<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
WORKGROUP TECHNOLOGY CORPORATION
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(Name of Registrant as Specified In Its Charter)
WORKGROUP TECHNOLOGY CORPORATION
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
WORKGROUP TECHNOLOGY CORPORATION
91 Hartwell Avenue
Lexington, Massachusetts 02421
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on July 28, 2000
---------------
To the Stockholders of Workgroup Technology Corporation:
The Annual Meeting of Stockholders of Workgroup Technology Corporation
(the "Corporation"), a Delaware corporation, will be held on Friday, July 28,
2000 at 10:00 a.m., local time, at the offices of Testa, Hurwitz & Thibeault,
LLP, 125 High Street, Boston, Massachusetts, 02110 for the following purposes:
1. To elect one (1) Class II director to serve for a three-year term or
until his successor is elected and qualified.
2. To amend and restate the Corporation's 1996 Non-Employee Director
Stock Option Plan to (i) increase the number of shares of the
Corporation's Common Stock, $0.01 par value per share (the "Common
Stock"), available for issuance thereunder to 300,000 shares and (ii)
amend Section 4 thereof so that upon the initial election to the
Corporation's Board of Directors and after each three year period of
service on the Board of Directors, a director shall receive an option
to purchase 48,000 shares of Common Stock.
3. 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 June 15, 2000
are entitled to notice of and to vote at the meeting and 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
/s/ Patrick H. Kareiva
Patrick H. Kareiva
Secretary
Lexington, Massachusetts
June 26, 2000
<PAGE>
WORKGROUP TECHNOLOGY CORPORATION
---------------
PROXY STATEMENT
June 26, 2000
Proxies in the form enclosed with this Proxy Statement are solicited by
the Board of Directors of Workgroup Technology Corporation (the
"Corporation"), a Delaware corporation, for use at the Annual Meeting of
Stockholders to be held on Friday, July 28, 2000, at 10:00 a.m., local time,
at the offices of Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston,
Massachusetts, 02110.
Only stockholders of record at the close of business on June 15, 2000
(the "Record Date") will be entitled to receive notice of and to vote at the
meeting and any adjournments thereof. As of that date, 8,012,407 shares of
common stock, $.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 stockholder giving a proxy has the right to revoke it (i) by filing a
later-dated proxy or a written notice of revocation with the Secretary of the
Corporation at any time before it is exercised or (ii) by voting in person at
the Annual Meeting (although attendance at the Annual Meeting will not, in
itself, constitute revocation of a proxy). Any written notice of revocation or
subsequent proxy should be sent so as to be delivered to Workgroup Technology
Corporation, 91 Hartwell Avenue, Lexington, Massachusetts, 02421, Attention:
Secretary, at or before the taking of the vote at the Annual Meeting.
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 a
nominee for election as a director, as well as abstentions and broker "non-
votes" with respect to all other matters being submitted to stockholders, 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 to such other proposal, the nominee
does not have discretionary voting power and has not received instructions
from the beneficial owner.
In the election of the Class II 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. On all other
matters being submitted to stockholders, an affirmative vote of a majority of
the shares present or represented and voting on each such matter is required
for approval. An automated system administered by the Corporation's transfer
agent tabulates the votes. The vote on each matter submitted to stockholders
is tabulated separately. Abstentions are included in the number of shares
present or represented and voting on each matter. Broker "non-votes" are not
so included.
The persons named as attorneys-in-fact in the proxies, Patrick H.
Kareiva and Cathey M. McDyer, are employees and/or officers of the
Corporation. All properly executed proxies returned in time to be counted at
the meeting will be voted as stated below under "Election of Director." Any
stockholder giving a proxy has the right to withhold authority to vote for any
individual nominee to the Board of Directors by writing that nominee's name in
the space provided on the proxy. In addition to the election of a director,
the stockholders will consider and vote upon a proposal to amend and restate
the Corporation's 1996 Non-Employee Director Stock Option Plan to (i) increase
the number of shares of the Corporation's Common Stock, $0.01 par value per
share (the "Common Stock"), available for issuance thereunder to 300,000
shares and (ii) amend Section 4 thereof so that upon the initial election to
the Corporation's Board of Directors and after a three year period of service
on the Board of Directors, such director shall receive an option to purchase
48,000 shares of Common Stock. Where a choice has been specified on the proxy
with respect to the foregoing matter, 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 and upon which the proxies may
<PAGE>
exercise discretion under applicable law, 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.
An Annual Report to Stockholders, containing financial statements for
the fiscal year ended March 31, 2000, 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 June 26, 2000.
MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of the Record Date: (i) the name and
address of each person who, to the knowledge of the Corporation, owned
beneficially more than 5% of the Common Stock of the Corporation outstanding
at such date; (ii) the name of each director or nominee; and (iii) the name of
each executive officer identified in the Summary Compensation Table set forth
below under "Compensation and Other Information Concerning Directors and
Officers," the number of shares owned by each of such persons and the
percentage of the outstanding shares represented thereby, and also sets forth
such information for all officers, directors and nominees as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percent Of
Name and Address of Beneficial Owner Ownership(/1/) Class(/2/)
------------------------------------ -------------- ----------
<S> <C> <C>
TA Associates Group(/3/) ........................... 1,534,953 19.2%
c/o TA Associates, Inc.
125 High Street
Boston, MA 02110
Norwest Equity Partners V, L.P.(/4/) ............... 666,666 8.3%
40 William Street
Suite 305
Wellesley, MA 02181
Patrick H. Kareiva(/5/)............................. 250,000 3.0%
James M. McConnell.................................. - -
Douglas A. Catalano................................. - -
John P. McDonough................................... 3,000 *
Steven C. Schlesinger............................... - -
Thomas J. Bilotta................................... - -
All officers, directors and nominees as a group (6
persons)(/6/)...................................... 250,000 3.0%
</TABLE>
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* Less than 1.0%.
(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.
(2) Applicable percentage of ownership as of the Record Date is based upon
8,012,407 shares of Common Stock outstanding on such date. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission (the "Commission"), and includes voting and investment
power with respect to shares. Shares of Common Stock subject to options
currently exercisable or exercisable within 60 days of the Record Date 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 880,086 shares of Common Stock owned by Advent VI L.P.; 406,946
shares of Common Stock owned by Advent Atlantic and Pacific II L.P.;
88,007 shares of Common Stock owned by Advent New York L.P.; 146,711
shares of Common Stock owned by Advent Industrial II L.P.; and 13,203
shares of Common Stock owned by TA Venture Investors L.P. Advent VI L.P.,
Advent Atlantic and Pacific II L.P., Advent New
2
<PAGE>
York L.P., Advent Industrial II L.P. and TA Venture Investors L.P. are part
of an affiliated group of investment partnerships collectively referred to
as the TA Associates Group. TA Associates, Inc. exercises sole voting and
investment power with respect to all of the shares held of record by the
named investment partnerships, with the exception of those shares held by
TA Venture Investors Limited Partnership. The foregoing information is
based upon a Schedule 13G filed on February 14, 2000.
(4) Information based on a Schedule 13G which was filed with the Securities
and Exchange Commission on February 5, 1998.
(5) Includes 250,000 shares of Common Stock which may be purchased within 60
days of the Record Date upon the exercise of stock options. Excludes
unvested options to purchase 250,000 shares of Common Stock.
(6) Includes 250,000 shares of Common Stock which may be purchased within 60
days of the Record Date upon the exercise of stock options. Excludes
unvested options to purchase 250,000 shares of Common Stock.
PROPOSAL 1
ELECTION OF DIRECTOR
The Board of Directors is currently fixed at three members. The Board of
Directors is divided into three classes, each of which may consist of only one
more director than as in any other class. As of the date of this Proxy
Statement, there is one Class I director, one Class II director and one Class
III director. Each director serves for a three-year term. The term of the
Class II director will expire at this Meeting. All directors will hold office
until their successors have been duly elected and qualified or until their
earlier death, resignation or removal. Mr. James M. McConnell is the current
Class I director; Mr. Patrick H. Kareiva is the current Class II director; and
Mr. Douglas A. Catalano is the current Class III director.
The Board of Directors has nominated and recommended that Mr. Kareiva,
who is currently a Class II Director, be elected as Class II director, to hold
office until the 2003 Annual Meeting of Stockholders or until his successor
has been duly elected and qualified or until his 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. Except as described in the preceding
sentence, unless otherwise instructed, the proxy holders will vote the proxies
received by them for Patrick H. Kareiva.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" PATRICK H. KAREIVA AS CLASS II DIRECTOR.
The following table sets forth the nominee to be elected at the meeting
and, for each director whose term of office will extend beyond the meeting,
the year such nominee or director was first elected a director, the position
currently held by the nominee and each director with the Corporation, the year
the nominee's or director's term will expire and class of director of the
nominee and each director:
<TABLE>
<CAPTION>
Nominee's or Director's
Name
and Year Nominee or
Director Position(s) with the Year Term Class of
First Became a Director Corporation Will Expire Director
----------------------- -------------------- ----------- --------
<S> <C> <C> <C>
Nominee:
Patrick H. Kareiva 1999 Chairman, Director, President, 2003 II
Chief Executive Officer,
Chief Financial Officer,
Treasurer and Secretary
Continuing Directors:
James M. McConnell 2000 Director 2002 I
Douglas A. Catalan0 2000 Director 2001 III
</TABLE>
3
<PAGE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the director nominees to be elected at
the meeting, the directors and the executive officers of the Corporation,
their ages, and the positions currently held by each such person with the
Corporation.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Patrick H. Kareiva....... 56 Chairman, Director, President, Chief Executive
Officer, Chief Financial Officer, Treasurer and
Secretary
Douglas A. Catalano
(/1/)................... 49 Director
James M. McConnell
(/1/)................... 59 Director
</TABLE>
--------------
(1) Member of Compensation Committee and Audit Committee.
Mr. Kareiva was appointed Director, President, Chief Executive Officer
and Secretary of the Corporation in September, 1999, Chief Financial Officer
and Treasurer in November, 1999 and Chairman in June 2000. From 1980 to 1999,
Mr. Kareiva was President and sole proprietor of Rockledge Group, a management
consulting firm providing strategic planning, business development and
corporate restructuring consulting services to the high technology industry.
Concurrently, from 1996 to 1997, Mr. Kareiva also served as President and
Chief Financial Officer of Scitex America Corporation, a wholly-owned
subsidiary of Scitex Corporation, Ltd., which provided digital imaging systems
and services to the graphic arts industry.
Mr. Catalano was appointed a Director of the Corporation in June 2000.
Since October 1999, Mr. Catalano has served as President, CEO, and a Director
of Granitar Incorporated, an Internet consulting and systems solutions firm.
From August 1998 until October 1999, he was a Principal and Sole Proprietor of
Swan Partners, a management consulting firm. From December 1996 until August
1998, Mr. Catalano served as President, CEO, and a Director of Peritus
Software Services, Inc., a provider of solutions for managing software assets.
From November 1982 until December 1996, Mr. Catalano held various positions at
Computer Sciences Corporation, including that of President of CSC Consulting,
a division of Computer Sciences Corporation, a provider of information
technology services to commercial and government markets. Mr. Catalano
currently serves as a Director of InCert Software Corporation, a provider of
tools for software analysis.
Mr. McConnell was appointed a Director of the Corporation in June 2000.
Since April 1990, he has served as President, CEO, and a Director of Instron
Corporation, a provider of materials and structural testing systems and
services. From 1987 through 1990, he was President and CEO of Automatic Switch
Company, and also formerly served as President of Rosemont, Inc., both wholly-
owned subsidiaries of Emerson Electric Corporation, a diversified manufacturer
of commercial, industrial, and consumer products. Mr. McConnell currently
serves as a Director of ESCO Technologies, Inc., a provider of industrial and
commercial products and systems.
Executive officers of the Corporation are elected by the Board of
Directors on an annual basis and serve until their successors have been duly
elected and qualified.
4
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met eight times during the fiscal year ended
March 31, 2000. Each of the directors attended 100% of the aggregate of all
meetings of the Board of Directors and Compensation and Audit Committees, of
which they were a member thereof during fiscal 2000. The Audit Committee of
the Board of Directors reviews with management and the Corporation's
independent public accountants the Corporation's financial statements, the
accounting principles applied in their preparation, the scope of the audit,
any comments made by the independent accountants upon the financial condition
of the Corporation and its accounting controls and procedures and such other
matters as the committee deems appropriate. During fiscal 2000, the Audit
Committee, which consisted of Stephen Gaal and Charles Moran, former directors
of the Corporation, met five times. The Compensation Committee makes
recommendations concerning the salaries and incentive compensation of
executive officers of the Corporation and administers the Corporation's stock
plans. During fiscal 2000, the Compensation Committee, which consisted of
Messrs. Gaal and Moran, did not meet. The Board of Directors does not
currently have a standing nominating committee.
5
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation Summary
The following table sets forth summary information concerning the
compensation paid or earned for services rendered to the Corporation in all
capacities during the fiscal years ended March 31, 2000, 1999 and 1998, as
applicable, to the (i) two individuals who served as the Corporation's Chief
Executive Officer during fiscal year 2000 and (ii) two former executives who
received total annual salaries and bonuses in excess of $100,000 in fiscal
2000. These four individuals are collectively referred to as the "Named
Executive Officers." No current executive officer of the Corporation, other
than Mr. Kareiva, received total annual salary and bonus in excess of $100,000
in fiscal 2000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation(/1/) Awards(/2/)
----------------------------- ------------------
Name and Fiscal Other Annual Securities All other
Principal Position Year Salary Bonus Compensation Underlying Options Compensation ($)
------------------ ------ -------- ------- ------------ ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Patrick H. Kareiva(/3/)(/4/) 2000 $179,415 - - - $100,000(/5/)
...........................
Chairman, Director,
President, Chief Executive
Officer, Chief Financial
Officer, Treasurer and
Secretary
John P. McDonough(/6/)...... 2000 $ 80,103 - - 25,000 $ 6,308(/7/)
President, Chief 1999 $160,000 $30,000 - 100,000 -
Executive Officer 1998 $147,263 - - 200,000 -
and Director
Steven C. Schlesinger(/8/).. 2000 $ 64,167 $52,333 $20,935 25,000 $ 62,827(/9/)
Vice President-- 1999 $110,000 $38,190 $21,734 20,000 -
Business Development
Thomas J. Bilotta(/10/) .... 2000 $ 87,500 $26,250 - 20,000 $79,327(/11/)
Senior Vice President-- 1999 $150,000 $20,700 - 50,000 -
Research and 1998 $124,519 $ 7,200 - 100,000 -
Development
</TABLE>
--------------
(1) The compensation described in this table does not include medical, group
life insurance or other benefits received by the Named Executive Officers
which are available generally to all salaried employees of the
Corporation and certain perquisites and other personal benefits,
securities or property received by the Named Executive Officers which do
not exceed the lesser of $50,000 or 10% of any such officer's aggregate
salary and bonus disclosed in this table.
(2) The Corporation did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payments during
fiscal 2000, 1999 or 1998.
(3) Mr. Kareiva was appointed Director, President, Chief Executive Officer
and Secretary of the Corporation in September 1999, Chief Financial
Officer and Treasurer in November 1999 and Chairman in June 2000.
(4) Mr. Kareiva will receive salary continuation at his then current annual
base salary for twelve months and a bonus payment based on a percentage
of total revenue of the Corporation if the Corporation terminates his
employment other than for cause or upon a change of control. See also
"Employment Contracts".
(5) Represents the Corporation's payment of a recruiting fee to an affiliate
of Mr. Kareiva.
6
<PAGE>
(6) Mr. McDonough resigned as President, Chief Executive Officer and Director
of the Corporation on September 20, 1999.
(7) Represents the payment of accrued vacation.
(8) Mr. Schlesinger resigned as Vice President--Business Development on
October 31, 1999.
(9) Includes the payment of $7,827 for accrued vacation and a severance
payment of $55,000.
(10) Mr. Bilotta resigned as Senior Vice President--Research and Development
on October 14, 1999.
(11) Includes the payment of $4,327 for accrued vacation and a severance
payment of $75,000.
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during
the year ended March 31, 2000 pursuant to the Corporation's 1996 Stock Plan to
each of the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants(/1/)(/2/) Potential Realizable
------------------------------------------------------- Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Appreciation
Underlying Employees For Option Term(/4/)
Options in Fiscal Exercise Price(/3/) Expiration ---------------------
Name Granted(#) Year ($/Share) Date 5%($) 10%($)
---- ---------- ---------- ------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patrick H. Kareiva - - - - - -
John P. McDonough 25,000(/5/) 5.83% $1.59 12/29/99 $ 1,992 $ 3,985
Steven C. Schlesinger 25,000(/5/) 5.83 1.59 1/29/00 1,992 3,985
Thomas J. Bilotta 20,000(/5/) 4.66 1.59 1/29/00 1,594 3,188
</TABLE>
--------------
(1) The Corporation granted options representing an aggregate of 429,075
shares to 65 employees and directors of the Corporation in fiscal 2000
under the Corporation's 1996 Stock Plan and 1996 Non-Employee Director
Stock Option Plan.
(2) The options, which were granted under the 1996 Plan, vest at the rate of
25% of the shares underlying the options one year from the date of grant
and approximately 2% monthly thereafter.
(3) The exercise price per share of each option was determined by the
Compensation Committee to be equal to the fair market value per share of
Common Stock on the date of grant.
(4) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of the
Corporation's Common Stock over the term of the options. These numbers
are calculated based on rules promulgated by the Commission and do not
reflect the Corporation's estimate of future stock price growth. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the timing of such exercises and the future performance of
the Corporation's Common Stock. There can be no assurance that the rates
of appreciation assumed in this table can be achieved or that the amounts
reflected will be received by the individuals.
(5) The options to purchase shares of Common Stock have either expired by
their terms or were forfeited upon the optionholder's termination of
employment with the Corporation.
Aggregate Option Exercises and Year-End Values
At fiscal year-end, all options granted to the Named Executive Officers
(other than Mr. Kareiva, who, as of fiscal year-end 2000, did not hold an
option to purchase shares of the Corporation's Common Stock) either expired by
their terms or were forfeited upon each Named Executive Officer's termination
of employment with the Corporation. No options were exercised by the Named
Executive Officers during the year ended March 31, 2000.
7
<PAGE>
Stock Plans
The Corporation currently has four stock ownership plans: the 1992 Stock
Plan; the 1996 Stock Plan; the 1996 Employee Stock Purchase Plan and the 1996
Non-Employee Director Stock Option Plan. Although there are no proposed
amendments to any of the plans, other than as set forth in Proposal 2 below,
Rule 16b-3 under the Exchange Act, requires that certain information regarding
the plans be furnished to stockholders of the Corporation. Following is a
summary of the material features of each of the plans (please see Proposal 2
for a summary of the 1996 Non-Employee Director Stock Option Plan).
1992 Stock Plan
The Corporation's 1992 Stock Plan (the "1992 Plan") was adopted by the
Corporation's Board of Directors on May 12, 1992 and approved by the
Corporation's stockholders on May 13, 1992. The 1992 Plan provides for the
issuance of up to 54,377 shares of the Corporation's Common Stock. The
Corporation's Board of Directors resolved on January 26, 1996, that as of the
effective date of the Corporation's initial public offering, March 21, 1996,
no further options be granted under the 1992 Plan. Currently, 13 employees,
former employees and officers hold options under the 1992 Plan.
Under the terms of the 1992 Plan, incentive stock options ("ISOs") may
be granted to employees of the Corporation and non-qualified stock options
("NQSOs"), stock awards and purchase rights may be granted to employees,
consultants and directors of the Corporation. Options granted under the 1992
Plan expire ten years from the date of grant. Options granted under the 1992
Plan are not transferable by the optionholder except by will or by the laws of
descent and distribution. ISOs granted under the 1992 Plan expire not more
than ten years from the date of grant (or not more than five years from the
date of grant in the case of ISOs granted to an employee or officer holding
10% or more of the voting stock of the Corporation). Generally, options issued
under the 1992 Plan vest at a rate of 20% after one year, with the remainder
vesting in equal quarterly installments over the next four years.
As of the Record Date, (i) options to purchase 54,377 shares of Common
Stock at a weighted average exercise price of $1.00 per share were outstanding
under the 1992 Plan; (ii) 769,446 shares of Common Stock of the Corporation
had been acquired upon the exercise of options with a weighted average
exercise price of $0.32; (iii) stock purchases totaling 509,165 shares of
Common Stock had been made pursuant to direct purchase rights granted under
the 1992 Plan with an aggregate purchase price of $7,637; and (iv) stock
awards totaling 45,170 shares of Common Stock had been granted under the 1992
Plan.
1996 Stock Plan
The Corporation's 1996 Stock Plan (the "1996 Plan") was adopted by the
Board of Directors and approved by the Corporation's stockholders on January
26, 1996. The 1996 Plan provides for the grant of ISOs to employees and the
grant of NQSOs, stock awards and purchase rights to employees, consultants,
directors and officers of the Corporation. The 1996 Plan provides for the
issuance of up to 3,000,000 shares of the Corporation's Common Stock.
Currently, 48 employees (including a director who is also an employee and an
officer of the Corporation) and two non-employee directors of the Corporation
are eligible to participate in the 1996 Plan.
The 1996 Plan is administered by the Compensation Committee of the Board
of Directors, which currently consists of Messrs. McConnell and Catalano, two
outside directors of the Corporation. Subject to the provisions of the 1996
Plan, the Compensation Committee has the authority to (i) determine to whom
options, awards and purchases shall be granted; (ii) determine the time at
which options or awards shall be granted or purchases made; (iii) determine
the purchase price of shares subject to each option or purchase; (iv)
determine whether each option granted shall be an ISO or an NQSO; (v)
determine 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 are to be imposed on shares
subject to options, awards and purchases; and (viii) interpret the 1996 Plan
and prescribe and rescind rules and regulations relating to it. The
Compensation Committee determines the exercise price per share for NQSOs,
awards and purchases under the 1996 Plan, so long as such exercise price is no
less than the minimum legal consideration required therefor under
8
<PAGE>
the laws of any jurisdiction in which the Corporation may be organized. The
exercise price per share for each ISO granted under the 1996 Plan may 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 Corporation, the price per share for 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. An option is not transferable
by the optionholder except by will or by the laws of descent and distribution.
Each option expires on the date specified by the Compensation 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 Corporation.
Generally, no ISO may be exercised more than 90 days following termination of
employment. However, in the event that termination is due to death or
disability, the option is exercisable for a maximum of 180 days after such
termination. No options, Awards or Purchases may be granted under the 1996
Plan after January 26, 2006.
As of the Record Date, options to purchase 1,628,318 shares of Common
Stock at a weighted average exercise price of $1.68 per share were outstanding
under the 1996 Plan, and no Awards or Purchases had been granted under the
1996 Plan.
1996 Employee Stock Purchase Plan
The 1996 Employee Stock Purchase Plan (the "1996 Purchase Plan") was
adopted by the Board of Directors and approved by the Corporation's
stockholders on January 26, 1996. The 1996 Purchase Plan provides for the
issuance of up to 350,000 shares of Common Stock pursuant to the exercise of
nontransferable options granted to participating employees. Currently, 40
employees of the Corporation are eligible to participate in the 1996 Purchase
Plan.
The 1996 Purchase Plan is administered by the Compensation Committee of
the Board of Directors. All employees of the Corporation, except employees who
own five percent or more of the Corporation's stock or whose customary
employment is 20 hours or less per week and more than five months in any
calendar year, are eligible to participate in the 1996 Purchase Plan.
Directors who are not employees of the Corporation may not participate in the
1996 Purchase Plan. To participate in the 1996 Purchase Plan, an employee must
authorize the Corporation to deduct an amount (not less than one percent nor
more than 10% of a participant's total cash compensation) from his or her pay
during six-month offering periods commencing on February 1 and August 1 of
each year (each a "Plan Period"). In no case may an employee purchase more
than 1,000 shares in any Plan Period. Employees may participate in the 1996
Purchase Plan only to the extent that the employee's right to purchase stock
under the 1996 Purchase Plan, and under all other employee stock purchase
plans of the Corporation under Section 432(b) of the Internal Revenue Code of
1986, as amended, does not exceed $25,000 of the fair market value of such
stock (determined on the date or dates that options on such stock were
granted) for each calendar year in which such option is outstanding at any
time. The exercise price of options shall be the lesser of (i) 85% of the
average market price of the Common Stock on the first business day of such
Plan Period or (ii) 85% of the average market price of the Common Stock on the
last business day of such Plan Period. The employee shall be entitled to
exercise such option only to the extent of the employee's accumulated payroll
deductions on the last day of such Plan Period. If an employee's accumulated
payroll deductions on the last day of a Plan Period would enable him or her to
purchase more shares than are permitted to be purchased under the 1,000 shares
or $25,000 limitations described above, the excess of the amount of the
accumulated payroll deductions over the aggregate purchase price of the shares
actually purchased shall be refunded to the employee, without interest, by the
Corporation.
An employee may not be granted an option if such employee, immediately
after the option is granted, owns stock possessing 5% or more of the total
combined voting power or value of all classes of shares of the Corporation.
Employees who own shares possessing 5% or more of the total combined voting
power of the Corporation (or who will, upon the grant of such option, own
shares possessing 5% or more of the total combined voting power of the
Corporation) are not eligible for participation in the 1996 Purchase Plan.
9
<PAGE>
An employee's rights under the 1996 Purchase Plan will terminate upon
the employee's termination of employment or his voluntary withdrawal from the
1996 Purchase Plan. An employee's rights under the 1996 Purchase Plan may not
be transferred or assigned to any other person other than by will or the laws
of descent and distribution. Any option granted under the 1996 Purchase Plan
to an employee may be exercised, during the employee's lifetime, only by the
employee. No options may be granted under the 1996 Purchase Plan after January
26, 2006.
As of the Record Date, 100,313 shares had been purchased under the 1996
Purchase Plan.
Bonuses
Mr. Kareiva and certain other executive officers of the Corporation
participate in the Corporation's Executive Management Incentive Compensation
Plan (the "Incentive Plan"). The Incentive Plan provides for the award of cash
bonuses and stock option grants in amounts determined by the Compensation
Committee and approved by the Board of Directors. Cash bonuses and options are
awarded under the Incentive Plan upon attainment of pre-established goals.
Options are typically awarded upon attainment of Corporation objectives. Cash
bonuses can be earned either through the attainment of Corporation financial
goals or individual management objectives established at the beginning of the
fiscal year.
Employment Contracts
The Corporation has an employment agreement with Mr. Kareiva. Pursuant
to the terms of Mr. Kareiva's employment agreement, upon a change of control
of the Corporation or if the Corporation terminates Mr. Kareiva's employment
for any reason other than for cause, Mr. Kareiva will be entitled to receive
the following amounts: (1) salary continuation at his then current annual base
salary, which is currently $360,000, for twelve months and (2) a pro rated
bonus payment of (a) if such termination occurs in fiscal 2001, an amount
equal to 2% of total revenue of the Corporation or (b) if such termination
event occurs in fiscal 2002, an amount mutually agreeable by the Corporation
and Mr. Kareiva provided that such amount is at least 60% of the annualized
average of the quarterly bonuses received in the third and fourth quarters of
fiscal 2001.
Report on Executive Compensation
This report is submitted by the Board of Directors of the Corporation
(the "Board"). The Board administered the Corporation's executive compensation
program during the fiscal year ended March 31, 2000. The Board is responsible
for reviewing and administering the Corporation's stock plans and reviewing
and approving compensation matters concerning the executive officers of the
Corporation.
The executive compensation program uses a combination of base salary,
cash bonuses and long-term incentive compensation in the form of stock options
to achieve the following goals:
. To enhance profitability of the Corporation and increase stockholder
value
. To reward executives consistent with the Corporation's annual and
long-term performance goals
. To provide competitive compensation that will attract and retain
qualified executives
. To recognize individual initiative and achievement
Base salary compensation levels for each of the Corporation's executive
officers are determined by evaluating the individual officer's
responsibilities, experience and performance, the internal equity of
compensation levels among executive officers, as well as generally available
information regarding salaries paid to executive officers with comparable
qualifications at companies in businesses comparable to the Corporation.
Cash bonuses are determined quarterly and annually pursuant to the
Incentive Plan and are based on the Corporation's achievement of targeted
measures of financial performance, including revenue, profit and cost-saving
goals, and, in certain cases, the achievement of non-financial objectives in
the officer's area of responsibility.
10
<PAGE>
Long-term incentive compensation in the form of stock option grants is
designed to align the interests of executive officers more closely with those
of the Corporation's stockholders by allowing those officers to share in long-
term appreciation in the value of the Corporation's Common Stock. It is the
Corporation's policy to grant stock options to executive officers at the time
they join the Corporation in an amount consistent with the employee's position
and level of seniority. In addition, the Board, at its discretion, generally
makes additional performance-based option grants. In making such performance-
based grants, the Board considers both individual and general corporate
performance, recommendations of the Chief Executive Officer, existing levels
of officer stock ownership and previous option grants and the current stock
price. For additional information regarding the grant of options in fiscal
2000, see the table under the heading "Option Grants in Last Fiscal Year."
Mr. Kareiva's Compensation. Compensation for the Corporation's President
and Chief Executive Officer, Patrick H. Kareiva, is determined in accordance
with the policies applicable to other executive officers of the Corporation
described above. When Mr. Kareiva was hired in September 1999 as President and
Chief Executive Officer of the Corporation, his base salary was set at
$336,000. Pursuant to Mr. Kareiva's compensation plan, he was eligible for a
bonus of up to approximately 50% of his base salary upon the attainment of
certain performance objectives. Mr. Kareiva's compensation has been determined
by the outside members of the Board based on his responsibilities, experience
and the comparable compensation plan provided to the former President and
Chief Executive Officer of the Corporation. For additional information
regarding Mr. Kareiva's fiscal 2000 compensation, see the tables under the
headings "Summary Compensation Table" and "Option Grants in Last Fiscal Year."
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. The Corporation also maintains insurance
and other benefit plans for its employees.
Tax Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), limits the tax
deduction to $1 million for compensation paid to any of the executive officers
unless certain requirements are met. The Board has considered these
requirements and the proposed regulations. It is the Board's present intention
that, so long as it is consistent with its overall compensation objectives,
substantially all executive compensation be deductible for United States
federal income tax purposes by those subsidiaries of the Corporation that are
subject to taxation in the United States. The Board believes that the
Corporation's 1996 Stock Plan currently qualifies for an exception to the
requirements of Section 162(m) and, subject to the prior sentence, will take
whatever further action is necessary to satisfy Section 162(m) requirements
for compensation paid pursuant to the 1996 Stock Plan.
Respectfully submitted by the Board of Directors this 31st day of May,
2000:
James M. Carney
Stephen J. Gaal
Patrick H. Kareiva
Charles E. Moran
Compensation of Directors
During the fiscal year ended March 31, 2000, neither employee nor non-
employee Directors received cash compensation for their service as members of
the Board of Directors. Non-employee directors are eligible for participation
in the 1996 Plan and the Director Plan. See "Stock Plans" and "Proposal 2".
11
<PAGE>
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 March 21, 1996 through March
31, 2000, with the cumulative total return for the Nasdaq Stock Market (U.S.
companies) and the Corporation's "Industry Index." The Corporation selected an
index of companies in the prepackaged software industry as its industry group.
Accordingly, the Industry Index reflects the performance of all companies in
the prepackaged software industry with 7372 as their Primary Standard
Industrial Classification Code Number. The comparison assumes $100 were
invested on March 21, 1996 in the Corporation's Common Stock at the $15.00
initial offering price and in each of the foregoing indices and assumes
reinvestment of dividends, if any.
Comparison of Cumulative Total Return/(1)/
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 3/21/1996 3/29/1996 3/31/1997 3/31/1998 3/31/1999 3/31/2000
Workgroup Tech 100.00 144.20 28.33 25.87 11.67 12.53
Prepackaged Software 100.00 100.00 120.20 213.65 309.09 543.61
NASDAQ Market Index 100.00 100.00 111.87 169.07 220.94 406.86
</TABLE>
--------------
(1) Prior to March 21, 1996 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
Securities and Exchange Commission and is not to be incorporated by
reference in any filings of the Corporation under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on this graph was
obtained from Media General Financial Services, a source believed to be
reliable, although the Corporation is not responsible for any errors or
omissions in such information.
12
<PAGE>
PROPOSAL 2
AMENDING AND RESTATING THE CORPORATION'S
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Corporation's 1996 Non-Employee Director Stock Option Plan (the
"Director Plan") was adopted by the Board of Directors and approved by the
Corporation's stockholders on January 26, 1996. The Director Plan currently
provides for the grant of non-qualified stock options to purchase a maximum of
100,000 shares of Common Stock of the Corporation to non-employee directors of
the Corporation. Currently, two non-employee directors are eligible to
participate in the Director Plan. On May 31, 2000 the Board of Directors
approved and recommended to the stockholders that they amend and restate the
Director Plan to (i) increase the number of shares of the Corporation's Common
Stock available for issuance thereunder to 300,000 shares and (ii) amend
Section 4 thereof so that upon the initial election to the Corporation's Board
of Directors and after a three year period of service on the Board of
Directors, a director shall receive an option to purchase 48,000 shares of
Common Stock. The Board of Directors of the Corporation has temporarily
suspended the granting of options under the Director Plan until the
stockholders of the Corporation have approved the amendment and restatement of
the Director Plan.
Description of the Director Plan
The Director Plan is administered by the Compensation Committee.
Currently under the Director Plan, each director who is neither an employee
nor an officer of the Corporation (a "Non-Employee Director") automatically
receives an initial non-qualified stock option (a "Non-Qualified Option") to
purchase 15,000 shares of Common Stock upon the later of (i) March 21, 1996 or
(ii) the date on which the Non-Employee Director first is elected to the Board
of Directors. Each Non-Employee Director who is still a member of the Board of
Directors upon the full vesting of his most recently granted option under the
Director Plan shall receive automatically during the term of the Director
Plan, and without further action by the Board of Directors, an additional Non-
Qualified Option to purchase 15,000 shares of Common Stock. All Non-Qualified
Options granted under the Director Plan vest in twelve equal quarterly
installments beginning three months from the date of grant.
Upon the amendment and restatement of the Director Plan, a Non-Employee
Director that is elected or appointed after June 1, 2000 shall automatically
receive an initial Non-Qualified Option to purchase 48,000 shares of Common
Stock upon the later of (i) the date on which the stockholders of the
Corporation approve the amendment and restatement of the Director Plan or (ii)
the date on which the Non-Employee Director first is elected to the Board of
Directors. Each Non-Employee Director who is still a member of the Board of
Directors upon the full vesting of his most recently granted option under the
Director Plan shall receive automatically during the term of the Director
Plan, and without further action by the Board of Directors, an additional Non-
Qualified Option to purchase 48,000 shares of Common Stock.
All options granted under the Director Plan will have an exercise price
equal to the fair market value of the Common Stock on the date of grant. The
term of each option will be for a period of ten years from the date of grant.
Options may not be assigned or transferred except by will or by the laws of
descent and distribution and are exercisable to the extent vested only while
the optionee is serving as a director of the Corporation or within 90 days
after the optionee ceases to serve as a director of the Corporation (except
that if a director dies or becomes disabled while he or she is serving as a
director of the Corporation, the option is exercisable for a one-year period
thereafter). No options may be granted under the Directors Plan after January
26, 2006.
On the Record Date, the market price, as reported by the Nasdaq National
Market, of Common Stock, the class of stock underlying all options subject to
the Director Plan, was $0.9375 per share. As of the Record Date, options to
purchase 32,498 shares of Common Stock, at a weighted average exercise price
of $8.86 per share, were outstanding under the Director Plan. Executive
officers and employees of the Corporation are not eligible for grants under
the Director Plan.
13
<PAGE>
The Board of Directors believes that the Corporation's ability to
continue to attract and retain qualified candidates and the current members of
the Board of Directors is in large part dependent upon the Corporation's
ability to provide such individuals long-term, equity-based incentives in the
form of stock options.
Certain Federal Tax Information
The following discussion of United States federal income tax
consequences of the issuance and exercise of options granted under the
Director Plan is based upon the provisions of the Internal Revenue Code of
1986, as amended, as in effect on the date of this Proxy Statement, current
regulations, and existing administrative rulings of the Internal Revenue
Service. It is not intended to be a complete discussion of all of the federal
income tax consequences of the Director Plan or of the requirements that must
be met in order to qualify for the described tax treatment. In addition, there
may be foreign, state or local tax consequences that are not discussed herein.
The following general rules are applicable under current federal income
tax law to Non-Qualified Options granted under the Director Plan:
1. In general, the optionee will not recognize any income upon the grant
of a Non-Qualified Option, and the Corporation will not be allowed a federal
income tax deduction upon such grant.
2. The optionee generally will recognize ordinary income at the time of
exercise of the Non-Qualified Option in an amount equal to the excess, if any,
of the fair market value of the shares on the date of exercise over the
exercise price. The Corporation may be required to withhold income tax on this
amount.
3. When the optionee sells the shares acquired through the exercise of a
Non-Qualified Option, he or she generally will recognize capital gain or loss
in an amount equal to the difference between the amount realized upon the sale
of the shares and his or her basis in the shares (generally, the exercise
price plus the amount taxed to the optionee as ordinary income). If the
optionee's holding period for the shares exceeds one year, such gain or loss
will be a long-term capital gain or loss.
4. When the optionee recognizes ordinary income attributable to a Non-
Qualified Option, the Corporation generally should be entitled to a
corresponding federal income tax deduction.
5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Corporation's Common Stock to the Corporation in
payment of the exercise price. If an optionee exercises a Non-Qualified Option
in such fashion, special rules apply.
6. Special rules apply if the shares acquired upon the exercise of a
Non-Qualified Option are subject to vesting, or are subject to certain
restrictions on resale under federal securities laws.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" AMENDING AND RESTATING THE DIRECTOR PLAN.
AUDITORS FOR FISCAL 2001
The Board of Directors has selected the firm of PricewaterhouseCoopers
LLP, independent certified public accountants, to serve as auditors for the
fiscal year ending March 31, 2001. PricewaterhouseCoopers LLP, has served as
the Corporation's auditors since fiscal 1994. It is expected that a member of
PricewaterhouseCoopers LLP, will be present at the Annual Meeting with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions.
14
<PAGE>
SECTION 16 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 Commission initial
reports of ownership and reports of changes in ownership of Common Stock of
the Corporation. Such persons are required by regulations of the Commission to
furnish the Corporation with copies of all such filings. Mr. James Carney, a
former director of the Corporation, failed to file a Form 5 Annual Statement
of Changes in Beneficial Ownership of Securities in a timely manner to reflect
his gift of 83,332 shares of the Corporation's Common Stock to a third party
in January 2000. Mr. Carney subsequently filed such a report that disclosed
the aforementioned transaction. Based on its review of the copies of such
filings received by it with respect to the fiscal year ended March 31, 2000
and written representations from certain Reporting Persons, the Corporation
believes that all other Reporting Persons complied with all Section 16(a)
filing requirements in the fiscal year ended March 31, 2000.
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 February 28, 2001.
The deadline for providing timely notice to the Corporation of matters that
stockholders otherwise desire to introduce at the next annual meeting of
stockholders of the Corporation is February 28, 2001, provided, however,
notice shall not be given prior to January 31, 2001. Further, any proposals
must comply with the other procedural requirements set forth in the
Corporation's By-laws, a copy of which is on file with the SEC, and as set
forth by the SEC. In order to curtail any 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
Workgroup Technology Corporation, 91 Hartwell Avenue, Lexington,
Massachusetts, 02421, Attention: Corporate Secretary.
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 of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, the sections of the Proxy Statement entitled "Report on Executive
Compensation" and "Stock Performance Graph" shall not be deemed to be so
incorporated, unless specifically otherwise provided in any such filing.
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 Corporation
has retained Corporate Investor Communications, Inc. to assist in the
solicitation of proxies. The Corporation will bear all reasonable solicitation
fees and expenses and the Corporation estimates that such fees and expenses
should be approximately $5,000 in the aggregate.
The contents and the sending of this Proxy Statement have been approved
by the Board of Directors of the Corporation.
15
<PAGE>
WORKGROUP TECHNOLOGY CORPORATION
AMENDED AND RESTATED
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Non-Qualified Stock Option Plan, to be known as the
Amended and Restated 1996 Non-Employee Director Stock Option Plan (hereinafter,
this "Plan") is intended to promote the interests of Workgroup Technology
Corporation (hereinafter, the "Company") by providing an inducement to obtain
and retain the services of qualified persons who are not employees or officers
of the Company to serve as members of its Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock") for which options may
be granted under this Plan shall not exceed 300,000 shares, subject to
adjustment in accordance with paragraph 10 of this Plan. Shares subject to this
Plan are authorized but unissued shares or shares that were once issued and
subsequently reacquired by the Company. If any options granted under this Plan
are surrendered before exercise or lapse without exercise, in whole or in part,
the shares reserved therefor shall continue to be available under this Plan.
3. Administration. This Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer this Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe this Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
under it.
4. Automatic Grant of Options. Subject to the availability of shares
under this Plan,
(a) each person who is elected or appointed a member of the
Board on or after June 1, 2000 and who is not an employee or officer of the
Company (a "Non-Employee Director") shall be automatically granted on the later
of (i) the date on which the stockholders of the Company approve the amendment
and restatement of the Plan or (ii) the date such person is first elected to the
Board, without further action by the Board, an option to purchase 48,000 shares
of the Common Stock, and
(b) each person who is a member of the Board who is a
Non-Employee Director on the date upon which his most recently granted option to
purchase shares of Common Stock becomes fully vested shall be automatically
granted on each such date an option to purchase 48,000 shares of the Common
Stock.
The options to be granted under this paragraph 4 shall be the only options ever
to be granted at any time to such member under this Plan.
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of paragraph 10 of this Plan. For
purposes of this Plan, if, at the time an option is granted under the Plan, the
Company's Common
<PAGE>
- 2 -
Stock is publicly traded, "fair market value" shall be determined as of the last
business day for which the prices or quotes discussed in this sentence are
available prior to the date such option is granted 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
List. However, if the Common Stock is not publicly traded at the time an option
is granted under the Plan, "fair market value" shall be deemed to be 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.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of paragraph 8 of this Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.
7. (a) Vesting of Shares and Non-Transferability of Options. Options
granted under this Plan shall not be exercisable until they become vested.
Options granted under this Plan shall vest in the optionee and thus become
exercisable in twelve (12) equal quarterly installments beginning three months
from the date of grant provided, that, in the event that an optionee's term as a
director expires at, and such optionee is not reelected and does not continue to
serve as a director following, the date of an annual meeting of stockholders
within the 90-day period preceding any vesting date, the installment of such
option corresponding to such vesting date shall vest on the date of such
meeting.
The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares it
shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in this Plan.
(b) Non-transferability. Any option granted pursuant to this
Plan shall not be assignable or transferable other than by will or the laws of
descent and distribution or pursuant to a domestic relations order and shall be
exercisable during the optionee's lifetime only by him or her.
8. Termination of Option Rights.
(a) Except as otherwise specified in the agreement relating to
an option, in the event an optionee ceases to be a member of the Board for any
reason other than death or permanent disability, any then unexercised portion of
options granted to such optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is then
vested but has not been exercised at the time the optionee so ceases to be a
member of the Board may be exercised, to the extent it is then vested, by the
optionee within 90 days of the date the optionee ceased to be a member of the
Board; and all options shall terminate after such 90 days have expired.
(b) In the event that an optionee ceases to be a member of the
Board by reason of his or her death or permanent disability, any option granted
to such optionee shall be immediately and automatically accelerated and become
fully vested and all unexercised options shall be exercisable by the optionee
(or by the optionee's personal representative, heir or legatee, in the event of
death) for a period of one year thereafter.
<PAGE>
- 3 -
9. Exercise of Option. Subject to the terms and conditions of this Plan
and the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to its principal executive offices,
stating the number of shares with respect to which the option is being
exercised, accompanied by payment in full for such shares. Payment may be (a) in
United States dollars in cash or by check, (b) in whole or in part in shares of
the Common Stock of the Company already owned by the person or persons
exercising the option or shares subject to the option being exercised (subject
to such restrictions and guidelines as the Board may adopt from time to time),
valued at fair market value determined in accordance with the provisions of
paragraph 5 or (c) 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. There shall be no
such exercise at any one time as to fewer than one hundred (100) shares or all
of the remaining shares then purchasable by the person or persons exercising the
option, if fewer than one hundred (100) shares. The Company's transfer agent
shall, on behalf of the Company, prepare a certificate or certificates
representing such shares acquired pursuant to exercise of the option, shall
register the optionee as the owner of such shares on the books of the Company
and shall cause the fully executed certificate(s) representing such shares to be
delivered to the optionee as soon as practicable after payment of the option
price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Events. Upon
the occurrence of any of the following events, an optionee's rights with respect
to options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) Stock Dividends and Stock Splits. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock deliverable
upon the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Recapitalization Adjustments. If the Company is to be
consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise, each option granted
under this plan which is outstanding but unvested as of the effective date of
such event shall become exercisable in full twenty (20) days prior to the
effective date of such event. In the event of a reorganization,
recapitalization, merger, consolidation, or any other change in the corporate
structure or shares of the Company, to the extent permitted by Rule 16b-3 under
the Securities Exchange Act of 1934, adjustments in the number and kind of
shares authorized by this Plan and in the number and kind of shares covered by,
and in the option price of outstanding options under this Plan necessary to
maintain the proportionate interest of the optionee and preserve, without
exceeding, the value of such option, shall be made. Notwithstanding the
foregoing, no such adjustment shall be made which would, within the meaning of
any applicable provisions of the Internal Revenue Code of 1986, as amended,
constitute a modification, extension or renewal of any Option or a grant of
additional benefits to the holder of an Option.
(c) 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
<PAGE>
- 4 -
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing
events, the class and aggregate number of shares set forth in paragraph 2 of
this Plan that are subject to options which previously have been or subsequently
may be granted under this Plan shall also be appropriately adjusted to reflect
such events. The Board shall determine the specific adjustments to be made under
this paragraph 10 and its determination shall be conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the provisions
of paragraphs 4 and 9 of this Plan, the Company shall have no obligation to
deliver any certificate or certificates upon exercise of an option until one of
the following conditions shall be satisfied:
(i) The issuance of shares with respect to which the
option has been exercised is at the time of the issue of such shares
effectively registered under applicable Federal and state securities
laws as now in force or hereafter amended; or
(ii) Counsel for the Company shall have given an
opinion that the issuance of such shares is exempt from registration
under Federal and state securities laws as now in force or hereafter
amended; and the Company has complied with all applicable laws and
regulations with respect thereto, including without limitation all
regulations required by any stock exchange upon which the Company's
outstanding Common Stock is then listed.
12. Legend on Certificates. The certificates representing shares issued
pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933 or any state securities laws.
13. Representation of Optionee. If requested by the Company, the
optionee shall deliver to the Company written representations and warranties
upon exercise of the option that are necessary to show compliance with Federal
and state securities laws, including representations and warranties to the
effect that a purchase of shares under the option is made for investment and not
with a view to their distribution (as that term is used in the Securities Act of
1933).
14. Option Agreement. Each option granted under the provisions of this
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with this Plan as may be determined by the officer
executing it.
15. Termination and Amendment of Plan. Options may no longer be granted
under this Plan after January 26, 2006, and this Plan shall terminate when all
options granted or to be granted hereunder are no longer outstanding. The Board
may at any time terminate this Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board may not,
without approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and voting on such matter
at a meeting, (a) increase the maximum number of shares for which options may be
granted under this Plan (except by adjustment pursuant to Section 10), (b)
materially modify the requirements as to eligibility to participate in this
Plan, (c) materially increase benefits accruing to option holders under this
Plan or (d) amend this Plan in any manner which would cause
<PAGE>
- 5 -
Rule 16b-3 under the Securities Exchange Act (or any successor or amended
provision thereof) to become inapplicable to this Plan; and provided further
that the provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any
successor or amended provision thereof) under the Securities Exchange Act of
1934 (including without limitation, provisions as to eligibility, amount, price
and timing of awards) may not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder. Termination or any
modification or amendment of this Plan shall not, without consent of a
participant, affect his or her rights under an option previously granted to him
or her.
16. Withholding of Income Taxes. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, may
require the optionee to pay withholding taxes in respect of amounts considered
to be compensation includible in the optionee's gross income.
17. Compliance with Regulations. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor or amended provision thereof) and any applicable
Securities and Exchange Commission interpretations thereof. If any provision of
this Plan is deemed not to be in compliance with Rule 16b-3, the provision shall
be null and void.
18. Governing Law. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of the Commonwealth
of Massachusetts, without giving effect to the principles of conflicts of law
thereof.
Approved by Board of Directors of the Company: January 26, 1996.
Approved by Stockholders of the Company: January 26, 1996.
Amended and Restated by the Stockholders of the Company: ___________.
<PAGE>
PROXY
WORKGROUP TECHNOLOGY CORPORATION
Proxy for the Annual Meeting of Stockholders
To be held July 28, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Patrick H. Kareiva and Cathey M. McDyer, and
each of them, proxies, with full power of substitution, to vote all shares of
stock of Workgroup Technology Corporation (the "Company") which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of the Company to be
held on Friday, July 28, 2000, at 10:00 a.m., local time, at the offices of
Testa, Hurwitz & Thibeault, LLP, 125 High Street, 22nd Floor, Boston,
Massachusetts 02110, and at any adjournments thereof, upon matters set forth in
the Notice of Annual Meeting of Stockholders and Proxy Statement dated June 26,
2000, a copy of which has been received by the undersigned. Execution of a
proxy will not in any way affect a stockholder's right to attend the meeting and
vote in person. The proxies are further authorized to vote, in their
discretion, upon such other business as may properly come before the meeting or
any adjournments thereof, and upon which the persons named as attorneys in the
proxies may exercise discretion under applicable law.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
1. To elect a member to the Board of Directors for the specified term or until
his successor is elected and qualified:
Class II Nominee (three-year term): Patrick H. Kareiva
FOR [ ] WITHHELD [ ]
2. To amend and restate the Corporation's Non-Employee Director Stock Option
Plan to (i) increase the number of shares of the Corporation's common
stock, $0.01 par value per share (the "Common Stock"), available for
issuance thereunder to 300,000 shares and (ii) amend Section 4 thereof so
that upon initial election to the Corporation's Board of Directors and
after each three year period of service on the Board of Directors, a
director shall receive an option to purchase 48,000 shares of Common Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
If signing as attorney, executor, trustee or
guardian, please give your full title as such.
If stock is held jointly, each owner should sign.
________________________________________
Signature Date
________________________________________
Signature Date
