TRACK
DATA CORPORATION
95
ROCKWELL PLACE
BROOKLYN,
NEW YORK 11217
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, December 11, 2008 (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 November 3, 2008 to all stockholders of
record on October 27, 2008 (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 seven
nominees for director named herein and for the selection of Marcum
& Kliegman LLP as independent auditors. The current members of
the Board of Directors presently hold voting authority for Common Stock
representing an aggregate of 54,113 votes, or approximately 1% 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. Barry Hertz, the Company’s principal
stockholder who owns or controls 4,702,775 votes or approximately 56% of the
total votes eligible to be cast at the Annual Meeting has indicated his
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 8,392,000 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 AND MANAGEMENT
The
following table sets forth, as of September 30, 2008, information regarding the
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) 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, 95 Rockwell Place, Brooklyn, New
York 11217.
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Shares
Owned Beneficially (1)
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Name
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No.
of Shares
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%
of Class
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Barry
Hertz (2)
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4,802,775
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56.
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6%
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Martin
Kaye (3)
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97,680
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1.
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2%
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Stanley
Stern (4)
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23,953
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*
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Albert
Drillick (5)
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35,780
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*
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Abraham
Biderman (6)
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18,000
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*
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E.
Bruce Fredrikson (7)
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23,600
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*
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Philip
Ort (6)
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18,000
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*
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Shaya
Sofer (6)
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18,000
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*
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All
Officers and Directors as a Group
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(seven
persons)(8)
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235,013
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2.
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7%
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---------------
* = less
than 1%
(1)
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Unless
otherwise indicated, (i) each person has sole investment and voting power
with respect to the shares indicated and (ii) the shares indicated are
currently outstanding shares. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person or group of persons
named above on a given date, any security which such person or persons has
the right to acquire within 60 days after such date is deemed to be
outstanding for the purpose of computing the percentage ownership of such
person or persons, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Subject
to the foregoing, the percentages are calculated based on 8,392,000 shares
outstanding.
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(2)
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Consists
of 3,782,906 shares owned by Mr. Hertz, 800,880 shares owned by Trusts
established in the names of Mr. Hertz’s children, 18,989 shares held by a
family LLC managed by Mr. Hertz who owns 8% of such LLC and 100,000 shares
owned by Rockwell Fulton Partners, LP, a partnership of which Mr. Hertz is
the general partner. Mr. Hertz disclaims beneficial interest in
shares owned by the Trust and 92% of the family LLC not owned by him. Also
includes 100,000 shares issuable upon the exercise of presently
exercisable options under the Company’s Stock Option
Plans.
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(3)
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Consists
of 7,680 shares owned of record and 90,000 shares issuable upon the
exercise of presently exercisable options granted under the Company's
Stock Option Plans.
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(4)
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Consists
of 9,953 shares owned of record and 14,000 shares issuable upon the
exercise of presently exercisable options granted under the Company's
Stock Option Plans.
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(5)
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Consists
of 30,220 shares owned of record jointly with his wife, 660 shares owned
by a trust in the name of his child, and 4,900 shares issuable upon the
exercise of presently exercisable options granted under the Company's
Stock Option Plans.
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(6)
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Consists
of shares issuable upon the exercise of presently exercisable options
granted under the Company’s Stock Option
Plans.
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(7)
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Consists
of 5,600 shares owned of record and 18,000 shares issuable upon the
exercise of presently exercisable options granted under the Company's
Stock Option Plans.
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(8)
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Consists
of 54,113 outstanding shares and 180,900 shares issuable upon exercise of
options described in footnotes 3 through 7
above.
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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 as directors
of Martin Kaye, Stanley Stern, Albert Drillick, Abraham Biderman, Dr. E. Bruce
Fredrikson, Phillip Ort and Shaya Sofer to hold office until the next Annual
Meeting of Stockholders or until their respective successors shall have been
duly elected and qualified. All of the nominees are presently directors of the
Company. The Company has no reason to believe that any of the nominees will
become unavailable to serve as directors for any reason before the Annual
Meeting. However, in the event that any of them shall become
unavailable, the person designated as proxy reserves the right to substitute
another person of his choice when voting at the Annual Meeting.
Officers
and Directors
The officers and directors of the
Company are as follows:
Name
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Age
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Position
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Martin
Kaye
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61
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Chief
Executive Officer since March 16, 2007,
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Chief
Financial Officer, Secretary and Director
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Stanley
Stern
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58
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Chief
Compliance Officer, TDSC, Director
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Albert
Drillick
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62
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Senior
Systems Analyst, Director
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Abraham
Biderman
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60
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Director
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E.
Bruce Fredrikson
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70
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Chairman
of the Board since March 16, 2007
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Philip
Ort
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59
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Director
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Shaya
Sofer
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59
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Director
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Key
Employees are as follows: |
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Barry
Hertz
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58
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Chief
of Technology, served as Chairman of the Board
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and
Chief Executive Officer until March 16, 2007
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David
Drillick
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37
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Chief
Operating Officer, TDSC
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Martin Kaye has been Chief
Executive Officer since March 16, 2007, and has been Chief Financial Officer,
Secretary and a Director of the Company since 1994. Mr. Kaye is a
certified public accountant. Mr. Kaye served as Chief Financial
Officer of Innodata from October 1993 and Director from March 1995 until his
resignation from those positions in May 2001. 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).
Stanley Stern has been Chief
Compliance Officer of the Company’s broker-dealer subsidiary, TDSC, since April,
2005. He served as Senior Vice President - Customer Relations from
June 2000 to November 2005. He has been a Director of the Company
since May 1999. He previously served as Director from April 1994
until his resignation in September 1997. He served as Vice President
of the Company and in other capacities for more than five years until his
resignation in December 1996. From January 1998 through May 2000, Mr.
Stern was Chief Operating Officer of Integrated Medical Technologies, Inc., an
Internet-based provider of medical services information. Mr. Stern
holds a B.B.A. from Baruch College (1973).
Albert Drillick has been a
Director of the Company since February 2004. He has served as a Director of
Applications and Senior Systems Analyst for the Company for more than the past
five years. He holds a Ph.D. degree in Mathematics from New York University
Courant Institute (1971).
Abraham Biderman has been a
Director of the Company since August 2002. Mr. Biderman is Chairman
of Eagle Advisers, LLC, a diversified financial services and money management
firm. From January 1990 to September 2003, he was Executive Vice
President of Lipper & Company, Inc., a diversified financial services
firm. Prior thereto, he served as special advisor to the Deputy Mayor
and then the Mayor during New York City's Koch Administration. From
January 1988 through December 1989, Mr. Biderman was Commissioner of New York
City's Department of Housing, Preservation and Development. Prior
thereto, he served as Commissioner of New York City's Department of Finance and
as Chairman of New York City's Employee Retirement System. Mr. Biderman is a
member of the Fiscal Opportunities Task Force of the New York City Partnership,
a member of the Housing Committee of the Real Estate Board of New York, a
Director of m-Phase Technologies, Inc., a company that manufactures and markets
high-bandwidth telecommunications products incorporating DSL technology, and is
also on the boards of numerous not-for-profit and philanthropic
organizations. Mr. Biderman is a certified public accountant and
graduated with a B.A. in Accounting from Brooklyn College (1970).
Dr. E. Bruce Fredrikson has
been a Director of the Company since June 1994 and he has served as Chairman
since March 16, 2007. Dr. Fredrikson is currently an independent consultant in
corporate finance and governance. He is Professor of Finance,
Emeritus, at Syracuse University's Martin J. Whitman School of Management where
he taught from 1966 until his retirement in May 2003. He is a director of
Consumer Portfolio Services, Inc., a consumer finance company, and Colonial
Commercial Corp., a supplier of HVAC products and supplies. Dr.
Fredrikson holds an A.B. in economics from Princeton University and a M.B.A. in
accounting and a Ph.D. in finance from Columbia University.
Philip Ort has been a Director
of the Company since June 2004. Mr. Ort has been the owner/operator
of a family Real Estate Management and Investment business comprising
residential and commercial properties since 1972. He serves on the
boards of several non-profit organizations. He attended Brooklyn
College from 1967 to 1970.
Shaya Sofer has been a
Director of the Company since June 2004. Since January 2001, he has
been Senior Managing Project Director of Energy Spectrum Inc., an energy
consulting firm focusing on CHP "Combine Heat and Power" (Cogeneration). Prior
thereto, he was a consultant. He served as Director of Facilities for
Track Data Corp. and as Executive Vice President of Fast Track Systems, a
disaster recovery business, from 1985 through 1998. He also was a
member of the board of directors of Track Data Corp. from 1986 through 1995,
prior to its merger with Global Market Information, Inc. Mr. Sofer holds a B.A.
in Mathematics from Queens College (1972).
Barry Hertz has served as
Chief of Technology since March 16, 2007. Prior thereto he served as the
Company's Chairman and Chief Executive Officer since its
inception. Mr. Hertz reached a settlement with the Securities and
Exchange Commission ("SEC") regarding insider-trading charges. Mr.
Hertz consented, without admitting or denying the allegations in the SECs
complaint, to a two-year bar from serving as an officer or director of a
publicly traded company and a two-year bar from association with a broker or
dealer. He holds a Masters degree in Computer Science from New York
University (1973) and a B.S. degree in Mathematics from Brooklyn College
(1971). Until his resignation in May 2001, Mr. Hertz also served as
Chairman of Innodata Corporation ("Innodata"), a public company co-founded by
Mr. Hertz, of which the Company was a Principal Stockholder, and which is a
global outsourcing provider of Internet and on-line digital content
services.
David Drillick has been Chief
Operating Officer of TDSC, the Company's broker-dealer subsidiary, since
December 2005. He has served as the Company's Vice President of
Online Trading Operations since August 2000. Mr. Drillick was a
Principal at Pond Equities, a full service securities broker-dealer, from
November 1997 through August 2000. He had previously been a Branch
Manager for King Financial Services, a self-clearing and full service securities
broker-dealer. Mr. Drillick holds a B.S. degree in
Mathematics/Actuarial Studies from Touro College (1992).
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. Albert
Drillick is the father of David Drillick, Chief Operating Officer of TDSC, the
Company’s broker-dealer subsidiary.
Director
Independence
The Board of Directors has determined
each of the following directors to be an “independent director” as defined in
Rule 4200(a)(15) of the listing standards of the National Association of
Securities Dealers (“the NASD listing standards”): E. Bruce Fredrikson, Abraham
Biderman, Phillip Ort and Shaya Sofer.
Controlled
Company Exemption
The Company is a Controlled Company as
defined in NASDAQ’s Stock Market Rule 4350(c)(5) as the Company is owned more
than 50% by one individual. Accordingly, a majority of independent
directors is not required to serve on the Company’s Board of
Directors.
Meetings
of the Board of Directors
The Board of Directors held four
meetings during the year ended December 31, 2007. During 2007, each
director attended in excess of 75% of both (i) the total number of board
meetings held during the period for which he was a director and (ii) the total
number of meetings of each committee of the board on which the director served
during the period for which he was on the committee. The Company does
not have a policy requiring incumbent directors and director nominees to attend
the Company’s annual meeting of stockholders. All directors attended
last year's annual meeting.
Committees
of the Board of Directors
The Company has a separately designated
standing audit committee established in accordance with Section 3(a)(58)(A) of
the Exchange Act. Serving on the Committee are Dr. E. Bruce
Fredrikson, Abraham Biderman and Philip Ort. The Board of Directors
has determined that it has an audit committee financial expert serving on the
audit committee, Abraham Biderman. Mr. Biderman is an independent
director as defined in Item 7(d)(3)(iv) of Schedule 14A. 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, to consider whether the
principal accountant’s provision of non-audit services is compatible with
maintaining the principal accountant’s independence 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 met four times
during 2007. The Board of Directors has determined that the members
of the Audit Committee are "independent" as defined in NASDAQ Stock Market’s
Marketplace Rule 4200.
The Board
of Directors does not have a Compensation Committee. In accordance
with NASDAQ Stock Market’s Marketplace Rule 4200, a majority of “independent”
directors is required to recommend and approve the compensation of executive
officers.
The
Company does not have a standing Nominating Committee. Due to the size of the
Company and the resulting efficiency of a Board of Directors that is also
limited in size, as well as the lack of turnover in the Company’s Board of
Directors, the Board of Directors has determined that it is not necessary or
appropriate at this time to establish a separate Nominating Committee. Potential
candidates are discussed by the entire Board of Directors, and director nominees
are selected by Board of Director resolution subject to the recommendation of a
majority of the independent directors. All of the nominees
recommended for election to the Board of Directors at the Annual Meeting are
directors standing for re-election. Although the Board of Directors has not
established any minimum qualifications for director candidates, when considering
potential director candidates, the Board considers the candidate's character,
judgment, diversity, skills, including financial literacy, and experience in the
context of the needs of the Company and the Board of Directors. In
2007, the Company did not pay any fees to any third party to assist in
identifying or evaluating potential nominees.
Report
of the Audit Committee
The
following report of the Audit Committee does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other
Company filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates this Report
by reference therein.
The
responsibilities of the Audit Committee, which are set forth in the Audit
Committee Charter, include providing oversight to the Company's financial
reporting process through periodic meetings with the Company’s independent
accountants and management to review accounting, auditing, internal controls and
financial reporting matters. The Audit Committee is also responsible
for the appointment, compensation and oversight of the Company’s independent
auditors. The management of the Company is responsible for the preparation and
integrity of the financial reporting information and related systems of internal
controls. The Audit Committee, in carrying out its role, relies on the Company's
senior management, including senior financial management, and its independent
accountants.
The Audit
Committee has implemented procedures to ensure that during the course of each
fiscal year it devotes the attention that it deems necessary or appropriate to
each of the matters assigned to it under the Audit Committee’s Charter. To carry
out its responsibilities, the Audit Committee met four times during fiscal
2007.
The
primary purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities relating to the quality and integrity
of the Company’s financial reports and financial reporting processes and systems
of internal controls. Management of the Company has primary
responsibility for the Company’s financial statements and the overall reporting
process, including maintenance of the Company’s system of internal
controls. The Company retains independent auditors who are
responsible for conducting an independent audit of the Company’s financial
statements, in accordance with generally accepted auditing standards, and
issuing a report thereon.
In performing its duties, the Audit Committee has reviewed and
discussed the audited financial statements with management and the Company’s
independent auditors. The Audit Committee has also discussed with the
Company's independent auditors, the matters required to be discussed by
Statement of Auditing Standards ("SAS") No.
61, "Communications with Audit Committee." SAS No. 61
requires the independent auditors to provide the Audit Committee with additional
information regarding the scope and results of their audit of the Company’s
financial statements, including with respect to (i) their responsibility under
auditing standards generally accepted in the United States of America, (ii)
significant accounting policies, (iii) management judgments and
estimates, (iv) any significant audit adjustments, (v) any
disagreements with management, and (vi) any difficulties encountered
in performing the audit. In addition, the Audit Committee received
written disclosures and the letter from the independent auditors required by
Independence Standards Board Statement No. 1, "Independence Discussions with
Audit Committees." The independent auditors have discussed its
independence with the Audit Committee, and has confirmed to us that, in its
professional judgment, it is independent of the Company within the meaning of
the federal securities laws.
On the
basis of the foregoing reviews and discussions, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007, for filing with the Securities and Exchange Commission. The
Audit Committee has also recommended, subject to shareholder approval, the
selection of the Company's independent auditors.
Audit
Committee
E. Bruce
Fredrikson
Abraham
Biderman
Philip
Ort
Code
of Ethics
The Company has adopted a Code of
Ethics that applies to its Chief Executive Officer and Chief Financial Officer.
The Code as well as any amendments and waivers of the Code, if any, is posted on
the Company’s website at http://www.trackdata.com/codeofethics.
Compliance
With Section 16(a) of the Securities Exchange Act of
1934
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The Company believes that during the
period from January 1, 2007 through December 31, 2007 all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with.
Stockholders
Communications With the Board of Directors
Generally,
stockholders who have questions or concerns regarding the Company should contact
our Investor Relations department at 718-522-7373. However, stockholders may
communicate with the Board of Directors by sending a letter to Board of
Directors of Track Data Corporation, c/o Corporate Secretary, 95 Rockwell Place,
Brooklyn, NY 11217. Any communications must contain a clear notation
indicating that it is a "Stockholder--Board Communication" or a
"Stockholder--Director Communication" and must identify the author as a
stockholder. The office of the Corporate Secretary will receive the
correspondence and forward appropriate correspondence to the Chairman of the
Board or to any individual director or directors to whom the communication is
directed. The Company reserves the right not to forward to the Board
of Directors any communication that is hostile, threatening, illegal, does not
reasonably relate to the Company or its business, or is similarly inappropriate.
The office of the Corporate Secretary has authority to discard or disregard any
inappropriate communication or to take any other action that it deems to be
appropriate with respect to any inappropriate communications.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
This
compensation discussion describes the material elements of compensation awarded
to, earned by, or paid to each of our executive officers who served as named
executive officers during the last completed fiscal year. This compensation
discussion focuses on the information contained in the following tables and
related footnotes and narrative for primarily the last completed fiscal
year. Our Board oversaw and administered our executive compensation
program. There is no compensation committee.
The
principal elements of our executive compensation program are base salary and
long-term equity incentives in the form of stock options. Other
benefits and perquisites consist of health insurance benefits and a qualified
401(k) savings plan. Our philosophy is to position the aggregate of these
elements at a level that is commensurate with our size and sustained
performance.
Compensation
Program Objectives and Philosophy
In
General. The objectives of our compensation programs are to
attract, motivate and retain talented and dedicated executive officers, provide
our executive officers with both cash and equity incentives to further the
interests of the Company and our stockholders, and provide employees with
long-term incentives so we can retain them.
Generally,
the compensation of our executive officers is composed of a base salary and
equity awards in the form of stock options. In setting base salaries, the Board
generally reviewed the individual contributions of the particular executive. In
addition, stock options are granted to provide the opportunity for long-term
compensation based upon the performance of our common stock over
time.
Competitive
Market. We define our competitive market for executive talent
and investment capital to be the technology and business services industries. To
date, we have not engaged in the benchmarking of executive compensation but we
may choose to do so in the future.
Compensation
Process. Our Board approved the compensation of our named
executive officers taking into consideration recommendations from our principal
executive officer (for compensation other than his own), as well as competitive
market guidance.
Regulatory
Considerations. Given the compensation cost to us of awarding
stock options under recent accounting pronouncements, we will consider the size
and frequency of any future stock option awards under our long-term equity
incentive program.
Base
Salaries
In
General. We provide the opportunity for our named executive
officers and other executives to earn a competitive annual base salary. We
provide this opportunity to attract and retain an appropriate caliber of talent
for the position, and to provide a base wage that is not subject to performance
risk. We review base salaries for our named executive officers annually and
increases are based on our performance and individual performance. The salary of
our principal executive officer was set by our Board at $242,400 for 2008, which
represents the $303,000 rate set for 2007, after a 20% decrease agreed to
effective October 1, 2007. Our Board also approved no increase in compensation
for 2008 from the annual base salary rate from 2007, after the aforementioned
20% decrease that became effective October 1, 2007. Mr. Stern –
$123,600; Mr. Hertz - $364,400; and Mr. Drillick – $132,800.
Total
Compensation Comparison. No options were awarded to executive
officers in 2008 or 2007 and bonuses of $15,000 in 2007 and $9,000 in 2006 were
awarded to Mr. Drillick in each year. Further, in 2007 Messrs. Kaye, Stern and
Hertz received long-term health care benefit insurance.
Annual
Cash Incentives
In
General. There are no programs presently in place to provide
the opportunity for our named executive officers and other executives to earn an
annual cash incentive award. There are no specific individual performance
goals for 2008 incentive awards, but the Board may exercise discretion and take
into account individual and corporate performance in determining
awards.
Long-term
Equity Incentives
In
General. We provide the opportunity for our named executive
officers and other executives to earn a long-term equity incentive award.
Long-term incentive awards provide employees with the incentive to stay with us
for longer periods of time, which in turn, provides us with greater stability.
These awards also are less costly to us in the short term than cash
compensation. We review long-term equity incentives for our named executive
officers and other executives annually.
Stock
Options. For our named executive officers, our stock option
program is based on grants that are individually negotiated. We have
traditionally used stock options as our form of equity compensation because
stock options provide a relatively straightforward incentive for our executives,
result in less immediate dilution of existing shareholders’ interests and, prior
to our adoption of FAS 123(R), resulted in less compensation expense for us
relative to other types of equity awards. For a discussion of the determination
of the fair market value of these grants, see Note A to Notes to Consolidated
Financial Statements.
There
were no option grants in 2006 or 2007 to our named executive
officers.
We do not
time stock option grants to executives in coordination with the release of
material non-public information. Our stock options have a 5-year contractual
exercise term. In general, the option grants are also subject to the following
post-termination and change in control provisions:
Event
|
|
Award
Vesting
|
|
Exercise
Term
|
|
|
|
|
|
Termination
by Us for Reason Other than Cause, Disability or Death
|
|
Forfeit
Unvested
|
|
Vested
– 30 days
|
|
|
|
|
|
Disability
or Death
|
|
Forfeit
Unvested
|
|
Vested
– 12 months
|
|
|
|
|
|
Termination
for Cause
|
|
Forfeit
Vested and Unvested
|
|
Expire
|
|
|
|
|
|
Change
in Control
|
|
Not
accelerated, comparable substitute, if necessary
|
|
Unchanged
|
Executive
Benefits and Perquisites
We
provide the opportunity for our named executive officers and other executives to
receive certain perquisites and general health and welfare benefits. We also
offer participation in our defined contribution 401(k) plan. We do not match
employee contributions for executive officers under our 401(k) plan. We provide
these benefits to provide an additional incentive for our executives and to
remain competitive in the general marketplace for executive talent. For the last
completed fiscal year, we provided the following personal benefits and
perquisites to our named executive officers: the Company pays a
portion of medical insurance premiums, and, in 2007, paid long term healthcare
insurance for Messrs. Kaye, Stern and Hertz with premiums of $18,700, $12,300
and $13,100, respectively.
The
following table sets forth information with respect to compensation paid by the
Company for services during the years ended December 31, 2007 and 2006 to the
Company's Chief Executive Officer and to the executive officers whose aggregate
annual salary and bonus exceeded $100,000.
|
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
Fiscal
|
|
Annual
|
|
|
|
Other
|
|
|
|
|
|
Name and Position |
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin
Kaye
|
|
2007
|
|
$287,850
|
|
-
|
|
$
|
18,700
|
(1)
|
|
$
|
306,550
|
|
|
Chief
Executive Officer since March 16, 2007,
|
|
2006
|
|
303,000
|
|
-
|
|
|
-
|
|
|
|
303,000
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
Hertz
|
|
2007
|
|
$431,775
|
|
-
|
|
$
|
88,100
|
(1)(2)
|
|
$
|
519,875
|
|
|
Chairman,
CEO until his
|
|
2006
|
|
454,500
|
|
-
|
|
|
-
|
|
|
|
454,500
|
|
|
resignation
on March 16, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serves
as Chief of Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
since
that date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
Stern
|
|
2007
|
|
$146,875
|
|
-
|
|
$
|
12,300
|
(1)
|
|
$
|
159,175
|
|
|
Chief
Compliance Officer of TDSC
|
|
2006
|
|
154,500
|
|
-
|
|
|
-
|
|
|
|
154,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Drillick
|
|
2007
|
|
$158,050
|
|
$15,000
|
|
|
-
|
|
|
$
|
173,050
|
|
|
Chief
Operating Officer of TDSC
|
|
2006
|
|
165,000
|
|
9,000
|
|
|
-
|
|
|
|
174,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.)
|
Long-term
health care premiums
|
(2.)
|
Includes
$75,000 for officer/director indemnification paid in
2007.
|
There were no options awarded in 2007.
There are no employment agreements, stock appreciation rights, pension plans or
long-term incentive plans or deferred compensation plans. No options were
exercised in 2007.
Outstanding
Equity Awards at December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options (1)
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
|
Martin
Kaye
|
|
20,000
|
|
|
$5.00
|
|
|
01/22/08
|
|
|
|
|
|
20,000
|
|
|
$6.25
|
|
|
01/22/08
|
|
|
|
|
|
40,000
|
|
|
$7.50
|
|
|
03/11/09
|
|
|
|
|
|
50,000
|
|
|
$3.00
|
|
|
12/27/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
Hertz
|
|
50,000
|
|
|
$5.00
|
|
|
01/22/08
|
|
|
|
|
|
50,000
|
|
|
$6.25
|
|
|
01/22/08
|
|
|
|
|
|
100,000
|
|
|
$7.50
|
|
|
03/11/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
Stern
|
|
2,000
|
|
|
$5.00
|
|
|
01/22/08
|
|
|
|
|
|
2,000
|
|
|
$6.25
|
|
|
01/22/08
|
|
|
|
|
|
4,000
|
|
|
$7.50
|
|
|
03/11/09
|
|
|
|
|
|
10,000
|
|
|
$3.00
|
|
|
12/27/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Drillick
|
|
2,000
|
|
|
$5.00
|
|
|
01/22/08
|
|
|
|
|
|
2,000
|
|
|
$6.25
|
|
|
01/22/08
|
|
|
|
|
|
4,000
|
|
|
$7.50
|
|
|
01/04/09
|
|
|
|
|
|
10,000
|
|
|
$3.00
|
|
|
12/27/10
|
|
|
(1) All
outstanding options are presently exercisable.
Directors
Compensation Table
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or Paid in Cash
|
|
All
Other Compensation
|
|
Total
|
|
E.
Bruce Fredrikson
|
|
$23,750
|
|
$2,000
|
|
$25,750
|
|
Abraham
Biderman
|
|
$15,000
|
|
$2,000
|
|
$17,000
|
|
Philip
Ort
|
|
$15,000
|
|
$2,000
|
|
$17,000
|
|
Shaya
Sofer
|
|
$15,000
|
|
$2,000
|
|
$17,000
|
|
E. Bruce
Fredrikson, Chairman, is paid at the rate of $30,000 per annum. All other
directors receive $15,000 per annum. In addition, directors receive
$500 for each meeting attended. At December 31, 2007 the aggregate number of
outstanding options for each director is as follows: E. Bruce Fredrikson –
22,000; Abraham Biderman – 22,000; Philip Ort – 18,000; and Shaya Sofer –
18,000.
Equity
Compensation Plan Information
All equity compensation plans have been
approved by the Company's stockholders.
|
|
|
|
|
At
December 31, 2007
|
|
|
|
a)
|
Number
of securities to be issued upon exercise of outstanding
|
|
|
options
|
672,000
|
|
|
|
b)
|
Weighted-average
exercise price of outstanding options
|
$5.79
|
|
|
|
c)
|
Number
of securities remaining available for future issuance
|
|
|
under
equity compensation plans (excluding securities reflected
|
|
|
in
(a) above)
|
1,310,000
|
Compensation
Committee Report
The
Company does not have a compensation committee. Accordingly, the
entire Board of Directors reviewed and discussed the Compensation Discussion and
Analysis required by Item 402(b) with management; and based on such review and
discussions, the Board recommended that the Compensation Discussion and Analysis
be included in the Company's Annual Report on Form 10-K.
Board
of Directors:
Martin
Kaye
Albert
Drillick
Stanley
Stern
E. Bruce
Fredrikson
Abraham
Biderman
Philip
Ort
Shaya
Sofer
Principal
Accountant Fees and Services
Audit Fees.
The audit
fees for 2007 and 2006 were $164,000 and $150,000, respectively, for Marcum
& Kliegman LLP. All services provided by independent accountants
were approved by the audit committee.
Audit Related Fees.
During
the fiscal years 2007 and 2006, Marcum & Kliegman LLP did not render audit
related services.
Tax
Fees.
Tax fees
consisted of representation on tax exams and preparation of tax returns. The
fees were $31,000 in 2007 and $39,000 in 2006 for Marcum & Kliegman
LLP.
All Other
Fees.
During
the fiscal years 2007 and 2006, Marcum & Kliegman LLP rendered no
professional services other than Audit and Tax matters.
Audit
Committee Pre-Approval Policies and Procedures.
The Audit
Committee is directly and solely responsible for oversight, engagement and
termination of any independent auditor employed by the Company for the purpose
of preparing or issuing an audit report or related work.
The
Committee:
Meets
with the independent auditor prior to the audit and discusses the planning and
staffing of the audit;
Approves
in advance the engagement of the independent auditor for all audit services and
non-audit services and approves the fees and other terms of any such
engagement;
Obtains
periodically from the independent auditor a formal written statement of the
matters required to be discussed by Statement of Auditing Standards No. 61, as
amended, and, in particular, describing all relationships between the auditor
and the Company; and
Discusses
with the auditor any disclosed relationships or services that may impact auditor
objectivity and independence.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its executive office
facilities in Brooklyn from a limited partnership owned by the Company’s
Principal Stockholder and members of his family. The Company paid the
partnership rent of $637,000 and $630,000 for the years ended December 31, 2007
and 2006, respectively. The lease provided for the Company to pay
$630,000 per annum through April 1, 2006. The Company paid at the same rate
without a lease until September 30, 2007. A new two-year lease was entered as of
October 1, 2007 at an annual rental of $657,000 plus real estate
taxes.
In connection with the Company's
arbitrage trading program, the Company's Principal Stockholder pledged
approximately 3.0 million shares of his holdings of the Company's common stock
as additional collateral for the arbitrage trading accounts. The
Company is paying its Principal Stockholder at the rate of 2% per annum on the
value of the collateral pledged. Such payments aggregated $39,000 and
$42,000 for the years ended December 31, 2007 and 2006,
respectively.
In April
2006, the Company's Principal Stockholder formed a private limited partnership
of which he is the general partner for the purpose of operating a hedge fund for
trading in certain options strategies. The Company has no financial
interest in or commitments related to, the hedge fund. The hedge fund
opened a trading account with the Company's broker-dealer. The
Company charged commissions to the hedge fund totaling $125,000 and $89,000 for
the years ended December 31, 2007 and 2006, respectively.
The
Company has an employee savings program under which employees may make deposits
and receive interest at the prime rate. As of December 31, 2007 and 2006, the
Company’s Chief Financial Officer (also Chief Executive Officer since March 16,
2007) had deposits in the program of $583,000 and $479,000 and received interest
of $44,000 and $32,000 during the years ended December 31, 2007 and 2006,
respectively. The savings program was terminated on February 29, 2008
and the outstanding balance was repaid.
On June
14, 2005, the SEC filed a civil complaint against Barry Hertz, the Company’s
Chairman and CEO at that time alleging violations of various provisions of the
federal securities laws in connection with certain transactions in the Company’s
stock owned by others. Mr. Hertz reached a settlement with the SEC regarding
these charges. Mr. Hertz consented, without admitting or
denying the allegations in the SECs complaint, to a permanent injunction from
violations of Section 10(b) and 10b-5 of the Exchange Act and Section 17(a) of
the Securities Act of 1933, a two-year bar from serving as an officer or
director of a publicly traded company, a two-year bar from association with a
broker or dealer, and also agreed to pay approximately $136,000 in disgorgement,
interest and civil penalties. In May, 2007, the Board of Directors
agreed to reimburse Mr. Hertz under the indemnification provisions of Delaware
law, $75,000 for the disgorgement and interest portion of the amounts paid to
the SEC by him.
The
Company does not have any written policies and procedures for review, approval
or ratification of any transaction required to be reported as related party
transactions. The Board of Directors determines in each matter, based
on their review of the transaction, whether to approve such
transaction. The Board policy is to obtain approval of a majority of
the indendent directors and a majority of the entire
Board. Continuing transactions will be reviewed
annually.
Corporate
Governance
The Board
of Directors has determined each of the following directors to be an
“independent director” as defined in Rule 4200(a)(15) of the listing standards
of the NASDAQ Stock Market: E. Bruce Fredrikson, Abraham Biderman, Phillip Ort
and Shaya Sofer.
The Company has a separately designated
standing audit committee established in accordance with Section 3(a)(58)(A) of
the Exchange Act. Serving on the Committee are Dr. E. Bruce Fredrikson, Abraham
Biderman and Philip Ort. The Board of Directors has determined that it has an
audit committee financial expert serving on the audit committee, Abraham
Biderman. Mr. Biderman is an independent director as defined in item 7(d)(3)(iv)
of Schedule 14A.
The Board
of Directors does not have a Compensation Committee or a Nominating Committee.
In accordance with NASDAQ Stock Market’s Marketplace Rule 4200, a majority of
“independent” directors is required to recommend and approve the compensation of
executive officers.
ITEM
II. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to approval by the
stockholders, the Board of Directors has appointed Marcum & Kliegman LLP as
the independent auditors to audit the financial statements of the Company for
the fiscal year ending December 31, 2008. Marcum & Kliegman LLP
also served as the Company's auditors for the fiscal years ended December 31,
2007, 2006 and 2005. It is expected that a representative of Marcum &
Kliegman 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.
In the event that the stockholders fail
to ratify this appointment, other certified public accountants will be
considered upon recommendation of the Audit Committee. Even if this
appointment is ratified, our Board of Directors, in its discretion, may direct
the appointment of a new independent accounting firm at any time during the
year, if the Board believes that such a change would be in the best interest of
the Company and its stockholders.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF MARCUM
& KLIEGMAN LLP AS INDEPENDENT AUDITORS
VOTE
REQUIRED
Election of
Directors. Directors will be elected at the meeting by a
plurality of the votes cast (i.e., the seven nominees receiving the greatest
number of votes will be elected as Directors).
Ratification of the Appointment of
Independent Auditors. The appointment of Marcum & Kliegman
LLP as independent auditors requires the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the matter. Abstentions will have the same effect as a vote
against such ratification, whereas broker non-votes and shares not represented
at the meeting will not be counted for purposes of determining whether such
ratification has been approved.
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 May
30, 2009 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.
ANNUAL
REPORT
A copy of our Annual Report on Form
10-K for the 2007 Fiscal Year has been mailed concurrently with this Proxy
statement to all stockholders entitled to notice of and to vote at the Annual
Meeting. The annual report is not incorporated into the Proxy
Statement and is not considered proxy solicitation material.
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.