from the date of grant.
As of December 31, 1998, no options for shares had been exercised under the
Director Plan and options for 68,267 shares were outstanding under the
Director Plan at an average exercise price of $11.85 per share.
Federal Income Tax Consequences
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to options granted under
the Director Plan and with respect to the sale of Common Stock acquired under
the Director Plan.
Tax Consequences to Optionees
An optionee will not recognize taxable income upon the grant of an option
under the Director Plan. Nevertheless, an optionee generally will recognize
ordinary compensation income upon the exercise of the option in an amount
equal to the excess of the fair market value of the Common Stock acquired
through the exercise of the option (the "Option Stock") on the exercise date
over the exercise price.
An optionee will have a tax basis for any Option Stock equal to the exercise
price plus any income recognized with respect to the option. Upon selling
Option Stock, an optionee generally will recognize capital gain or loss in an
amount equal to the difference between the sale price of the Option Stock and
the optionee's tax basis in the Option Stock. This capital gain or loss will
be a long-term capital gain or loss if the optionee has held the Option Stock
for more than one year prior to the date of the sale and will be a short-term
capital gain or loss if the optionee has held the Option Stock for a shorter
period.
Tax Consequences to the Corporation
The grant of a stock option under the Director Plan will have no tax
consequences to the Corporation. The Corporation generally will be entitled to
a business-expense deduction, however, with respect to any ordinary
compensation income recognized by an optionee under the Director Plan.
PROPOSAL 3
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as independent
accountants of the Corporation for the year ending December 31, 1999, subject
to ratification by stockholders at the Meeting. If the stockholders do not
ratify the selection of Arthur Andersen LLP, the Board of Directors will
reconsider the matter. A representative of Arthur Andersen LLP, the
Corporation's independent accountants for the year ended December 31, 1998, is
expected to be present at the Meeting to respond to appropriate questions, and
to make a statement if he or she so desires.
17
<PAGE>
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal submitted pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, as amended, that a stockholder of the Corporation wishes to be
considered for inclusion in the Corporation's proxy materials for its 2000
Annual Meeting of Stockholders must be received by the Secretary of the
Corporation at the principal offices of the Corporation, One Wayside Road,
Burlington, Massachusetts 01803, no later than December 10, 1999.
In addition, the Corporation's bylaws require that the Corporation be given
advance notice of stockholder nominations for election to the Corporation's
Board of Directors and of other matters which stockholders wish to present for
action at an annual meeting of stockholders (other than matters included in
the Corporation's proxy statement in accordance with Rule 14a-8). The required
notice must comply with the Corporation's bylaws and be received not less than
60 days nor more than 90 days prior to the Corporation's annual meeting,
provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the annual meeting is given to stockholders, such
notice must be received by the Corporation not later than the close of
business on the 10th day following the date on which the notice of the date of
the annual meeting was mailed or such public disclosure was made, whichever
occurs first.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
The Corporation will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Corporation's directors, officers and regular
employees may, without additional remuneration, solicit proxies by telephone,
telegraph, facsimile and personal interviews. The Corporation will also
request brokerage houses, custodians, nominees and fiduciaries to forward
copies of the proxy material to those persons for whom they hold shares and
request instructions for voting the proxies. The Corporation will reimburse
such brokerage houses and other persons for their reasonable expenses in
connection with this distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
/s/ Eric J. Pyenson
Eric J. Pyenson, Secretary
April 9, 1999
18
<PAGE>
- --------------------------------- DETACH HERE ---------------------------------
PROXY
OPEN MARKET, INC.
One Wayside Road
Burlington, Massachusetts 01803
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary B. Eichhorn, Eric J. Pyenson and John
H. Chory and each of them the proxies of the undersigned, with power of
substitution to each of them, to vote all shares of Open Market, Inc. (the
"Corporation") which the undersigned is entitled to vote at the 1999 Annual
Meeting of Stockholders of the Corporation to be held on Wednesday, May 12,
1999, at 10:00 a.m. (local time) at Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109 (the "Meeting").
In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Meeting or any adjournment thereof.
(Continued and to be dated and signed on reverse side)
SEE REVERSE SEE REVERSE
SIDE SIDE
<PAGE>
- --------------------------------- DETACH HERE ---------------------------------
[X] Please mark votes
as in this example.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to
office or proposal specified below, this proxy will be voted for such
election to office or proposal.
1. To elect two Class III Directors.
Nominees: Shikhar Ghosh and Eugene F. Quinn
FOR WITHHELD
[_] [_]
[_]
---------------------------------------
For both nominees except as noted above
2. To approve amendments to the Corporation's FOR AGAINST ABSTAIN
1996 Director Option Plan to (a) increase [_] [_] [_]
the number of shares of Common Stock
authorized for issuance under such plan from 100,000 to 200,000 and
(b) provide that all options granted on or after May 12, 1999 shall
be fully exercisable on the date of grant.
3. To ratify the selection by the Board of FOR AGAINST ABSTAIN
Directors of Arthur Andersen LLP as the [_] [_] [_]
Corporation's independent public accountants
for the fiscal year ending December 31, 1999.
MARK HERE FOR ADDRESS CHANGE OR COMMENT AND NOTE AT LEFT [_]
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE.
The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies, co-executors
or co-trustees, both should sign. Persons signing as Attorney, Executor,
Trustee, Administrator or Guardian should give their full title.
Signature: Date:
-------------------------------------- ----------------------
Signature: Date:
-------------------------------------- ----------------------
