<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Infinium Software, Inc.
(Name of Registrant as Specified In Its Charter)
[ ]
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
INFINIUM SOFTWARE, INC.
25 COMMUNICATIONS WAY
HYANNIS, MASSACHUSETTS 02601
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 5, 1999
------------------------
To the Stockholders of Infinium Software, Inc.:
The Annual Meeting of Stockholders of Infinium Software, Inc. a
Massachusetts corporation (the "Corporation"), will be held on Friday, February
5, 1999 at 3:00 p.m., local time, at the Sheraton Hyannis Resort located at West
End Circle, Hyannis, Massachusetts 02601 for the purpose of considering and
voting upon the following matters:
1. To elect one (1) Class III director to serve for a three-year term
or until his successor is elected and qualified;
2. To (i) amend the Corporation's 1995 Stock Plan to increase the
number of shares of common stock available to grant under the plan by
1,000,000 shares; and (ii) to approve the continuance of the 1995 Stock
Plan, as amended;
3. To ratify the selection of the firm of PricewaterhouseCoopers LLP
as independent auditors of the Corporation for the fiscal year ending
September 30, 1999; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on December 15, 1998
are entitled to notice of and to vote at the meeting and at any adjournments
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
By Order of the Board of Directors
ANNE MARIE MONK
Clerk
Hyannis, Massachusetts
December 29, 1998
<PAGE> 3
INFINIUM SOFTWARE, INC.
25 COMMUNICATIONS WAY
HYANNIS, MASSACHUSETTS 02601
------------------------
PROXY STATEMENT
------------------------
DECEMBER 29, 1998
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Infinium Software, Inc., a Massachusetts corporation (the
"Corporation"), for use at the Annual Meeting of Stockholders to be held on
Friday, February 5, 1999, at 3:00 p.m., local time, at the Sheraton Hyannis
Resort, West End Circle, Hyannis, Massachusetts 02601 and at any adjournments
thereof (the "Meeting").
Only stockholders of record at the close of business on December 15, 1998
(the "Record Date") will be entitled to receive notice of and to vote at the
Meeting and any adjournments thereof. As of that date, 12,518,835 shares of
common stock, $0.01 par value per share (the "Common Stock"), of the Corporation
were issued and outstanding. The holders of Common Stock are entitled to one
vote per share on any proposal presented at the Meeting. Stockholders may vote
in person or by proxy. Execution of a proxy will not in any way affect a
stockholder's right to attend the Meeting and vote in person. Any proxy may be
revoked by a stockholder at any time before its exercise by: (i) delivering
written revocation or a later dated proxy to the Clerk of the Corporation; or
(ii) attending the Meeting and voting in person.
The representation in person or by proxy of at least a majority of the
outstanding Common Stock entitled to vote at the Meeting is necessary to
constitute a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker "non-votes" are counted as present or
represented for purposes of determining the presence or absence of a quorum for
the Meeting. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because, in
respect of such other proposal, the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
The persons named as attorneys-in-fact in the proxies are officers of the
Corporation. All properly executed proxies returned in time to be counted at the
Meeting will be voted. In addition to the election of a director, the
stockholders will consider and vote upon proposals to amend and continue the
Corporation's 1995 Stock Plan and to ratify the selection of auditors, as
further described in this proxy statement. Where a choice has been specified on
the proxy with respect to the foregoing matters, the shares represented by the
proxy will be voted in accordance with the specifications and will be voted FOR
if no specification is indicated.
The Board of Directors knows of no other matters to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as attorneys in the proxies.
In the election of a director, the nominee receiving the highest number of
affirmative votes of the shares present or represented and entitled to vote at
the Meeting shall be elected as a director. Votes withheld from the election of
a director will be excluded entirely from the vote and will have no effect.
Approval of the proposals set forth under Items 2 and 3 require the affirmative
vote of the holders of a majority of the shares present or represented and
voting on the matter. An automated system administered by the Corporation's
transfer agent tabulates the votes on each matter submitted to stockholders.
Abstentions are included in the number of shares present or represented and
voting on each matter, and will have the effect of a negative vote on the item
voted upon. Broker "non-votes" are not so included and will have no effect on
the outcome of the vote on the item.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended September 30, 1998, is being mailed together with this proxy
statement to all stockholders entitled to vote. This proxy statement and the
form of proxy were first mailed to stockholders on or about December 29, 1998.
<PAGE> 4
MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information as of October 31, 1998,
regarding the beneficial ownership of shares of the Corporation's Common Stock
by (i) each person or entity who, to the knowledge of the Corporation, owns
beneficially more than 5% of the outstanding Common Stock of the Corporation;
(ii) each director and director nominee of the Corporation; (iii) each executive
officer identified in the Summary Compensation Table set forth below under
"Compensation of Executive Officers"; and (iv) all executive officers, directors
and director nominees of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT
NAME OF BENEFICIAL OWNER OF OWNERSHIP (1) OF CLASS (2)
- ------------------------ ---------------- ------------
<S> <C> <C>
5% STOCKHOLDERS
Robert A. Pemberton......................................... 2,214,389(3) 17.7%
c/o Infinium Software, Inc.
25 Communications Way
Hyannis, MA 02601
Kopp Investment Advisors, Inc............................... 1,856,700(4) 14.8%
6600 France Avenue South, Suite 672
Edina, Minnesota 55435
DIRECTORS AND EXECUTIVE OFFICERS
Frederick J. Lizza.......................................... 282,641(5) 2.2%
John W. Baumstark........................................... 187,320(6) 1.5%
Daniel J. Kossmann.......................................... 175,214(7) 1.4%
Francis J. Torbey........................................... 44,525(8) *
R. Stephen Cheheyl.......................................... 23,000(9) *
Manuel Correia.............................................. 58,522(10) *
Roland D. Pampel............................................ 23,000(11) *
Robert P. Schechter......................................... 23,000(12) *
All executive officers and directors as a group (ten
persons).................................................. 3,148,417(13) 23.7%
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise noted, each person or entity named in the table has
sole voting and investment power with respect to the shares. The inclusion
herein of any shares of Common Stock deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission (the "SEC"), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which an individual or group
has sole or shared voting power or investment power and also any shares
which an individual or group has the right to acquire within 60 days after
October 31, 1998.
(2) Applicable percentage of ownership as of October 31, 1998 is based upon
12,517,289 shares of Common Stock outstanding on such date. Shares of
Common Stock subject to options currently exercisable or exercisable within
60 days after October 31, 1998 are deemed outstanding for computing the
percentage ownership of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person.
(3) Includes 8,142 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998. Also includes
175,000 shares held by the Pemberton Family Foundation, Inc., a
not-for-profit organization as to which Mr. Pemberton disclaims beneficial
ownership, is exempt from tax under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the directors and
officers of which are Mr. Pemberton and his spouse, Patricia Pemberton.
Also includes 2,031,863 shares held by The Robert A. Pemberton Family
Trust, dated December 30, 1988, of which Mr. Pemberton is a trustee.
2
<PAGE> 5
(4) Based solely upon information reported on Amendment No. 3 to Schedule 13G
as filed with the SEC on February 10, 1998 by Kopp Investment Advisors,
Inc. ("Kopp"), reporting that (a) although Kopp exercises investment
discretion as to these shares, it votes only 320,500 of such shares and is
not the record owner of any of such shares and (b) Kopp is an investment
adviser registered under the Investment Advisers Act of 1940.
(5) Includes 246,295 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998.
(6) Includes 137,320 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998.
(7) Includes 125,214 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998.
(8) Includes 43,677 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998.
(9) Includes 22,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998.
(10) Includes 50,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998. Includes
1,000 shares held jointly by Mr. Correia with his spouse, Rose Marie
Correia, and 7,522 shares held jointly by Mr. Correia with his brother,
David Correia.
(11) Includes 22,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998.
(12) Includes 22,000 shares of Common Stock issuable pursuant to outstanding
stock options exercisable within 60 days of October 31, 1998. Includes
1,000 shares held jointly by Mr. Schechter with his spouse, Susan
Schechter.
(13) Includes 783,454 shares of Common Stock issuable to all executive officers
and directors pursuant to outstanding stock options exercisable within 60
days of October 31, 1998 (of which 106,806 shares of Common Stock are
issuable to Anne Marie Monk pursuant to outstanding stock options
exercisable within 60 days of October 31, 1998) and 10,000 shares of Common
Stock acquired by Ms. Monk.
PROPOSAL 1
ELECTION OF DIRECTORS
1 The Board of Directors is currently fixed at six members. The Board of
Directors is divided into three classes, each of which consists of two
directors. Each director generally serves for a three-year term. The term of the
Class III directors will expire at this Meeting. All directors will hold office
until their successors have been duly elected and qualified or until their
earlier resignation or removal. Manuel Correia and Frederick J. Lizza are the
Class I directors; Robert A. Pemberton and Robert P. Schechter are the Class II
directors; and Roland D. Pampel and R. Stephen Cheheyl are the Class III
directors.
The Board of Directors has nominated and recommended that Mr. Pampel, who
is currently a member of the Board of Directors, be elected a Class III
director, to hold office until the Annual Meeting of Stockholders to be held in
2002 or until his successor has been duly elected and qualified or until his
earlier resignation or removal. The Corporation's other current Class III
director, Mr. Cheheyl, is not standing for re-election to the Board of
Directors. The Company anticipates that in the near future the Board of
Directors will appoint another member to the Board of Directors to serve for the
remainder of the full term of the Class III directors and until such director's
successor has been duly elected and qualified or until such director's earlier
resignation or removal. The Board of Directors knows of no reason why the
nominee should be unable or unwilling to serve, but if the nominee should for
any reason be unable or unwilling to serve, the proxies will be voted for the
election of such other person for the office of director as the Board of
Directors may recommend in the place of such nominee. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
nominee named below. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE NOMINEE LISTED BELOW.
3
<PAGE> 6
The following table sets forth the nominee to be elected at the Meeting,
the directors whose term of office will extend beyond the Meeting, the year such
nominee or director was first elected a director, the positions currently held
by such nominee or such director with the Corporation, the year the nominee's or
director's term will expire and the class of director of the nominee and each
director:
<TABLE>
<CAPTION>
NOMINEE'S OR DIRECTOR'S CALENDAR
NAME AND YEAR NOMINEE OR DIRECTOR YEAR TERM CLASS OF
FIRST BECAME A DIRECTOR POSITION(S) WITH THE CORPORATION WILL EXPIRE DIRECTOR
- --------------------------------- -------------------------------- ----------- --------
<S> <C> <C> <C>
NOMINEE:
Roland D. Pampel................... Director 1999 III
1995
CONTINUING DIRECTORS:
Manuel Correia..................... Director 2000 I
1996
Frederick J. Lizza................. Director, President and Chief 2000 I
1996 Executive Officer
Robert A. Pemberton................ Director and Chairman of the Board 2001 II
1981
Robert P. Schechter................ Director 2001 II
1995
</TABLE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of September 30, 1998, the director
nominee to be elected at the Meeting, the directors and the executive officers
of the Corporation, their ages, and their positions with the Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Robert A. Pemberton........................ 57 Director and Chairman of the Board
Frederick J. Lizza......................... 43 Director, President and Chief Executive
Officer
John W. Baumstark.......................... 36 Senior Vice President, Field Operations
Chief Financial Officer, Vice President and
Daniel J. Kossmann......................... 42 Treasurer
Anne Marie Monk............................ 40 General Counsel, Vice President, Secretary
and Clerk
Francis J. Torbey.......................... 41 Senior Vice President, Application
Development
R. Stephen Cheheyl(1)...................... 52 Director
Manuel Correia(2).......................... 63 Director
Roland D. Pampel(2)........................ 64 Director
Robert P. Schechter(1)..................... 50 Director
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Robert A. Pemberton founded the Corporation and has served as Chairman of
the Board and a Director since 1981. He served as Chief Executive Officer from
1981 to December 1996 and as President from 1981 to 1990 and from 1993 to
February 1996. Before founding the Corporation, Mr. Pemberton held management
positions at State Street Bank and Trust Company in Boston and was a Vice
President at Boston Safe Deposit and Trust Company.
Frederick J. Lizza joined the Corporation in January 1995 as Executive Vice
President, Product Development and Marketing and assumed responsibility for
Customer Support in September 1995. From February to December 1996, Mr. Lizza
served as President and Chief Operating Officer of the Corporation. He was
elected as a Director of the Corporation in April 1996 and became President and
Chief Executive
4
<PAGE> 7
Officer in December 1996. Before joining the Corporation, Mr. Lizza held various
executive positions at Trinzic Corporation from 1986 to January 1995, most
recently as Vice President and General Manager, Data Access Product Group. Mr.
Lizza previously held various marketing management positions at Software
International (a subsidiary of General Electric Information Services) and at
Arthur Andersen & Company.
John W. Baumstark joined the Corporation in April 1989 and has been Senior
Vice President, Field Operations since July 1995, after having served as Vice
President, Worldwide Sales and Service Operations from October 1994 to July
1995, Vice President, North American Operations from September 1993 to October
1994 and Regional Sales Manager from December 1991 to September 1993. Before
joining the Corporation, Mr. Baumstark held various sales and marketing
positions at NCR Corporation from June 1984 to March 1986 and at Management
Science America from March 1986 to April 1989.
Daniel J. Kossmann joined the Corporation in June 1992 as Chief Financial
Officer and Vice President. He is responsible for the finance, information
systems and operations functions. Before joining the Corporation, Mr. Kossmann
was Vice President, Finance and Administration and Chief Financial Officer of
Datalogix International Inc. from 1989 to June 1992, and held various management
positions at National Education Corporation from 1981 to 1988. From 1978 to
1981, Mr. Kossmann was employed by Price Waterhouse LLP.
Anne Marie Monk joined the Corporation in October 1991 as General Counsel
and has served as General Counsel and Vice President since February 1993. She is
responsible for the legal, contracts administration, customer relations and
human resources functions. Before joining the Corporation, Ms. Monk was
associated with the Boston law firms of Csaplar & Bok and Gaston & Snow from
1985 to 1991.
Francis J. Torbey joined the Corporation in June 1996 as Vice President,
Application Development and became Senior Vice President, Application
Development of the Corporation in October 1996. He is responsible for all
application development and research groups. Before joining the Corporation, Mr.
Torbey was an executive of Landmark Systems Inc. from 1993 to 1996, most
recently as Vice President of Distributed Products. From 1990 to 1993, Mr.
Torbey was Director of Research and Development for Intersolv Inc. and held
various management positions at Air Products and Chemicals, Inc. from 1979 to
1990.
R. Stephen Cheheyl has been a Director of the Corporation since July 1995.
From October 1994 until he retired in December 1995, Mr. Cheheyl served as an
Executive Vice President of Bay Networks, Inc., which was formed though the
merger of Wellfleet Communications, Inc. ("Wellfleet") and Synoptics
Communications Inc. From December 1990 to October 1994, Mr. Cheheyl served as
Senior Vice President, Finance and Administration, of Wellfleet. He also serves
as a director of Auspex Systems, Inc., Sapient Corporation and MCMS, Inc.
Manuel Correia has been a Director of the Corporation since September 1993.
Mr. Correia has served as Chief Operating Officer of CoWare, Inc. since May
1997. Mr. Correia served as Vice President, Technical Services of Cadence Design
Systems Inc. ("Cadence") from 1994 to May 1997, Vice President, Applications
Engineering Operations of Cadence from 1993 to 1994 and as Vice President,
Customer Service of Cadence from 1991 to 1993. Mr. Correia is also a director of
C.ATS Software Inc.
Roland D. Pampel has been a Director of the Corporation since July 1995.
Mr. Pampel was the President and Chief Executive Officer of Microcom Corporation
from March 1994 until his retirement in January 1997 and a director of Microcom
from March 1994 until May 1997 when Microcom was acquired. Before joining
Microcom, Mr. Pampel served as the President, Chief Executive Officer and a
director of Nicolet Instrument Corporation from October 1991 to December 1993,
and as President, Chief Executive Officer and a director of Bull HN Information
Systems from January 1988 to July 1990. Mr. Pampel is also a director of Cayenne
Software, Inc. and Peritus Software Inc.
Robert P. Schechter has been a Director of the Corporation since July 1995.
Mr. Schechter has been the President, Chief Executive Officer and a director of
Natural MicroSystems Corporation since May 1995 and Chairman since March 1996.
From 1987 to 1994, Mr. Schechter held various senior executive positions at
Lotus Development Corporation and from 1980 to 1987 was a partner of Coopers &
Lybrand LLP.
5
<PAGE> 8
Executive officers of the Corporation are elected by the Board of Directors
on an annual basis and serve until the next annual meeting of the Board of
Directors and until their successors have been duly elected and qualified.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four (4) times during the fiscal year ended
September 30, 1998. Each director attended at least 75% of the meetings of the
Board of Directors and all committees of the Board on which he served. The
Corporation has an Audit Committee and a Compensation Committee. The Audit
Committee of the Board of Directors, whose members currently are Messrs. Cheheyl
and Schechter, is responsible for reviewing the scope, results and costs of the
audit with the Corporation's independent accountants, and reviewing the
financial statements and audit practices of the Corporation. The Audit Committee
met four (4) times during the last fiscal year. The Compensation Committee,
whose members currently are Messrs. Correia and Pampel, is responsible for
recommending compensation and benefits for the executive officers of the
Corporation to the Board of Directors and for administering the Corporation's
1984 Incentive Stock Option Plan, as amended, the 1989 Stock Option Plan (the
"1989 Plan"), the 1995 Stock Plan, as amended (the "1995 Plan"), the 1995
Employee Stock Purchase Plan (the "Purchase Plan") and the 1995 Non-Employee
Director Stock Option Plan (the "Director Plan"). The Compensation Committee met
five (5) times during fiscal 1998.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth summary information concerning the
compensation earned for services rendered to the Corporation in all capacities
during the fiscal years ended September 30, 1998, 1997 and 1996 for (i) the
Corporation's Chief Executive Officer and (ii) each of the other four most
highly compensated executive officers of the Corporation who received total
annual salary and bonus in excess of $100,000 in fiscal 1998 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION(3)
ANNUAL COMPENSATION AWARDS
------------------------------------- ----------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
POSITION(1) YEAR SALARY BONUS COMPENSATION(2) OPTIONS(#) COMPENSATION
- ------------------------ ------- -------- -------- --------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Pemberton..... 1998 $175,000 $ 61,112 $ -- 30,000 $ 77,099(4)
Chairman 1997 182,000 79,122 -- -- 124,566(5)
1996 242,000 59,423 -- -- 127,554(6)
Frederick J. Lizza...... 1998 260,000 95,932 920(7) 30,000 3,579(4)
President and Chief 1997 241,667 122,102 -- 170,000 5,010(5)
Executive Officer 1996 190,625 50,310 -- 180,000 3,429(6)
John W. Baumstark....... 1998 200,000 146,093 1,104(7) 30,000 3,590(4)
Senior Vice President 1997 175,000 166,228 -- 75,000 3,414(5)
1996 160,000 46,719 41,651(8) 28,000 1,600(6)
Daniel J. Kossmann...... 1998 175,000 63,955 920(7) 25,000 3,608(4)
Chief Financial 1997 165,000 80,099 -- 70,000 4,688(5)
Officer 1996 152,000 39,299 -- 28,000 3,040(6)
Francis J. Torbey....... 1998 180,000 56,848 7,527(7) 30,000 3,963(4)
Senior Vice President, 1997(9) 170,000 68,377 119,411(10) 50,000 3,979(5)
Application
Development
</TABLE>
- ---------------
(1) Principal positions shown are those held as of September 30, 1998, which is
the end of fiscal year 1998. In December 1996, Mr. Pemberton ceased to
serve as Chief Executive Officer of the Corporation and Mr. Lizza became
Chief Executive Officer of the Corporation.
6
<PAGE> 9
(2) In accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted in those instances
where the aggregate amount of such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total of annual
salary and bonuses for the Named Executive Officer for such year.
(3) Represents stock options granted during fiscal 1996, 1997 and 1998 under
the Corporation's 1989 Plan and 1995 Plan. The Corporation did not make any
restricted stock awards, grant any stock appreciation rights ("SARs") or
make any long-term incentive plan payouts during fiscal 1996, 1997 or 1998.
(4) Represents (a) disability insurance premiums of $950 paid on policies
maintained by the Corporation for the benefit of separate trusts for the
benefit of Mr. Pemberton's family members (the "Pemberton Family Trusts");
(b) Corporation matching contributions under the 401(k) Plan of $4,821 for
Mr. Pemberton, $3,579 for Mr. Lizza, $3,590 for Mr. Baumstark, $3,608 for
Mr. Kossmann and $3,963 for Mr. Torbey; (c) life insurance premiums paid on
a universal life policy maintained by the Corporation of $3,877 for Mr.
Pemberton; and (d) the dollar value of the benefit to Mr. Pemberton of
split-dollar life insurance premiums paid by the Corporation on policies
providing total coverage of $10,000,000 owned by the Pemberton Family
Trusts, determined to be $67,490 on an actuarial basis. The premium
payments made by the Corporation under the split-dollar life insurance
policies are advances for the benefit of the Pemberton Family Trusts which
are secured by assignments of the related insurance policies. The premium
advances made by the Corporation under the split-dollar plans will be
repaid (without interest) out of the death benefits payable under the
policies.
(5) Represents (a) disability insurance premiums of $950 paid on policies
maintained by the Corporation for the benefit of separate trusts for the
benefit of the Pemberton Family Trusts; (b) Corporation matching
contributions under the 401(k) Plan of $3,643 for Mr. Pemberton, $5,010 for
Mr. Lizza, $3,414 for Mr. Baumstark, $4,688 for Mr. Kossmann, $3,292 for
Ms. Monk and $3,979 for Mr. Torbey; (c) life insurance premiums paid on a
universal life policy maintained by the Corporation of $3,876 for Mr.
Pemberton; and (d) the dollar value of the benefit to Mr. Pemberton of
split-dollar life insurance premiums paid by the Corporation on policies
providing total coverage of $10,000,000 owned by the Pemberton Family
Trusts, determined to be $116,097 on an actuarial basis. The premium
payments made by the Corporation under the split-dollar life insurance
policies are advances for the benefit of the Pemberton Family Trusts which
are secured by assignments of the related insurance policies. The premium
advances made by the Corporation under the split-dollar plans will be
repaid (without interest) out of the death benefits payable under the
policies.
(6) Represents (a) disability insurance premiums paid by policies maintained by
the Corporation, (b) the Corporation matching contributions under the
401(k) Plan, (c) life insurance premiums paid on a universal life insurance
policy maintained by the Corporation, and (d) the dollar value to Mr.
Pemberton of split dollar life insurance premiums paid on policies
maintained by the Corporation, determined on an actuarial basis.
(7) Represents tax adjustments paid during the fiscal year.
(8) Represents sales commissions for the fiscal year.
(9) Mr. Torbey became an executive officer in October 1996. Information is
provided as to all compensation of Mr. Torbey for service to the
Corporation in all capacities during the entire fiscal year.
(10) Includes approximately $107,000 of expenses incurred in connection with Mr.
Torbey's relocation from Maryland to the Hyannis area.
EXECUTIVE COMPENSATION PLAN AND SEVERANCE AGREEMENTS
For fiscal 1996, 1997, and 1998 each of the executive officers of the
Corporation participated in an incentive bonus plan which provided cash bonuses
based upon the attainment of certain corporate quarterly and annual profits
targets and annual revenues and bookings targets. The amounts of these bonuses
earned in such fiscal years are included in the compensation table set forth
above.
In addition to the bonus plan, each of the executive officers of the
Corporation has a severance agreement which provides that, in the event the
executive is terminated without cause and the executive enters into a
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<PAGE> 10
one-year non-competition agreement with the Corporation, he or she will be
entitled to receive (i) severance pay from the Corporation in a lump sum equal
to the total annual target compensation for the year (salary and bonuses), (ii)
employee benefits for one year following the date of termination and (iii)
acceleration of the vesting of all outstanding options.
OPTION GRANTS TABLE
The following table sets forth certain information concerning grants of
stock options made during fiscal 1998 to the Named Executive Officers. No SARs
were granted during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
---------------------------------------------------------- REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE OR PRICE APPRECIATION
OPTIONS EMPLOYEES IN BASE PRICE FOR OPTIONS TERM($)(4)
GRANTED FISCAL YEAR PER EXPIRATION ----------------------
NAME (#)(1) (%)(2) SHARE($)(3) DATE 5% 10%
- ---- ---------- ------------- ----------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Pemberton........ 30,000 5% $16.00 10/31/2007 $301,869 $764,996
Frederick J. Lizza......... 30,000 5% 16.00 10/31/2007 301,869 764,996
John W. Baumstark.......... 30,000 5% 16.00 10/31/2007 301,869 764,996
Daniel J. Kossmann......... 25,000 4% 16.00 10/31/2007 251,558 637,497
Francis J. Torbey.......... 30,000 5% 16.00 10/31/2007 301,869 764,996
</TABLE>
- ---------------
(1) The per share exercise price of all options is the market price of the
Common Stock on the date of grant, and the term of each option is ten years,
subject to earlier termination upon termination of employment. The
exercisability of all such options accelerates upon termination of the
optionee's employment for any reason other than cause if the optionee
executes a one-year non-competition agreement with the Corporation.
(2) Based on an aggregate of 589,900 shares subject to options granted to
employees of the Corporation in fiscal 1998.
(3) The exercise or base price per share of each option was equal to the fair
market value of the Common Stock on the date of grant, as determined by the
Compensation Committee of the Board of Directors.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date and are not intended to forecast possible future
appreciation, if any, in the price of the Common Stock. The gains shown are
net of the option exercise price, but do not include deductions for taxes or
other expenses associated with the exercise of the options or the sale of
the underlying shares. The actual gains, if any, on the stock option
exercises will depend on the future performance of the Common Stock, the
optionholder's continued employment through the option vesting period and
the date on which the options are exercised.
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<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Corporation's Common Stock granted to the Named Executive Officers,
including (i) the number of shares of Common Stock purchased upon exercise of
options during the fiscal year ended September 30, 1998; (ii) the net value
realized upon such exercise; (iii) the number of unexercised options outstanding
at September 30, 1998; and (iv) the value of such unexercised options at
September 30, 1998:
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES VALUE OPTIONS AT FISCAL YEAR-END(#) FISCAL YEAR-END ($)(3)
ACQUIRED ON REALIZED ------------------------------ ---------------------------
NAME EXERCISE(#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Pemberton...... -- $ -- 0 30,000 $ 0 $ 0
Frederick J. Lizza....... 29,946 242,803 201,653 289,001 472,096 492,856
John W. Baumstark........ 50,357 334,532 87,071 118,572 388,318 256,089
Daniel J. Kossmann....... 79,999 822,141 83,643 103,358 405,545 207,916
Francis J. Torbey........ -- -- 27,678 77,322 60,154 114,845
</TABLE>
- ---------------
(1) The Corporation has not granted SARs.
(2) Amounts disclosed in this column are calculated based on the difference
between the fair market value of the Corporation's Common Stock on the date
of exercise and the exercise price of the options. The Named Executive
Officers will receive cash only if and when they sell the Common Stock
issued upon exercise of the options and the amount of cash received by such
individuals is dependent on the price of the Corporation's Common Stock at
the time of such sale.
(3) Value is based on the difference between the option exercise price and the
fair market value at September 30, 1998, the fiscal year end ($9.375 per
share closing price as quoted on the Nasdaq National Market), multiplied by
the number of shares underlying the option.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation Committee of the Board of Directors, which is comprised of two
non-employee directors: Messrs. Correia and Pampel. From time to time, Mr. Lizza
(the Chief Executive Officer) and Ms. Monk (the General Counsel) may attend
meetings of the Compensation Committee.
Pursuant to authority delegated by the Board of Directors, the Compensation
Committee is responsible for establishing, amending, terminating and making
grants under the Corporation's stock option plans and reviewing and approving
cash and noncash compensation matters concerning the executive officers of the
Corporation. The Compensation Committee's objective is to establish compensation
programs designed to (a) attract, retain and reward executives who will lead the
Corporation in achieving its business goals and (b) align the financial
interests of the Corporation's executives with those of its long-term investors.
Overview
Compensation under the executive compensation program is comprised of cash
compensation in the form of salary, quarterly and annual incentive bonuses, and
long-term incentive awards in the form of stock option grants. In addition, the
compensation program is comprised of various benefits, including medical,
disability and life insurance plans, financial planning assistance, the Purchase
Plan and a 401(k)-qualified savings and profit-sharing plan. All of these plans,
other than the financial planning assistance, are generally available to all
employees of the Corporation.
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<PAGE> 12
In the first half of the 1996 fiscal year, the Corporation commissioned an
independent outside consulting firm to conduct a total compensation survey of
the compensation of certain executive positions in a group of companies selected
on the basis of similarity in revenue level, industry segment and competitive
employment market to the Corporation. In addition, the Corporation annually
reviews proxy information from companies deemed comparable and data from a
number of compensation surveys, including nationally recognized compensation
surveys.
Base Salary
Base salary levels for each of the Corporation's executive officers,
including the Chief Executive Officer, are generally set within a range of base
salaries that the Compensation Committee believes are paid to similar executive
officers at companies deemed comparable based on the similarity in revenue
level, industry segment and competitive employment market to the Corporation. In
addition, the Compensation Committee generally takes into account the
Corporation's past financial performance and future expectations, as well as the
performance of the executives and changes in executives' responsibilities.
Base salary levels for fiscal year 1998 for each of the Corporation's
executive officers, including the Chief Executive Officer, were determined based
on the data described above. Fiscal year 1998 base salary levels for each of the
executives generally were at or near the average salary levels for similar
executives at comparable companies.
Incentive Compensation
Each executive officer is eligible to receive cash bonuses at the end of
each fiscal quarter and at the end of the fiscal year based upon the
Corporation's performance. The Compensation Committee believes that the target
annual bonus amounts for fiscal year 1998 for each of the Corporation's
executive officers generally, including the Chief Executive Officer, were set
within the range of incentive compensation levels for similar executives at
comparable companies.
Generally, quarterly and annual bonuses are based on the Corporation's
performance in comparison to the quarterly and annual profit targets and annual
revenue targets, and, for Mr. Baumstark, quarterly software and services revenue
targets set by the executive officers and the Board of Directors at the
beginning of the fiscal year. Actual quarterly and annual bonuses earned in
fiscal 1998 were based on the Corporation's performance in comparison to the
quarterly and annual profit targets and annual revenue targets, and, for Mr.
Baumstark, quarterly software and services revenue targets set by the executive
officers and the Board of Directors at the beginning of fiscal 1998.
If the Corporation achieves or exceeds each of the performance targets on
which bonuses are based, each executive officer will receive an additional bonus
of 50% (30% in the case of Mr. Baumstark) of his or her respective target
amount. If the Corporation's performance is greater or less than its performance
targets in any quarter or for the fiscal year, actual quarterly and annual
bonuses paid will be greater or less than the target quarterly and annual bonus
by an accelerated or decelerated factor, as the case may be. In general, 50% of
the target annual bonus amount is based on quarterly performance and 50% is
based on annual performance.
Because the Corporation did not meet all of the performance goals set for
it by the executive officers and the Board of Directors for the fiscal year, the
bonuses that each executive officer received in fiscal year 1998 were 71% of the
target annual bonus amount set for each executive officer, except for Mr.
Baumstark, who received 83% of his target annual bonus amount. None of the
executives received the additional 50% (or 30%) bonus referred to above.
Quarterly and annual bonuses totaling $463,023 were awarded to the Corporation's
executive officers, of which Mr. Lizza received $95,932 and Messrs. Pemberton,
Kossmann, Baumstark and Torbey and Ms. Monk, collectively, received $367,091.
Stock Options
Stock options are the principal vehicle used by the Corporation for the
payment of long-term compensation, to provide a stock-based incentive to improve
the Corporation's financial performance and to
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<PAGE> 13
assist in the recruitment, retention and motivation of professional, managerial
and other personnel. The Corporation's stock option plans are administered by
the Compensation Committee. To date, the Compensation Committee has not granted
stock options at less than fair market value.
Generally, stock options are granted to eligible employees from time to
time based primarily upon the individual's actual and/or potential contributions
to the Corporation and the Corporation's financial performance. Stock options
are designed to align the interests of the Corporation's executive officers with
those of its stockholders by encouraging executive officers to enhance the value
of the Corporation, the price of the Common Stock, and hence, the stockholders'
return. In addition, the vesting of stock options over a period of time is
designed to create an incentive for the individual to remain with the
Corporation. The Corporation grants new options to the executives, including the
Chief Executive Officer, on an ongoing basis to provide continuing incentives to
the executives for future performance and to remain with the Corporation.
During the fiscal year ended September 30, 1998, options to purchase an
aggregate of 155,000 shares of Common Stock were awarded to the Corporation's
executive officers. Of such options, 30,000 were granted to Mr. Lizza.
Other Benefits
The Corporation also has various broad-based employee benefit plans.
Executive officers participate in these plans on the same terms as eligible,
non-executive employees, subject to any legal limits on the amounts that may be
contributed or paid to executive officers under these plans. The Corporation
offers a stock purchase plan, under which employees may purchase Common Stock at
a discount, and a 401(k) profit-sharing plan, which permits employees to invest
in a wide variety of funds on a pre-tax basis. The Corporation also maintains
medical, disability and life insurance plans and other benefit plans for its
employees. In addition, the Corporation also provides the executive officers of
the Corporation with financial planning assistance.
Tax Deductibility of Executive Compensation
Section 162(m) of the Code generally limits to $1 million the tax deduction
for compensation paid to any of the Named Executive Officers unless certain
requirements are met. The Compensation Committee has considered these
requirements and the related regulations. It is the Compensation Committee's
present intention that, so long as it is consistent with its overall
compensation objectives, substantially all executive compensation shall be
deductible for federal income tax purposes.
Mr. Lizza's Compensation
Consistent with the executive compensation policies described above of
providing salaries and target incentive compensation based on compensation
survey and proxy data for similar positions in comparable companies, the
Compensation Committee determined the base salary and target incentive
compensation for Mr. Lizza, the Corporation's Chief Executive Officer. For
fiscal 1998, Mr. Lizza received 71% of the target incentive compensation set for
him because the Corporation did not meet all of the performance goals set for it
by the executive officers and the Board of Directors for the fiscal year. For
the fiscal year, Mr. Lizza received $260,000 in base salary and was awarded
bonuses totaling $95,932 based upon corporate performance. Mr. Lizza's bonus
compensation for fiscal 1998 was approximately 37% of his base salary. Mr.
Lizza, who owned as of September 30, 1998, 36,346 shares of Common Stock in the
Corporation, was granted options to purchase 30,000 shares of Common Stock in
fiscal 1998.
RESPECTFULLY SUBMITTED BY THE
COMPENSATION COMMITTEE
Manuel Correia
Roland D. Pampel
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<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Correia and Pampel. No
person who served as a member of the Compensation Committee was, during the past
fiscal year, an officer or employee of the Corporation or any of its
subsidiaries, was formerly an officer of the Corporation or any of its
subsidiaries, or had any relationship requiring disclosure herein. No executive
officer of the Corporation served as a member of the compensation committee of
another entity (or other committee of the Board of Directors performing
equivalent functions or, in the absence of any such committee, the entire Board
of Directors), one of whose executive officers served as a director of the
Corporation.
COMPENSATION OF DIRECTORS
Each non-employee director of the Corporation receives $10,000 annually
(paid at the rate of $2,500 per quarter) for serving as a director and an
additional $1,000 for each Board meeting attended. The non-employee directors of
the Corporation are Messrs. Cheheyl, Correia, Pampel and Schechter. The
Corporation also reimburses non-employee directors for expenses incurred in
attending Board meetings. No additional compensation is paid to directors for
attending Board or committee meetings.
Under the Corporation's Director Plan, at each annual meeting, each
non-employee director of the Corporation will receive an option to purchase
4,000 shares of Common Stock, which will be exercisable over a four-year period
at the rate of 25% per year. In addition, any person shall, upon first becoming
a non-employee director, receive an option to purchase 28,000 shares, which will
also be exercisable over a four-year period at the rate of 25% per year. The
exercise price per share for all options granted under the Director Plan will be
equal to the market price of the Common Stock on the date of grant. During
fiscal 1998, each of the non-employee directors was granted an option to
purchase 4,000 shares of Common Stock at $16.125, the fair market value on the
date of grant.
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<PAGE> 15
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Corporation's Common Stock during the period from the
Corporation's initial public offering on November 17, 1995 through September 30,
1998, with the cumulative total return for The Nasdaq Stock Market (U.S.
companies) and the Hambrecht & Quist Computer Software Index (the "H & Q
Computer Index"). The comparison assumes $100 was invested on November 17, 1995
in the Corporation's Common Stock at the $11.00 initial offering price and in
each of the foregoing indices and assumes reinvestment of dividends, if any.
COMPARISON OF 34 MONTH CUMULATIVE TOTAL RETURN
AMONG INFINIUM SOFTWARE, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST COMPUTER SOFTWARE INDEX(1)(2)
[PERFORMANCE GRAPH]
NASDAQ HAMBRECHT
INFINIUM STOCK & QUIST
SOFTWARE, MARKET COMPUTER
INC. (U.S.) SOFTWARE
11/17/95 100 100 100
9/30/96 91 118 117
9/30/97 138 162 152
9/30/98 87 166 158
MEASUREMENT
PERIOD
(FISCAL YEAR INFINIUM NASDAQ STOCK H&Q COMPUTER
COVERED) SOFTWARE, INC. MARKET (U.S.) INDEX
- ------------ -------------- ------------- ------------
11/17/95 100 100 100
9/30/96 91 118 117
9/30/97 138 162 152
9/30/98 87 166 158
13
<PAGE> 16
- ---------------
(1) Before November 17, 1995 the Corporation's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
This chart is not "soliciting material", is not deemed filed with the SEC
and is not to be incorporated by reference in any filings of the Corporation
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether
made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
(2) The stock price performance shown on the graph is not necessarily indicative
of future price performance. Certain information used on this graph was
obtained from the Nasdaq Stock Market. The Nasdaq Stock Market -- US Index
was prepared by Nasdaq by the Center for Research in Security Prices at the
University of Chicago and the H & Q Computer Index was prepared by Research,
an independent company. Such sources are believed to be reliable, although
the Corporation is not responsible for any errors or omissions in such
information.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation has adopted a policy whereby all transactions between the
Corporation and its officers, directors and affiliates will be on terms no less
favorable to the Corporation than could be obtained from unrelated third parties
and will be approved by a majority of the disinterested members of the
Corporation's Board of Directors.
One member of Mr. Pemberton's family is employed by the Corporation in a
managerial, non-executive position. The Corporation believes that the
compensation paid by the Corporation to this family member is on terms no less
favorable to the Corporation than could be obtained from unrelated third
parties.
PROPOSAL 2
APPROVAL OF AMENDMENT TO AND CONTINUATION OF THE
CORPORATION'S 1995 STOCK PLAN
Stock options are the principal vehicle used by the Corporation for the
payment of long-term compensation, to provide a stock-based incentive to improve
the Corporation's financial performance and to assist in the recruitment,
retention and motivation of professional, managerial and other personnel. Under
the 1995 Plan, the Corporation is currently authorized to grant options to
purchase up to an aggregate of 3,500,000 shares of Common Stock to directors,
officers and employees of, and consultants to the Corporation. As of September
30, 1998, there were 1,150,855 shares available for future grant under the 1995
Plan. Accordingly, as of October 26, 1998, the Board of Directors adopted,
subject to stockholder approval, an amendment to the 1995 Plan that increases
the number of shares of Common Stock available for issuance upon exercise of
options granted under the 1995 Plan by 1,000,000 shares. Section 162(m) of the
Code generally disallows a tax deduction to public companies for compensation
over $1 million paid to the Corporation's Chief Executive Officer and four other
most highly compensated executive officers. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
satisfied. In particular, income recognized upon the exercise of a stock option
is not subject to the deduction limit if the option was issued under a plan
approved by stockholders that provides a limit to the number of shares that may
be issued under the plan to any individual.
In order for options and restricted stock awarded under the 1995 Plan, as
amended by the amendment, to comply with Section 162(m) after the Meeting, the
continuance of the 1995 Plan must be approved by the stockholders. If the
stockholders do not vote to continue the 1995 Plan, the Company will not grant
any further options or make any further awards of restricted stock under the
1995 Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENT TO AND CONTINUATION OF THE 1995 PLAN.
SUMMARY OF 1995 PLAN
On October 2, 1995, the Board of Directors adopted, and on October 20, 1995
the stockholders approved, the 1995 Plan. The 1995 Plan provides for the
issuance of incentive stock options and nonqualified stock
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<PAGE> 17
options, stock awards or purchase rights (collectively, "Awards") to employees,
consultants, directors and officers of the Corporation (collectively
"Participants"). Incentive stock options may only be granted to employees of the
Corporation. The maximum number of shares with respect to which incentive stock
options and non-qualified stock options may be granted to any Participant under
the 1995 Plan may not exceed 350,000 shares of Common Stock during any twelve
month period.
The 1995 Plan is administrated by the Compensation Committee of the Board
of Directors. Subject to the provisions of the 1995 Plan, the Compensation
Committee has the authority to select the optionees or stock recipients and
determine the terms of the options or restricted stock granted, including (i)
the number of shares, (ii) option exercise terms, (iii) the exercise or purchase
price (which in the case of an incentive stock option cannot be less than 100%
of the fair market value of the Common Stock as of the date of the grant or less
than 110% of the fair market value of the Common Stock in the case of incentive
stock options granted to employees holding more than 10% of the voting power of
the corporation), (iv) the duration of the option, which, in the case of
incentive stock options cannot exceed ten years, or five years in the case of
incentive stock options granted to a stockholder and (v) the time, manner and
form of payment for restricted stock and upon exercise of an option.
An option is not transferable by the optionholder except by will or by the
laws of descent and distribution, or, in the case of nonqualified options only,
pursuant to a valid domestic relations order. Generally, no incentive stock
option may be exercised more than three months following termination of
employment unless the termination is due to death or disability, in which case
the option is exercisable for a maximum of 180 days after such death or
termination. On December 18, 1998, the closing sales price of the Corporation's
Common Stock as reported on the Nasdaq National Market was $5.9375.
Because option grants under the 1995 Plan are determined on a case-by-case
basis by the Compensation Committee of the Board of Directors, the benefits to
be received by any particular current executive officer, by all current
executive officers as a group, or by non-executive officer employees as a group
cannot be determined by the Corporation at this time. During fiscal year 1998
all current executive officers as a group received options to purchase 155,000
shares of Common Stock, at a weighed average exercise price of $16.00 per share,
and all employees, excluding all current executive officers as a group, received
options to purchase 434,900 shares of Common Stock at a weighed average exercise
price of $15.20 per share. During fiscal year 1998, no current director of the
Company (other than Messrs. Pemberton and Lizza) received options under the 1995
Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
1995 Plan and with respect to the sale of Common Stock acquired under the 1995
Plan.
Incentive Stock Options. In general, a Participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a Participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the Participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the Participant has owned the ISO Stock at the time it is
sold. If the Participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the Participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the Participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the Participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the Participant has held
15
<PAGE> 18
the ISO Stock for more than one year prior to the date of sale.
If a Participant sells ISO Stock for less than the exercise price, then the
Participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the Participant has held the ISO Stock for more than
one year prior to the date of sale.
Nonstatutory Stock Options. As in the case of an incentive stock option, a
Participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
Participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a Participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a Participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the Participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term capital gain or loss if the Participant has held the
NSO Stock for more than one year prior to the date of the sale.
Stock Appreciation Rights. A Participant will not recognize taxable income
upon the grant of a stock appreciation right under the 1995 Plan. Instead, a
Participant generally will recognize as ordinary compensation income any cash
delivered and the fair market value of any Common Stock delivered in payment of
an amount due under a stock appreciation right.
Upon selling any Common Stock received by a Participant in payment of an
amount due under a stock appreciation right, the Participant generally will
recognize a capital gain or loss in an amount equal to the difference between
the sale price of the Common Stock and the Participant's tax basis in the Common
Stock. This capital gain or loss will be a long-term capital gain or loss if the
Participant has held the Common Stock for more than one year prior to the date
of the sale.
Restricted Stock. A Participant will not recognize taxable income upon the
grant of a restricted stock Award unless the Participant makes an election under
Section 83(b) of the Code (a "Section 83(b) Election"). If the participant makes
a Section 83(b) Election within 30 days of the date of the grant, then the
Participant will recognize ordinary compensation income, for the year in which
the Award is granted, in an amount equal to the difference between the fair
market value of the Common Stock at the time the Award is granted and the
purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, then the Participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The Participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the Participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the Common Stock and the
Participant's tax basis in the Common Stock. This capital gain or loss will be a
long-term capital gain or loss if the shares are held for more than one year.
For this purpose, the holding period shall begin just after the date on which
the forfeiture provisions or restrictions lapse if a Section 83(b) Election is
not made, or just after the Award is granted if a Section 83(b) Election is
made.
Other Stock-Based Awards. The tax consequences associated with any other
stock-based Awards granted under the 1995 Plan will vary depending on the
specific terms of the Award. Among the relevant factors are whether or not the
Award has a readily ascertainable fair market value, whether or not the Award is
subject to forfeiture provisions or restrictions on transfer, the nature of the
property to be received by the participant under the Award, and the
Participant's holding period and tax basis for the Award or underlying Common
Stock.
Tax Consequences to the Corporation. The grant of an Award under the 1995
Plan will have no tax
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<PAGE> 19
consequences to the Corporation. Moreover, in general, neither the exercise of
an incentive stock option nor the sale of any Common Stock acquired under the
1995 Plan will have any tax consequences to the Corporation. The Corporation
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the 1995 Plan, including in connection with a restricted stock Award or as a
result of the exercise of a nonstatutory stock option or a Disqualifying
Disposition. Any such deduction will be subject to the limitations of Section
162(m) of the Code.
PROPOSAL 3
APPOINTMENT OF AUDITORS
The Board of Directors proposes that the firm of PricewaterhouseCoopers LLP
("PwC"), independent certified public accountants, be appointed to serve as
auditors for the fiscal year ending September 30, 1999. The ratification of this
selection is not required under the laws of the Commonwealth of Massachusetts,
where the Corporation is incorporated, but the results of this vote will be
considered by the Board of Directors in selecting auditors for future fiscal
years. PwC has served as the Corporation's accountants since 1994. It is
expected that a member of PwC will be present at the meeting with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE RATIFICATION OF THIS SELECTION.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
Section 16(a) of the Exchange Act requires the Corporation's directors,
executive officers and holders of more than 10% of the Corporation's Common
Stock (collectively, "Reporting Persons") to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock of the
Corporation. Such persons are required by regulations of the SEC to furnish the
Corporation with copies of all such filings. Based on its review of the copies
of such filings received by it with respect to the fiscal year ended September
30, 1998 and written representations from certain Reporting Persons, the
Corporation believes that all Section 16(a) filings required to be made by
Reporting Persons in the fiscal year ended September 30, 1998 were timely made
in accordance with the Exchange Act, other than a filing by Daniel J. Kossman
with respect to a stock sale and a filing by Manuel Correia with respect to a
stock purchase, which filings were not made on a timely basis.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next Annual Meeting of
Stockholders of the Corporation must be received at the Corporation's principal
executive offices not later than August 31, 1999. In order to curtail
controversy as to the date on which a proposal was received by the Corporation,
it is suggested that proponents submit their proposals by Certified Mail, Return
Receipt Requested to Infinium Software, Inc., 25 Communications Way, Hyannis,
Massachusetts 02601, Attention: Secretary and Clerk.
INCORPORATION BY REFERENCE
To the extent that this proxy statement has been or will be specifically
incorporated by reference into any filing by the Corporation under the
Securities Act or the Exchange Act the sections of the proxy statement entitled
"Compensation Committee Report on Executive Compensation" and "Stock Performance
Graph" shall not be deemed to be so incorporated, unless specifically otherwise
provided in any such filing.
17
<PAGE> 20
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation, and
in addition to soliciting stockholders by mail through its regular employees,
the Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Corporation
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Corporation
may also be made of some stockholders in person or by mail, telephone or
telegraph following the original solicitation.
The contents and the distribution of this proxy statement has been approved
by the Board of Directors of the Corporation.
18
<PAGE> 21
1452-PS-99
<PAGE> 22
APPENDIX A
INFINIUM SOFTWARE, INC.
AMENDED AND RESTATED 1995 STOCK PLAN
1. PURPOSE. The purpose of the Infinium Software, Inc. 1995 Stock Plan
(the "Plan") is to encourage key employees of Infinium Software, Inc. (the
"Company") and of any present or future parent or subsidiary of the Company
(collectively, "Related Corporations") and other individuals who render services
to the Company or a Related Corporation, by providing opportunities to
participate in the ownership of the Company and its future growth through (a)
the grant of options which qualify as "incentive stock options" ("ISOs") under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
(b) the grant of options which do not qualify as ISOs ("Non-Qualified Options");
(c) awards of stock in the Company ("Awards"); and (d) opportunities to make
direct purchases of stock in the Company ("Purchases"). Both ISOs and
Non-Qualified Options are referred to hereafter individually as an "Option" and
collectively as "Options." Options, Awards and authorizations to make Purchases
are referred to hereafter collectively as "Stock Rights." As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation," respectively, as those terms are defined in Section 424 of the
Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or by a committee
appointed by the Board (the "Committee"); provided that the Plan shall be
administered: (i) to the extent required by applicable regulations under
Section 162(m) of the Code, by two or more "outside directors" (as defined
in applicable regulations thereunder) and (ii) to the extent required by
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or any
successor provision ("Rule 16b-3"), by a disinterested administrator or
administrators within the meaning of Rule 16b-3. Hereinafter, all
references in this Plan to the "Committee" shall mean the Board if no
Committee has been appointed. Subject to ratification of the grant or
authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine to whom (from among the class of
employees eligible under paragraph 3 to receive ISOs) ISOs shall be
granted, and to whom (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Awards and
to make Purchases) Non-Qualified Options, Awards and authorizations to make
Purchases may be granted; (ii) determine the time or times at which Options
or Awards shall be granted or Purchases made; (iii) determine the purchase
price of shares subject to each Option or Purchase, which prices shall not
be less than the minimum price specified in paragraph 6; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (v)
determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised; (vii) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such
restrictions, if any, and (viii) interpret the Plan and prescribe and
rescind rules and regulations relating to it. If the Committee determines
to issue a Non-Qualified Option, it shall take whatever actions it deems
necessary, under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the
Plan or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such
rules and regulations for carrying out the Plan as it may deem advisable.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock
Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. A majority of the Committee shall constitute a quorum and acts
of a majority of the members of the Committee at a meeting at which a
quorum is
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present, or acts reduced to or approved in writing by all the members of
the Committee (if consistent with applicable state law), shall be the valid
acts of the Committee. From time to time the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with
or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Subject to the provisions
of the first sentence of paragraph 2(A) above, if applicable, Stock Rights
may be granted to members of the Board. All grants of Stock Rights to
members of the Board shall in all other respects be made in accordance with
the provisions of this Plan applicable to other eligible persons.
Consistent with the provisions of the first sentence of Paragraph 2(A)
above, members of the Board who either (i) are eligible to receive grants
of Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights
may vote on any matters affecting the administration of the Plan or the
grant of any Stock Rights pursuant to the Plan, except that no such member
shall act upon the granting to himself or herself of Stock Rights, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to the
granting to such member of Stock Rights.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant a Stock Right. The
granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Stock Rights.
4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 4,500,000, subject to adjustment as provided in paragraph 13. If any Stock
Right granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part or shall be repurchased by the Company, the shares of Common
Stock subject to such Stock Right shall again be available for grants of Stock
Rights under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 350,000 shares of Common Stock
under the Plan during any twelve month period, subject to adjustment as provided
in paragraph 13. If any Option granted under the Plan shall expire or terminate
for any reason without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part or shall be repurchased by the
Company, the shares subject to such Option shall be included in the
determination of the aggregate number of shares of Common Stock deemed to have
been granted to such employee under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time on or after October 2, 1995 and prior to October 2, 2005. The date
of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR NON-QUALIFIED OPTIONS, AWARDS AND PURCHASES. The
exercise price per share specified in the agreement relating to each
Non-Qualified Option granted, and the purchase price per share of stock
granted in any Award or authorized as a Purchase, under the Plan shall in
no event be less than the minimum legal consideration required therefor
under the laws of any jurisdiction in which the Company or its successors
in interest may be organized. If Non-Qualified Options, Awards, or
Purchases granted under the Plan, with an exercise or purchase price less
than the fair market value per share of Common Stock on the date of grant,
are intended to qualify as performance-based compensation under Section
162(m) of the Code and any applicable regulations thereunder thenany such
Non-Qualified
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Option granted under the Plan shall be exercisable, and any such Award or
Purchase granted under the Plan shall be paid, only after (i) the
attainment of a pre-established, objective performance goal established by
the Committee; (ii) shareholder approval; and (iii) certification by the
Committee that the performance goal was in fact satisfied, all in
accordance with the requirements for performance-based compensation
pursuant to applicable regulations under Section 162(m) of the Code.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not
be less than one hundred ten percent (110%) of the fair market value per
share of Common Stock on the date of grant. For purposes of determining
stock ownership under this paragraph, the rules of Section 424(d) of the
Code shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for the
first time by such employee during any calendar year with respect to stock
having a fair market value (determined at the time the ISOs were granted)
in excess of $100,000. The Company intends to designate any Options granted
in excess of such limitation as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the date of grant or, if the
prices or quotes discussed in this sentence are unavailable for such date,
the last business day for which such prices or quotes are available prior
to the date of grant and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common
Stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the Nasdaq
National Market, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
Nasdaq National Market. If the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall mean
the fair value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of the Common
Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments or
upon the occurance of such events as the Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
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C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable. There shall
be no such exercise as to fewer than one hundred (100) shares unless such
exercise is of all of the remaining shares then purchasable by the person
or persons exercising the option.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date that any installment of any Option becomes exercisable;
provided that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option
granted to any employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to paragraph 16) if such acceleration would
violate the annual vesting limitation contained in Section 422(d) of the
Code, as described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the agreement
relating to such ISO, if an ISO optionee ceases to be employed by the Company
and all Related Corporations other than by reason of death or disability as
defined in paragraph 10, no further installments of his or her ISOs shall become
exercisable, and his or her ISOs shall terminate on the earlier of (a) ninety
(90) days after the date of termination of his or her employment, or (b) their
specified expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
paragraph 16. For purposes of this paragraph 9, employment shall be considered
as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute.
Notwithstanding the preceding sentence, a, provided that the optionee obtains
the written approval of the Committee for such leave of absence, and provided
further, that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the optionee after the
approved
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger or other reorganization in
which the holders of the outstanding voting stock of the Company
immediately preceding the consummation of such event, shall, immediately
following such event, hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, or in the event of a sale
of all or substantially all of the Company's assets or otherwise (each, an
"Acquisition"), the Committee or the board of directors of any entity
assuming the obligations of the Company hereunder (the "Successor Board"),
shall, as to outstanding Options, either (i) make appropriate provision for
the continuation of such Options by substituting on an equitable basis for
the shares then subject to such Options either (a) the consideration
payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (b) shares of stock of the surviving or
successor corporation or (c) such other securities as the Successor Board
deems appropriate, the fair market value of which shall not materially
exceed the fair market value of the shares of Common Stock subject to such
Options immediately preceding the Acquisition; or (ii) upon written notice
to the optionees, provide that all Options must be exercised, to the extent
then exercisable or to be exercisable as a result of the Acquisition,
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the fair market value of
the shares subject to such Options (to the extent then exercisable or to be
exercisable as a result of the Acquisition) over the exercise price
thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he or she would have received if he or she had exercised
such Option prior to such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
"modification"
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of such ISOs (as that term is defined in Section 424 of the Code) or would
cause any adverse tax consequences for the holders of such ISOs. If the
Committee determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs or would cause adverse tax
consequences to the holders, it may refrain from making such adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall not
have the rights of a shareholder with respect to the shares covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
October 2, 1995, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to October 2, 1996, any grants of ISOs
under the Plan made prior to that date will be rescinded. The Plan shall expire
at the end of the day on October 1, 2005 (except as to Options outstanding on
that date). Subject to the provisions of paragraph 5 above, Options may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months before
or after the Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to paragraph 13);
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(b) the benefits accruing to participants under the Plan may not be materially
increased; (c) the requirements as to eligibility for participation in the Plan
may not be materially modified; (d) the provisions of paragraph 3 regarding
eligibility for grants of ISOs may not be modified; (e) the provisions of
paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); (f) the expiration date of the Plan may not be extended; and (g) the Board
may not take any action which would cause the Plan to fail to comply with Rule
16b-3. Except as otherwise provided in this paragraph 15, in no event may action
of the Board or stockholders alter or impair the rights of a grantee, without
such grantee's consent, under any Option previously granted to such grantee.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS. The Committee, at the
written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but shall not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
ISOs. At the time of such conversion, the Committee (with the consent of the
optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's ISOs
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Committee takes appropriate action.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of an Option hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation includible in gross income. The Committee in its discretion may
condition (i) the exercise of an Option, (ii) the grant of an Award, (iii) the
making of a Purchase of Common Stock for less than its fair market value, or
(iv) the vesting or transferability of restricted stock or securities acquired
by exercising an Option, on the grantee's making satisfactory arrangement for
such withholding. Such arrangement may include payment by the grantee in cash or
by check of the amount of the withholding taxes or, at the discretion of the
Committee, by the grantee's delivery of previously held shares of Common Stock
or the withholding from the shares of Common Stock otherwise deliverable upon
exercise of a Option shares having an aggregate fair market value equal to the
amount of such withholding taxes.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
21. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the Commonwealth
of Massachusetts or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
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DETACH HERE
PROXY
INFINIUM SOFTWARE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 5, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Daniel J. Kossmann and Anne Marie Monk, and
each of them with full power of substitution to vote all shares of stock of
INFINIUM SOFTWARE, INC. (the "Corporation") which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Corporation to be held on
Friday, February 5, 1999, at 3:00 p.m. local time at the Sheraton Hyannis
Resort, West End Circle, Hyannis, Massachusetts 02601 and at any adjournment
thereof, upon matters set forth in the Notice of Annual Meeting and Proxy
Statement dated December 29, 1998 a copy of which has been received by the
undersigned.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO CHOICE
IS SPECIFIED, THEN THIS PROXY WILL BE VOTED IN FAVOR OF ELECTING THE NOMINEE, IN
FAVOR OF AMENDING AND CONTINUING THE 1995 STOCK PLAN AND IN FAVOR OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS AUDITORS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 1999. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
_________________
SEE REVERSE
SIDE
_________________
<PAGE> 29
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. To elect one (1) Class III director to serve for a three-year term except
as marked to the contrary below:
Nominee: Roland D. Pampel
FOR WITHHELD
[ ] THE [ ] FROM THE
NOMINEE NOMINEE
FOR AGAINST ABSTAIN
2. To approve the amendment to and [ ] [ ] [ ]
continuance of the 1995 Stock Plan.
3. To ratify the selection of the firm of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as auditors
for the Corporation for the fiscal year
ending September 30, 1999.
4. To transact such other business as may [ ] [ ] [ ]
properly come before the meeting and
any adjournments thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING: [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT: [ ]
Please sign your name exactly as it appears on your stock certificate(s),
write in the date and return this proxy as soon as possible in the enclosed
envelope. If the stock is registered in more than one name, each joint owner
should sign. If signing as attorney, executor, trustee, administrator or
guardian, please give full title as such. Only authorized officers should sign
for corporations.
Signature:________________ Date: ______ Signature:____________ Date:_________
