<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Peregrine Systems, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: N/A
--------
(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, N/A
-------
(4) Proposed maximum aggregate value of transaction: N/A
--------------------
(5) Total fee paid: N/A
-----------------------------------------------------
[ ] 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: N/A
---------------------------------------------
(2) Form, Schedule, or Registration Statement No.: N/A
----------------------
(3) Filing Party: N/A
-------------------------------------------------------
(4) Date Filed: N/A
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<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 12, 1997
2:00 p.m.
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Peregrine
Systems, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
August 12, 1997, at 2:00 p.m., local time, at the Company's principal executive
offices at 12670 High Bluff Drive, San Diego, California 92130 for the following
purposes:
1. To elect directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected;
2. To ratify the appointment of Arthur Andersen LLP as independent
accountants for the Company for the fiscal year ending March 31, 1998;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on June 30, 1997, are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. To
assure your representation at the meeting, however, you are urged to mark, sign,
date, and return the enclosed Proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. YOU MAY REVOKE YOUR PROXY IN THE
MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE IT HAS
BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER ATTENDING THE ANNUAL MEETING
MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A PROXY.
For the Board of Directors
PEREGRINE SYSTEMS, INC.
/s/ RICHARD T. NELSON
----------------------------
Richard T. Nelson
SECRETARY
San Diego, California
July 11, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED
TO COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PEREGRINE SYSTEMS, INC.
PROXY STATEMENT FOR THE
1997 ANNUAL MEETING OF STOCKHOLDERS
------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Peregrine Systems, Inc., a Delaware corporation ("PSI" or the "Company"), for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Tuesday, August 12, 1997, at 2:00 p.m., local time, or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at
the Company's principal executive offices at 12670 High Bluff Drive, San Diego,
California 92130. The telephone number at that location is (619) 481-5000.
When proxies are properly dated, executed, and returned, the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares will be voted for the election of the nominees for directors set forth
herein, for the ratification of the appointment of Arthur Andersen LLP as
independent auditors as set forth herein and, at the discretion of the proxy
holders, upon such other business as may properly come before the Annual Meeting
or any adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to Stockholders
for the year ended March 31, 1997, including financial statements, were first
mailed on or about July 11, 1997, to all stockholders entitled to vote at the
Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on June 30, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
At the Record Date, the Company had issued and outstanding and entitled to vote
15,215,735 shares of Common Stock, $.001 par value.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company at or before the taking of the vote at the
Annual Meeting a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting, or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Peregrine Systems, Inc. at 12670 High
Bluff Drive, San Diego, California 92130, Attention: Secretary, or hand-
delivered to the Secretary of the Company at or before the taking of the vote at
the Annual Meeting.
VOTING
Each share of Common Stock outstanding on the Record Date is entitled to
one vote. Stockholders' votes will be tabulated by persons appointed by the
Board of Directors to act as inspectors of election for the Annual Meeting.
Abstentions are considered shares present and entitled to vote and, therefore,
have the same legal effect as a vote against a matter presented at the Annual
Meeting. Any shares held in street name for which the broker or nominee
receives no instructions from the beneficial owner, and as to which such broker
or nominee does not have discretionary voting authority under applicable New
York Stock Exchange rules, will be considered as shares not entitled to vote and
will therefore not be considered in the tabulation of the votes but will be
considered for purposes of determining the presence of a quorum.
<PAGE>
SOLICITATION OF PROXIES
The expense of soliciting proxies in the enclosed form will be borne by the
Company. In addition, the Company may reimburse banks, brokerage firms, and
other custodians, nominees, and fiduciaries representing beneficial owners of
shares for their expenses in forwarding soliciting materials to such beneficial
owners. Proxies may also be solicited by certain of the Company's directors,
officers, and employees, personally or by telephone, telegram, facsimile, or
other means of communication. No additional compensation will be paid for such
services.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules promulgated by
the Securities and Exchange Commission. Proposals of stockholders of the
Company intended to be presented for consideration at the Company's 1998 Annual
Meeting of Stockholders must be received by the Company no later than March 13,
1998, in order that they may be included in the proxy statement and form of
proxy related to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting, a Board of seven directors will be elected, each to
hold office until his or her successor is elected and qualified, or until his or
her death, resignation, or removal. Shares represented by the accompanying
proxy will be voted for the election of the seven nominees (recommended by the
Board of Directors) who are named in the following table, unless the proxy is
marked in such a manner as to withhold authority so to vote. The Company has no
reason to believe that the nominees for election will not be available to serve
their prescribed terms. If any nominee for any reason is unable to serve or
will not serve, however, the proxy may be voted for such substitute nominee as
the persons appointed in the proxy may in their discretion determine.
The following table sets forth certain information concerning the nominees,
which information is based on data furnished to the Company by the nominees:
<TABLE>
<CAPTION>
POSITION(S)
NAME AGE WITH THE COMPANY DIRECTOR SINCE
---- --- ---------------- --------------
<S> <C> <C> <C>
Alan H. Hunt . . . . . . . . . 55 President, Chief Executive Officer and Director 1995
David A. Farley. . . . . . . . 42 Vice President, Finance, Chief Financial
Officer and Director 1995
John J. Moores (1) . . . . . . 52 Chairman of the Board of Directors 1989
Christopher A. Cole. . . . . . 42 Director 1981
Richard A. Hosley II (1) . . . 52 Director 1992
Charles E. Noell III (1)(2). . 45 Director 1992
Norris van den Berg (2). . . . 58 Director 1992
</TABLE>
___________
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
There is no family relationship among any of the directors and executives
of the Company.
ALAN H. HUNT has served as the Company's President and Chief Executive
Officer and as a member of the Board of Directors since October 1995. From July
1994 until November 1995, Mr. Hunt was President and Chief Executive Officer and
a director of XVT Software Inc., a development tools software company ("XVT").
From
2
<PAGE>
March 1991 until May 1994, Mr. Hunt was Senior Vice President of Sales and
Marketing (North America) for BMC Software, Inc., a vendor of software system
utilities for IBM mainframe computing environments ("BMC").
DAVID A. FARLEY has served as the Company's Vice President, Finance, and
Chief Financial Officer and as a member of the Board of Directors since October
1995. Mr. Farley served as Secretary of the Company from October 1995 until
February 1997. From November 1994 to November 1995, Mr. Farley was Vice
President, Finance, and Chief Financial Officer and a director of XVT. From
December 1984 until October 1994, Mr. Farley held various accounting and
financial positions at BMC, most recently as Chief Financial Officer and as a
director.
JOHN J. MOORES has served as Chairman of the Company's Board of Directors
since March 1990 and as a Board member since March 1989. In 1980, Mr. Moores
founded BMC and served as its President and Chief Executive Officer from 1980 to
1986 and as Chairman of its Board of Directors from 1980 to 1992. Since
December 1994, Mr. Moores has served as owner and Chairman of the Board of the
San Diego Padres Baseball Club, L.P. and since September 1991 as Chairman of the
Board of JMI Services, Inc., a private investment company. Mr. Moores also
serves as a director of Homegate Hospitality, Inc.
CHRISTOPHER A. COLE has served as a member of the Company's Board of
Directors since founding the Company in 1981. He also served as its President
and Chief Executive Officer from 1986 until 1989. Since 1992, Mr. Cole has
served as President and Chief Executive Officer of Questrel, Inc., a software
development company.
RICHARD A. HOSLEY II has served as a member of the Company's Board of
Directors since January 1992. Prior to retiring from full-time employment,
Mr. Hosley served as President and Chief Executive Officer of BMC. Mr. Hosley
also serves as a director of Logic Works, Inc. and as a director and member of
the compensation committee of Axent Technologies, Inc.
CHARLES E. NOELL III has served as a member of the Company's Board of
Directors since January 1992. Since January 1992, Mr. Noell has served as
President and Chief Executive Officer of JMI Services, Inc., a private
investment company, and as a General Partner of JMI Equity Partners, L.P. ("JMI
Equity Partners"). JMI Equity Partners is the General Partner of JMI Equity
Fund, L.P., a venture capital investment firm ("JMI Equity Fund"). Mr. Noell
also serves as a director of Expert Software, Inc. and Transaction Systems
Architects, Inc. and as a director and member of the compensation committee of
Homegate Hospitality, Inc.
NORRIS VAN DEN BERG has served as a member of the Company's Board of
Directors since January 1992. Mr. van den Berg has served as a General Partner
of JMI Equity Partners since July 1991. JMI Equity Partners is the General
Partner of JMI Equity Fund. Mr. van den Berg also serves as a member of the
Board of Directors of Prism Solutions, Inc.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Directors will be elected by a plurality of the votes of the shares
present and entitled to vote at the Annual Meeting and entitled to vote on the
election of directors. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
FOREGOING SLATE OF NOMINEES AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES LISTED ABOVE.
BOARD AND COMMITTEE MEETINGS
The Company's Board of Directors held five meetings during the fiscal
year ended March 31, 1997. No incumbent director during fiscal 1997 attended
fewer than seventy-five percent (75%) of the aggregate of (i) the total number
of meetings of the Board of Directors held during the period for which such
person was a director and (ii) the total number of meetings held by all
committees of the Board of Directors on which such person served (during the
period such person served) except that Christopher A. Cole attended sixty
percent (60%) of the meetings of the Board of Directors held during fiscal 1997.
The Board of Directors has standing Audit and Compensation Committees. The
Board of Directors does not have a Nominating Committee.
3
<PAGE>
The Audit Committee was comprised of Charles E. Noell III and Norris van
den Berg during fiscal 1997. The purposes of the Audit Committee are to review
with the Company's management and independent accountants such matters as
internal accounting controls and procedures, the plan and results of the annual
audit, and suggestions of the accountants for improvements in accounting
procedures; to nominate independent accountants; and to provide such additional
information as the committee may deem necessary to make the Board of Directors
aware of significant financial matters which require the Board's attention.
The members of the Compensation Committee during fiscal 1997 were John J.
Moores, Richard A. Hosley II, and Charles E. Noell III. The Compensation
Committee held one meeting during fiscal 1997. The purposes of the Compensation
Committee are to review and approve the compensation to be paid or provided to
the Company's executive officers, the aggregate compensation of all employees of
the Company, and the terms of compensation plans of all types.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company and administers various incentive compensation and
benefit plans. The Compensation Committee consists of directors Richard A.
Hosley II, John J. Moores and Charles E. Noell III. Alan H. Hunt, President,
Chief Executive Officer and director of the Company, participates in all
discussions and decisions regarding salaries and incentive compensation for all
employees and consultants of the Company, except that he is excluded from
discussions regarding his own salary and incentive compensation. No interlocking
relationship exists between any member of the Company's Compensation Committee
and any member of any other company's board of directors or compensation
committee.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company does not currently have any employment contracts in effect with
any Named Executive Officer (as defined in the table indicating beneficial
security ownership of management on page 5).
The Company and Alan H. Hunt, its President and Chief Executive Officer,
are parties to a restricted stock agreement dated November 1, 1995 pursuant to
which the Company issued Mr. Hunt 400,000 shares of Common Stock. The Company
and David A. Farley, its Chief Financial Officer, are parties to a substantially
equivalent restricted stock agreement dated November 1, 1995 pursuant to which
the Company issued Mr. Farley 200,000 shares of Common Stock. The shares issued
to each of Messrs. Hunt and Farley vest incrementally over ten years, subject to
earlier vesting over six years contingent upon the Company's achieving certain
financial milestones. The restricted stock agreements permit either Mr. Hunt or
Mr. Farley to surrender shares to satisfy withholding tax obligations that arise
as the shares vest. In connection with the vesting of 66,000 shares in April
1997, Mr. Hunt surrendered 28,296 shares subject to this restricted stock
agreement. In the event of a merger or change in control of the Company, all
such shares will become automatically vested.
Under the 1994 Plan, in the event of a merger or a change in control of the
Company, vesting of options outstanding under the 1994 Plan will automatically
accelerate such that outstanding options will become fully exercisable,
including with respect to shares for which such options would be otherwise
unvested.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 31, 1997 by (i) each person or
entity who is known by the Company to own beneficially 5% or more of the
Company's outstanding Common Stock; (ii) each director of the Company; (iii) the
Company's Chief Executive Officer and each of the Company's four most highly
compensated executive officers who were serving as executive officers of the
Company as of March 31, 1997 (the "Named Executive Officers"); and (iv) all
directors and executive officers of the Company as a group.
SHARES BENEFICIALLY
NAME AND ADDRESS(1) OWNED(2)
------------------- --------------------
NUMBER PERCENT
---------- -------
JMI Equity Fund, L.P.. . . . . . . . . . . . . . 1,280,620 8.4%
12680 High Bluff Drive
San Diego, CA 92130
John J. Moores (3) . . . . . . . . . . . . . . . 9,549,784 62.8%
Charles E. Noell III (4) . . . . . . . . . . . . 1,325,620 8.7%
Norris van den Berg (5). . . . . . . . . . . . . 1,325,620 8.7%
James W. Butler (6). . . . . . . . . . . . . . . 825,000 5.1%
Christopher A. Cole (7). . . . . . . . . . . . . 630,821 4.1%
Alan H. Hunt (8) . . . . . . . . . . . . . . . . 521,704 3.4%
David A. Farley (9). . . . . . . . . . . . . . . 424,408 2.8%
Douglas S. Powanda (10). . . . . . . . . . . . . 112,500 *
Richard A. Hosley II (11). . . . . . . . . . . . 45,000 *
William G. Holsten (12). . . . . . . . . . . . . 38,400 *
Douglas F. Garn (13) . . . . . . . . . . . . . . 62,500 *
All current executives officers and directors
as a group (14 persons) (14) . . . . . . . . . . 12,853,289 80.6%
___________
*Less than 1%.
(1) Unless otherwise indicated, the address for each listed stockholder is c/o
Peregrine Systems, Inc., 12670 High Bluff Drive, San Diego, California
92130. Except as otherwise indicated, and subject to applicable community
property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock held by them.
(2) Applicable percentage ownership is based on 15,213,057 shares of Common
Stock outstanding as of May 31, 1997, together with applicable options for
such stockholder. 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, subject to community
property laws, where applicable. Shares of Common Stock subject to options
that are presently exercisable or exercisable within 60 days of May 31,
1997 are deemed to be beneficially owned by the person holding such options
for the purpose of computing the percentage of ownership of such person but
are not treated as outstanding for the purpose of computing the percentage
of any other person.
(3) Includes 3,753,816 Shares held by Mr. Moores as trustee under various
trusts, substantially all of which were established for members of
Mr. Moores's family. Mr. Moores is Chairman of the Company's Board of
Directors. Excludes 1,280,620 shares of Common Stock held by JMI Equity
Fund, L.P., of which Mr. Moores is a limited partner. Mr. Moores does not
exercise voting or dispositive control over the shares held by JMI Equity
Fund, L.P. and disclaims beneficial ownership of all such shares except to
the extent of his pecuniary interest therein.
(4) Includes 45,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997 and 1,280,620 shares of Common
Stock held by JMI Equity Fund, L.P. Mr. Noell is a director of the Company
and a General Partner of JMI Equity Partners L.P., the General Partner of
JMI Equity Fund, L.P. Mr. Noell disclaims beneficial ownership of all
shares held by JMI Equity Fund, L.P. except to the extent of his pecuniary
interest therein.
(5) Includes 45,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997 and 1,280,620 shares of Common
Stock held by JMI Equity Fund, L.P. Mr. van den Berg is a director of the
Company and a General Partner of JMI Equity Partners L.P., the General
Partner of JMI Equity Fund, L.P. Mr. van den Berg disclaims beneficial
ownership of all shares held by JMI Equity Fund, L.P. except to the extent
of his pecuniary interest therein.
(6) Includes 825,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997. Mr. Butler is the former
President and Chief Executive Officer of the Company.
5
<PAGE>
(7) Includes 104,078 shares of Common Stock issuable upon exercise of stock
options which are presently exercisable or will become exercisable within
60 days of May 31, 1997. Mr. Cole is a member of the Company's Board of
Directors.
(8) Includes 150,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997 and 334,000 shares subject to a
restricted stock agreement. Mr. Hunt is the Company's President and Chief
Executive Officer and a member of its Board of Directors.
(9) Includes 75,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997 and 200,000 shares subject to a
restricted stock agreement. Mr. Farley is the Company's Vice President,
Finance, and Chief Financial Officer and a member of its Board of
Directors.
(10) Includes 112,500 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997. Mr. Powanda is the Company's
Vice President, International Sales.
(11) Includes 45,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997. Mr. Hosley is a member of the
Company's Board of Directors.
(12) Includes 38,444 shares of Common Stock issuable upon exercised outstanding
stock options which are presently exercisable or will become exercisable
within 60 days of May 31, 1997. Mr. Holsten is the Company's Vice
President, Professional Services.
(13) Includes 62,500 shares of Common Stock issuable upon exercised outstanding
stock options which are presently exercisable or will become exercisable
within 60 days of May 31, 1997. Mr. Garn is the Company's Vice President,
North American Sales.
(14) Includes 873,147 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of May 31, 1997.
DIRECTOR COMPENSATION
The Company reimburses each member of the Company's Board of Directors for
out-of-pocket expenses incurred in connection with attending Board meetings. No
member of the Company's Board of Directors currently receives any additional
cash compensation. The Company has granted each of directors Christopher A.
Cole, Richard A. Hosley II, Charles E. Noell III, and Norris van den Berg
options to acquire 45,000 shares of Common Stock at an exercise price of $1.34
under the Company's 1991 Nonqualified Stock Option Plan. All such options vested
in annual installments over four years, are now fully exercisable, and expire if
not exercised prior to May 2002. In addition, Mr. Cole holds an additional
vested option to acquire 56,250 shares of Common Stock at an exercise price of
$0.51 per share. Such option was initially granted to Mr. Cole under the
Company's Nonqualified Stock Option Plan in connection with Mr. Cole's service
as an executive officer. Following Mr. Cole's resignation as an executive
officer, the Company agreed to extend the exercisability of the option for so
long as Mr. Cole continues as a director of the Company, but no later than
December 2000.
The Company's 1997 Director Option Plan (the "Director Plan") provides that
options will be granted to non-employee directors, other than non-employee
directors who hold or are affiliated with a holder of three percent of the
Company's outstanding Common Stock, pursuant to an automatic nondiscretionary
grant mechanism. Each new non-employee director is automatically granted an
option to purchase 25,000 shares of Common Stock at the time he or she is first
elected to the Board of Directors. Each non-employee director will subsequently
be granted an option to purchase 5,000 shares of Common Stock at each annual
meeting of stockholders beginning with the 1998 Annual Meeting of Stockholders.
Each such option will be granted at the fair market value of the Common Stock on
the date of grant. Options granted to non-employee directors under the Director
Plan will become exercisable over four years, with 25% of the shares vesting
after one year and the remaining shares vesting in quarterly installments
thereafter.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth in summary form information concerning the
compensation awarded to, earned by, or paid for services rendered to the Company
in all capacities during the fiscal years ended March 31, 1997 and 1996 by each
of the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION AWARDS
------------------------ ------------------------------------------
FISCAL RESTRICTED STOCK SECURITIES UNDERLYING ALL OTHER
YEAR SALARY BONUS AWARDS OPTIONS(#) COMPENSATION
------ -------- ------- ---------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Hunt (2). . . . . . . 1997 $225,000 $225,160(6) - - $4,862(11)
President and Chief 1996 192,500 130,557(6) $936,000(10) 400,000 16,968(11)
Executive Officer
David A. Farley (3) . . . . . 1997 150,000 126,240(7) - - 2,712(12)
Vice President, Finance, 1996 120,000 73,146(7) 468,000(10) 200,000 100,321(12)
and Chief Financial
Officer
Douglas F. Garn (4) . . . . . 1997 150,000 197,324(8) - 200,000 18,788(13)
Vice President, 1996 - - - - -
North American Sales
William G. Holsten (5). . . . 1997 90,000 120,000 - 50,000 4,481(14)
Vice President, 1996 90,000 201,574 - 100,000 35,387(14)
Professional
Services
Douglas S. Powanda. . . . . . 1997 150,000 104,300(9) - 50,000 2,885(15)
Vice President, 1996 106,000 179,127(9) - - 7,704(15)
International Sales
</TABLE>
___________
(1) Other than the salary and bonus described herein, the Company did not pay
any executive officer named in the Summary Compensation Table any fringe
benefits, perquisites or other compensation in excess of 10% of such
executive officer's salary and bonus during either fiscal 1997 or fiscal
1996.
(2) Mr. Hunt became President and Chief Executive Officer of the Company in
October 1995. Mr. Hunt's salary and bonus for fiscal 1996 include amounts
paid to him as President and Chief Executive Officer of XVT. The Company
acquired XVT in October 1995.
(3) Mr. Farley became Vice President, Finance, and Chief Financial Officer of
the Company in October 1995. Mr. Farley's salary and bonus for fiscal 1996
include amounts paid to him as Vice President, Finance, and Chief Financial
Officer of XVT.
(4) Mr. Garn became the Company's Vice President, North American Sales, in
April 1996.
(5) Mr. Holsten became Vice President, Professional Services of the Company in
November 1995. Mr. Holsten's salary and bonus for fiscal 1996 include
amounts paid to him as Director, Professional Services, of XVT.
(6) Bonus compensation for fiscal 1997 includes $136,500 earned in fiscal 1997
to be paid in fiscal 1998. Bonus compensation for fiscal 1996 includes
$65,000 earned in fiscal 1996 but paid in fiscal 1997.
(7) Bonus compensation for fiscal 1997 includes $126,240 earned in fiscal 1997
to be paid in fiscal 1998. Bonus compensation for fiscal 1996 includes
$35,000 earned in fiscal 1996 to be paid in fiscal 1998.
(8) Bonus compensation for fiscal 1997 consists of (i) $68,426 of bonus
compensation and $75,898 of commission income earned and paid in fiscal
1997 and (ii) $33,000 of bonus compensation and $20,000 of commission
income earned in fiscal 1997 to be paid in fiscal 1998.
(9) Bonus compensation for fiscal 1997 consists of (i) $32,531 of bonus
compensation and $26,769 of commission income earned and paid in fiscal
1997 and (ii) $34,000 of bonus compensation and $11,000 of commission
income earned in fiscal 1997 to be paid in fiscal 1998. Bonus compensation
for fiscal 1996 consists of (i) $131,492 of bonus compensation and $4,725
of commission income earned and paid in fiscal 1996 and (ii) $37,351 of
bonus compensation and $5,559 of commission income earned in fiscal 1996
but paid in fiscal 1997.
(10) In November 1995, the Company issued Mr. Hunt an aggregate of 400,000 and
Mr. Farley an aggregate of 200,000 shares of Common Stock pursuant to
restricted stock agreements in connection with their initial employment.
The estimated fair value of such shares at the time of issuance was $2.34
per share. Such shares vest incrementally over ten years subject to earlier
vesting over six years contingent upon the Company's achieving certain
financial milestones. As of March 31, 1997, based upon the Company's
initial public offering price of $9.00 per share in April 1997, the
aggregate
7
<PAGE>
fair market value of the shares held by Mr. Hunt was $3,600,000, and the
aggregate fair market value of the shares held by Mr. Farley was
$1,800,000. The restricted stock agreements between the Company and Messrs.
Hunt and Farley permit either of them to surrender shares to satisfy tax
withholding obligations that arise as the shares vest. In connection with
the vesting of 66,000 shares in April 1997, Mr. Hunt surrendered 28,296
shares subject to his restricted stock agreement.
(11) Represents $1,084 and $238 in group life insurance excess premiums paid by
the Company in fiscal 1997 and fiscal 1996, respectively; $3,778 and $844
in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1997 and fiscal 1996, respectively; and $15,886 in
relocation expenses paid by the Company in fiscal 1996.
(12) Represents $337 and $84 in group life insurance excess premiums paid by the
Company in fiscal 1997 and fiscal 1996, respectively; $2,375 and $1,875 in
matching contributions under the Company's 401(k) plan paid by the Company
in fiscal 1997 and fiscal 1996, respectively; and $98,362 in relocation
expenses paid by the Company in fiscal 1996.
(13) Represents $218 in group life insurance excess premiums, $4,604 in matching
contributions under the Company's 401(k) plan and $13,966 in relocation
expenses paid by the Company in fiscal 1997.
(14) Represents $2,106 and $509 in group life insurance excess premiums paid by
the Company in fiscal 1997 and fiscal 1996, respectively; $2,375 and $594
in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1997 and fiscal 1996, respectively; and $34,284 in
relocation expenses paid by the Company in fiscal 1996.
(15) Represents $337 and $248 in group life insurance excess premiums paid by
the Company in fiscal 1997 and fiscal 1996, respectively; $2,548 and $2,340
in matching contributions under the Company's 401(k) plan paid by the
Company in fiscal 1997 and fiscal 1996, respectively; and $5,116 in
relocation expenses paid by the Company in fiscal 1996.
STOCK OPTION GRANTS
The following table sets forth certain information relating to stock
options awarded to each of the Named Executive Officers during the fiscal year
ended March 31, 1997. All such options were awarded under the Company's 1994
Stock Option Plan.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------- VALUES AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTIONS TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------
GRANTED FISCAL 1997(2) SHARE(3)(4) DATE(5) 5% 10%
----------- -------------- ----------- --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Hunt. . . . . . . . . - - - - - -
David A. Farley . . . . . . . - - - - - -
Douglas F. Garn . . . . . . . 200,000 21.5% $2.34 4/01/06 $294,323 $745,871
William G. Holsten. . . . . . 50,000 5.4% 2.34 12/16/06 73,581 186,468
Douglas S. Powanda. . . . . . 50,000 5.4% 2.34 12/16/06 73,581 186,468
</TABLE>
_______________
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) Based on options to acquire 928,784 shares granted under the Company's 1994
Stock Option Plan during fiscal 1997. All options granted to the Named
Executive Officers during fiscal 1997 are governed by the Company's 1994
Stock Option Plan.
(3) Options were granted at an exercise price equal to not less than the fair
market value of the Company's Common Stock on the date of grant as
determined in good faith by the Board of Directors.
(4) Exercise price may be paid in cash, check, by delivery of already-owned
shares of the Company's Common Stock subject to certain conditions, or
pursuant to a cashless exercise procedure under which the optionee provides
irrevocable instructions to a brokerage firm to sell the purchased shares
and to remit to the Company, out of the sale proceeds, an amount equal to
the exercise price plus all applicable withholding taxes.
(5) Twenty-five percent (25%) of the shares issuable upon exercise of options
granted under the Company's 1994 Stock Option Plan become vested on the
first anniversary of the date of grant, and the remaining shares vest over
three years at the rate of 6.25% of the shares subject to option at the end
of each three-month period thereafter.
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<PAGE>
OPTION EXERCISES AND FISCAL 1997 YEAR-END VALUES
No Named Executive Officer exercised any stock option during fiscal year
1997. The following table sets forth certain information regarding stock options
held as of March 31, 1997 by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
MARCH 31, 1997 MARCH 31, 1997*
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Alan H. Hunt . . . . . . 125,000 275,000 $832,500 $1,831,500
David A. Farley. . . . . 62,500 137,500 416,250 915,750
Douglas F. Garn. . . . . - 200,000 - 1,332,000
William G. Holsten . . . 32,194 118,750 212,618 790,875
Douglas S. Powanda . . . 97,500 102,500 671,850 690,150
</TABLE>
____________
* Based upon the initial public offering price of $9.00 per share minus the
exercise price.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, THIS
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT BE
DEEMED "FILED" WITH THE COMMISSION AND SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY SUCH FILINGS.
The Compensation Committee of the Board of Directors (the "Committee")
establishes the general compensation policies of the Company and the
compensation plans and the specific compensation levels for senior executives,
including the Company's Chief Executive Officer.
GENERAL COMPENSATION PHILOSOPHY
The primary objectives of the Company's executive compensation policies
include the following:
- To attract, motivate, and retain a highly qualified executive management
team;
- To link executive compensation to the Company's financial performance as
well as to defined individual management objectives established by the
Committee;
- To compensate competitively with the practices of similarly situated
technology companies; and
- To create management incentives designed to enhance stockholder value.
The Company competes in an aggressive and dynamic industry and, as a
result, believes that finding, motivating, and retaining quality employees,
particularly senior managers, sales personnel, and technical personnel, are key
factors to the Company's future success. The Committee's compensation
philosophy seeks to align the interests of stockholders and management by tying
compensation to the Company's financial performance, either directly in the form
of salary and bonuses paid in cash or indirectly in the form of appreciation of
stock options granted to employees through the Company's equity incentive
programs.
CASH COMPENSATION
The Company seeks to provide cash compensation to its executive officers,
including base salary and an annual cash bonus, at levels that are commensurate
with cash compensation paid at similarly-situated technology companies. Annual
increases in base salary are determined on an individual basis based on market
data and a review of the officer's performance and contribution to various
individual, departmental, and corporate objectives. Cash bonuses are intended
to provide additional incentives to achieve such objectives.
9
<PAGE>
The salaries and cash bonuses of each of the executive officers of the
Company, other than the Chief Executive Officer, were determined by the Board of
Directors, upon the recommendation of the Chief Executive Officer. The Chief
Executive Officer's base salary was determined by the Board of Directors, upon
the recommendation of the Compensation Committee with no increase from his
annual base salary in the prior fiscal year. In addition, cash bonuses for the
Company's President and Chief Executive Officer and its Chief Financial Officer
were allocated on a mutually agreed basis from a bonus pool established by the
Board of Directors. Cash bonuses may also be earned by operational vice
presidents based on their divisional financial performance.
Based on a review of proxy data and other relevant market data, the
Compensation Committee believes that cash compensation paid to the Company's
executive officers, including the Chief Executive Officer, was generally
consistent with amounts paid to officers with similar responsibilities at
similarly-situated pre-IPO software companies.
EQUITY-BASED COMPENSATION
RESTRICTED STOCK. In November 1995, the Company granted Alan H. Hunt, its
President and Chief Executive Officer, and David A. Farley, its Chief Financial
Officer, in connection with their becoming officers of the Company, 400,000
shares and 200,000 shares, respectively, of Common Stock pursuant to restricted
stock agreements. Such shares vest incrementally over ten years, subject to
earlier vesting over six years contingent upon the Company's achieving certain
financial milestones. The restricted stock agreements permit Mr. Hunt or
Mr. Farley to surrender shares to satisfy withholding tax obligations that arise
as the restrictions lapse, and in connection with the lapsing of restrictions on
66,000 shares in April 1997, Mr. Hunt surrendered 28,296 shares of Common Stock
subject to his restricted stock agreement.
The Company believes that the restricted stock arrangements with
Messrs. Hunt and Farley effectively implement its compensation philosophy of
aligning management interests with stockholder interests. At the time Mr. Hunt
and Mr. Farley became associated with the Company, the Board of Directors
charged them with improving the Company's financial and operational performance.
Because restrictions on the shares issued under the restricted stock agreement
lapse early if the Company achieves certain targeted financial performance
milestones, the Board of Directors believed that such grants are an effective
incentive to the Chief Executive Officer and Chief Financial Officer to take the
necessary actions, including a major restructuring of the Company's sales
organization, to improve the Company's financial performance. The financial
targets in the restricted stock agreements were intended to be aggressive yet
realizable, and the Compensation Committee believes such arrangements continue
to offer strong incentives for management to work to increase revenues and
improve financial performance. The Company's financial performance improved
measurably in fiscal 1997, resulting in early lapsing of certain shares for both
Mr. Hunt and Mr. Farley.
STOCK OPTIONS. Stock options are periodically granted to provide
additional incentive to executives and other employees to maximize long-term
total return to the Company's stockholders. Stock options are a particularly
strong incentive because they are valuable to employees only if the fair market
value of the Company's Common Stock increases above the exercise price, which is
set at the fair market value of the Company Common Stock on the date the option
is granted. In addition, employees must remain employed with the Company for a
fixed period of time in order for the options to vest fully. Options generally
vest over a four year period to encourage option holders to continue in the
employ of the Company.
All of the options granted in the year ended March 31, 1997 were approved
by the full Board of Directors. Future option grants to executive officers will
be determined by the Compensation Committee or the full Board of Directors. In
making its determination, the Compensation Committee intends to consider the
executive's position at the Company, such executive's individual performance,
the number of options held (if any) and the extent to which such options are
vested, and any other factors that the Compensation Committee may deem relevant.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162 of the Code limits the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly-compensated executive officers. The Company
10
<PAGE>
may deduct such compensation only to the extent that during any fiscal year the
compensation paid to such individual does not exceed $1 million or meet certain
specified conditions (including stockholder approval). Based on the Company's
current compensation plans and policies and proposed regulations interpreting
this provision of the Code, the Company and the Committee believe that, for the
near future, there is little risk that the Company will lose any significant tax
deduction for executive compensation.
THE COMPENSATION COMMITTEE
John J. Moores
Charles E. Noell III
Richard A. Hosley II
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
on Form 3 and changes in ownership on Forms 4 or 5 with the Securities and
Exchange Commission (the "SEC"). Such officers, directors, and 10% stockholders
are also required by SEC rules to furnish the Company with copies of all
Section 16(a) reports they file. The Company's officers, directors, and 10%
stockholders did not become reporting persons under Section 16(a) until the
Company's initial public offering in April 1997. As a result, no filings were
made during the year ended March 31, 1997.
CERTAIN TRANSACTIONS
John J. Moores, the Chairman of the Company's Board of Directors and the
majority stockholder of the Company, is party to a Continuing and Unconditional
Guaranty dated November 13, 1995 (as subsequently amended), pursuant to which
Mr. Moores guaranteed the Company's obligations under its bank line of credit
agreement and term loan. As of March 31, 1997, the Company's outstanding
obligations under such credit line and term loan were $2.0 million and
$1.6 million, respectively. The credit line and term loan balances were fully
repaid after the Company's April 1997 initial public offering. The Company
anticipates the guarantee of Mr. Moores will not be a part of any future credit
facility the Company may obtain after expiration of the existing facility in
November 1997.
In July 1996, Mr. Moores made a loan to the Company in the amount of
$2,000,000, which was repaid three days later. The Company used the proceeds of
the $2,000,000 loan to make a capital contribution to its subsidiary in the
United Kingdom, which, in turn, repaid certain advances owed to the Company. In
December 1996, Mr. Moores loaned the Company $250,000, which was repaid in
February 1997. Each of these loans bore interest at the prime rate announced by
major banks.
The Company and JMI Services, Inc., an investment management company ("JMI
Services"), are parties to a sublease pursuant to which the Company subleases
approximately 13,310 square feet of office space at its San Diego headquarters
to JMI Services. The term of the sublease is from June 1, 1996 through October
21, 2003. The sublease provides for initial monthly rental payments of $16,638
to increase by $666 per month on each anniversary of the sublease. Mr. Moores
serves as Chairman of the Board of JMI Services, and Charles E. Noell, III, a
director of the Company, serves as President and Chief Executive Officer. The
Company believes that the terms of the sublease are at competitive market rates.
The Company leases a suite at San Diego's Jack Murphy Stadium at
competitive rates and on an informal basis from the San Diego Padres Baseball
Club, L.P. (the "Padres"). Mr. Moores has served as owner and Chairman of the
Board of the Padres since December 1994. The Company's annual payments for such
suite and game tickets total approximately $60,000.
Pursuant to an Acquisition Agreement dated November 29, 1995 among the
Company, Skunkware, Inc. ("Skunkware") and Peregrine/Bridge Transfer
Corporation, a database software subsidiary of the Company ("PBTC"), the Company
sold all the outstanding shares of PBTC to Skunkware. Under the acquisition
agreement, the Company
11
<PAGE>
receives a royalty on certain license sales of PBTC and provides certain
computer and administrative resources to PBTC for a monthly fee of $37,500. JMI
Equity Fund L.P. ("JMI Equity Fund") is the controlling stockholder of
Skunkware. Mr. Noell and Norris van den Berg, a director of the Company, are
general partners of JMI Equity Partners L.P., general partner of JMI Equity
Fund, and Mr. Moores is a limited partner of JMI Equity Fund. JMI Equity Fund
holds approximately 8.4% of the Company's outstanding Common Stock.
The Company and James W. Butler are parties to an agreement dated
December 31, 1995 governing Mr. Butler's resignation as an executive officer and
member of the Company's Board of Directors. Pursuant to the agreement, the
Company paid Mr. Butler $90,000 during fiscal 1997.
COMPANY PERFORMANCE
The Company's registration statement covering the Company's initial public
offering became effective April 8, 1997. Accordingly, no Company performance
graph is available for the fiscal year end.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, independent
accountants, to audit the financial statements of the Company for the current
fiscal year ending March 31, 1998. The Company expects that a representative of
Arthur Andersen LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if he or she desires to do so, and will be
available to answer any appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Company
stock present or represented and voting at the Annual Meeting will be required
to approve this proposal. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS
PROPOSAL AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed proxy card to vote the shares
they represent as the Board of Directors may recommend.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
mark, sign, date, and return the accompanying proxy card as promptly as possible
in the postage-prepaid envelope enclosed for that purpose.
For the Board of Directors
PEREGRINE SYSTEMS, INC.
/s/ RICHARD T. NELSON
----------------------------
Richard T. Nelson
SECRETARY
Dated: July 11, 1997
12
<PAGE>
- -------------------------------------------------------------------------------
PEREGRINE SYSTEMS, INC.
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of PEREGRINE SYSTEMS, inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated July 11, 1997, and hereby
appoints Alan H. Hunt and David A. Farley and each of them proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1997 Annual
Meeting of Stockholders of PEREGRINE SYSTEMS, inc. to be held on Tuesday,
August 12, 1997 at 2:00 p.m., local time at 12670 High Bluff Drive, San
Diego, California, and any adjournment(s) thereof, and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth on the reverse side.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- -------------------------------------------------------------------------------
Please mark your votes as indicated in this example /X/
1. Election of Directors.
FOR all nominees listed below (except as marked to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
Nominees: Alan H. Hunt, David A. Farley, John J. Moores, Christopher A. Cole,
Richard A. Hosley II, Charles E. Noell III, and Norris van den Berg
- ------------------------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee(s) name(s) on the line above.)
2. Proposal to ratify the appointment of Arthur Anderson LLP as independent
accountants for the fiscal year ending March 31, 1998.
FOR / / AGAINST / / ABSTAIN / /
In their discretion, the proxies are authorized to vote upon such other
matter(s) which may properly come before the meeting and at any adjournment(s)
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR THE LISTED NOMINEES IN THE ELECTION OF DIRECTORS AND FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSON LLP AS INDEPENDENT
ACCOUNTANTS FOR THE 1998 FISCAL YEAR.
Both of such attorneys or substitutes (if both are present and acting at said
meeting or any adjournment(s) thereof, or, if only one shall be present and
acting, then that one) shall have and may exercise all of the powers of said
attorneys-in-fact hereunder.
Signature(s) Dated , 1997
--------------------------------------------- ---------
(This Proxy should be marked, dated, and signed by the stockholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
