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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
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Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DBT Online, Inc.
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(Name of Registrant as Specified in Its Charter)
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[DBT ONLINE LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 22, 1997
The Annual Meeting of Shareholders of DBT Online, Inc. (the "Company") will
be held on Thursday, May 22, 1997, at 9:00 a.m. at The New York Athletic Club,
Room 1, 10th Floor, 180 Central Park South, New York, New York 10019 for the
following purposes:
1. To elect three Class I directors to hold office until their term
expires at the Annual Meeting of Shareholders in 2000 and until their
successors are duly elected and qualified.
2. To amend the Company's Amended and Restated Stock Option Plan to
increase the number of authorized shares from 900,000 to 1,500,000 shares
available for issuance under the Plan.
3. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for 1997; and
4. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 15, 1997,
as the record date for the meeting. Only shareholders of record at that time are
entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the meeting. The Board of Directors
urges you to date, sign and return the enclosed proxy promptly. You are
cordially invited to attend the meeting in person. The return of the enclosed
proxy will not affect your right to vote in person if you do attend the meeting.
J. Henry Muetterties
Secretary
April 28, 1997
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[DBT ONLINE LOGO]
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PROXY STATEMENT
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This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of DBT Online, Inc. (the "Company") for use
at the Company's Annual Meeting of Shareholders (the "Meeting") for purposes set
forth in the foregoing notice. This proxy statement, the foregoing notice and
the enclosed proxy are being sent to shareholders on or about April 28, 1997.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters. If the
enclosed proxy is properly executed and returned prior to voting at the Meeting,
the shares presented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instruction, the shares will be voted "FOR"
the nominees of the Board of Directors in the election of the directors; "FOR"
the increase in the number of shares available for issuance under the Amended
and Restated Stock Option Plan; "FOR" the ratification of the appointment of
Deloitte & Touche LLP as independent auditors for the fiscal year ending
December 31, 1997; and in the discretion of the persons named on the proxy with
respect to such other business as may properly come before the Meeting or any
adjournments or postponements thereof.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary in writing at the Company's principal executive offices, by delivering
a duly executed proxy bearing a later date or by attending the Meeting and
voting in person. The Company's principal executive offices are located 5550 W.
Flamingo Road, Suite B-5, Las Vegas, Nevada 89103.
VOTING SECURITIES
At the close of business on April 15, 1997, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the Meeting,
there were 7,750,818 outstanding shares of the Company's common stock (the
"Common Stock"), the only class of voting securities outstanding. Only the
record holders of the Common Stock at the close of business on the record date
will be entitled to vote. The presence at the Meeting, in person or by proxy, of
a majority of such outstanding shares will constitute a quorum. Each share of
Common Stock is entitled to one vote, without cumulation, on each matter to be
voted upon at the Meeting.
BACKGROUND
The Company is a holding company which operates its business through two
wholly-owned subsidiaries, Database Technologies, Inc., a Florida corporation
("DBT"), and Patlex Corporation, a Pennsylvania corporation ("Patlex"). DBT is
an on-line provider of integrated database services. Patlex is engaged in the
exploitation and enforcement of two laser patents. The Company was reorganized
into its current structure on August 20, 1996, pursuant to the terms of a merger
agreement between Patlex and DBT and the creation of the Company as a holding
company (the ""Reorganization"). In the Reorganization, (i) Patlex shareholders
became shareholders of the Company with Patlex becoming a wholly-owned
subsidiary of the Company, and (2) the Company acquired DBT in a reverse
purchase, which means that it was treated for accounting purposes as if DBT
acquired the Company and Patlex. The Company is the successor company to Patlex
for federal securities law reporting purposes.
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The Reorganization resulted in a change of control of Patlex, because the
shareholders of DBT received approximately 66.8% of the outstanding shares of
Company Common Stock. The largest shareholder of DBT, Hank E. Asher, became the
largest shareholder of the Company. Mr. Asher, who has been the President, Chief
Executive Officer and a director of the Company since the Reorganization, was
the beneficial owner of 35.7% of the outstanding shares of Company Common Stock
as of March 31, 1997. See "Security Ownership of Certain Beneficial Owners and
Management."
ELECTION OF DIRECTORS
The Board is divided into three classes of directors. The Bylaws of the
Company provide that at each annual meeting of shareholders directors shall be
chosen by class for a term of three years, or for such shorter term as the
shareholders may specify to preserve, as evenly as practicable, the division of
directors into classes. Three directors are to be elected at the Meeting, to
hold office until the annual meeting of shareholders in 2000.
At the Meeting, the shareholders will elect three Class I directors to hold
office, subject to the provisions of the Bylaws, until their term expires at the
annual meeting of shareholders in 2000 and until their respective successors
shall have been duly elected and qualified. The current term of the present
Class I directors is expiring at the Meeting.
The affirmative vote of the holders of a majority of the votes cast by the
holders of the Common Stock present, or represented by proxy, and entitled to
vote at the Meeting shall be required for the election of the Class I directors.
Shares of Common Stock held by shareholders present in person at the Meeting
that are not voted for a nominee or shares held by shareholders represented at
the Meeting by proxy from which authority to vote for a nominee has been
properly withheld (including broker non-votes) will not affect the election of
the nominees receiving the plurality of votes. UNLESS CONTRARY INSTRUCTIONS ARE
GIVEN, THE PERSONS NAMED IN THE ENCLOSED PROXY OR THEIR SUBSTITUTES WILL VOTE
FOR THE ELECTION OF THE NOMINEES NAMED BELOW.
The Board of Directors believes that the nominees are willing to serve as
directors. If a nominee at the time of election is unable or unwilling to serve
or is otherwise unavailable for election, and as a result another nominee is
designated, the persons named in the enclosed proxy or their substitutes will
have discretion and authority to vote or to refrain from voting for such other
nominee in accordance with their judgment.
The nominees for election as Class I directors and the directors whose
terms of office continue after the Meeting, together with their ages as of the
Meeting and certain information about them, are as follows:
NAME CLASS OF DIRECTOR AGE
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NOMINEES FOR TERM EXPIRING IN 2000
Kenneth G. Langone................................................. I 61
Eugene L. Step..................................................... I 68
Sari Zalcberg...................................................... I 43
CONTINUING DIRECTORS WHOSE TERM EXPIRES IN 1998
Charles Asher...................................................... II 44
Frank Borman....................................................... II 69
Jack Hight......................................................... II 72
CONTINUING DIRECTORS WHOSE TERM EXPIRES IN 1999
Hank E. Asher...................................................... III 46
Gary E. Erlbaum.................................................... III 52
Thomas L. Simpson.................................................. III 53
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KENNETH G. LANGONE has been a director of the Company since August 1996,
and was a director of Patlex from September 1995 to August 1996. He has been
involved with Patlex since 1979, serving as a Patlex director from 1979 to
December 1992, and as a director of AutoFinance Group, Inc. ("AFG") from
December 1992 to September 1995, during the period that Patlex was a subsidiary
of AFG. Since 1974, Mr. Langone has been Chairman of the Board, Chief Executive
Officer and President of Invemed Associates, Inc. ("Invemed"), a New York Stock
Exchange member firm engaged in investment banking and brokerage. He is one of
the co-founders of the Home Depot, Inc. and has been a director of that company
since 1978. He also serves as a director of St. Jude Medical, Inc., Unifi, Inc.
and United States Satellite Broadcasting Co. He is also a director of several
private corporations.
EUGENE L. STEP became a director of the Company in March 1997. From 1973 to
1992, Mr. Step served in various senior management positions with Eli Lilly &
Co., most recently as Executive Vice President, President of the Pharmaceutical
Division and a member of the Board of Directors and its Executive Committee. Mr.
Step is a past Chairman of the Board of the Pharmaceutical Manufacturers
Association and a past President of the International Federation of
Pharmaceutical Manufacturers Association. Mr. Step also serves as a director of
Cell Genesys, Inc., Scios, Inc., Medco, Inc., Pathogenesis, Inc. and Guidant
Corp.
SARI ZALCBERG has been a director of the Company since August 1996, and was
a director of DBT from 1995 to August 1996. She is the Chief Executive Officer
and sole shareholder of La Grande Trunk, Inc., a retail concern with location in
two states. Ms. Zalcberg is also a member of the Regional Board of Directors of
the Valparaiso Banking Center of Bank One Merrillville, N.A., an Indiana
chartered Bank.
CHARLES ASHER has been a director of the Company since August 1996, and was
a director of DBT from 1994 to August 1996. He practices law in South Bend,
Indiana.
FRANK BORMAN has been Chairman of the Company since August 1996, and
President of Patlex since 1988. From September 1995 until August 1996, he also
served as Chief Executive Officer and a director of Patlex. He served as
Chairman and Chief Executive Officer of Patlex from 1988 to December 1992, and
as Chairman of AFG from December 1992 to September 1995, during the period that
Patlex was a subsidiary of AFG. He served as Vice Chairman of the Board of
Directors at Texas Air Corporation from 1986 to 1991. From 1969 to 1986, he
served in various capacities for Eastern Airlines, including President, Chief
Executive Officer and Chairman of the Board of Directors. Mr. Borman served in
the United States Air Force from 1950 to 1970. Mr. Borman currently serves as a
director of The Home Depot, Inc., Outboard Marine Corporation, Thermo
Instruments Systems and American Superconductor Corporation and is also a member
of the Board of Trustees of the National Geographic Society.
JACK HIGHT has been a director of the Company since August 1996, and was
Chairman of the Board of DBT from 1995 to August 1996. Since 1981, Mr. Hight has
held various positions at Intec Systems, Inc., which he founded, including his
current position of Chief Financial Officer and Chairman of the Board. From 1978
to 1980, he was Chairman of the Board, Chief Executive Officer and President of
Information Science, Inc., a public company. In the 1960s, Mr. Hight co-founded
and was President of Electronic Data Systems Federal Corporation before it
merged with Electronic Data Systems Corporation in 1968.
HANK E. ASHER has been President, Chief Executive Officer and a director of
the Company since August 1996. He has been the President, Chief Executive
Officer and a director of DBT since he founded the company in 1992. Prior to
founding DBT, Mr. Asher performed contract programming services for various
computer companies.
GARY E. ERLBAUM has been a director of the Company since August 1996, and
was a director of Patlex from September 1995 to August 1996. He has been
involved with Patlex since May 1972, serving as a Patlex director from 1983 to
December 1992, and as a director of AFG from December 1992 to September 1995,
during the period that Patlex was a subsidiary of AFG. Mr. Erlbaum served as the
Chairman of the Board of Directors of Patlex from September 1977 to July 1981
and from October 1981 to February 1983, and served as the President of Patlex
from May 1972 to September 1977 and from December 1978 to July 1981. Since 1983,
he has been the President of Greentree Properties Corporation, which is engaged
in real estate and business ventures. He is also a director of several
privately-owned companies.
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THOMAS L. SIMPSON was elected Chief Operating Officer and a director of the
Company in February 1997. Mr. Simpson had been Senior Vice President, Chief
Operating Officer and Secretary of GMIS Inc., a developer of software for health
care payor market, from May 1995 until January 1997. Prior to that, Mr. Simpson
held various financial management positions at Alco Standard Corporation, a
distributor of office products, from 1986 to 1995, including his most recent
position as Chief Financial Officer of Unisource, Inc., a distributor of paper
products.
Charles Asher, Hank Asher and Sari Zalcberg are siblings.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. During 1996, the Company's non-employee
directors did not receive any compensation for serving as directors. Beginning
in 1997, non-employee directors of the Company receive annual compensation of
$16,000 and $1,000 for each meeting of the Board of Directors attended, up to a
maximum annual compensation of $20,000. All directors will be reimbursed for
expenses associated with the attendance of the Board of Directors' meetings.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
There were four meetings of the Board of Directors of Patlex Corporation
and three meetings of the Board of Directors of the Company during the year
ended December 31, 1996. No director attended less than 75% of the meetings of
the Board or of the Committees of the Board of which they were a member, with
the exception of Ms. Zalcberg who attended only two meetings of the Board of
Directors of the Company.
The Board of Directors has the following committees:
COMMITTEE MEMBERSHIP
-------------------------------------------------- ------------------------------------
Executive Committee............................... Messrs. H. Asher, Borman, Erlbaum
and Hight
Audit Committee................................... Messrs. Erlbaum, Hight, and Ms.
Zalcberg
Compensation Committee............................ Messrs. C. Asher, Hight and Langone
Nominating Committee.............................. Messrs. C. Asher, H. Asher, Borman,
Step, Simpson, Erlbaum, Hight,
Langone and Ms. Zalcberg
The Executive Committee is authorized to approve certain actions by the
Company. The Audit Committee is charged with the responsibility of reviewing the
Company's accounting policies, practices and controls. The Audit Committee is
also responsible for making recommendations to the Board of Directors regarding
the selection of independent auditors, and for reviewing the results and scope
of audits and other services provided by the Company's independent auditors. The
Compensation Committee reviews the compensation policies of the Company and
administers the Company's Amended and Restated Stock Option Plan. The Nominating
Committee identifies and reviews the qualifications of candidates to serve on
the Board of Directors. The Board of Directors has no formal procedure for
receiving recommendations from shareholders regarding potential nominees. The
Board of Directors will consider recommendations from shareholders regarding
potential nominees, when and if such recommendations are submitted. During 1996,
the Executive Committee had two meetings and the Compensation Committee had one
meeting, and the Audit Committee and the Nominating Committee did not have a
formal meeting during 1996.
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EXECUTIVE COMPENSATION
The following tables sets forth compensation information concerning the
Chief Executive Officer of the Company at December 31, 1996 and the four other
most highly compensated executive officers of the Company for the fiscal year
ended December 31, 1996. For the periods presented in the summary compensation
table, Mr. Asher was compensated by DBT and the other four named executive
officers were compensated by Patlex.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
----------------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- ---------------------------------- ---- -------- ------- ---------------- ------------ ----------------
HANK E. ASHER..................... 1996 $110,000 $ 0 $* 0 $ 0
President and Chief Executive
Officer
FRANK BORMAN...................... 1996 145,000 0 * 0 7,569
Chairman of the Board, 1995 140,000 0 * 100,000 4,867
President of Patlex 1994 140,000 0 * 0 3,179
RICHARD LAITINEN(3)............... 1996 100,632 31,093 37,080 0 5,283
Vice President, Treasurer, 1995 93,042 19,384 16,864 20,000 5,862
and Chief Financial Officer 1994 90,332 15,055 15,808 0 1,575
J. HENRY MUETTERTIES.............. 1996 113,923 35,199 53,202 0 5,393
Vice President, Secretary, 1995 105,330 21,944 19,091 20,000 4,249
and General Counsel 1994 102,262 17,044 17,896 0 1,464
DONALD E. SHUMATE(3).............. 1996 83,543 22,450 15,899 0 2,789
Vice President and Controller 1995 77,242 12,874 13,517 10,000 5,450
1994 74,992 6,249 12,186 0 840
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* Value of perquisites and other personal benefits paid does not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported for
the executive officer.
(1) For fiscal year 1996, includes amounts contributed to Patlex's Deferred
Compensation Plan for Mr. Laitinen ($19,759), Mr. Muetterties ($22,368) and
Mr. Shumate ($15,899). This amount includes $17,321 paid to Mr. Laitinen
and $30,834 paid to Mr. Muetterties for certain costs in connection with
employment by Patlex and relocation to Las Vegas, Nevada.
(2) For fiscal year 1996, includes amounts received as company matching
contributions under Patlex's 401(k) savings plan by Mr. Borman ($4,400),
Mr. Laitinen ($4,297), Mr. Muetterties ($4,864) and Mr. Shumate ($1,614),
and amounts paid by Patlex for life insurance premiums for Mr. Borman
($3,169), Mr. Laitinen ($986), Mr. Muetterties ($529) and Mr. Shumate
($1,175).
(3) Messrs. Laitinen and Shumate ceased being executive officers of the Company
on February 18, 1997.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING
OPTIONS/SAR'S VALUE OF UNEXERCISED
HELD AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END (#) AT FISCAL YEAR END ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ------------ ----------- ------------- ----------- -------------
Hank E. Asher.............. -- -- -- -- -- --
Frank Borman............... -- -- 100,000 -- $2,500,000 --
Richard Laitinen(1)........ 20,000 $772,500 -- -- -- --
J. Henry Muetterties....... -- -- 20,000 -- $ 500,000 --
Donald E. Shumate(1)....... 10,000 $375,000 -- -- -- --
- ---------------
1 Messrs. Laitinen and Shumate ceased being executive officers of the Company
on February 18, 1997.
EMPLOYMENT AGREEMENTS
In March 1991, Patlex entered into an employment agreement with Mr. Borman,
which provided for an initial three-year term commencing on January 1, 1991 with
automatic one-year extensions on the anniversary of the commencement date,
unless either Patlex or Mr. Borman gives notice to the other that the term of
the agreement will not be extended. The employment agreement contains certain
restrictive covenants, including provisions relating to noncompetition,
nonsolicitation and the nondisclosure of proprietary information, during the
executive's employment with the Company and for specified periods thereafter.
The current annual compensation rate for Mr. Borman is $160,000.
During 1992, Patlex entered into employment agreements with Messrs.
Laitinen, Muetterties and Shumate. Each of the agreements has been extended
through December 1999. The current annual compensation rate for Messrs.
Laitinen, Muetterties and Shumate is $104,035, $117,775 and $86,368,
respectively, and each executive is entitled to a minimum annual bonus of
$10,000 and other incentive compensation. The employment agreements contain
certain restrictive covenants, including provisions relating to noncompetition,
nonsolicitation and the nondisclosure of proprietary information, during the
relevant executive's employment with the Company and for specified periods
thereafter.
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The following Compensation Committee Report and the Stock
Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by
reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this
information by reference, and shall not otherwise be
deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT
The completion of the Reorganization on August 20, 1996, resulted in the
creation of the Company as a holding company with Patlex and DBT as wholly-owned
subsidiaries. Prior to the Reorganization, Patlex was a public corporation and
the members of the Patlex Compensation Committee were Kenneth G. Langone and
Gary E. Erlbaum. Prior to the Reorganization, DBT was a private company and
compensation decisions were made by the board as a whole. Following the closing
of the Reorganization, the Company's Board of Directors reconstituted the
Compensation Committee to consist of Charles A. Asher, Jack Hight and Kenneth G.
Langone (Chairman).
The Compensation Committee is responsible for implementing and
administering the Company's compensation policies and programs for its executive
officers. This includes setting the base salaries and the total compensation
levels of the Chief Executive Officer (the "CEO") and the other executive
officers of the Company. In addition, the Compensation Committee is responsible
for (i) setting the performance criteria for bonus awards and determining the
achievement levels and payout for the executive officers and (ii) determining
which executive officers will be granted stock options and the size and terms of
such grants.
COMPENSATION PHILOSOPHY
The Company's compensation policies for executive officers, as established
by the Patlex Compensation Committee prior to the Reorganization and continued
by the Compensation Committee for the remainder of 1996, are designed to (a)
provide competitive compensation packages that will attract and retain talented
executive officers, (b) link compensation to financial and operating results, so
as to reward successful performance, and (c) provide long-term equity
compensation, to further align the interests of executive officers with those of
shareholders and further reward successful performance. The principal components
of the Company's executive officer compensation program are base salary, bonus
awards and grants of stock options.
ANNUAL COMPENSATION
Annual cash compensation is comprised of a base salary and bonus awards.
Salary determinations have not been based upon any specific criteria. The salary
levels of the executive officers of the Company for 1996 were based on
established levels set by employment contracts entered into by the executive
officers with Patlex in 1991 and 1992.
Bonus awards made to executive officers in 1996 were based in part on
established minimums set by their employment agreements and in part upon the
Company's achievement of performance targets, including the successful
completion of the Reorganization in August 1996.
LONG-TERM COMPENSATION
Prior to the Reorganization, Patlex had only granted stock options at the
time that Patlex began trading publicly in 1995. Since the Reorganization, the
Compensation Committee has had the discretion to grant stock options to the
executive officers. No stock options were granted to the Company's executive
officers in 1996.
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COMPENSATION OF CHIEF EXECUTIVE OFFICER
Frank Borman was the CEO of Patlex until the Reorganization, and he
remained an executive officer for the rest of 1996. His annual base salary was
$140,000 pursuant to his employment agreement in 1994, 1995 and after Patlex was
spun off from AFG and was raised to $160,000 in October 1996. The increased
salary under his employment agreement reflected the successful completion of the
acquisition of DBT in the Reorganization and his increased responsibilities as
Chairman of the Board of the Company after the Reorganization. He received no
bonus or options for 1996.
Hank E. Asher became the CEO of the Company at the time of the
Reorganization. His salary level of $110,000 for 1996 was established by board
of DBT and was continued after the Reorganization for the remainder of 1996. He
received no bonus or options for 1996.
DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162(m) of the Internal Revenue Code generally denies a federal
income tax deduction for certain compensation exceeding $1,000,000 paid to the
CEO or any of the four other highest paid executive officers, excluding (among
other things) certain performance-based compensation. Through December 31, 1996,
this provision has not affected the Company's tax deductions, but the
Compensation Committee will continue to monitor the potential impact of section
162(m) on the Company's ability to deduct executive compensation.
COMPENSATION COMMITTEE
Kenneth G. Langone, Chairman
Charles A. Asher
Jack Hight
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STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return of (i) the
Nasdaq Composite Index (the "Nasdaq Index"), and (ii) a "peer group" index,
assuming an investment of $100 on September 28, 1995 in each of the Common Stock
of the Company, the stocks comprising the Nasdaq Index and the stocks comprising
the "peer group," and further assuming reinvestment of dividends. The "peer
group" consists of Acxiom Corporation, American Business Information, Inc. and
Equifax Inc.
The graph commences on September 28, 1995, the date that the Patlex Common
Stock began trading publicly. From September 28, 1995 and until March 17, 1996,
the Patlex Common Stock was listed on the Nasdaq Small-Cap Market. From March
18, 1996 until August 19, 1996, the Patlex Common Stock was listed on the Nasdaq
National Market. After the closing of the Reorganization, the Company's Common
Stock began trading on the Nasdaq National Market on August 20, 1996.
COMPARISON OF CUMULATIVE RETURN
9/28/95 100 100 100
12/31/95 368.8 105.2 100.5
12/31/96 743.8 154.1 123.3
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Invemed Associates, Inc. ("Invemed"), from time to time, has provided
financial advisory services to the Company, for which customary compensation has
been received. In connection with the September 1995 merger between AFG and
KeyCorp and the related spinoff of Patlex, Invemed provided certain financial
advisory services to AFG for which Invemed received fees of approximately
$2,470,000. Kenneth G. Langone, a director and shareholder of the Company, is
Chairman of the Board, Chief Executive Officer and President of Invemed, and is
the principal shareholder of Invemed's parent.
In November 1995, DBT extended a loan to Hank Asher, in return for an
unsecured demand note, bearing interest at 8%, payable to DBT in the amount of
$200,000, which was repaid in December 1996. In addition, during 1995, advances
totaling $54,100 were made to Mr. Asher, without interest, which were repaid in
January 1996.
On February 7, 1994, DBT entered into a debt and royalty agreement with a
consortium of seven individuals including Jack Hight. During 1995, Mr. Hight
became a shareholder and director of DBT. The agreement provided the financing
necessary for DBT to enter the Texas market. The agreement provided for a loan
to DBT of $200,000, which was repaid in 1995. The agreement also provided for
DBT to grant to the consortium a royalty to share in the revenues of the Texas
expansion up to $800,000, computed as 10% of specified revenues from Texas
operations. Through December 31, 1996, the Company had paid $59,900 relating to
such royalties.
In connection with the relocation to Las Vegas, Nevada, Patlex extended
bridge loans to Messrs. Laitinen and Shumate in the amounts of $75,000 and
$80,000, respectively. The loans bear interest at 8.25% and are due in full on
or before December 31, 1997. The interest payments are deducted weekly from the
salaries of Messrs. Laitinen and Shumate. Also in connection with its
relocation, Patlex sold its office facility situated in Las Cruces, New Mexico
to a limited liability company owned by the two sons of Frank Borman, Chairman
of the Board of the Company and President of Patlex. The sale was an arms-length
transaction based on an independent appraisal of the property in the amount of
$400,000.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Common Stock as of March 31, 1997 (i) by each person who
beneficially owns more than 5% of the outstanding shares of the Common Stock,
(ii) by each of the Company's executive officers and directors, and (iii) by all
of the current executive officers and directors of the Company as a group.
Unless otherwise noted, each person named in the table has sole voting and
investment power as to shares shown.
SHARES OF
COMMON STOCK PERCENT
NAMES OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
----------------------------------------------------------- ------------------ --------
Hank Asher (1)............................................. 2,768,229 35.7%
Charles Asher.............................................. 984,411 12.7
Frank Borman (2)........................................... 114,200 1.5
Gary E. Erlbaum (3)........................................ 360,672 4.6
Jack Hight (4)............................................. 135,001 1.7
Kenneth G. Langone (5)..................................... 935,000 11.9
Richard Laitinen........................................... 15,157 *
Timothy M. Leonard......................................... -0-
J. Henry Muetterties (6)................................... 24,910 *
Thomas L. Simpson.......................................... -0-
Donald E. Shumate.......................................... 13,525 *
Eugene L. Step............................................. -0-
Sari Zalcberg.............................................. 52,493 *
All current officers and directors
as a group (11 persons) (7).............................. 5,374,916 66.4
- ---------------
* Less than 1%
The address of each 5% shareholder is c/o Database Technologies, Inc., 100
E. Sample Road, Suite 200, Pompano Beach, FL 33064.
(1) All of such shares are owned by Asher Investment Partners, a Delaware
general partnership, of which one general partner is Hank Asher,
individually, and the other general partner is Asher Holdings, Inc., a
Delaware corporation, of which Hank Asher is 100% shareholder.
(2) Includes 100,000 shares issuable pursuant to stock options currently
exercisable.
(3) Includes (i) 21,933 shares owned by SPSP Corporation of which Mr. Erlbaum is
a director, President and 36.7% shareholder, (ii) 1,875 shares held by
trusts for which Mr. Erlbaum serves as trustee or co-trustee, (iii) 166,480
shares owned by Erlbaum Family L.P., of which Mr. Erlbaum is President of
the general partner, (iv) 1,890 shares owned by Mr. Erlbaum's son, and (v)
100,000 shares issuable upon exercise of presently exercisable options.
(4) Includes (i) 5,000 shares owned by Mr. Hight's wife and (ii) 25,000 shares
issuable upon exercise of presently exercisable options.
(5) Includes 450,000 shares owned by Invemed Associates, Inc. and 100,000 shares
issuable upon exercise of presently exercisable options. Mr. Langone is
Chairman of the Board, Chief Executive Officer and President of Invemed and
the principal shareholder of Invemed's parent corporation.
(6) Includes 20,000 shares issuable pursuant to stock options currently
exercisable.
(7) Includes 345,000 shares issuable pursuant to stock options currently
exercisable.
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SECTION 16(a) -- BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon the Company's review of Forms 3, 4 and 5 and on amendments
thereto furnished to the Company pursuant to Section 16 of the Exchange Act,
such forms were filed on a timely basis by each reporting person except for a
Form 4 for Mr. Jack Hight which was inadvertently filed late by the Company.
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED
STOCK OPTION PLAN
PROPOSED AMENDMENTS
The Amended and Restated Stock Option Plan (the "Plan") originally received
board approval in March 1995 and shareholder approval in September 1995. On
August 20, 1996, the Plan was amended and restated to, among other things, (i)
increase the number of authorized shares thereunder from 375,000 to 900,000
shares available for issuance under the Plan, (ii) amend the provisions
regarding administration of the Plan and (iii) amend the provisions regarding
treatment of option holders upon a change of control. The purpose of the Plan is
to recognize the contributions made to the Company and its subsidiaries by its
employees and certain consultants or advisors, to provide these individuals with
additional incentives to devote themselves to the Company's future success and
to improve the Company's ability to attract, retain and motivate individuals
upon whom the Company's sustained growth and financial success depend. The Plan
is also intended as an additional incentive to directors who are not employees
of the Company to serve on the Board of Directors and to devote themselves to
the future success of the Company.
The Plan provides for the grant of options to purchase Common Stock to be
made to employees, officers, directors and independent contractors of the
Company and its subsidiaries. The Plan is intended to assist the Company and its
subsidiaries in attracting, retaining and motivating employees, officers,
directors and independent contractors of particular merit.
The Board of Directors approved, subject to shareholder approval, an
amendment to the Plan to increase the number of authorized shares thereunder
from 900,000 to 1,500,000 shares available for issuance under the Plan.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the votes cast by the
holders of the Common Stock present, or represented by proxy, and entitled to
vote at the Meeting is required to approve the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE PLAN.
DESCRIPTION OF THE PLAN
Options. The Plan provides for the grant of incentive stock options
("ISOs")to officers and employees of the Company and its subsidiaries and
nonqualified stock options ("NQSOs") to officers, employees (including employees
who are also directors) and key advisors, such as consultants, independent
contractors and principals of organizations involved with the Company.
Administration. The Plan is administered by a committee (the "Committee"),
consisting of not less than two persons appointed by the Board of Directors, all
of whom must be "disinterested persons" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended and "outside directors" as defined
in Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Committee has the authority to administer and interpret the Plan as well as
the authority to determine (i) the individuals to whom options are granted, (ii)
the type, size and terms of the options, (iii) the timing of grants and the
duration of the exercise period, and (iv) any other matters arising under the
Plan.
Shares Subject to the Plan. The aggregate number of shares of common stock
that have been or may be issued or transferred under the Plan is 900,000 shares
and, if the amendment to the Plan is approved by
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shareholders, will be 1,500,000. Under the Plan, the maximum number of shares
that may be granted to any one individual during any calendar year shall be
350,000 shares.
Terms of Option Grants. Under the Plan, the Committee has full discretion
to determine the term, exercisability (vesting), and price of options granted
under the Plan. The Committee also has the authority to accelerate
exercisability (vesting) of options granted under the Plan. The option price for
ISOs, however, must be equal to or greater than the "fair market value" of the
stock on the date of grant. NQSOs may be issued at a price that is greater than,
equal to or less than the fair market value. The Plan limits the minimum option
price of NQSOs to 85% of the fair market value of the stock on the date of
grant.
Corporate Transactions. Upon a change of control, which is defined in the
Plan to include a change of control in the beneficial ownership of 40% or more
of the voting power of the Company, the commencement or announcement of an
intention to commence a tender offer for 40% or more of the voting power of the
Company, a sale or exchange of substantially all its assets, dissolution or
liquidation, or a merger or consolidation where the company does not survive,
all outstanding options will accelerate automatically and become exercisable.
Upon a change of control where the Company does not survive, all outstanding
stock options shall be assumed or replaced with comparable options of the
surviving corporation. The Committee is responsible to determine the
comparability and its decision is final and binding. Notwithstanding the
foregoing, upon a change of control, the Committee may require option holders to
surrender their outstanding options for cash or Company stock.
FEDERAL INCOME TAX CONSEQUENCES
There are no federal income tax consequences to optionees or to the Company
upon the grant of an NQSO under the Plan. Upon the exercise of NQSOs, optionees
will recognize ordinary compensation income in an amount equal to the excess of
the fair market value of the shares at the time of exercise over the exercise
price of the NQSO, and the company generally will be entitled to a corresponding
federal income tax deduction. Upon the sale of shares of common stock acquired
by exercise of an NQSO, an optionee will have a capital gain or loss (long-term
or short-term depending upon the length of time the shares were held) in an
amount equal to the difference between the amount realized upon the sale and the
optionee's adjusted tax basis in the shares of common stock (the exercise price
plus the amount of ordinary income recognized by the optionee at the time of
exercise of the NQSO).
An optionee of an ISO will not recognize taxable income for purposes of the
regular income tax, upon either the grant or exercise of the ISO. However, for
purposes of the alternative minimum tax imposed under the Code, in the year in
which an ISO is exercised, the amount by which the fair market value of the
shares of common stock acquired upon exercise exceeds the stock option price
will be treated as an item of adjustment and included in the computation of the
recipient's alternative minimum taxable income in the year of exercise. An
optionee will recognize long-term capital gain or loss on a disposition of the
shares acquired upon exercise of an ISO provided that the optionee does not
dispose of such shares within two years from the date the ISO was granted and
within one year after such shares were transferred to him. If the optionee
satisfies the foregoing holding periods, then the company will not be allowed a
deduction by reason of the grant or exercise of the ISO. As a general rule, if
an optionee disposes of the shares acquired upon exercise of an ISO before
satisfying both holding period requirements (a "disqualifying disposition"), the
gain recognized on such a disposition will be taxed as ordinary income to the
extent of the difference between the fair market value of such shares on the
date of exercise and the option price, and the company will be entitled to a
deduction in that amount. The gain, if any, in excess of the amount recognized
as ordinary income on such a disqualifying disposition will be long-term or
short-term capital gain, depending upon the length of time the optionee held the
shares prior to the disposition.
SECTION 162(m) OF THE CODE
Under section 162(m) of the Code, the Company may be precluded from
claiming a federal income tax deduction for total remuneration in excess of
$1,000,000 paid to the chief executive officer or to any of the other four most
highly compensated officers of a public company in any one year. An exception
does exist,
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however, for "performance-based compensation," including amounts received upon
the exercise of stock options pursuant to a plan approved by shareholders that
meets certain requirements. The Plan is intended to satisfy these requirements.
Options granted at below market value, however, will not qualify as
performance-based compensation for these purposes.
ACCOUNTING CONSEQUENCES
There is no charge to the income of the Company in connection with the
grant or exercise of an option under the Plan as long as the exercise price is
not below the market price on the date of grant, the number of shares is fixed
at the grant date, and vesting is not conditioned upon performance. Any tax
benefit received by the Company upon exercise of an NQSO or as a result of a
disqualifying disposition of option shares obtained upon exercise of an ISO is
reflected as a credit to capital in excess of par value and not as income.
Earnings per share may be affected by the Plan by the effect on the calculation,
as prescribed under generally accepted accounting principles, of the number of
outstanding shares of common stock. At the time shares are actually issued as a
result of the exercise of stock options, additional dilution of earnings per
share could result.
OPTION GRANT INFORMATION
As of March 31, 1997, grants of stock options to purchase 975,000 shares of
Common Stock were outstanding (132,500 of which are subject to Shareholder
approval). The stock options granted under the Plan are held by 62 employees and
4 non-employee directors. Grants of stock options to purchase 425,000 shares of
Common Stock have been granted, in the aggregate, to directors. The stock
options that have been granted are either immediately exercisable or are subject
to periodic vesting over a period of up to five years. As of March 31, 1997, the
weighted average exercise price of all the stock options is $27.69 per share.
Set forth below is the number of shares underlying options granted in 1997
under the Plan out of the 600,000 additional shares of Common Stock to be
reserved for issuance pursuant to the Plan if the proposed amendment to the Plan
is approved.
NEW PLAN BENEFITS
NUMBER OF
NAME AND POSITION OPTIONS
- ---------------------------------------------------------------------------------- ---------
Thomas L. Simpson
Chief Operating Officer......................................................... 75,000
Eugene L. Step
Director........................................................................ 25,000
All eligible employees who are not executive officers as a group (5 persons)...... 32,500
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of its Audit Committee, has
selected the firm of Deloitte & Touche LLP to serve as independent public
accountants for the Company for the current fiscal year. Representatives of
Deloitte & Touche LLP are expected to be present at the Meeting and will have
the opportunity to make a statement if they desire to do so. The representatives
are also expected to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Meeting is required for
ratification of the selection of Deloitte & Touche LLP as the Company's
independent public accountants for fiscal year 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF THE
AUDITORS.
On February 18, 1997, the Company appointed the accounting firm of Deloitte
& Touche LLP as the Company's independent public accountants, to audit the books
and records of the Company and its subsidiaries beginning with the financial
statements for the fiscal year ended December 31, 1996.
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Deloitte & Touche LLP had been the independent public accountants for DBT
for the fiscal year ended December 31, 1995. Ernst & Young LLP had been the
independent public accountants for Patlex for the fiscal years ended June 30,
1995 and 1996, and served as the independent public accountants for the Company
as a newly formed holding company in connection with the Reorganization and for
the fiscal year ended June 30, 1996. As a result of the Reorganization, the
Company adopted a December 31 fiscal year.
On February 18, 1997, the Company dismissed Ernst & Young LLP as the
Company's independent public accountants and selected Deloitte & Touche LLP to
replace Ernst & Young LLP in this role. The decision to change the Company's
accountants and auditors was approved by the Audit Committee of the Board of
Directors.
During the two fiscal years ended June 30, 1996, and the subsequent period
through February 18, 1997, there were no disagreements between the Company (or
Patlex as the predecessor to the Company) and Ernst & Young LLP on any matter
relating to accounting principles or practices, financial statement disclosure,
or auditing scope or procedures which disagreements, if not resolved to Ernst &
Young LLP's satisfaction, would have caused them to make reference in connection
with their reports to the subject matter of the disagreement. In addition, Ernst
& Young LLP's reports on the financial statements of the Company (or Patlex as
the predecessor to the Company) for the two fiscal years ended June 30, 1996,
contained no adverse opinions or disclaimers of opinion nor were such reports
qualified or modified as to uncertainty, audit scope or accounting principles.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Annual Meeting of
Shareholders in 1998 must be received by the Company by December 29, 1997 in
order to be considered for inclusion in the Company's proxy statement and form
of proxy relating to that Meeting.
COST OF SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of the Board of
Directors' proxies for the Meeting, including the cost of preparing, assembling
and mailing proxy material, the handling and tabulation of the proxies received
and charges of brokerage houses and other institutions, nominees and fiduciaries
forwarding such materials to beneficial owners. In addition to the mailing of
the proxy material, such solicitation may be made in person or by telephone or
telegraph by directors, officers or regular employees of the Company, or other
persons who may be engaged to perform soliciting activities.
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DBT ONLINE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank Borman and Thomas L. Simpson, and each
of them acting alone, with the power to appoint his substitute, proxy to
represent the undersigned and vote as designated below all of the shares of
Common Stock of DBT Online, Inc. held of record by the undersigned on April 15,
1997, at the Annual Meeting of Shareholders to be held on May 22, 1997 and at
any adjournments or postponements thereof.
1. Approval of all three Class I nominees for the Company's Board of Directors
as listed below.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.
Kenneth G. Langone Eugene L. Step Sari Zalcberg
2. Approval of the amendment to the Company's Amended and Restated Stock Option
Plan to increase the number of shares of Common Stock authorized for issuance
from 900,000 to 1,500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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3. Approval of Deloitte & Touche LLP as the independent auditors of the Company
for 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In his discretion, the proxy is authorized to vote upon such other matters as
may properly come before the meeting or any adjournments or postponements
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSAL 1, "FOR" PROPOSAL 2 AND "FOR" PROPOSAL 3.
Dated:
- --------------------------------------, 1997 -----------------------------------
Signature
-----------------------------------
Signature if held jointly
Please sign exactly as name appears
to the left. When shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.