<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RESEARCH ENGINEERS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
RESEARCH ENGINEERS, INC.
22700 SAVI RANCH PARKWAY
YORBA LINDA, CALIFORNIA 92887
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 25, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Research Engineers, Inc., a Delaware corporation ("Company"), will be held at
10:00 a.m. local time, on September 25, 1997, at the Company's executive offices
located at 22700 Savi Ranch Parkway, Yorba Linda, California 92887 ("Annual
Meeting") for the following purposes:
1. To elect five directors to the Board of Directors;
2. To approve the adoption of the Company's 1997 Stock Option Plan;
3. To approve the selection of KPMG Peat Marwick LLP to audit the
financial statements of the Company for the fiscal year beginning
April 1, 1997; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on August 25, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and all adjourned meetings thereof.
By Order of the Board of Directors
/S/ AMRIT K. DAS
Amrit K. Das
President
Dated: August 26, 1997
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY
REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
<PAGE>
RESEARCH ENGINEERS, INC.
22700 SAVI RANCH PARKWAY
YORBA LINDA, CALIFORNIA 92887
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 25, 1997
---------------
VOTING AND PROXY
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Research Engineers, Inc. (the "Company")
for use at the 1997 Annual Meeting of Stockholders to be held at 10:00 a.m.,
local time, on September 25, 1997, at the Company's executive offices located at
22700 Savi Ranch Parkway, Yorba Linda, California 92887 (the "Annual Meeting")
and at any adjournments thereof. When such proxy is properly executed and
returned, the shares it represents will be voted in accordance with any
directions noted thereon. If no specification is indicated, the shares will be
voted "FOR" the election as directors of the four nominees listed thereon. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted by written notice to the Secretary of the Company, by issuance of a
subsequent proxy or by voting at the Annual Meeting in person.
At the close of business on August 25, 1997, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding 5,704,000 shares of Common
Stock, $.01 par value per share ("Common Stock"). Each share of Common Stock
entitles the holder of record thereof to one vote on any matter coming before
the Annual Meeting. Only stockholders of record at the close of business on
August 25, 1997 are entitled to notice of and to vote at the Annual Meeting or
at any adjournments thereof.
Under Delaware law and the Company's Bylaws, a majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum at
a meeting of stockholders. Generally, if a quorum is present, the affirmative
vote of a majority of the shares represented and voting on any matter will
constitute the act of the stockholders provided the number of shares voting in
favor of any proposal equals at least a majority of the quorum. Although
abstentions and "broker non-votes" are not counted either "for" or "against" any
proposals, if the number of abstentions or "broker non- votes" results in the
votes "for" a proposal not equaling at least a majority of the quorum required
for the meeting, the proposal will not be approved. This will be the case even
though the number of votes "for" the proposal exceeds the votes "against" the
proposal.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling, and mailing the proxy
solicitation materials. Proxies may be solicited personally, or by mail or by
telephone, by directors, officers and regular employees of the Company who will
not be additionally compensated therefor. It is anticipated that this proxy
statement and accompanying proxy card will be mailed on or about August 26, 1997
to all stockholders entitled to vote at the Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are more fully discussed below.
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
Directors are elected annually and hold office until the next annual
meeting of stockholders or until their respective successors are elected and
qualify. It is intended that the proxies solicited by the Board of Directors
will be voted for election of the five nominees listed below unless a contrary
instruction is made on the proxy. If for any reason one or more of these
nominees should be unavailable as a candidate for director, an event which is
not anticipated, the person named in the accompanying proxy will vote for
another candidate or candidates nominated by the Board of Directors. All of the
nominees for director are, at present, directors of the Company.
The following table sets forth certain information with respect to (i) each
nominee for director of the Company, (ii) the named executive officers in the
Summary Compensation Table on p. 7 and (iii) all director nominees and executive
officers of the Company as a group at July 15, 1997, including the number of
shares of Common Stock beneficially owned by each of them. The persons named
hold sole voting and investment power with respect to the shares shown opposite
their respective names, unless otherwise indicated. The information with respect
to each person specified is as supplied or confirmed by such person or based
upon statements filed with the Securities and Exchange Commission ("SEC").
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL CLASS OF
NAME AND AGE OR DIRECTOR OWNERSHIP OF COMMON
IDENTITY OF GROUP(1) SINCE COMMON STOCK(1) STOCK
- -------------------- ----- --------------- -----
<S> <C> <C> <C>
Amrit K. Das(2)(3) 1981 1,798,425 31.5%
50
Jyoti Chatterjee(2)(4) 1990 144,311 2.5%
41
Dan W. Heil(5) 1990 95,954 1.7%
64
Bruce E. Cummings(6) 1996 1,666 *
49
Santanu Das(7) 1996 1,027,116 17.9%
24
All Director Nominees and 3,101,658 54.0%
Executive Officers of the
Company as a Group
(7 persons)(8)
</TABLE>
_______________
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Shares of Common Stock subject to options currently exercisable, or
exercisable within 60 days after July 15, 1997, are deemed to be
outstanding in calculating the percentage ownership of a person or group
but are not deemed to be outstanding as to any other person or group.
(2) Executive officer of the Company.
(3) Includes 1,796,759 shares of Common Stock held by the A. and P. Das Living
Trust and 1,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date. Does not
include 671,463 shares of Common Stock held by Mr. Das' daughter, Sormistha
Das, or 1,027,116 shares of Common Stock beneficially held by Mr. Das' son,
Santanu Das. Mr. Das disclaims beneficial ownership of the shares of Common
Stock held by Sormistha Das and Santanu Das.
(4) Includes 11,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date.
(5) Includes 1,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date.
(6) Represents 1,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date.
(7) Includes 11,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date. Mr. Das
is the son of Amrit Das, the Company's President and Chief Executive
Officer.
(8) Includes 10,500 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date.
3
<PAGE>
BUSINESS EXPERIENCE
AMRIT K. DAS is the founder of the Company and has served as its President,
Chief Executive Officer and as a Director since its inception in 1981. Mr. Das
holds a B.S. in Civil/Structural Engineering from Calcutta University, India and
a M.S. in Structural Engineering from the University of South Carolina.
JYOTI CHATTERJEE has served as the Company's Executive Vice President,
Chief Operating Officer and as a Director since April 1990. Prior to that Mr.
Chatterjee served as Chief Consulting Engineer for the Company from 1985 to
1990. Mr. Chatterjee holds a B.S. in Structural Engineering from the Indian
Institute of Technology and a M.S. in Structural Engineering from the University
of Pennsylvania.
DAN W. HEIL has served as a Director of the Company since 1990. Mr. Heil
has been the President and Chief Executive Officer of Willdan Associates, an
engineering and planning company since its founding in 1965. Mr. Heil holds a
B.S. in Civil Engineering from Stanford University.
BRUCE E. CUMMINGS has served as a Director of the Company since 1996. Mr.
Cummings is the Principal of Bruce Cummings Associates, management and marketing
consultants. Prior to that, Mr. Cummings was the President and Chief Executive
Officer of Portrait Display Labs, Inc., a manufacturer of special purpose
computer monitors which he co-founded, from 1992 to June 1997. From January 1991
to July 1992, Mr. Cummings was Vice President of Corporate Marketing for
Macromedia. Mr. Cummings is currently a member of the Advisory Board for Europe
Direct, the European Direct Marketing Conference. Mr. Cummings holds a B.S. in
Marketing from California State University at Long Beach.
SANTANU DAS has served as Manager of New Technology of the Company since
May 1997 and as a Director since September 1996. Prior to that Mr. Das served as
a Senior Engineering Analyst for the Company from 1991 to April 1997. Mr. Das
holds a B.S. in Structural Engineering from the University of Southern
California and an M.S. in Structural Engineering from the Massachusetts
Institute of Technology. Santanu Das is the son of Amrit Das, the Company's
President and Chief Executive Officer.
All directors hold office until the next annual stockholders' meeting or
until their respective successors are elected or until their earlier death,
resignation or removal. Officers are appointed by, and serve at the discretion
of, the Board of Directors.
BOARD OF DIRECTORS MEETINGS
The Board of Directors of the Company held three meetings during the fiscal
year ended March 31, 1997, and took action by unanimous written consent on eight
occasions. Each incumbent director attended at least 75% of the aggregate of (a)
the total number of meetings of the Board of Directors held during the fiscal
year ended March 31, 1997 (held during the period for which he has been a
director) and (b) the total number of meetings held by all committees of the
Board of Directors on which he served during the fiscal year ended March 31,
1997 (held during the period that he served).
All directors hold office until the next annual meeting of stockholders of
the Company and the election and qualification of their successors. Officers are
appointed by, and serve at the discretion of, the Board of Directors.
COMMITTEES
The Board of Directors has established an Audit Committee and Compensation
Committee. The Board of Directors has no nominating committee. Selection of
nominees for the Board of Directors is made by the entire Board of Directors.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the results and scope
of the audit and other services provided by the Company's independent auditors,
reviews the Company's financial statements for each interim period, and reviews
and evaluates the Company's internal
4
<PAGE>
audit and control functions. The Audit Committee currently consists of Messrs.
Cummings and Heil. The Audit Committee held no meetings during the fiscal year
ended March 31, 1997.
The Compensation Committee makes recommendations to the Board of Directors
concerning salaries and incentive compensation for employees and consultants of
the Company. The Compensation Committee currently consists of Messrs. Das and
Heil. The Compensation Committee held no meetings during the fiscal year ended
March 31, 1997.
The Stock Option Committee selects the persons entitled to receive options
under the Company's Stock Option Plan and establishes the number of shares,
exercise price, vesting period and other terms of the options granted under the
Stock Option Plan. The Stock Option Committee consists of Messrs. Das and Heil.
The Stock Option Committee took action by unanimous written consent on four
occasions during the fiscal year ended March 31, 1997.
DIRECTORS' COMPENSATION
The Company's directors do not currently receive any cash compensation for
service on the Board of Directors or any committee thereof, but directors may be
reimbursed for certain expenses in connection with attendance at Board of
Directors and committee meetings. All directors receive annual nonqualified
stock options to purchase 5,000 shares of Common Stock with an exercise price
equal to 100% of the then-current fair market value of Common Stock on the date
of grant. These options are granted on each anniversary date of such person's
becoming a director of the Company.
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's executive officers and directors, and persons who
beneficially own more than 10% of a registered class of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission ("Commission"). Such officers,
directors and stockholders are required by Commission regulations to furnish the
Company with copies of all such reports that they file.
Based solely upon a review of copies of such reports furnished to the
Company during its fiscal year ended March 31, 1997 and thereafter, or any
written representations received by the Company from a director, officer or
beneficial owner of more than 10% of the Company's Common Stock ("reporting
persons") that no other reports were required, the Company believes that, during
the Company's 1997 fiscal year, all Section 16(a) filing requirements applicable
to the Company's reporting persons were complied with except that Brian Paul,
the Company's Secretary, Treasurer and Chief Financial Officer, inadvertently
failed to file on a timely basis a Form 4 with respect to the acquisition of
shares of Common Stock in February 1997. On May 24, 1997, Mr. Paul filed a Form
5 with respect to the acquisition of shares of Common Stock on February 21,
1997.
EMPLOYMENT AGREEMENTS
As of May 1, 1996, the Company entered into five-year employment agreements
with each of Amrit Das, Jyoti Chatterjee and Clara Young. Those agreements,
which became effective upon the closing of the Company's initial public offering
of its Common Stock, provide that Mr. Das, Mr. Chatterjee and Ms. Young will
receive minimum base annual salaries of $260,000, $156,000 and $104,000,
respectively. Each employment agreement also provides for the grant of an annual
bonus with such bonuses, if any, to be determined by the Compensation Committee
of the Board of Directors.
5
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of July 15, 1997, the identity of each
person known to the Company to be the beneficial owner of more than 5% of the
Company's Common Stock and the respective beneficial ownerships of those
persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
OF BENEFICIAL OWNER OF COMMON STOCK(1) OF COMMON STOCK
- ------------------- ------------------ ---------------
<S> <C> <C>
Amrit K. Das(2) 1,798,425 31.5%
22700 Savi Ranch Parkway
Yorba Linda, CA 92887
Santanu Das(3) 1,027,116 17.9%
1043 Taylor Court
Anaheim Hills, CA 92808
Sormistha Das 671,463 11.8%
1043 Taylor Court
Anaheim Hills, CA 92808
All directors and executive
officers as a group (7 persons)(4) 3,101,658 54.0%
- ---------------
</TABLE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Shares of Common Stock subject to options currently exercisable, or
exercisable within 60 days after July 15, 1997, are deemed to be
outstanding in calculating the percentage ownership of a person or group
but are not deemed to be outstanding as to any other person or group.
(2) Includes 1,796,759 shares of Common Stock held by the A. and P. Das Living
Trust and 1,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date. Does not
include 671,463 shares of Common Stock held by Mr. Das' daughter, Sormistha
Das, or 1,027,116 shares of Common Stock beneficially held by Mr. Das' son,
Santanu Das. Mr. Das disclaims beneficial ownership of the shares of Common
Stock held by Sormistha Das and Santanu Das.
(3) Includes 11,666 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date. Mr. Das
is the son of Amrit Das, the Company's President and Chief Executive
Officer.
(4) Includes 38,830 shares of Common Stock underlying options which are
exercisable as of July 15, 1997 or within 60 days after such date.
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company of the Company's
Chief Executive Officer and the only other executive officer of the Company
whose aggregate cash compensation exceeded $100,000 (collectively, the "Named
Executives") during the fiscal years ended March 31, 1996 and 1997.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Salary Bonus Compensation(1) Options Compensation(2)
Principal Position Year ($) ($) ($) (#) ($)
- ------------------ ---- ------- --------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Amrit K. Das ................ 1997 249,200 -- 119,710(3) 25,000 9,500
President and Chief 1996 228,000 -- 41,328(4) -- 9,240
Executive Officer
Jyoti Chatterjee ............ 1997 136,560 -- -- 48,000 8,194
Executive Vice President 1996 99,840 20,912(5) -- -- 6,340
and Chief Operating Officer
</TABLE>
___________
(1) The costs of certain benefits are not included because they did not exceed,
in the case of each Named Executive, the lesser of $50,000 or 10% of the
total annual salary and bonus as reported above.
(2) Represents 401(k) contributions made by the Company on behalf of the Named
Executive.
(3) Includes $41,331 of premiums paid by the Company pursuant to a split-
dollar life insurance policy established by the Company for the benefit of
Mr. Das.
(4) Represents $41,328 of premiums paid by the Company pursuant to a split-
dollar life insurance policy established by the Company for the benefit of
Mr. Das.
(5) Represents a performance bonus of 23,116 shares of restricted Common Stock
of the Company, valued at approximately $20,912 (as determined by the Board
of Directors of the Company), granted to Mr. Chatterjee in September 1995.
STOCK OPTION GRANTS IN 1997
The following table sets forth information concerning individual grants of
stock options made pursuant to the Company's 1996 Stock Plan and 1997 Stock
Option Plan during fiscal 1997 to each of the Named Executives. The Company has
never granted any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of
Securities Percent of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date
---- ---------- ---------------- -------- ----------
<S> <C> <C> <C> <C>
Amrit K. Das......... 25,000 7.2% $2.75 4/16/06-2/6/07
Jyoti Chatterjee..... 48,000 13.9% $2.75 4/16/06-2/6/07
</TABLE>
7
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the number of shares of the
Company's Common Stock acquired upon exercise of options, the value realized
therefor, the number of unexercised options at March 31, 1997 and the value of
unexercised in-the-money options at March 31, 1997 for the Named Executives in
the Summary Compensation Table above. The Named Executives did not hold any
stock appreciation rights during fiscal 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised in-the-Money
Options at Fiscal Options at Fiscal
Shares Year-End(#) Year-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
---- ------------ ----------- -------------------- --------------------
<S> <C> <C> <C> <C>
Amrit K. Das......... -- -- 1,666 / 23,334 417 / 5,834
Jyoti Chatterjee..... -- -- 11,666 / 36,334 2,917 / 9,084
</TABLE>
REPORT ON REPRICING OF OPTIONS
The Board of Directors has issued the following explanation in connection
with two adjustments to the exercise price of non-qualified stock options
("Options") previously awarded to employees, officers and directors in fiscal
1997, which Options included options to purchase up to 5,000 shares of the
Company's Common stock which were automatically granted to each of the Named
Executives, as described below:
"On April 16, 1997, the Company's 1996 Stock Option Plan Committee granted
the Options under the 1996 Stock Option Plan. The Options were exercisable at a
price of $6.00 per share, as such value was determined to be the approximate
fair market value per share as of the date of grant based upon, among other
things, a contemplated IPO price of $7.50 per share. Because of adverse market
conditions, the Company effected its IPO at a price per share equal to $5.00
rather than $7.50, resulting in the exercise price of the Options being greater
than the market price of the underlying Common Stock. Consequently, effective
July 26, 1996, the Board of Directors reduced the exercise price of the Options
from $6.00 to $5.00 to coincide with the $5.00 IPO price per share.
In light of a decrease in the market price of the Company's Common stock to
an amount below the exercise price of the Options, the Board of Directors on
December 13, 1996 resolved that the persons to whom the Options had been granted
had provided exceptional services to the Company and were nonetheless deserving
of compensation above and beyond their salaries and cash bonuses. Consequently,
the Board of Directors reduced the per share exercise price of the options to
$2.75, which represented the closing price per share as reported on Nasdaq of
the Company's common stock on December 13, 1996."
8
<PAGE>
APPROVAL OF 1997 STOCK OPTION PLAN
(Proposal 2)
1996 AND 1997 STOCK OPTION PLANS
On April 16, 1996, the Board of Directors and the sole stockholder of the
Company adopted the Company's 1996 Stock Option Plan (the "1996 Plan") by action
taken without a meeting of the directors and sole stockholder by written
consent. On February 6, 1997, the Board of Directors adopted the 1997 Stock
Option Plan (the "1997 Plan") by action taken without a meeting of the directors
by written consent. The 1996 Plan and the 1997 Plan are sometimes referred to
collectively as the "Plans." The Plans are designed to enable the Company to
offer an incentive based compensation system to employees, officers and
directors of the Company and to employees of companies who do business with the
Company. The Plans provide for the grant of incentive stock options ("ISOs"),
nonqualified stock options ("NQOs") and the 1996 Plan provides for the grant of
director nonqualified stock options ("Director NQOs") (ISOs, NQOs and Director
NQOs, collectively called "Options"). As of July 15, 1997, the Company had a
total of 91 employees, officers and directors, eligible to receive Options under
the Plans.
As of July 15, 1997, a total of 251,100 NQOs granted under the 1996 Plan
were outstanding and a total of 25,000 Director NQOs granted under the 1996 Plan
were outstanding. As of that same date, a total of 28,000 NQOs, 25,000 Director
NQOs and 139,800 ISOs have been granted under the 1997 Plan (subject to
stockholder approval of the 1997 Plan). An aggregate of 3,000 shares of the
Company's Common Stock have been issued pursuant to the exercise of NQOs granted
under the 1996 Plan.
The Company has registered, at the Company's expense, with the SEC on a
Form S-8 Registration Statement the shares of Common Stock issuable under the
1996 Plan.
The following summary description of the Plans are qualified in its
entirety by reference to the full text of the Plans. A copy of the 1997 Plan is
attached to this proxy statement as Exhibit A.
SHARES SUBJECT TO THE PLANS
A total of 294,000 shares of the Company's Common Stock are authorized for
issuance under the 1996 Plan. A total of 300,000 shares of the Company's Common
Stock are authorized for issuance under the 1997 Plan. Any shares of Common
Stock which are subject to an award but are not used because the terms and
conditions of the award are not met, or any shares which are used by
participants to pay all or part of the purchase price of any Option may again be
used for awards under the Plans.
ADMINISTRATION
The Plans are administered by a Committee ("Committee") of not less than
two nor more than five persons appointed by the Board of Directors, each of whom
must be a director of the Company. The 1996 Plan provides that members of the
Committee are not eligible to receive Options under the 1996 Plan (other than
Director NQOs). It is the intent of the Plans that they be administered in a
manner such that option grants and exercises would be "exempt" under Rule 16b-3
of the Exchange Act. The Committee is currently comprised of Messrs. Das and
Heil.
The Committee is empowered to select those eligible persons to whom Options
shall be granted under the Plans; to determine the time or times at which each
Option shall be granted, whether Options will be ISOs or NQOs, and the number of
shares to be subject to each Option; and to fix the time and manner in which
each such Option may be exercised, including the exercise price and option
period, and other terms and conditions of such Options, all subject to the terms
and conditions of the Plans. The Committee has sole discretion to interpret and
administer the Plans, and its decisions regarding the Plans are final.
9
<PAGE>
OPTION TERMS
ISOs granted under the Plans must have an exercise price of not less than
100% of the fair market value of the Common Stock on the date the ISO is granted
and must be exercised within ten years from the date of grant. In the case of an
ISO granted to an optionee who owns more than 10% of the total voting securities
of the Company on the date of grant, such exercise price shall be not less than
110% of fair market value on the date of grant, and the option period may not
exceed five years. NQOs granted under the Plans must have an exercise price of
not less than 85% of the fair market value of the Common Stock on the date the
NQO is granted.
Options may be exercised during a period of time fixed by the Committee
except that no Option (other than an ISO granted to a stockholder owning more
than 10% of the voting securities of the Company) may be exercised more than ten
years after the date of grant. In the discretion of the Committee, payment of
the purchase price for the shares of stock acquired through the exercise of an
Option may be made in cash, shares of the Company's Common Stock or a
combination of cash and shares of the Company's Common Stock.
AMENDMENT AND TERMINATION
The Plans may be wholly or partially amended or otherwise modified,
suspended or terminated at any time and from time to time by the Board of
Directors. The Board of Directors may not (i) materially impair any outstanding
Options without the express consent of the optionee or (ii) materially increase
the number of shares subject to the Plans, materially increase the benefits
acquiring to optionees under the Plans, materially modify the requirements as to
eligibility to participate in the Plans or alter the method of determining the
Option exercise price without stockholder approval. No Option may be granted
under the 1996 Plan and the 1997 Plan after April 15, 2006 and February 5, 2007,
respectively.
FEDERAL INCOME TAX CONSEQUENCES
NQOs.
Holders of NQOs do not realize income as a result of a grant of the Option,
but normally realize compensation income upon exercise of an NQO to the extent
that the fair market value of the shares of Common Stock on the date of exercise
of the NQO exceeds the exercise price paid. The Company will be required to
withhold taxes on ordinary income realized by an optionee upon the exercise of a
NQO.
In the case of an optionee subject to the "short-swing" profit recapture
provisions of Section 16(b) of the Exchange Act, the optionee realizes income
only upon the lapse of the six-month period under Section 16(b), unless the
optionee elects to recognize income immediately upon exercise of his Option.
ISOs.
Holders of ISOs will not be considered to have received taxable income upon
either the grant of the Option or its exercise. Upon the sale or other taxable
disposition of the shares, long-term capital gain will normally be recognized on
the full amount of the difference between the amount realized and the Option
exercise price paid if no disposition of the shares has taken place within
either (a) two years from the date of grant of the Option or (b) one year from
the date of transfer of the shares to the optionee upon exercise. If the shares
are sold or otherwise disposed of before the end of the one-year or two-year
periods, the holder of the ISO must include the gain realized as ordinary income
to the extent of the lesser of (1) the fair market value of the Option stock
minus the Option price, or (2) the amount realized minus the Option price. Any
gain in excess of these amounts, presumably, will be treated as capital gain.
The Company will be entitled to a tax deduction in regard to an ISO only to the
extent the optionee has ordinary income upon the sale or other disposition of
the Option shares.
Upon the exercise of an ISO, the amount by which the fair market value of
the purchased shares at the time of exercise exceeds the Option price will be an
"item of tax preference" for purposes of computing the optionee's alternative
minimum tax for the year of exercise. If the shares so acquired are disposed of
prior to the expiration of the one-year or two-year periods described above,
there should be no "item of tax preference" arising from the Option exercise.
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POSSIBLE ANTI-TAKEOVER EFFECTS
Although not intended as an anti-takeover measure by the Board of
Directors, one of the possible effects of the Plans could be to place additional
shares, and to increase the percentage of the total number of shares
outstanding, in the hands of the directors and officers of the Company. Such
persons may be viewed as part of, or friendly to, incumbent management and may,
therefore, under certain circumstances be expected to make investment and voting
decisions in response to a hostile takeover attempt that may serve to discourage
or render more difficult the accomplishment of such attempt.
In addition, Options may, in the discretion of the Committee, contain a
provision providing for the acceleration of the exercisability of outstanding,
but unexercisable, installments upon the first public announcement of a tender
offer, merger, consolidation, sale of all or substantially all of the assets of
the Company, or other attempted changes in the control of the Company. In the
opinion of the Board of Directors, such an acceleration provision merely ensures
that optionees under the Plans will be able to exercise their Options as
intended by the Board of Directors and stockholders of the Company prior to any
such extraordinary corporate transaction which might serve to limit or restrict
such right. The Board of Directors is, however, presently unaware of the
possibility of any hostile takeovers involving the Company.
REQUIRED VOTE OF STOCKHOLDERS
The favorable vote of a majority of the shares of Common Stock voting in
person or by proxy at the Annual Meeting is required to approve the 1997 Plan.
As noted, the Board approved the 1997 Plan. Stockholders should be aware,
however, that the Board may be viewed as having a conflict of interest in
approving, and recommending that stockholders approve, the 1997 Plan. If the
1997 Plan is approved by the stockholders, Options granted under the 1997 Plan,
including those granted to directors of the Company, will be confirmed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE 1997 PLAN.
INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors has selected the certified public accounting firm of
KPMG Peat Marwick LLP to audit and comment on the Company's financial statements
for the fiscal year ending March 31, 1998, and conduct whatever audit functions
are deemed necessary pursuant thereto. KPMG Peat Marwick LLP audited the
Company's 1997 financial statements included in the 1997 Annual Report to
stockholders.
It is anticipated that a representative of KPMG Peat Marwick LLP will be
present at the Annual Meeting and will be given the opportunity to make a
statement, if desired, and to respond to appropriate questions, if any,
concerning their engagement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1994, Amrit K. Das, the Company's Chief Executive Officer and
President, made a loan to the Company in the amount of $271,000 bearing interest
at 9% per annum and payable on March 1, 1999. The loan was repaid by the Company
in July 1996.
In March 1994, Santanu K. Das, the son of Amrit K. Das and a stockholder of
the Company, made a loan to the Company in the amount of $92,000 bearing
interest at 9% per annum and payable on March 1, 1999. The loan was repaid by
the Company in March 1997.
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In March 1994, Sormistha Das, the daughter of Amrit K. Das and a
stockholder of the Company, made a loan to the Company in the amount of $55,000
bearing interest at 9% per annum and payable on March 1, 1999. The loan was
repaid by the Company in March 1997.
In May 1994, the Company established a secured credit facility with Wells
Fargo Bank, N.A. and executed a Promissory Note, in favor of Wells Fargo Bank,
N.A. in the aggregate principal amount of $140,000 and bearing interest at a
variable rate equal to Wells Fargo's money market funds rate plus 3.5% per
annum, which is collateralized by a blanket security interest with respect to
the general assets of the Company and personally guaranteed by Amrit K. Das and
Purabi Das. The aggregate outstanding principal and accrued interest on this
loan was repaid in December 1996.
On May 1, 1996, Amrit K. Das transferred, assigned and surrendered to the
Company 2,626 ordinary equity shares of Research Engineers Private Limited, a
corporation organized and existing under the laws of India ("RE India"), which
represents 99.88% of the issued and outstanding shares of RE India. Pending the
receipt of permission for such transfer from the Central Government of India,
Mr. Das has assigned all of the rights, privileges and benefits in and to such
shares to the Company.
In July 1996, an advance of $309,000, including principal and accrued
interest, was repaid to Amrit K. Das, the Company's President and Chief
Executive Officer. The advance was made to the Company in connection with the
acquisition of the Technical Group, Inc. in 1990, in the amount of $200,000.
In August 1996, the Company repaid two notes aggregating approximately
$1,705,000. These notes were made in connection with the acquisition of the
Company's facility in Yorba Linda, California in February 1994 and were
personally guaranteed by Amrit K. Das, the Company's President and Chief
Executive Officer, and Purabi Das, Mr. Das' wife.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should come before the Annual Meeting,
it is the intention of the person named in the proxy to vote such proxy in
accordance with his judgment on such matters.
FORM 10-KSB REPORT
A copy of the Company's annual report to the Securities and Exchange
Commission on Form 10-KSB is available without charge to stockholders and may be
obtained by writing to Investor Relations Department, Research Engineers, Inc.,
22700 Savi Ranch Parkway, Yorba Linda, California 92887.
STOCKHOLDER PROPOSALS
Any proposals of security holders which are intended to be presented at
next year's Annual Meeting must be received by the Company at its principal
executive offices on or before May 25, 1998, in order to be considered for
inclusion in the Company's proxy materials relating to that meeting.
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EXHIBIT A
RESEARCH ENGINEERS, INC.
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of this 1997 Stock Option Plan
("Plan") of Research Engineers, Inc., a Delaware corporation ("Company"), is to
provide the Company with a means of attracting and retaining the services of
highly motivated and qualified directors and key personnel. The Plan is intended
to advance the interests of the Company by affording to directors and key
employees, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity for
investment in the Company and the incentives inherent in stock ownership in the
Company. In addition, the Plan contemplates the opportunity for investment in
the Company by employees of companies that do business with the Company. For
purposes of this Plan, the term Company shall include subsidiaries, if any, of
the Company.
2. LEGAL COMPLIANCE. It is the intent of the Plan that all options granted
under it ("Options") shall be either "Incentive Stock Options" ("ISOs"), as such
term is defined in Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or non-qualified stock options ("NQOs"); provided, however, ISOs shall
be granted only to employees of the Company. An Option shall be identified as an
ISO or an NQO in writing in the document or documents evidencing the grant of
the Option. All Options that are not so identified as ISOs are intended to be
NQOs. In addition, the Plan provides for the grant of NQOs to employees of
companies that do business with the Company. It is the further intent of the
Plan that it conform in all respects with the requirements of Rule 16b-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3"). To the extent that any aspect of the Plan or its
administration shall at any time be viewed as inconsistent with the requirements
of Rule 16b-3 or, in connection with ISOs, the Code, such aspect shall be deemed
to be modified, deleted or otherwise changed as necessary to ensure continued
compliance with such provisions.
3. ADMINISTRATION OF THE PLAN.
3.1 PLAN COMMITTEE. The Plan shall be administered by a committee
("Committee"). The members of the Committee shall be appointed from time to time
by the Board of Directors of the Company ("Board") and shall consist of not less
than two (2) nor more than five (5) persons. Such persons shall be directors of
the Company.
3.2 GRANTS OF OPTIONS BY THE COMMITTEE. In accordance with the
provisions of the Plan, the Committee, by resolution, shall select those
eligible persons to whom Options shall be granted ("Optionees"); shall determine
the time or times at which each Option shall be granted, whether an Option is an
ISO or an NQO and the number of shares to be subject to each Option; and shall
fix the time and manner in which the Option may be exercised, the Option
exercise price, and the Option period. The Committee shall determine the form of
option agreement to evidence the foregoing terms and conditions of each Option,
which need not be identical, in the form provided for in Section 7. Such option
agreement may include such other provisions as the Committee may deem necessary
or desirable consistent with the Plan, the Code and Rule 16b-3.
3.3 COMMITTEE PROCEDURES. The Committee from time to time may adopt
such rules and regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company. The Committee shall keep
minutes of its meetings and records of its actions. A majority of the members of
the Committee shall constitute a quorum for the transaction of any business by
the Committee. The Committee may act at any time by an affirmative vote of a
majority of those members voting. Such vote may be taken at a meeting (which may
be conducted in person or by any telecommunication medium) or by written consent
of Committee members without a meeting.
3.4 FINALITY OF COMMITTEE ACTION. The Committee shall resolve all
questions arising under the Plan and option agreements entered into pursuant to
the Plan. Each determination, interpretation, or other action made or
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taken by the Committee shall be final and conclusive and binding on all persons,
including, without limitation, the Company, its shareholders, the Committee and
each of the members of the Committee, and the directors, officers and employees
of the Company, including Optionees and their respective successors in interest.
3.5 NON-LIABILITY OF COMMITTEE MEMBERS. No Committee member shall be
liable for any action or determination made by him or her in good faith with
respect to the Plan or any Option granted under it.
4. BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN. The Board may,
from time to time, make such changes in or additions to the Plan as it may deem
proper and in the best interests of the Company and its shareholders. The Board
may also suspend or terminate the Plan at any time, without notice, and in its
sole discretion. Notwithstanding the foregoing, no such change, addition,
suspension, or termination by the Board shall (i) materially impair any option
previously granted under the Plan without the express written consent of the
optionee; or (ii) materially increase the number of shares subject to the Plan,
materially increase the benefits accruing to optionees under the Plan,
materially modify the requirements as to eligibility to participate in the Plan
or alter the method of determining the option exercise price described in
Section 8, without shareholder approval.
5. SHARES SUBJECT TO THE PLAN. For purposes of the Plan, the Committee is
authorized to grant Options for up to 300,000 shares of the Company's common
stock ("Common Stock"), or the number and kind of shares of stock or other
securities which, in accordance with SECTION 13, shall be substituted for such
shares of Common Stock or to which such shares shall be adjusted. The Committee
is authorized to grant Options under the Plan with respect to such shares. Any
or all unsold shares subject to an Option which for any reason expires or
otherwise terminates (excluding shares returned to the Company in payment of the
exercise price for additional shares) may again be made subject to grant under
the Plan.
6. OPTIONEES. Options shall be granted only to officers, directors or key
employees of the Company or employees of companies that do business with the
Company designated by the Committee from time to time as Optionees. Any Optionee
may hold more than one option to purchase Common Stock, whether such option is
an Option held pursuant to the Plan or otherwise. An Optionee who is an employee
of the Company ("Employee Optionee") and who holds an Option must remain a
continuous full or part-time employee of the Company from the time of grant of
the Option to him until the time of its exercise, except as provided in SECTION
10.3.
7. GRANTS OF OPTIONS. The Committee shall have the sole discretion to
grant Options under the Plan and to determine whether any Option shall be an ISO
or an NQO. The terms and conditions of Options granted under the Plan may differ
from one another as the Committee, in its absolute discretion, shall determine
as long as all Options granted under the Plan satisfy the requirements of the
Plan. Upon determination by the Committee that an Option is to be granted to an
Optionee, a written option agreement evidencing such Option shall be given to
the Optionee, specifying the number of shares subject to the Option, the Option
exercise price, whether the Option is an ISO or an NQO, and the other individual
terms and conditions of such Option. Such option agreement may incorporate
generally applicable provisions from the Plan, a copy of which shall be provided
to all Optionees at the time of their initial grants under the Plan. The Option
shall be deemed granted as of the date specified in the grant resolution of the
Committee, and the option agreement shall be dated as of the date of such
resolution. Notwithstanding the foregoing, unless the Committee consists solely
of non-employee directors, any Option granted to an executive officer, director
or 10% beneficial owner for purposes of Section 16 of the Securities Exchange
Act of 1934, as amended ("Section 16 of the 1934 Act"), shall either be (a)
conditioned upon the Optionee's agreement not to sell the shares of Common Stock
underlying the Option for at least six (6) months after the date of grant or (b)
approved by the entire Board or by the shareholders of the Company.
8. OPTION EXERCISE PRICE. The price per share to be paid by the Optionee
at the time an ISO is exercised shall not be less than one hundred percent
(100%) of the Fair Market Value (as hereinafter defined) of one share of the
optioned Common Stock on the date on which the Option is granted. No ISO may be
granted under the Plan to any person who, at the time of such grant, owns
(within the meaning of Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any parent thereof, unless the exercise price of such ISO is
at least equal to one hundred and ten percent (110%) of Fair Market Value on the
date of grant. The price per share to be paid by the Optionee at the time an NQO
is exercised shall not be less than eighty-five percent (85%) of the Fair Market
Value on the date on which the NQO is granted, as determined by the Committee.
For purposes of
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the Plan, the "Fair Market Value" of a share of the Company's Common Stock as of
a given date shall be: (i) the closing price of a share of the Company's Common
Stock on the principal exchange on which shares of the Company's Common Stock
are then trading, if any, on the day immediately preceding such date, or, if
shares were not traded on such date, then on the next preceding trading day
during which a sale occurred; or (ii) if the Company's Common Stock is not
traded on an exchange but is quoted on Nasdaq or a successor quotation system,
(1) the last sales price (if the Common Stock is then listed as a National
Market Issue under the Nasdaq National Market System) or (2) the closing
representative bid price (in all other cases) for the Common Stock on the day
immediately preceding such date as reported by Nasdaq or such successor
quotation system; or (iii) if the Company's Common Stock is not publicly traded
on an exchange and not quoted on Nasdaq or a successor quotation system, the
closing bid price for the Common Stock on such date as determined in good faith
by the Committee; or (iv) if the Company's Common Stock is not publicly traded,
the fair market value established by the Committee acting in good faith. In
addition, with respect to any ISO, the Fair Market Value on any given date shall
be determined in a manner consistent with any regulations issued by the
Secretary of the Treasury for the purpose of determining fair market value of
securities subject to an ISO plan under the Code.
9. CEILING OF ISO GRANTS. The aggregate Fair Market Value (determined at
the time any ISO is granted) of the Common Stock with respect to which an
Optionee's ISOs, together with incentive stock options granted under any other
plan of the Company and any parent, are exercisable for the first time by such
Optionee during any calendar year shall not exceed $100,000. If an Optionee
holds such incentive stock options that become first exercisable (including as a
result of acceleration of exercisability under the Plan) in any one year for
shares having a Fair Market Value at the date of grant in excess of $100,000,
then the most recently granted of such ISOs, to the extent that they are
exercisable for shares having an aggregate Fair Market Value in excess of such
limit, shall be deemed to be NQOs.
10. DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS.
10.1 OPTION PERIOD. The option period shall be determined by the
Committee with respect to each Option granted. In no event, however, may the
option period exceed ten (10) years from the date on which the Option is
granted, or five (5) years in the case of a grant of an ISO to an Optionee who
is a ten percent (10%) shareholder at the date on which the Option is granted as
described in SECTION 8.
10.2 EXERCISABILITY OF OPTIONS. Each Option shall be exercisable in
whole or in consecutive installments, cumulative or otherwise, during its term
as determined in the discretion of the Committee.
10.3 TERMINATION OF OPTIONS DUE TO TERMINATION OF EMPLOYMENT,
DISABILITY, OR DEATH OF OPTIONEE; TERMINATION FOR "CAUSE", OR RESIGNATION IN
VIOLATION OF AN EMPLOYMENT AGREEMENT. All Options granted under the Plan to any
Employee Optionee shall terminate and may no longer be exercised if the Employee
Optionee ceases, at any time during the period between the grant of the Option
and its exercise, to be an employee of the Company; provided, however, that the
Committee may alter the termination date of the Option if the Optionee transfers
to an affiliate of the Company. Notwithstanding the foregoing, (i) if the
Employee Optionee's employment with the Company shall have terminated for any
reason (other than involuntary dismissal for "cause" or voluntary resignation in
violation of any agreement to remain in the employ of the Company, including,
without limitation, any such agreement pursuant to SECTION 15), he may, at any
time before the expiration of three (3) months after such termination or before
expiration of the Option, whichever shall first occur, exercise the Option (to
the extent that the Option was exercisable by him on the date of the termination
of his employment); (ii) if the Employee Optionee's employment shall have
terminated due to disability (as defined in Section 22(e)(3) of the Code and
subject to such proof of disability as the Committee may require), such Option
may be exercised by the Employee Optionee (or by his guardian(s), or
conservator(s), or other legal representative(s)) before the expiration of
twelve (12) months after such termination or before expiration of the Option,
whichever shall first occur (to the extent that the Option was exercisable by
him on the date of the termination of his employment); (iii) in the event of the
death of the Employee Optionee, an Option exercisable by him at the date of his
death shall be exercisable by his legal representative(s), legatee(s), or
heir(s), or by his beneficiary or beneficiaries so designated by him, as the
case may be, within twelve (12) months after his death or before the expiration
of the Option, whichever shall first occur (to the extent that the Option was
exercisable by him on the date of his death); and (iv) if the Employee
Optionee's employment is terminated for "cause" or in violation of any agreement
to remain in the employ of the Company, including, without limitation, any such
agreement pursuant to SECTION 14, his Option shall terminate immediately upon
termination of
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employment, and such Option shall be deemed to have been forfeited by the
Optionee. For purposes of the Plan, "cause" may include, without limitation, any
illegal or improper conduct (1) which injures or impairs the reputation,
goodwill, or business of the Company; (2) which involves the misappropriation of
funds of the Company, or the misuse of data, information, or documents acquired
in connection with employment by the Company; or (3) which violates any other
directive or policy promulgated by the Company. A termination for "cause" may
also include any resignation in anticipation of discharge for "cause" or
resignation accepted by the Company in lieu of a formal discharge for "cause."
11. MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES.
11.1 WRITTEN NOTICE OF EXERCISE. An Optionee may elect to exercise an
Option in whole or in part, from time to time, subject to the terms and
conditions contained in the Plan and in the agreement evidencing such Option, by
giving written notice of exercise to the Company at its principal executive
office.
11.2 CASH PAYMENT FOR OPTIONED SHARES. If an Option is exercised for
cash, such notice shall be accompanied by a cashier's or personal check, or
money order, made payable to the Company for the full exercise price of the
shares purchased.
11.3 STOCK SWAP FEATURE. At the time of the Option exercise, and
subject to the discretion of the Committee to accept payment in cash only, the
Optionee may determine whether the total purchase price of the shares to be
purchased shall be paid solely in cash or by transfer from the Optionee to the
Company of previously acquired shares of Common Stock, or by a combination
thereof. If the Optionee elects to pay the total purchase price in whole or in
part with previously acquired shares of Common Stock, the value of such shares
shall be equal to their Fair Market Value on the date of exercise, determined by
the Committee in the same manner used for determining Fair Market Value at the
time of grant for purposes of SECTION 8.
11.4 INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND LEGALITY
OF ISSUANCE. The receipt of shares of Common Stock upon the exercise of an
Option shall be conditioned upon the Optionee (or any other person who exercises
the Option on his or her behalf as permitted by SECTION 10.3) providing to the
Committee a written representation that, at the time of such exercise, it is the
intent of such person(s) to acquire the shares for investment only and not with
a view toward distribution. The certificate for unregistered shares issued for
investment shall be restricted by the Company as to transfer unless the Company
receives an opinion of counsel satisfactory to the Company to the effect that
such restriction is not necessary under then pertaining law. The providing of
such representation and such restrictions on transfer shall not, however, be
required upon any person's receipt of shares of Common Stock under the Plan in
the event that, at the time of grant of the Option relating to such receipt or
upon such receipt, whichever is the appropriate measure under applicable federal
or state securities laws, the shares subject to the Option shall be (i) covered
by an effective and current registration statement under the Securities Act of
1933, as amended, and (ii) either qualified or exempt from qualification under
applicable state securities laws. The Company shall, however, under no
circumstances be required to sell or issue any shares under the Plan if, in the
opinion of the Committee, (i) the issuance of such shares would constitute a
violation by the Optionee or the Company of any applicable law or regulation of
any governmental authority, or (ii) the consent or approval of any governmental
body is necessary or desirable as a condition of, or in connection with, the
issuance of such shares.
11.5 SHAREHOLDER RIGHTS OF OPTIONEE. Upon exercise, the Optionee (or
any other person who exercises the Option on his behalf as permitted by SECTION
10.3) shall be recorded on the books of the Company as the owner of the shares,
and the Company shall deliver to such record owner one or more duly issued stock
certificates evidencing such ownership. No person shall have any rights as a
shareholder with respect to any shares of Common Stock covered by an Option
granted pursuant to the Plan until such person shall have become the holder of
record of such shares. Except as provided in SECTION 13, no adjustments shall be
made for cash dividends or other distributions or other rights as to which there
is a record date preceding the date such person becomes the holder of record of
such shares.
11.6 HOLDING PERIODS FOR TAX PURPOSES. The Plan does not provide that
an Optionee must hold shares of Common Stock acquired under the Plan for any
minimum period of time. Optionees are urged to consult with their own tax
advisors with respect to the tax consequences to them of their individual
participation in the Plan.
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12. SUCCESSIVE GRANTS. Successive grants of Options may be made to any
Optionee under the Plan.
13. ADJUSTMENTS.
(a) If the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by reason of a
recapitalization, reclassification, reorganization, merger, consolidation, share
exchange, or other business combination in which the Company is the surviving
parent corporation, stock split-up, combination of shares, or dividend or other
distribution payable in capital stock or rights to acquire capital stock,
appropriate adjustment shall be made by the Committee in the number and kind of
shares for which options may be granted under the Plan. In addition, the
Committee shall make appropriate adjustment in the number and kind of shares as
to which outstanding and unexercised options shall be exercisable, to the end
that the proportionate interest of the holder of the option shall, to the extent
practicable, be maintained as before the occurrence of such event. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of the option but with a
corresponding adjustment in the exercise price per share.
(b) In the event of the dissolution or liquidation of the Company, any
outstanding and unexercised options shall terminate as of a future date to be
fixed by the Committee.
(c) In the event of a Reorganization (as hereinafter defined), then,
(i) If there is no plan or agreement with respect to the
Reorganization ("Reorganization Agreement"), or if the Reorganization Agreement
does not specifically provide for the adjustment, change, conversion, or
exchange of the outstanding and unexercised options for cash or other property
or securities of another corporation, then any outstanding and unexercised
options shall terminate as of a future date to be fixed by the Committee; or
(ii) If there is a Reorganization Agreement, and the Reorganization
Agreement specifically provides for the adjustment, change, conversion, or
exchange of the outstanding and unexercised options for cash or other property
or securities of another corporation, then the Committee shall adjust the shares
under such outstanding and unexercised options, and shall adjust the shares
remaining under the Plan which are then available for the issuance of options
under the Plan if the Reorganization Agreement makes specific provisions
therefor, in a manner not inconsistent with the provisions of the Reorganization
Agreement for the adjustment, change, conversion, or exchange of such options
and shares.
(d) The term "Reorganization" as used in this SECTION 13 shall mean any
reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company. Nothing herein shall
require the Company to adopt a Reorganization Agreement, or to make provision
for the adjustment, change, conversion, or exchange of any options, or the
shares subject thereto, in any Reorganization Agreement which it does adopt.
(e) The Committee shall provide to each optionee then holding an
outstanding and unexercised option not less than thirty (30) calendar days'
advanced written notice of any date fixed by the Committee pursuant to this
SECTION 13 and of the terms of any Reorganization Agreement providing for the
adjustment, change, conversion, or exchange of outstanding and unexercised
options. Except as the Committee may otherwise provide, each optionee shall have
the right during such period to exercise his option only to the extent that the
option was exercisable on the date such notice was provided to the optionee.
Any adjustment to any outstanding ISO pursuant to this SECTION 13, if made
by reason of a transaction described in Section 424(a) of the Code, shall be
made so as to conform to the requirements of that Section and the regulations
thereunder. If any other transaction described in Section 424(a) of the Code
affects the Common Stock subject to any unexercised ISO theretofore granted
under the Plan (hereinafter for purposes of this SECTION 13 referred to as
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the "old option"), the Board of Directors of the Company or of any surviving or
acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or to
assume the old option.
(f) No modification, extension, renewal, or other change in any option
granted under the Plan may be made, after the grant of such option, without the
optionee's consent, unless the same is permitted by the provisions of the Plan
and the option agreement. In the case of an ISO, optionees are hereby advised
that certain changes may disqualify the ISO from being considered as such under
Section 422 of the Code, or constitute a modification, extension, or renewal of
the ISO under Section 424(h) of the Code.
(g) All adjustments and determinations under this SECTION 13 shall be
made by the Committee in good faith in its sole discretion.
14. CONTINUED EMPLOYMENT. As determined in the sole discretion of the
Committee at the time of grant and if so stated in a writing signed by the
Company, each Option may have as a condition the requirement of an Employee
Optionee to remain in the employ of the Company, or of its affiliates, and to
render to it his or her exclusive service, at such compensation as may be
determined from time to time by it, for a period not to exceed the term of the
Option, except for earlier termination of employment by or with the express
written consent of the Company or on account of disability or death. The failure
of any Employee Optionee to abide by such agreement as to any Option under the
Plan may result in the termination of all of his or her then outstanding Options
granted pursuant to the Plan. Neither the creation of the Plan nor the granting
of Option(s) under it shall be deemed to create a right in an Employee Optionee
to continued employment with the Company, and each such Employee Optionee shall
be and shall remain subject to discharge by the Company as though the Plan had
never come into existence. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in options granted
under this Plan shall not constitute an element of damages in the event of
termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise.
15. TAX WITHHOLDING. The exercise of any Option granted under the Plan is
subject to the condition that if at any time the Company shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such exercise or a later lapsing of time or
restrictions on or disposition of the shares of Common Stock received upon such
exercise, then in such event, the exercise of the Option shall not be effective
unless such withholding shall have been effected or obtained in a manner
acceptable to the Company. When an Optionee is required to pay to the Company an
amount required to be withheld under applicable income tax laws in connection
with the exercise of any Option, the Optionee may, subject to the approval of
the Committee, which approval shall not have been disapproved at any time after
the election is made, satisfy the obligation, in whole or in part, by electing
to have the Company withhold shares of Common Stock having a value equal to the
amount required to be withheld. The value of the Common Stock withheld pursuant
to the election shall be determined by the Committee, in accordance with the
criteria set forth in SECTION 8, with reference to the date the amount of tax to
be withheld is determined. The Optionee shall pay to the Company in cash any
amount required to be withheld that would otherwise result in the withholding of
a fractional share. The election by an Optionee who is an officer of the Company
within the meaning of Section 16 of the 1934 Act, to be effective, must meet all
of the requirements of Section 16 of the 1934 Act.
16. TERM OF PLAN.
16.1 EFFECTIVE DATE. Subject to shareholder approval, the Plan shall
become effective as of February 6, 1997.
16.2 TERMINATION DATE. Except as to options granted and outstanding
under the Plan prior to such time, the Plan shall terminate at midnight on
February 5, 2007, and no Option shall be granted after that time. Options then
outstanding may continue to be exercised in accordance with their terms. The
Plan may be suspended or terminated at any earlier time by the Board within the
limitations set forth in SECTION 4.
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17. NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is intended
to amend, modify, or rescind any previously approved compensation plans,
programs or options entered into by the Company. This Plan shall be construed to
be in addition to and independent of any and all such other arrangements.
Neither the adoption of the Plan by the Board nor the submission of the Plan to
the shareholders of the Company for approval shall be construed as creating any
limitations on the power or authority of the Board to adopt, with or without
shareholder approval, such additional or other compensation arrangements as the
Board may from time to time deem desirable.
18. GOVERNING LAW. The Plan and all rights and obligations under it shall
be construed and enforced in accordance with the laws of the State of
California.
19. INFORMATION TO OPTIONEES. Optionees under the Plan who do not
otherwise have access to financial statements of the Company will receive the
Company's financial statements at least annually.
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RESEARCH ENGINEERS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Research Engineers, Inc. ("Company") hereby
constitutes and appoints Amrit K. Das, with the power to appoint his substitute,
as attorney and proxy, to appear, attend and vote all of the shares of Common
Stock of the company standing in the name of the undersigned on the record date
at the 1997 Annual Meeting of Stockholders of the Company to be held at the
Company's offices located at 22700 Savi Ranch Parkway, Yorba Linda, California
92887, on September 25, 1997, at 10:00 a.m. local time, and at any adjournment
thereof, upon the following:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
RESEARCH ENGINEERS, INC.
SEPTEMBER 25, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- --------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
FOR all nominees WITHHOLD
listed at right AUTHORITY
except as marked to vote for all
to the contrary below nominees listed at right
1. To elect five [_] [_]
directors as
follows:
(INSTRUCTION: To withhold authority to vote for
any individual nominee, strike a line through the
nominee's name in the list provided at right.)
NOMINEES: Amrit K. Das
Jyoti Chatterjee
Dan W. Heil
Bruce E. Cummings
Santanu Das
2. To consider and vote upon a proposal to adopt the Company's 1997 Stock Option
Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To consider and vote upon a proposal to ratify the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for the fiscal year
beginning April 1, 1997.
[_] [_] [_]
4. To vote in his discretion on such other business as may properly come before
the meeting, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES HERETOFORE GIVEN BY THE PROXY
MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE TO THE SECRETARY
OF THE COMPANY, BY ISSUANCE OF A SUBSEQUENT PROXY OR BY VOTING AT THE ANNUAL
MEETING IN PERSON.
(Signature of Stockholder(s))_______________ (Print Name(s) Here)_______________
DATED:__________________
NOTE: Please mark, date, sign and return this proxy promptly in the enclosed
envelope. When shares are held by joint tenants, both should sign. When
signing as attorney, as executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
