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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from________ to ________
Commission File Number 0-4096
COMSHARE, INCORPORATED
(Exact name of registrant as specified in its charter)
MICHIGAN 38-1804887
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (734) 994-4800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock $1.00
Par Value Rights to Purchase Preferred Shares
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [ X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of August 31, 1998 based on $2.88 per share, the last sale price
for the Common Stock on such date as reported on the NASDAQ Stock Market
National Market System, was approximately $27,956,000.
As of August 31, 1998 the Registrant had 10,075,547 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K Report
-------- into which it is incorporated
Portions of Proxy Statement for the -----------------------------
1998 Annual Meeting of Shareholders III
("The 1998 Proxy Statement")
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PART I
ITEM 1. BUSINESS
This Business section contains forward looking statements that involve
uncertainties. Actual results could differ materially from those in the forward
looking statements due to a number of uncertainties, including, but not limited
to those discussed below, particularly in "Business - Uncertainties Related to
Forward Looking Statements."
GENERAL
Comshare, Incorporated and its subsidiaries (collectively referred to as
"Comshare" or the "Company") develop, market and support client/server financial
analytic applications software for management planning and control. The Company
targets its products and services to the chief financial officer's ("CFO")
organization across a broad range of industries, offering software for
budgeting, consolidation, management reporting and performance measurement.
Comshare's software is differentiated by its robust multidimensional guided
analysis capabilities which allow end-users to quickly identify and analyze
problem areas particularly in very large databases. The Company's software
products enable the enterprise-wide integration of data from multiple data
sources, complementing underlying transaction systems. The Company delivers
complete software solutions by providing implementation, consulting, training
and support services in addition to the software sales.
On June 4, 1998, Comshare sold certain software products, accounts receivable,
customer contracts, intellectual property, intangibles, permits and business
records related to its Arthur (TM) strategic merchandise management applications
for the retail industry and its Boost Sales and Margin Planning software product
for the consumer packaged goods industry (together, the "Retail Business") to
JDA Software, Inc. for $44 million in cash and the assumption of certain
liabilities related to the Retail Business. The sale of the Retail Business
resulted in a pre-tax gain of $35,386,000 and an after-tax gain of $19,986,000.
BUSINESS STRATEGY
The Company's objective is to be a leading provider of financial analytic
applications. The key elements of the Company's strategy include the following:
1. Focus on financial analytic applications for budgeting, consolidation,
management reporting and performance measurement. These applications
provide analytical capability to end-users not available in underlying
transaction systems which are geared toward efficient transaction
processing rather than analysis and reporting. The Company's early efforts
emphasize budgeting applications, because it believes that this market
offers the greatest immediate potential.
2. Complement multiple transaction vendors. Comshare's applications can
integrate data from multiple transaction systems into a single application
for reporting and analysis, offering customers the flexibility of dealing
with multiple underlying transaction systems which their business needs
often require.
3. Provide easy enterprise-wide deployment of the software. Comshare's
applications are designed to support enterprise-wide budgeting,
consolidation, management reporting and performance analysis for large and
complex businesses. The software can be easily customized to meet the
unique needs of a customer, yet readily deployed. The typical
implementation can be accomplished in 60 to 90 days.
4. Differentiate with guided analysis and financial functionality. Drawing on
years of experience in the business intelligence market, Comshare
differentiates its products by giving end-users adhoc query and reporting
capability which is driven by guided analysis. This analytical capability
allows an end-user to identify problem areas quickly and drill down for
more information. Guided analysis is particularly critical for
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applications involving large databases which in turn make it difficult and
time consuming for the end-user to identify problems buried in the
databases.
5. Support relational and OLAP multidimensional database technologies. Many
of today's businesses are best understood in a multidimensional context,
for example, across time periods, across geographies and across products.
Comshare's applications have historically supported OLAP database
technology which was developed specifically for multidimensional business
problems. However, relational database technology is increasingly able to
handle such analysis and is considered mainstream technology by many
companies. To broaden the market appeal of its applications, Comshare is
in the process of developing applications to support both relational and
OLAP databases for certain of its main applications.
6. Use a common technology platform, the Comshare Application Architecture,
based on Microsoft Corporation ("Microsoft") standards. The Comshare
Application Architecture allows the Company to offer an integrated suite
of applications to its customers and permits new technology features to
become quickly available to all products developed using this
architecture. Microsoft standard technologies enable the Company to focus
its resources on the application functionality of the products and avoid
the time and cost of developing proprietary technologies. The Microsoft
technologies allow the Company to support the products of other software
vendors more easily.
PRODUCTS
The Company offers financial analytic applications designed for use by customers
in a broad range of industries, primarily targeted at the finance organizations
of corporations.
Comshare's software products are generally licensed to end-use customers under
non-exclusive perpetual license agreements. Software license fees for the
Company's decision support software applications vary widely depending upon the
product, platform and number of users supported. Add-on features and products
are available for additional fees. The initial amount paid by customers
purchasing the Company's products typically covers the software license fee and
product maintenance for the first year of the license. Customers may continue
product maintenance thereafter for an annual fee normally ranging from 15 to 20
percent of the license fee.
The Company offers three main products: Comshare BudgetPLUS ("BudgetPLUS") ,
Comshare Decision ("Decision") and its web-version, Comshare DecisionWeb
("DecisionWeb"), and Comshare FDC ("FDC"). In addition, the Company supports a
number of legacy products.
1. BUDGETPLUS
Comshare's lead application is BudgetPLUS, a client/server based application
offering enterprise-wide budgeting functionality. It is designed to improve
productivity, shorten budget cycles and enhance the quality of an enterprise's
budget process.
BudgetPLUS offers the flexibility of a spreadsheet combined with the control and
accounting intelligence of a general ledger package. Data collection is through
the use of the popular Excel spreadsheet in a secure environment, enabling the
business manager to develop their budgets within a system, which can be
centrally administered for easy consolidation and review. BudgetPLUS provides
the ability to build custom data entry screens, load data, track budget
versions, translate currencies, perform consolidations and handle
reorganizations. It is designed to handle enterprise-wide budgeting and to be
implemented quickly and easily. Limited ongoing support by the customer's
information technology organization is required.
BudgetPLUS is integrated with Decision to provide a single financial database to
enhance the integrity and usability of the data, including all budget versions,
forecasts and actual results. This provides end-users access for adhoc analysis
and reporting across the enterprise.
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Comshare currently offers BudgetPLUS using Hyperion Solutions Corporation's
("Hyperion") Essbase database. Under development is a version of BudgetPLUS
which uses Oracle Corporation's ("Oracle") relational database and plans have
been announced to support Microsoft's SQL Server relational database.
The analysis and reporting capability of DecisionWeb is also available with
BudgetPLUS.
2. DECISION
Decision and DecisionWeb are the latest generation decision support products
offered by Comshare and follow a long line of executive information system
("EIS") products offered by the Company. Comshare was among the first software
companies to successfully introduce EIS products to the market.
Decision and DecisionWeb are applications designed to provide information to a
wide range of business users for planning, analysis and reporting. These
applications are customized by the Company's consultants, third parties or the
customers themselves to meet specific customer requirements. While these
products can be used to develop a wide range of applications, Comshare is
focusing its sales and development efforts primarily on financial performance
measurement applications. These applications can be developed on a stand-alone
basis or in connection with Comshare's BudgetPLUS product. Typical applications
include balanced scorecards, sales analysis applications, product and customer
profitability analysis applications and key performance indicator applications.
Decision and DecisionWeb capitalize on the increased use of multidimensional
analysis by business professionals to solve business problems. Using
multidimensional analysis, business professionals view information in a manner
which is consistent with their perception of the underlying business, for
example, across time periods, across geographies and across products. Decision
and DecisionWeb facilitate these and other multidimensional analyses by
permitting end-users to structure business data across multiple dimensions of
importance to these users.
Decision includes a full suite of client/server software necessary to deliver an
enterprise-wide application, including software which 1) gathers and
consolidates data from multiple, disparate data sources, 2) server-based
technology to facilitate computer-intensive functions such as sorting and adhoc
calculations, and 3) an analysis and presentation front end for end-users.
Decision provides for automated data acquisition, cleansing, integration and
consolidation of data from diverse sources. This summarized information is
stored in a multidimensional database, which is currently Hyperion's Essbase
database. The current version of Decision also supports Microsoft's Plato in its
current beta form, which is expected to be commercially released by Microsoft by
the end of the calendar year 1998. At that time, Decision will also support all
third party OLAP databases which conform to Microsoft's OLE DB for OLAP
standard. The front-end software gives end-users access to business information
in an understandable way plus the power of adhoc analysis.
For companies with very large databases, the only practical way of identifying
areas requiring further analysis is the use of guided analysis techniques.
Comshare offers several different guided analysis capabilities. Overview, a
guided analysis technique, is particularly adaptable to very large databases
because it allows entire hierarchies to be viewed on a screen at one time, color
coded for exceptions. This gives the end-users the ability to find problems
easily as well as to see problems in context with other items in the hierarchy.
Detect and Alert technology, another guided analysis technique, give users
private and public monitors. End-users can define the data to be monitored and
the acceptable data ranges on their desktops. The desktop receives alerts when
values are found outside the acceptable ranges, which relieves end-users from
the task of searching for problems. Intelligent Component Expansion, a third
guided analysis technique, alerts users to problems hidden at lower levels of a
business hierarchy that they are not currently viewing. A quick scan of company
results will reveal trouble spots. Comshare's Question & Answer interface guides
users through a series of questions, leading them through a standard analysis
process specifically developed for sales analysis applications.
DecisionWeb is a Web server-based component of Decision which allows end-users
with Internet browsers to access and analyze the same applications that other
end-users can on client/server platforms. Decision and DecisionWeb are both
based on Comshare's Application Architecture so organizations can deliver the
same application enterprise-wide available on Decision, by using a combination
of Decision client desktops and Internet browsers with DecisionWeb. Businesses
benefit from web-based applications because they reduce the cost of deploying
and maintaining applications to multiple end-users in multiple locations.
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DecisionWeb delivers Java-based web applications with generally the same
functionality found in Decision, including exception reporting, personal
calculations, sorting, the ability to write data back to the central database,
drill down, charting and customizable points of entry for individual users.
3. FDC
FDC is a statutory consolidation and management reporting application which
collects and consolidates financial data from different general ledgers and
other sources within a multidivisional or multilocation organization. It
produces consolidated financial reports for management, public and statutory
reporting. With FDC, a customer can cut their closing time and provide financial
results more quickly to end-users.
FDC offers the financial intelligence and control found in general ledgers.
Information can be integrated from multiple general ledger systems without
rekeying data. FDC performs currency translations, handles intercompany
eliminations and account reclassifications.
FDC is a client/server application which uses a Btrieve database to store data,
which can include historical and budgeted data.
FDC is offered with Execu-View Finance, which allows users point and click
access to interactively browse, report, graph and analyze information gathered
in FDC, similar to Decision.
4. LEGACY PRODUCTS
Comshare continues to support Commander OLAP, the client/server predecessor to
Decision and earlier EIS-based products. The Company also sells and supports
System W and IFPS decision support products for use on mainframe and UNIX-based
computers. Customers use System W and IFPs for applications similar to those
developed with Decision, although the multidimensional database resides on the
mainframe, rather than on the server. Because market demand has shifted towards
client/server technology, the mainframe-related portions of Comshare's business
have declined significantly in recent years. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
SERVICES AND SUPPORT
The Company offers implementation, consulting, training, presales and postsales
technical support and maintenance to complement its software product offerings.
Comshare supports its product offerings with customer support from its teams of
industry and product decision support specialists and its worldwide distributor
network.
IMPLEMENTATION AND CONSULTING SERVICES
Implementation and consulting services are offered for all of the Company's
software products, and include application design and modification, installation
assistance, implementation and troubleshooting support.
Comshare complements its services through partnership arrangements with value
added consultants who complete a certification process, given to recognize
consultants qualified in the use of Comshare applications. The certification
process is also designed to help Comshare's customers receive quality service
and support, training, project oversight and service monitoring. Comshare
certified value added consultants include, among others, Legacy Technology,
Technium and Pinnacle Solutions in the U.S.; A.G. Solutions, Ltd. in the U.K.;
Cap Gemini Sogeti and Valoris in France; and Kurt Salmon Associates in the U.S.,
U.K. and Germany.
SOFTWARE MAINTENANCE AND SUPPORT
The Company provides customer telephone helpline support staffed with
experienced professionals. Customers under maintenance receive product
enhancements and updates, bug fixes and access to Comshare's telephone helpline
and helpline web pages. Initial product license fees typically include the first
year of maintenance support. Thereafter, maintenance customers pay an annual
maintenance fee, which is typically 15 to 20 percent of the software license
fee.
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CUSTOMER TRAINING
Comshare offers a training program to customers and third party consultants.
Training classes are provided by the Company at customer sites, at its local
sales offices and at its central training centers in Ann Arbor, Michigan and
London, England. The Company's training program is designed for end-users and
system support staff and includes a variety of training classes covering
software applications functional use, applications building and system
administration.
CUSTOMERS
Comshare and its distributors are currently providing maintenance at over 2,100
corporate and public sector customer sites in 42 countries. Comshare's
diversified customer base includes many Fortune 1000 and Financial Times 1000
industrial companies as well as large and mid-sized companies in the
communications, financial services, health care, retail and transportation
industries, and many governmental and other public sector organizations.
SALES AND MARKETING
Comshare products and services are sold on a worldwide basis by a direct sales
operation and by an extensive worldwide distributor network. Both of these
complementary distribution channels leverage the Company's industry and
application expertise and offer presales and postsales implementation,
consulting, and customer support and services.
The Company sells and markets its software products and services in the U.S.,
Canada, U.K., France and Germany through direct sales organizations. Direct
sales operations are organized geographically, and within a geographic region
are generally organized by industry.
The Company has an extensive distributor network covering 37 countries not
directly served by the Company. The Company has selected established software
application vendors or systems integration firms to act as distributors to
market, implement and support Comshare products in their respective geographic
areas. Revenue from the Company's distributors was $19.4 million, or
approximately 22% of total revenue, in fiscal 1998.
To generate sales, the Company conducts comprehensive marketing programs which
include direct mail, public relations, advertising, seminars, trade shows and
on-going customer communication programs. The sales cycle begins with the
generation of a sales lead or request for proposal from a prospect. After a lead
is qualified, the Company's sales force analyzes the potential customer's needs
and makes one or more presentations to the potential customer. After obtaining a
preliminary commitment, the Company often develops customized demonstrations to
illustrate how the Company's products will satisfy a customer's specific needs.
The sales cycle varies in length from customer to customer, but typically ranges
from three to nine months.
RESEARCH AND PRODUCT DEVELOPMENT
The Company's product development strategies are to: (1) provide financial
analytic applications on both the client/server and web-based platforms; (2)
differentiate Comshare products with guided analysis capabilities for very large
databases; (3) provide applications using relational and OLAP database
technologies; (4) follow Microsoft standards; and (5) leverage the Comshare
Application Architecture.
Web-based applications are increasingly popular among major corporations because
they are easier to deploy and support in a multilocation environment. Comshare
offers DecisionWeb, a web-based alternative to Decision, and plans to develop
web-based versions of its other products in the future.
Many of Comshare's customers have large enterprise-wide applications which
result in very large databases. The Company has developed guided analysis
technologies to help end-users quickly and easily determine problem areas for
further analysis. These guided analysis capabilities include Overview, which was
developed based on technology licensed from Inxight Software, Inc., a Xerox New
Enterprise Company ("Inxight"), Detect and Alert,
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Intelligent Component Expansion and the Question & Answer interface. Comshare is
pursuing extensions to these guided analysis capabilities, particularly in
partnership with Inxight.
Relational database technology is increasingly capable of handling
multidimensional business problems which proprietary OLAP database technologies
were developed to solve. Because relational technology is considered mainstream
and is supported by most major corporations, Comshare is developing relational
versions of certain of its applications and plans to support both the OLAP and
relational versions. Prior to the sale of its Retail Business, the Company
developed relational versions of its retail applications, and it is now applying
this knowledge and certain technology to developing a relational version of
BudgetPLUS.
Microsoft is viewed as setting the standard for client/server technology. All of
Comshare's products run on NT on the server and NT and Windows '98 on the
desktop. The Company plans to continue to support Microsoft's platforms and to
replace proprietary middleware technology over time with Microsoft technology.
Specifically, the Company's current version of Decision supports the beta
version of Microsoft's OLAP database, Plato, and the OLAP connectivity standard
developed by Microsoft, called OLE DB for OLAP. This means that Decision will
support any OLAP database that adheres to the OLE DB for OLAP standard when it
is commercially released. Commercial release by Microsoft is expected by
calendar year-end.
To support its application strategy, the Company developed a common
architectural platform known as Comshare Application Architecture ("CAA"). This
architecture is a three-tiered design that includes a database tier, an
application server tier, and a client-side presentation tier with standard
interfaces which allow changes in one tier without affecting the other tiers.
The CAA offers several benefits for future product development. First, CAA will
allow the Company to integrate its products for the benefit of customers who buy
multiple Comshare applications. Second, new applications can be developed using
the CAA allowing the Company to leverage existing technology. Third, CAA will
enable the Company to implement innovative, differentiating features in the
application server tier, which will benefit all applications developed based on
CAA.
During the fiscal years ended June 30, 1998, 1997, and 1996 worldwide internal
research and development expenses were (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Internal research and product development $12,355 $15,556 $15,977
As a % of total revenue 13.8% 16.8% 13.4%
</TABLE>
The markets for the Company's products are characterized by rapid technological
advances, evolving industry standards, changes in customer requirements and
frequent introductions and enhancements of competitive products. The Company's
success and future financial performance will depend on its ability to
anticipate these changes as they occur and to enhance its existing products and
develop new products in a timely and cost-effective manner which keeps pace with
these changes. There can be no assurance that the Company will be able to
successfully accomplish future technological or product transitions, that the
Company will not experience significant delays in developing new products or
enhancements required to accomplish such transitions, or that the Company will
have sufficient financial resources available to it to finance such efforts.
There can be no assurance as to the impact that any such transition would have
on the Company's revenue or profitability. In addition, there can be no
assurance that the Company's new products and enhancements will adequately
address the changing needs of the marketplace and achieve market acceptance or
that developments by others will not render the Company's products obsolete or
noncompetitive.
The foregoing statements regarding the Company's product development efforts
contain "forward looking statements" within the meaning of the Securities
Exchange Act of 1934. Actual results could differ materially from those in the
forward looking statements due to a number of uncertainties, including, but not
limited to, those described below and under "Business - Uncertainties Relating
to Forward Looking Statements".
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INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company's success is dependent on its proprietary technology. The Company
does not hold any material patents and seeks to protect its technology primarily
through trademarks, copyrights, employee and third-party non-disclosure
agreements and trade secret laws, which afford only limited protection.
Comshare distributes its software products under software license agreements
which generally grant customers a non-exclusive license to use the Company's
products. The Company considers its software products to be valuable and unique
assets and actively attempts to protect them contractually by generally
restricting usage to internal operations, and prohibiting the unauthorized
reproduction or transfer to third parties. The Company also believes that the
nature of its customers and the provision of continuing maintenance and support
services reduce the risk of unauthorized reproduction.
The Company has registered certain of its trademarks and copyrights. The Company
is the owner of various trademarks, including Comshare BudgetPLUS, Comshare
Decision, Detect and Alert(R), Comshare EIS, Comshare Execu-View, Guided
Analysis, Comshare FDC, Comshare NewsAlert, The Decision Support Company(R),
Comshare DecisionWeb, Comshare Sales Analysis, Overview and Comshare Application
Architecture. The Company's software bears appropriate copyright notices.
The laws of some foreign countries do not protect the Company's proprietary
rights to the same extent as do the laws of the United States. In addition,
certain provisions of the Company's contracts prohibiting unauthorized
reproduction may be unenforceable under the laws of certain foreign countries.
There can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or development by others of similar or superior technology. Although
the Company believes that its products and technology do not infringe on any
existing proprietary rights of others, there can be no assurance that third
parties will not assert infringement claims in the future or that any such
claims will not require the Company to enter into license arrangements or result
in litigation, regardless of the merits of such claims. No assurance can be
given that any necessary licenses will be available or that, if available, such
licenses can be obtained on commercially reasonable terms. Should litigation
with respect to any such claims commence, such litigation could be extremely
expensive and time-consuming.
LICENSED TECHNOLOGIES
The Company licenses certain software programs and tools from third parties and
incorporates them into the Company's products. Generally, these licenses are
non-exclusive worldwide licenses providing for varying royalty payments and
expiration dates. The Company believes that the inclusion of third-party
software programs and tools in its products reduces product development risk and
time to market.
Examples of third-party software tools that the Company incorporates into its
products include, Hyperion's Essbase, Inxight's Hyperbolic Tree, Btrieve
Technology, Inc.'s Btrieve database, Microsoft's Excel, Oracle's Express,
Applix's TM1 and Strategic Mapping, Inc.'s Atlas View SDK. During fiscal 1998,
the Company was substantially dependent upon Hyperion's Essbase, to provide the
critical multidimensional functionality for Decision and BudgetPLUS. The
Company's worldwide license for Essbase was extended in September, 1998 and
expires December 31, 2002. The license agreegment may be terminated earlier in
the event of an uncured material breach. The Company may extend the license if
certain minimum revenues are achieved. In addition, the Company may continue to
maintain and support its customer base after termination of the license
agreement with Hyperion.
The Company also has license agreements with Oracle and Applix, and Decision
supports three different databases: Essbase, Express and TM1. The Company has
under development a relational version of BudgetPLUS and has developed a version
of Decision which supports Microsoft's Plato database currently in beta test and
expected to be completed by the end of calendar 1998. The Company's strategy is
to support multiple databases through the use of Comshare Application
Architecture.
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COMPETITION
The markets for Comshare's software products are highly competitive and
characterized by continued change and rapid technological advancements. In
general, the Company competes principally on the basis of: (1) software
application utility, which includes the extent to which its product offerings
meet specific end-user markets and needs; (2) functionality, which includes the
breadth and depth of features and functions and ease-of-use; (3) service and
support, which includes the range and quality of technical support, training and
consulting services; (4) vendor reputation; (5) product architecture, which
includes distributed computing capability, and ease of customization and
integration with other applications; and (6) product pricing in relation to
performance. The Company believes it competes favorably with respect to these
factors, although it may be at a competitive disadvantage against its principal
competitors because of their significantly larger market share and greater
financial, technical, marketing and other resources.
The client/server applications software market, including the market for
decision support software, is intensely competitive, highly fragmented and
subject to rapid change and evolving industry standards. The Company changed its
strategy in fiscal 1998 to focus on financial analytic applications, rather than
the broader decision support market. As a result, the number of competitors are
fewer, but also more focused. The Company now competes primarily with Oracle's
product Oracle Financial Analyzer and Hyperion which is the survivor of the
merger of Hyperion Software Corporation and Arbor Software Corporation.
The Company also competes with a variety of additional software companies,
third-party professional service organizations that develop custom software and
with internal information technology departments which develop financial
analytic applications. Among The Company's current and potential competitors are
a number of large software companies, including developers of spreadsheets,
database query and reporting tools, transaction processing-based applications
and database technologies, that may elect to increase the financial analytic
capabilities of their current products or that may develop or acquire products
that compete with the Company's products. In addition, recent acquisitions and
adoptions of OLAP technologies by various software vendors may result in
increased competition in the Company's markets. Increased competition could
result in price reductions, reduced operating margins and loss of market share.
In addition, many of the Company's current and potential competitors have
significantly greater financial, technical, marketing and other resources than
the Company. As a result, they may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, or to devote greater
resources to the development, promotion and sale of products than the Company.
There can be no assurance that the Company will be able to compete successfully
against current and future competitors.
INTERNATIONAL OPERATIONS
The Company derived 54.1%, 47.6% and 53.1% of its total revenue from outside
North America in fiscal 1998, 1997, and 1996, respectively, and expects that
revenue generated outside North America will continue to represent a significant
portion of the Company's total revenue. This international business is subject
to various risks inherent in international activities, including the impact on
the Company's operations of, and the burdens of complying with, a wide variety
of laws, regulations, rules and policies of local foreign governments, such as
those relating to currency controls, hiring and termination of employees, import
restrictions and the protection of proprietary rights.
The Company's international operations also expose the Company to constantly
fluctuating currency rates. Currency fluctuations have in the past adversely
affected, and may in the future adversely affect, the Company's reported
revenue, expenses and shareholders' equity. The Company's international sales
are primarily denominated in foreign currencies. As a result, an increase in the
value of the U.S. dollar relative to foreign currencies has the effect of
reducing the Company's reported revenue and profits from international sales
denominated in such currencies. Conversely, a weakening in the value of the U.S.
dollar relative to foreign currencies has the effect of increasing the Company's
reported revenue and profits from international sales denominated in such
currencies. Currency exchange rate fluctuations can also result in gains and
losses from foreign currency exchange transactions. The Company at various times
has entered into forward exchange contracts to hedge exposures related to
foreign currency exchange transactions. Because the Company only selectively
hedges against certain large transactions that present the most exposure to
exchange rate fluctuations, the Company's results of operations will continue to
be impacted by fluctuations in foreign currency exchange rates, which at times
could be material. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of the Notes to
Consolidated Financial Statements.
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For a description of certain financial information regarding the Company by
geographic area, see Note 10 of the Notes to Consolidated Financial Statements.
EMPLOYEES
Comshare employed 405 full-time employees as of June 30, 1998; including 137 in
sales and marketing, 92 in consulting and implementation services, 65 in
research and product development, and 111 in customer support and
administration. None of the Company's employees are represented by a collective
bargaining agreement, nor has the Company experienced any work stoppages. The
Company considers its relations with its employees to be good.
MISCELLANEOUS
Compliance with federal, state and local laws and ordinances that regulate the
discharge of materials into the environment has not had, and is not expected to
have, a material effect upon the capital expenditures, earnings or competitive
position of Comshare.
UNCERTAINTIES RELATING TO FORWARD LOOKING STATEMENTS
"Item 1. Business" and other parts of this Form 10-K contain "forward-looking
statements" within the meaning of the Securities Exchange Act of 1934, as
amended. Actual results could differ materially from those in the forward
looking statements due to a number of uncertainties, including, but not limited
to, those discussed in this section and in "Research and Product Development",
"Intellectual Property and Proprietary Rights", "Licensed Technologies",
"Competition" and "International Operations" above and in "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations - Year
2000" and "Market Sensitivity Analysis."
The Company's future results could differ materially from those in the forward
looking statements due to a number of uncertainties, including, but not limited
to, the demand for the Company's products and services; the size, timing and
recognition of revenue from significant orders; increased competition; the
Company's success in and expense associated with developing, introducing and
shipping new products, particularly in markets not previously served by the
Company; new product introductions and announcements by the Company's
competitors; changes in Company strategy; product life cycles; the cost and
continued availability of third party software and technology incorporated into
the Company's products; the impact of rapid technological advances, evolving
industry standards and changes in customer requirements, including the impact on
the Company's revenues of the proposed release by Microsoft of an OLAP database
(see "Item 1. Business-Products"), the impact of recent transitional changes in
North American and international management and sales personnel; cancellations
of maintenance and support agreements; software defects; changes in operating
expenses; variations in the amount of cost savings anticipated to result from
cost reduction actions; the impact of cost reduction actions on the Company's
operations; fluctuations in foreign exchange rates; the impact of undetected
errors or defects associated with year 2000 date functions on the Company's
current products and internal systems; the ability of the Company to generate
sufficient future taxable income or to execute available tax strategies required
to realize deferred tax assets; economic conditions generally or in specific
industry segments; risks inherent in seeking and consummating acquisitions,
including the diversion of management attention to the assimilation of the
operations and personnel of acquired businesses, the ability of the Company to
successfully integrate acquired businesses and the impact on the Company's
results and financial condition from debt issued, liabilities acquired and
additional expenses incurred in connection with such acquisitions. In addition,
a significant portion of the Company's revenue in any quarter is typically
derived from non-recurring license fees, a substantial portion of which is
booked in the last month of a quarter. Since the purchase of the Company's
products is relatively discretionary and generally involves a significant
commitment of capital, in the event of any downturn in any potential customer's
business or the economy in general, purchases of the Company's products may be
deferred or canceled. Further, the Company's expense levels are based, in part,
on its expectations as to future revenue and a significant portion of the
Company's expenses do not vary with revenue. As a result, if revenue is below
expectations, results of operations are likely to be materially adversely
affected.
11
<PAGE> 12
ITEM 2. PROPERTIES
Comshare leases sales offices and general office space in 14 major cities
throughout the United States, Canada and Europe. Comshare's primary leased
locations are identified in the following table:
<TABLE>
<CAPTION>
Approximate Lease
Area in Principal Expiration
Location Square Feet Activity Date
- -------- ------------ --------- ----------
<S> <C> <C> <C>
Headquarters,
Administration, Sales,
Marketing, Research
Ann Arbor, and Product Development
Michigan 70,000 and Customer Support February 2005*
Administration, Sales,
London, Marketing and
England 34,000 Implementation Services January 2008
</TABLE>
* Option to cancel February 2000.
ITEM 3. LEGAL PROCEEDINGS
Between August 9, 1996 and September 5, 1996, following the Company's
announcement of certain violations of the Company's revenue recognition
policies, four separate shareholder class action suits were filed in the United
States District Court for the Eastern District of Michigan against the Company
and certain of its officers and directors on behalf of shareholders who had
purchased the Company's common stock between April 17, 1996 and August 6, 1996.
The Court consolidated the four suits into one class action, In Re Comshare,
Incorporated Securities Litigation, and the plaintiffs amended their complaint
to expand the class to shareholders who had purchased the Company's common stock
between August 2, 1995 and August 6, 1996. The action alleged that the
plaintiffs sustained losses as a result of the defendants' alleged untrue
statements of material facts and alleged omissions to state material facts
necessary in order to make the statements made not misleading. The complaint
sought unspecified damages and costs. On September 18, 1997, the Court dismissed
all of the claims. The plaintiffs have appealed the dismissal of the action to
the U.S. Court of Appeals for the Sixth Circuit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
12
<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's common stock is traded on The Nasdaq Stock Market, Inc. - National
Market System under the symbol "CSRE".
The following table sets forth, for the periods indicated, the high and low per
share closing sales prices for the Company's common stock as reported on The
Nasdaq Stock Market, Inc. - National Market System. All amounts in the following
table have been adjusted to reflect the three-for-two stock split effective in
the second quarter of fiscal 1996.
<TABLE>
<CAPTION>
MARKET PRICES
FISCAL YEAR -------------
ENDING JUNE 30 HIGH LOW
------------- ---- ----
<S> <C> <C> <C> <C>
1996 First Quarter $ 21.58 13.50
Second Quarter 25.67 17.33
Third Quarter 27.25 20.00
Fourth Quarter 31.50 20.25
1997 First Quarter 31.63 11.63
Second Quarter 17.50 13.00
Third Quarter 18.75 13.00
Fourth Quarter 14.38 11.25
1998 First Quarter 12.38 8.00
Second Quarter 8.19 4.81
Third Quarter 9.81 6.13
Fourth Quarter 8.88 7.00
1999 First Quarter $ 7.88 2.88
(through August 31, 1998)
</TABLE>
At August 31, 1998, there were approximately 1,100 holders of record of the
Company's common stock.
DIVIDEND POLICY
The Company has not paid dividends on its common stock since incorporation. It
is the Company's present policy to retain earnings for use in the Company's
business. Accordingly, the Company does not anticipate that cash dividends will
be paid in the foreseeable future. The Company's credit agreement contains
covenants which prohibit the payment of cash dividends on the common stock. See
Note 3 of the Notes to Consolidated Financial Statements regarding restrictions
on the payment of dividends.
13
<PAGE> 14
ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected financial data for the five fiscal years ended June 30 are derived
from the audited Consolidated Financial Statements of the Company. This
information should be read in conjunction with "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and related Notes included elsewhere in this
annual report on Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
---------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenue $ 89,753 $ 92,831 $ 118,984 $ 108,358 $ 96,626
Income (loss) from operations
before restructuring and
unusual charges (4,034) (19,727) 6,375 8,850 3,991
Income (loss) from operations (14,724) (25,972) (16,792) 2,485 1,648
Net income (loss) 5,266 (17,117) (9,891) 5,328 222
Per common share
- basic EPS $ 0.53 $ (1.75) $ (1.09) $ 0.63 $ 0.03
Average shares
(thousands) 9,903 9,770 9,048 8,398 8,234
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
-----------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Cash & cash equivalents $49,102 $11,651 $27,468 $ 1,398 $ 1,774
Total assets 88,692 80,751 98,238 79,310 88,944
Long-term debt 1,434 343 1,913 5,436 15,354
Total shareholders' equity $38,405 $31,959 $48,664 $32,548 $26,506
ADDITIONAL DATA:
Number of employees at year-end 405 579 695 686 729
</TABLE>
NOTES: (1) The income (loss) from operations for the fiscal years ended
June 30, 1998, 1997, 1996, 1995 and 1994 include restructuring
and unusual charges of $10,690,000, $6,245,000, $23,167,000,
$6,365,000 and $2,343,000, respectively. See Note 2 of the Notes
to Consolidated Financial Statements for information regarding
restructuring and unusual charges.
(2) Net income for the fiscal year ended June 30, 1998, includes an
after-tax gain of $19,986,000 from the sale of the Company's
Retail Business. The Retail Business accounted for approximately
$17,800,000 of the Company's 1998 revenue. See Note 13 of the
Notes to Consolidated Financial Statements for information
regarding the sale of the Company's Retail Business.
(3) The fiscal year ended June 30, 1996 included a $1,200,000 tax
benefit which related to the settlement of certain tax issues
and the amendment of certain tax returns to claim credits which
had previously not been claimed.
(4) The fiscal year ended June 30, 1995 included a $4,100,000 tax
benefit related to the recognition of prior years net operating
losses and tax credits, as well as tax reserves released.
(5) The fiscal year ended June 30, 1994 included a $1,100,000 gain
from the sale of undeveloped land.
14
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain financial data
as a percentage of total revenue:
<TABLE>
<CAPTION>
AS A PERCENT OF TOTAL REVENUE
YEAR ENDED
JUNE 30,
--------
1998 1997 1996
------------ ----------- ----------
REVENUE
<S> <C> <C> <C>
Software licenses 36.3% 39.2% 48.5%
Software maintenance 39.0 38.8 31.2
Implementation, consulting and other services 24.7 22.0 20.3
------------ ----------- ----------
TOTAL REVENUE 100.0 100.0 100.0
COSTS AND EXPENSES
Selling and marketing 46.5 57.7 43.2
Cost of revenue and support 32.2 32.9 26.7
Internal research and product development 13.8 16.8 13.4
Internally capitalized software (7.1) (7.5) (5.2)
Software amortization 7.2 7.7 5.5
General and administrative 11.9 13.7 11.0
Restructuring and unusual charges 11.9 6.7 19.5
------------ ----------- -----------
TOTAL COSTS AND EXPENSES 116.4 128.0 114.1
------------ ----------- -----------
LOSS FROM OPERATIONS (16.4) (28.0) (14.1)
Gain on sale of Retail Business 39.4 - -
Interest and other income (expense) 0.1 0.2 0.4
------------ ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 23.1 (27.8) (13.7)
------------ ----------- -----------
Provision (benefit) for income taxes 17.2 (9.4) (5.4)
------------ ----------- -----------
NET INCOME (LOSS) 5.9% (18.4)% (8.3)%
============ =========== ===========
</TABLE>
15
<PAGE> 16
REVENUE
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, PERCENT JUNE 30, PERCENT JUNE 30,
1998 CHANGE 1997 CHANGE 1996
-------- ------ -------- ------ ------
REVENUE
<S> <C> <C> <C> <C> <C>
Software licenses $ 32,610 (10.5)% $ 36,455 (36.8)% $ 57,715
Software maintenance 34,972 (2.8) 35,983 (3.0) 37,095
Implementation & consulting svcs. 22,171 8.7 20,393 (15.6) 24,174
--------- --------- ---------
TOTAL REVENUE $ 89,753 (3.3)% $ 92,831 (22.0)% $ 118,984
========= ========= =========
</TABLE>
Total revenue decreased 3.3% in fiscal 1998 compared with fiscal 1997 primarily
due to sale of the Company's Retail Business on June 4, 1998. Total revenue
decreased 22% in fiscal 1997 compared with fiscal 1996 primarily due to the
decline in software license revenue. The Retail Business accounted for
approximately $17,800,000 of the Company's 1998 revenue.
SOFTWARE LICENSE REVENUE
Software license revenue decreased 10.5% in fiscal 1998 compared with fiscal
1997. The decrease in software license fee revenue reflects the sale of the
Company's Retail Business during the fourth quarter of fiscal 1998, and the
effect of staff turnover in the domestic sales force, particularly in the first
half of the year.
Software license revenue decreased 36.8% in fiscal 1997 compared with fiscal
1996. The decline in software license fee revenue was mainly due to a loss of
sales momentum from turnover in the Company's international sales force, as a
result of the Company's investigation into violations of the Company's revenue
recognition policies, and turnover in the Company's domestic sales force as a
result of transitional changes in the sales organization.
In connection with the Company's fiscal 1996 year end audit, the Company
discovered side letters setting forth conditions to certain foreign orders in
violation of the Company's revenue recognition policies. No violations were
found in U.S. orders. The growth in fiscal 1996 for all the Company's products
was negatively impacted by these violations, although it is difficult to
estimate what license growth would have been in fiscal 1996 without the
violation of Company policies. The full impact on fiscal 1996 loss before taxes
from orders requiring non-recognition or reversal was approximately $6.9
million, which included amounts for prior quarters and years. These prior period
adjustments are not material to the quarters or year to which they relate, and
prior period results were not restated.
SOFTWARE MAINTENANCE REVENUE
Software maintenance revenue decreased 2.8% in fiscal 1998 compared with fiscal
1997. The decrease in fiscal 1998 was primarily due to the decline in software
maintenance revenue from mainframe products and to a lesser extent by the sale
of the Company's Retail Business. Mainframe software maintenance revenue
decreased 25.3% in fiscal 1998 and 26.7% in fiscal 1997 primarily due to
mainframe maintenance cancellations and continued customer migration to
client/server platforms. The decline in mainframe software maintenance revenue
in fiscal 1998 was partially offset by a 4% increase in client/server
maintenance revenue. Client/server software maintenance revenue represented 82%,
or $28.6 million, of total software maintenance revenue in fiscal 1998, compared
to 76%, or $27.4 million, in fiscal 1997 and 68%, or $25.4 million, in fiscal
1996.
Software maintenance revenue decreased 3.0% in fiscal 1997 compared to fiscal
1996, principally due to the 26.7% decline in mainframe maintenance revenue,
partially offset by an 8% increase in client/server maintenance revenue.
Mainframe software maintenance revenue is expected to continue to decline.
IMPLEMENTATION AND CONSULTING SERVICES REVENUE
Implementation, consulting and other service revenue increased 8.7% in fiscal
1998 compared with fiscal 1997 principally due to increased billable hours of
the consulting organization.
16
<PAGE> 17
Implementation, consulting and other service revenue decreased 15.6% in fiscal
1997 compared to fiscal 1996 primarily due to a lower number of billable
consultants as a result of the lower level of software license revenue, and to
the sale of the Company's Australian business to a distributor in June 1996.
COSTS AND EXPENSES
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
JUNE 30, PERCENT JUNE 30, PERCENT JUNE 30,
1998 CHANGE 1997 CHANGE 1996
------------- -------- ------------ --------- -------------
COST AND EXPENSES
<S> <C> <C> <C> <C> <C>
Selling and marketing $ 41,767 (22.0)% $ 53,552 4.3 % $ 51,354
Cost of revenue and support 28,883 (5.6) 30,594 (3.8) 31,814
Internal research and product development 12,355 (20.6) 15,556 (2.6) 15,977
Internally capitalized software (6,403) (8.1) (6,966) 13.2 (6,153)
Software amortization 6,446 (9.6) 7,129 9.1 6,535
General and administrative 10,739 (15.4) 12,693 (3.0) 13,082
----------- ------------ ------------
Total costs and expenses before
restructuring and
unusual charges 93,787 (16.7) 112,558 - 112,609
Restructuring and unusual charges 10,690 71.2 6,245 (73.0) 23,167
=========== ============ ============
TOTAL COSTS AND EXPENSES $ 104,477 (12.1)% $ 118,803 (12.5)% $ 135,776
=========== ============ ============
</TABLE>
Total costs and expenses before restructuring and unusual charges decreased
16.7% from fiscal 1997 to fiscal 1998 as a result of broad-based actions to
reduce costs in light of the revenue decline in fiscal 1997 and fiscal 1998. In
addition, the sale of the Company's Retail Business in early June 1998
contributed to the cost reduction. Total costs and expenses before restructuring
and unusual charges were flat in fiscal 1997 compared to fiscal 1996, reflecting
increased spending on marketing offset by lower expenses elsewhere.
Selling and marketing expense decreased 22.0% in fiscal 1998 compared to fiscal
1997. This decline was primarily due to staff reductions resulting from a
streamlining of the sales management structure and reductions in marketing
expenditures resulting from targeting of direct lead generating activities. The
decline also was due to a lesser extent, by a reduction in the number of staff
as a result of the June 4, 1998 sale of the Company's Retail Business. Selling
and marketing expense increased 4.3% in fiscal 1997 compared to fiscal 1996
primarily due to increased spending on marketing activities to promote the
Company's new applications. The increase was partially offset by the cost
reduction actions taken in the third quarter of fiscal 1997 and decreased
commissions on lower software license revenue.
Cost of revenue and support expense decreased 5.6% in fiscal 1998 compared with
fiscal 1997 principally due to lower royalties on reduced license fees, and
reduced production and distribution costs arising from the move to delivery of
products on compact discs. Cost of revenue and support expense decreased 3.8% in
fiscal 1997 compared with fiscal 1996 primarily due to the decrease in
implementation services costs with lower service revenue.
Internal research and product development expense decreased 20.6% in fiscal 1998
compared to fiscal 1997. The decrease represents the full effect of the cost
reduction actions taken in fiscal 1997, and staff reductions as part of the
Company's sale of its Retail Business. Internal research and product development
expense in fiscal 1997 decreased 2.6% compared with fiscal 1996 mainly due to
the cost reduction actions taken early in the third quarter of fiscal 1997 in
connection with the consolidation of the Company's product development
activities in Ann Arbor, Michigan and closing of the Leicester, England product
development facility, partially offset by increased spending for ongoing
enhancements to existing software products.
Internally capitalized software decreased 8.1% in fiscal 1998 compared to fiscal
1997 due to decreased levels of development costs that were capitalized and
amortized. Software amortization expense decreased in fiscal 1998 compared to
fiscal 1997 due to the decreased levels of capitalized software. Internally
capitalized software increased 13.2% in fiscal 1997 compared to fiscal 1996
mainly due to the increased levels of development costs that were capitalizable.
Software amortization expense increased in fiscal 1997 compared to fiscal 1996
due to the increased levels of capitalized software.
17
<PAGE> 18
General and administrative expense, decreased 15.4% in fiscal 1998 compared to
fiscal 1997. The decrease in fiscal 1998 was primarily due to cost reductions
actions taken to lower administrative costs and reduced legal fees as a result
of the resolution of a number of legal matters, including the settlement of the
Arbor Software Corporation litigation. Expenses decreased 3.0% in fiscal 1997
compared to fiscal 1996. General and administrative expense excluding the fiscal
1996 provisions for $900,000 of professional service fees associated with the
investigation into violations of the Company's revenue recognition policies,
$760,000 reserved in connection with the termination of the Company's vacant
office facility in London, England and $600,000 gain on sale of the Company's
Australian business, increased 5.6% in fiscal 1997 compared to fiscal 1996. The
increase in 1997 was primarily due to increased legal fees.
In fiscal 1998, the Company recorded a $10.7 million pretax charge for
restructuring and unusual charges related to the write off of capitalized
software, termination costs for certain executives, staff reduction and facility
costs related to the consolidation of the Company's helpline activities and
planned actions to reduce facility and other costs. The restructuring charges
included total staff reductions of approximately 27 people.
In fiscal 1997, the Company recorded a $6.2 million restructuring charge for
management actions or plans in connection with the consolidation of the
Company's product development activities in Ann Arbor, Michigan and reductions
in staff and non-revenue generating costs. This $6.2 million pre-tax charge was
composed of $2.4 million for personnel reductions, $2.6 million in space and
office costs and $1.2 million for non-compete and consulting agreement. The
restructuring charge included staff reductions of approximately 70 employees.
See Note 2 of the Notes to Consolidated Financial Statements.
During the year ended June 30, 1996, the Company recorded a $23,167,000 charge
to write off certain capitalized software.
OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
1998 1997 1996
--------- --------- ---------
OTHER INCOME (EXPENSE)
<S> <C> <C> <C>
Net interest income $ 144 $ 494 $ 492
Gain on sale of Retail Business 35,386 - -
Exchange loss (71) (310) (50)
--------- --------- --------
TOTAL OTHER INCOME $ 35,459 $ 184 $ 442
========= ========= =========
</TABLE>
Lower average cash balances for most of the 1998 fiscal year resulted in a
decrease in net interest income in fiscal 1998 compared to fiscal 1997. Net
interest income increased in fiscal 1997 compared to fiscal 1996. The increase
was due to a decline in interest expense and bank related charges, offset by a
decrease in interest income during fiscal 1997, as compared to fiscal 1996.
On June 4, 1998, the Company sold certain software products, accounts
receivable, customer contracts, intellectual property, intangibles, permits and
business records related to its Arthur (TM) strategic merchandise management
applications for the retail industry and its Boost Sales and Margin Planning
software product for the consumer packaged goods industry to JDA Software, Inc.
for $44 million in cash and the assumption of certain liabilities related to the
Retail Business. The Company also received $1 million of prepaid royalties. The
sale of the Retail Business resulted in a pre-tax gain of $35,386,000 and an
after-tax gain of $19,986,000.
FOREIGN CURRENCY
In fiscal 1998, 1997, and 1996, 54.1%, 47.6%, and 53.1% of the Company's total
revenue was from outside North America. Most of the Company's international
revenue is denominated in foreign currencies. Comshare recognizes currency
transaction gains and losses in the period of occurrence. As currency rates are
constantly changing, these gains and losses can, at times, fluctuate greatly.
The $71,000 foreign exchange loss in fiscal 1998 principally reflected the
weakening of certain foreign currencies against the British pound during the
twelve months ended June 30, 1998. The Company had exchange losses of $310,000
and $50,000 in fiscal 1997 and 1996, respectively, principally due to the
weakening of certain foreign currencies against the British pound.
18
<PAGE> 19
Foreign currency fluctuations in fiscal 1998, 1997 and 1996 impacted operating
income as currency fluctuations on revenue denominated in a foreign currency
were partially offset by currency fluctuations on expenses denominated in a
foreign currency. In fiscal 1998, the increase in total revenue, at actual
exchange rates, was $0.6 million less than at comparable exchange rates. The
decrease in total expenses in fiscal 1998, at actual exchange rates, was $1.4
million greater than at comparable exchange rates. As a result of the changes in
the foreign currency exchange rates, the increase in the net income before taxes
in fiscal 1998, at actual exchange rates, was $0.8 million greater than at
comparable exchange rates. In fiscal 1997, the decrease in total revenue at
actual exchange rates, was $1.1 million less than at comparable exchange rates.
The decrease in total expense in fiscal 1997, at actual exchange rates, was $0.9
million less than at comparable exchange rates. As a result of the changes in
foreign currency exchange rates, the increase in net loss before taxes in fiscal
1997, at actual exchange rates, was $0.2 million less than at comparable
exchange rates.
Inflation did not have a material impact on the Company's revenue or income from
operations in fiscal 1998, 1997 or 1996.
INCOME TAXES
The income tax provision in fiscal 1998 of $15.5 million was related to the
Company's sale of its Retail Business. No tax benefit was recognized on the
Company's operating loss or restructuring and unusual charges in fiscal 1998.
The benefit from income taxes in fiscal 1997 was $8.7 million which related to
the Company's operating loss for the year. The benefit from income taxes in
fiscal 1996 was $6.5 million which included the tax benefits related to the
Company's operating loss, and $1.2 million related to the settlement of certain
tax issues and the amendment of certain tax returns to claim credits which had
previously not been claimed.
Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the deferred tax assets is
not assured, management believes it is more likely than not that the deferred
tax assets will be realized through future taxable income or by using a tax
strategy currently available to the Company. On a quarterly basis, management
will assess whether it remains more likely than not that the deferred tax assets
will be realized. This assessment could be impacted by a combination of
continuing operating losses and a determination that the tax strategy is no
longer sufficient to realize some or all of the deferred tax assets.
The foregoing statements regarding the realization of deferred tax assets are
"forward looking statements" within the meaning of the Securities Exchange Act
of 1934. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Safe Harbor Statement" for discussion of uncertainties
relating to such statements.
A comparative analysis of the factors influencing the effective income tax rate
is presented in Note 8 of the Notes to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, cash and cash equivalents were $49.1 million, compared with
cash and cash equivalents of $11.7 million at June 30, 1997. The increase in
cash and cash equivalents was principally due to the proceeds from the Company's
sale of its Retail Business.
Net cash used in operating activities was $0.8 million in fiscal 1998, compared
with $8.4 million in fiscal 1997. The reduction in net cash used in operating
activities was primarily due to the significantly lower loss before
restructuring and unusual costs in fiscal 1998 compared to fiscal 1997.
Net cash provided by investing activities was $39.0 million in fiscal 1998,
compared to $10.7 million net cash used in investing activities in fiscal 1997.
The increase in cash related to investing activities, was principally due to the
proceeds from sale of Retail Business and prepaid royalties related to a value
added reseller agreement with JDA Software Group. At June 30, 1998, the Company
did not have material capital expenditure commitments. In fiscal 1999, property
and equipment purchases are expected to be comparable to fiscal 1998. There are
expected to be no additions to internally developed software in fiscal 1999.
Net cash used in financing activities was $0.6 million in fiscal 1998, compared
with $3.5 million net cash provided by investing activities in fiscal 1997. The
decrease in cash related to investing activities was primarily due to lower bank
borrowings as of June 30, 1998, compared to the prior year.
19
<PAGE> 20
Working capital as of June 30, 1998 was $29.5 million, compared with negative $1
million as of June 30, 1997. The increase in working capital was primarily due
to the increase in cash and cash equivalents from the proceeds of the sale of
the Retail Business, offset by the increase in accrued liabilities related to
the Retail sale and restructuring cost reserves. Total assets were $88.7 million
at June 30, 1998, compared with total assets of $80.8 million at June 30, 1997.
The increase in total assets was primarily due to the increase in cash and cash
equivalents offset by decreases in capitalized computer software and deferred
tax assets.
The Company has a $10 million credit agreement which matures on October 1, 2000.
Borrowings are secured by accounts receivable and the credit agreement contains
covenants regarding among other things, earnings, leverage, net worth and
payment of dividends. Under the terms of the agreement, the Company is not
permitted to pay cash dividends on its common stock. Permitted borrowings
available as of June 30, 1998 under this credit agreement were $10 million, of
which $823,000 was outstanding. Borrowings available at any time are based on
the lower of $10 million or a percentage of worldwide eligible accounts
receivable. At June 30, 1998, the interest rate, which was based on LIBOR plus
applicable margin, varied between 2.5 % and 4.2 %.
Separately, in August 1997, one of the Company's European subsidiaries entered
into a $1.2 million loan agreement, which matures on June 30, 2000. The Company
had outstanding borrowings under this agreement of $868,000 at June 30, 1998.
The interest rate was 12.5 % at June 30, 1998.
In September 1998, the Board of Directors authorized the repurchase of up to
1,000,000 shares of the Company's outstanding Common Stock. Pursuant to this
repurchase program, the Company has repurchased 78,500 shares of the Company's
Common Stock for a total cost of approximately $387,000, as of September 18,
1998. The Company may buy shares of its Common Stock on the open market or in
privately negotiated transactions from time to time, based on market prices.
The Company believes that the combination of present cash balances and amounts
available under credit facilities will be sufficient to meet the Company's
currently anticipated cash requirements for at least the next twelve months. The
foregoing statement is a "forward looking statement" within the meaning of the
Securities Exchange Act of 1934. The extent to which such sources will be
sufficient to meet the Company's anticipated cash requirements is subject to a
number of uncertainties including the ability of the Company's operations to
generate sufficient cash to support operations, and other uncertainties
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Safe Harbor Statement."
MARKET SENSITIVITY ANALYSIS
The Company is exposed to market risk from changes in foreign exchange and
interest rates. To reduce the risk from changes in foreign exchange rates, the
Company selectively uses financial instruments. The Company does not hold or
issue financial instruments for trading purposes.
FOREIGN CURRENCY
The Company at various times denominates borrowings in foreign currencies and
enters into forward exchange contracts to hedge exposures related to foreign
currency transactions. The Company does not use any other types of derivatives
to hedge such exposures nor does it speculate in foreign currency. In general,
the Company uses forward exchange contracts to hedge against large selective
transactions that present the most exposure to exchange rate fluctuations. At
June 30, 1998 and June 30, 1997, the Company had forward contracts of
approximately $3.1 million and $1.8 million (notional amounts), respectively,
denominated in foreign currencies. The contracts outstanding at June 30, 1998
mature through July 31, 1998 and are intended to hedge various foreign currency
commitment due from foreign subsidiaries and the Company's distributors. Due to
the short term nature of these financial instruments, the fair value of these
contracts is not materially different than their notional amount at June 30,
1998 and 1997.
Gains and losses on the forward contracts are largely offset by gains and losses
on the underlying exposure. The Company conducts business in approximately 15
foreign currencies, predominately British pounds, French francs and Japanese
yen. A hypothetical 10 percent appreciation of the U.S. Dollar from June 30,
1998 market rates would increase the unrealized value of the Company's forward
contracts by an immaterial amount. Conversely, a hypothetical 10 percent
depreciation of the U.S. Dollar from June 30, 1998 market rates would decrease
the unrealized value of the Company's forward contracts by an immaterial amount.
In either scenario, the gains or losses on the forward contracts are largely
offset by the gains or losses on the underlying transactions.
20
<PAGE> 21
INTEREST RATES
The Company maintains its cash and cash equivalents in highly liquid investments
with maturities of ninety days or less. The Company has the ability to hold its
fixed income investments until maturity, and therefore the Company would not
expect its operating results or cash flows to be affected to any significant
degree by the effect of a hypothetical 10 percent change in market interest
rates on its cash and cash equivalents.
YEAR 2000
Many existing computer programs use only the last two digits to refer to a year.
Therefore, these computer programs do not properly recognize a year that begins
with "20" instead of the familiar "19". If not corrected, many computer
applications could fail or create erroneous results. Programs that will operate
in the Year 2000 unaffected by the change in year from 1999 to 2000 are referred
to herein as "Year 2000 compliant". Certain portions of the discussion set forth
below contain "forward looking statements" within the meaning of the Securities
Exchange Act of 1934, as amended, including, but not limited to, those relating
to the Year 2000 compliance of the Company's products and systems, future costs
to remediate Year 2000 issues, the timetable in which such remediation is to
occur, the alternatives available to the Company to become fully Year 2000
compliant, the Company's mission critical requirements and the impact on the
Company of an inability of it or its key suppliers to become fully Year 2000
compliant. Actual results could differ materially from those in the forward
looking statement due to a number of uncertainties set forth below.
The Company has tested and modified the most current versions of its products to
be Year 2000 compliant. The Company believes that all of its current
client/server products are Year 2000 compliant (including BudgetPLUS, Decision,
DecisionWeb and FDC). The Company expects to release new versions of its
principal mainframe products that will be Year 2000 compliant prior to the end
of calendar year 1998. The Company has no plans to make earlier versions of its
products Year 2000 compliant and will attempt to contact customers informing
them of their decision.
Not all the Company's customers are running product versions that are Year 2000
compliant. The Company will continue to encourage these customers to migrate to
its current product versions. Some of these customers may not be willing to
migrate to current product versions because of the cost and time required to do
so, including the need to rewrite custom applications which are not Year 2000
compliant. The Company may decide not to renew maintenance contracts with these
customers for periods after fiscal year 1999. A significant portion of the
Company's maintenance revenue in fiscal year 1998 was derived from customers
running versions of the Company's products which are not Year 2000 compliant;
however, customers paying maintenance are entitled to obtain Year 2000 compliant
versions of licensed products at no additional cost.
The Company incorporates a number of software tools into its products. (See
"Item 1. Business - Licensed Technologies"). The Company has performed limited
testing of the current versions of these software tools as part of the testing
of its products and believes they are Year 2000 compliant. In addition, with
respect to certain of these software tools, the Company has also received
written representations or warranties from the vendor that these products are
Year 2000 compliant. Nevertheless, if one of the databases supported by the
Company is not fully Year 2000 compliant, sales of the Company's products could
be impacted.
If any of the Company's customers are unable to make their information
technology systems Year 2000 compliant in a timely fashion, they may suspend
further product purchases from the Company and renewal of maintenance contracts
until their systems are Year 2000 compliant. Because the Company's customers are
generally large and medium sized businesses and the Company has received
numerous communications from customers about their Year 2000 compliance efforts,
the Company expects most of its customers will become Year 2000 compliant in a
timely fashion, although the Company is not in a position to monitor their
progress.
The Company is currently developing a plan to determine whether its vendors,
distributors and leased facilities (all of which are referred to as "Third Party
Suppliers") are Year 2000 compliant. The plan will include the identification of
principal Third Party Suppliers, including those which are mission critical,
contact with those Third Party Suppliers to determine their level of Year 2000
compliance, review of materials provided or published by Third Party Suppliers
regarding their Year 2000 compliance efforts and, with respect to mission
critical Third Party Suppliers, some form of additional verification of
compliance. The Company expects to initiate this process before the end of
calendar year 1998. Alternative Third Party Suppliers will be identified for
those not expected to be Year 2000 compliant by the middle of calendar 1999. The
Company believes it has a limited number of mission critical Third Party
Suppliers and believes that there are multiple alternatives for its mission
critical requirements, including handling certain of these functions internally.
21
<PAGE> 22
The Company has completed the assessment of its principal internal information
technology systems for Year 2000 compliance. With respect to these eight
principal systems, the Company has upgraded four of these systems with Year 2000
compliant versions. The Company plans to replace one of the remaining four
systems with new third party software, and is currently reviewing alternative
vendors. The Company has determined that the system to be replaced could be made
Year 2000 compliant in the event a replacement system cannot be implemented in a
timely fashion. Using internal personnel the Company plans to modify the three
remaining internal systems to make these Year 2000 compliant. The Company has
started the modification process and has scheduled completion by middle of
calendar year 1999. The Company intends to actively monitor progress on this
project. In the event that the systems cannot be modified in a timely fashion,
the Company will concentrate its efforts on mission critical revisions. The
Company also believes that certain of these systems could be replaced with new
third party systems which are Year 2000 compliant, although the time required to
implement a new system or the additional costs could be significant.
The Company has engaged a third party to assess the Company's personal computer
and network hardware and software for Year 2000 compliance and to help develop a
plan to make necessary modifications. The assessment will begin in the fourth
quarter of calendar year 1998. Completion of this project is scheduled for the
first half of calendar year 1999. Since the Company continuously upgrades its
hardware and software as part of its normal business, much of the older hardware
and software is likely to be eliminated prior to 2000. The Company has
contingency plans in the event that these systems cannot be remediated in a
timely fashion through the replacement of older equipment.
A failure of one or more of these internal systems to become Year 2000
compliant, particularly the Company's principal internal information technology
systems, could require the Company to manually process information or could
prevent or limit access to mission critical information.
The Company's non-information technology systems consist principally of
telephone and data communication systems. The Company has completed the initial
assessment of these systems for Year 2000 compliance. Remediation has begun and
is scheduled for completion in the first half of calendar year 1999. If the
Company's telephone and data communications systems cannot be remediated to
become compliant, the Company will be required to replace those systems before
the end of calendar year 1999. The Company believes that there are alternative
providers of these systems which are Year 2000 compliant, but to date it has not
explored the time required to implement a new system or the additional cost to
the Company.
Most of the costs incurred by the Company to date on Year 2000 compliance issues
have been internal staff costs and costs relating to normal product upgrades,
which the Company has not separately tracked. As a result, the Company is not
able to reasonably estimate the amount of such expenditures. The Company
presently expects that its future costs relating to Year 2000 compliance,
including replacement systems, will be between $1.3 million and $2.5 million.
The Company would have incurred many of the costs for these efforts in any event
because of the normal process of product and equipment upgrades. These cost
estimates are subject to a number of uncertainties, which could result in actual
costs exceeding the estimated amounts including, but not limited to, undetected
errors or defects discovered in connection with the remediation process or
unanticipated difficulties in completing the remediation in a timely fashion,
resulting in the need either to replace more of the systems than originally
expected and/or hire more personnel or third party firms to assist in the
remediation process.
Some commentators have stated that a significant amount of litigation will arise
out of Year 2000 compliance issues. While the Company believes that its efforts
to address Year 2000 issues for which it is responsible should be successful, a
description of its most reasonably likely worst case Year 2000 scenarios have
been described above. In addition, it is possible that there will be undetected
errors or defects associated with Year 2000 date functions in the Company's
current products and internal systems or those of its key vendors. If any of the
foregoing scenarios should occur, it is possible that the Company could be
involved in litigation. Further, although the Company does not believe that it
has any obligation to continue to support prior versions of its products after
the termination of maintenance contracts covering those products, nor any
obligation to make prior versions of its products, including custom applications
written by the Company, Year 2000 compliant, it is possible that its customers
may take a contrary position and initiate litigation. Because of the
unprecedented nature of litigation in this area, it is uncertain how the Company
may be affected by it. In the event of such litigation or the occurrence of one
or more of the most reasonably likely worst case Year 2000 scenarios, the
Company's revenues, net income or financial condition could be materially
adversely affected.
22
<PAGE> 23
SAFE HARBOR STATEMENT
Certain information in this Form 10-K contains "forward looking statements"
within the meaning of the Securities Exchange Act of 1934, including those
concerning the Company's future results and strategy. Actual results could
differ materially from those in the forward looking statements due to a number
of uncertainties, including, but not limited to, the demand for the Company's
products and services; the size, timing and recognition of revenue from
significant orders; increased competition; the Company's success in and expense
associated with developing, introducing and shipping new products; new product
introductions and announcements by the Company's competitors; changes in Company
strategy; product life cycles; the cost and continued availability of third
party software and technology incorporated into the Company's products; the
impact of rapid technological advances, evolving industry standards and changes
in customer requirements, including the impact on the Company's revenues of the
proposed release by Microsoft of an OLAP database; the impact of recent
transitional changes in North American and international management and sales
personnel; cancellations of maintenance and support agreements; software
defects; changes in operating expenses; variations in the amount of cost savings
anticipated to result from cost reduction actions; the impact of cost reduction
actions on the Company's operations; fluctuations in foreign exchange rates; the
impact of undetected errors or defects associated with the Year 2000 date
functions on the Company's current products and internal systems; the ability of
the Company to generate sufficient future taxable income or to execute available
tax strategies, required to realize deferred tax assets; economic conditions
generally or in specific industry segments; risks inherent in seeking and
consummating acquisitions, including the diversion of management attention to
the assimilation of the operations and personnel of acquired businesses, the
ability of the Company to successfully integrate acquired businesses and the
impact on the Company's results and financial condition from debt issued,
liabilities acquired, and additional expenses incurred in connection with such
acquisitions. In addition, a significant portion of the Company's revenue in any
quarter is typically derived from non-recurring license fees, a substantial
portion of which is booked in the last month of a quarter. Since the purchase of
the Company's products is relatively discretionary and generally involves a
significant commitment of capital, in the event of any downturn in any potential
customer's business or the economy in general, purchases of the Company's
products may be deferred or canceled. Further, the Company's expense levels are
based, in part, on its expectations as to future revenue and a significant
portion of the Company's expenses do not vary with revenue. As a result, if
revenue is below expectations, results of operations are likely to be materially
adversely affected.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
See "Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations - Market Sensitivity Analysis".
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedule filed herewith are set forth on the Index
to Consolidated Financial Statements and Schedule on page 27 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated herein by reference to the
Company's 1998 Proxy Statement under the captions "Election of Directors" and
"Further Information-Executive Officers."
23
<PAGE> 24
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
Company's 1998 Proxy Statement under the caption "Executive Compensation."
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is incorporated herein by reference to the
Company's 1998 Proxy Statement under the captions "Further Information-Principal
Shareholders" and "Further Information-Stock Ownership of Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is incorporated herein by reference to the
Company's 1998 Proxy Statement under the captions "Certain Relationships and
Related Transactions."
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a)The following documents are filed as part of this Report:
1. Consolidated Financial Statements:
The Financial Statements filed with this report are listed in the
Index to Consolidated Financial Statements and Schedule which
appears on page 27.
2. Consolidated Financial Statement Schedule:
The Financial Statement Schedule filed with this report is listed in
the Index to Consolidated Financial Statements and Schedule which
appears on page 27.
3. The exhibits filed with this report are listed in the Index to
Exhibits which appears on page 49. The following are the
Company's management contracts and compensatory plans and
arrangements which are required to be filed as exhibits to this Form
10-K:
EXHIBIT NO. DESCRIPTION
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended - incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1993.
10.02 Comshare, Incorporated 1988 Stock Option Plan, as amended -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1990 and Exhibit 10.22
to the Registrant's Form 10-Q Report for the quarter ended September
30, 1994.
10.03 Amended and Restated Profit Sharing Plan of Comshare, Incorporated,
effective as of October 1, 1995 - incorporated by reference to Exhibit
4.1 to the Registrant's Form S-8 Registration Statement No. 33-65109.
10.04 Interim Trust Deed establishing the Comshare Money Purchase Plan for
employees of the United Kingdom, effective March 1, 1994 - incorporated
by reference to Exhibit 10.08 to the Registrant's Form 10-K for the
fiscal year ended June 30, 1994.
10.05 Employment and NonCompetition Agreement between Comshare, Incorporated
and T. Wallace Wrathall, effective as of April 1, 1994 - incorporated
by reference to Exhibit 10.23 to the Registrant's Form 10-Q Report for
the quarter ended December 31, 1994.
24
<PAGE> 25
10.06 Amended and Restated Employee Agreement between Comshare, Incorporated
and Richard L. Crandall effective July 1, 1994, as amended -
incorporated by reference to Exhibit 10.10 to the Registrant's Form
10-K for the fiscal year ended June 30, 1994.
10.07 Non-Competition Agreement between Comshare, Incorporated and Richard L.
Crandall - incorporated by reference to Exhibit 10.11 of the
Registrant's Form 10-K for the fiscal year ended June 30, 1994.
(Portions of this exhibit have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for
confidential treatment pursuant to Rule 24b-2).
10.08 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle
regarding terms of employment dated April 18, 1994 - incorporated by
reference to Exhibit 10.12 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.09 Description of Incentive Arrangements for certain executive officers
for fiscal years 1994 and 1995-1997.
10.10 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll - incorporated by
reference to Exhibit 10.22 to the Registrant's Form 10-Q Report for the
quarter ended March 31, 1997.
10.11 Trust Agreement under the Benefit Adjustment Plan of Comshare,
Incorporated, effective April 25, 1988, as amended - incorporated by
reference to Exhibit 10.31 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1993.
10.12 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary
for maintaining the Profit Sharing Plan of Comshare, Incorporated
effective March 31, 1992, as amended - incorporated by reference to
Exhibit 10.15 to the Registrant's Form 10-K for the fiscal year ended
June 30, 1994.
10.13 1994 Executive Stock Purchase Program of Comshare, Incorporated -
incorporated by reference to Exhibit 10.19 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.14 Employee Stock Purchase Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.20 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.15 1994 Directors Stock Option Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.16 Letter agreement between Comshare, Incorporated and Geoffrey R. Cluett
dated April 29, 1997 regarding terms of employment and non-compete
agreement - incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1997.
10.17 Agreement between Comshare, Incorporated and T. Wallace Wrathall dated
October 24, 1997 - incorporated by reference to Exhibit 10.1 to the
Registrant's Form 10-Q Report for the quarter ended September 30, 1997.
10.18 Executive Bonus Program, effective October 1, 1997 - incorporated
by reference to Exhibit 10.1 to the Registrant's Form 10-Q Report for
the quarter ended December 31, 1997.
10.19 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Dennis G. Ganster.
10.20 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Kathryn A. Jehle.
10.21 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and David King.
10.22 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Stanley Starkey.
10.23 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Norman Neuman.
25
<PAGE> 26
10.24 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Geoffrey Cluett.
10.25 Comshare, Incorporated 1998 Global Employee Stock Option Plan.
10.26 Summary of 1998 Senior Executive Incentive Plan.
10.27 Summary of 1999 Senior Executive Incentive Plan.
(b) Reports on Form 8-K.
Since the end of its most recent fiscal quarter on March 31, 1998, the
Registrant has filed the following reports on Form 8K.
Date of Report Items Reported
- -------------- ---------------
6/9/98 Item 5. Comshare, Incorporated announces sale of
certain software products for the retail industry to
JDA Software Group, Inc.
6/19/98 Item 2. Comshare, Incorporated reports sale of
certain software products, accounts receivable,
customer contracts, intellectual property,
intangibles, permits and businesses records related
to its Arthur(TM) strategic merchandise management
applications for the retail industry and its software
products for the consumer packaged goods industry to
JDA Software, Inc.
26
<PAGE> 27
COMSHARE, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
PAGE
----
Report of Independent Public Accountants 28
Consolidated Statement of Operations for
the Fiscal Years Ended June 30, 1998, 1997 and 1996 29
Consolidated Balance Sheet as of June 30, 1998 and 1997 30-31
Consolidated Statement of Cash Flows for the
Fiscal Years Ended June 30, 1998, 1997 and 1996 32
Consolidated Statement of Shareholders' Equity
for the Fiscal Years Ended June 30, 1998, 1997 and 1996 33
Notes to Consolidated Financial Statements 34-46
SCHEDULE
II. Consolidated Schedule of Valuation & Qualifying Accounts 47
27
<PAGE> 28
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Comshare, Incorporated:
We have audited the accompanying consolidated balance sheets of COMSHARE,
INCORPORATED (a Michigan corporation) and subsidiaries as of June 30, 1998 and
1997, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended June 30,
1998. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Comshare, Incorporated and
subsidiaries as of June 30, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1998 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
September 18, 1998.
28
<PAGE> 29
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
---------------------------
1998 1997 1996
------------- ------------- -------------
REVENUE
<S> <C> <C> <C>
Software licenses $ 32,610 $ 36,455 $ 57,715
Software maintenance 34,972 35,983 37,095
Implementation, consulting and other services 22,171 20,393 24,174
------------- ------------- -------------
TOTAL REVENUE 89,753 92,831 118,984
COSTS AND EXPENSES
Selling and marketing 41,767 53,552 51,354
Cost of revenue and support 28,883 30,594 31,814
Internal research and product development 12,355 15,556 15,977
Internally capitalized software (6,403) (6,966) (6,153)
Software amortization 6,446 7,129 6,535
General and administrative 10,739 12,693 13,082
Restructuring and unusual charges 10,690 6,245 23,167
------------- ------------- -------------
TOTAL COSTS AND EXPENSES 104,477 118,803 135,776
------------- ------------- -------------
LOSS FROM OPERATIONS (14,724) (25,972) (16,792)
OTHER INCOME (EXPENSE)
Net interest income 144 494 492
Gain on sale of Retail Business 35,386 - -
Exchange loss (71) (310) (50)
------------- ------------- -------------
TOTAL OTHER INCOME 35,459 184 442
INCOME (LOSS) BEFORE TAXES 20,735 (25,788) (16,350)
Provision (benefit) for income taxes 15,469 (8,671) (6,459)
------------- ------------- -------------
NET INCOME (LOSS) $ 5,266 $ (17,117) $ (9,891)
============= ============= =============
SHARES USED IN BASIC EPS COMPUTATION 9,903 9,770 9,048
============= ============= =============
SHARES USED IN DILUTED EPS COMPUTATION 10,074 9,770 9,048
============= ============= =============
NET INCOME (LOSS) PER COMMON SHARE-BASIC EPS $ 0.53 $ (1.75) $ (1.09)
============= ============= =============
NET INCOME (LOSS) PER COMMON SHARE-DILUTED EPS $ 0.50 $ (1.75) $ (1.09)
============= ============= =============
</TABLE>
The accompanying notes are an integral part of this statement.
29
<PAGE> 30
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
--------------
1998 1997
------------ ------------
Assets
Current assets
<S> <C> <C>
Cash and cash equivalents $ 49,102 $ 11,651
Accounts receivable, less allowance for
doubtful accounts of $1,830 and $1,053 as of
June 30, 1998 and 1997, respectively 21,354 24,675
Deferred income taxes 1,256 1,953
Prepaid expenses and other current assets 3,322 5,298
------------ ------------
Total current assets 75,034 43,577
Property and equipment, at cost
Computers and other equipment 16,781 18,678
Leasehold improvements 2,293 2,708
------------ ------------
19,074 21,386
Less - Accumulated depreciation 15,792 16,432
------------ ------------
Property and equipment, net 3,282 4,954
Computer software, net of accumulated
amortization of $10,685 as of June 30, 1997 - 9,075
Goodwill, net of accumulated
amortization of $1,525 and $1,551 as of
June 30, 1998 and 1997, respectively 1,500 1,609
Deferred income taxes 5,377 15,580
Other assets 3,499 5,956
------------ ------------
$ 88,692 $ 80,751
============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
30
<PAGE> 31
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET - (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
--------------
1998 1997
---------- ----------
Liabilities and Shareholders' Equity
Current liabilities
<S> <C> <C>
Notes payable $ 1,238 $ 4,332
Accounts payable 14,398 12,597
Accrued liabilities -
Payroll 2,964 3,191
Taxes 5,035 1,953
Other 7,034 2,601
---------- ----------
Total accrued liabilities 15,033 7,745
Deferred revenue 14,834 19,868
---------- ----------
Total current liabilities 45,503 44,542
Long-term debt 1,434 343
Other liabilities 3,350 3,907
Commitments and contingencies
Shareholders' equity
Capital stock:
Preferred stock, no par value;
authorized 5,000,000 shares; none issued - -
Common stock, $1.00 par value;
authorized 20,000,000 shares; outstanding
10,003,167 shares as of June 30, 1998
and 9,871,260 shares as of June 30, 1997 10,003 9,871
Capital contributed in excess of par 40,335 39,528
Retained earnings (deficit) (7,350) (12,363)
Currency translation adjustments (4,032) (4,021)
---------- ----------
38,956 33,015
Less - Notes receivable 551 1,056
---------- ----------
Total shareholders' equity 38,405 31,959
---------- ----------
$ 88,692 $ 80,751
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
31
<PAGE> 32
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
---------------------------
1998 1997 1996
------------ ------------- ------------
Operating activities
<S> <C> <C> <C>
Net income (loss) $ 5,266 $ (17,117) $ (9,891)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 9,023 9,582 8,330
Gain on sale of Retail Business (35,386) - -
Noncash restructuring and unusual charges 10,176 1,317 23,167
Changes in operating assets and liabilities:
Accounts receivable 2,848 10,226 (5,679)
Prepaid expenses and other assets (112) 537 (928)
Accounts payable 1,864 (5,728) 6,686
Accrued liabilities (3,539) (160) 58
Deferred revenue (4,928) 1,314 (19)
Deferred income taxes 14,550 (8,829) (8,238)
Other liabilities (556) 427 338
------------ ------------- ------------
Net cash provided by (used in) operating activities (794) (8,431) 13,824
Investing activities
Additions to computer software (6,546) (6,966) (6,207)
Payments for property and equipment (601) (2,835) (3,220)
Proceeds from sale of Retail Business & prepaid royalties 45,000 - -
Other 1,103 (883) (1,272)
------------ ------------- ------------
Net cash provided by (used in) investing activities 38,956 (10,684) (10,699)
Financing activities
Net borrowings (repayments) under notes payable (3,277) 4,053 -
Net borrowings (repayments) under debt agreements and capital
leases obligations 1,254 (1,403) (3,394)
Stock options exercised 753 878 474
Issuance of common stock - - 25,148
Other 691 (31) 730
------------ ------------- ------------
Net cash provided by (used in) financing activities (579) 3,497 22,958
Effect of exchange rate changes (132) (199) (13)
------------ ------------- ------------
Net increase (decrease) in cash 37,451 (15,817) 26,070
Balance at beginning of period 11,651 27,468 1,398
------------ ------------- ------------
Balance at end of period $ 49,102 $ 11,651 $ 27,468
============ ============= ============
Supplemental disclosures:
Cash paid for interest $ 215 $ 169 $ 371
============ ============= ============
Cash paid for income taxes $ 862 $ 740 $ 1,869
============ ============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
32
<PAGE> 33
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
---------------------------
1998 1997 1996
---- ---- ----
Common stock
<S> <C> <C> <C>
Balance beginning of year $ 9,871 $ 9,691 $ 8,221
Employee Stock Purchase Plan 61 18 26
1994 Executive Stock Purchase Program - 21 -
Retirement of shares (9) (39) (16)
Sale of common stock in a public offering - - 1,294
Stock options exercised 80 180 166
---------- ----------- -----------
Balance end of year 10,003 9,871 9,691
---------- ----------- -----------
Capital contributed in excess of par
Balance beginning of year 39,528 38,132 13,199
Employee Stock Purchase Plan 362 333 384
1994 Executive Stock Purchase Program - 392 -
Retirement of shares (240) (160) (62)
Sale of common stock in a public offering - - 23,854
Stock options exercised 685 831 757
---------- ----------- -----------
Balance end of year 40,335 39,528 38,132
---------- ----------- -----------
Retained earnings (deficit)
Balance beginning of year (12,363) 5,239 15,500
Net income (loss) 5,266 (17,117) (9,891)
Retirement of shares (253) (485) (370)
---------- ----------- -----------
Balance end of year (7,350) (12,363) 5,239
---------- ----------- -----------
Currency translation adjustments
Balance beginning of year (4,021) (3,586) (3,239)
Translation adjustments (11) (435) (347)
---------- ----------- -----------
Balance end of year (4,032) (4,021) (3,586)
---------- ----------- -----------
Less - Notes receivable
Balance beginning of year 1,056 812 1,133
1994 Executive Stock Purchase Program - 244 (122)
Employee Stock Ownership Plan (505) - (199)
---------- ----------- -----------
Balance end of year 551 1,056 812
---------- ----------- -----------
Total shareholders' equity $ 38,405 $ 31,959 $ 48,664
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
33
<PAGE> 34
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY. Comshare, Incorporated (the "Company") develops, markets and
supports client/server financial analytic applications software for management
planning and control. The Company also provides services such as maintenance,
training, consulting and support services. Comshare is currently providing
maintenance at over 2,100 corporate and public sector customer sites.
The Company markets its products through a direct sales force in the United
States, Canada, United Kingdom, France and Germany and has an extensive
distributor network in 37 other countries. The Company was incorporated in
Michigan in February 1966 and commenced operations at that time.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are wholly owned. All
material intercompany accounts and transactions have been eliminated.
REVENUE. The Company's revenue consists of software license, software
maintenance and implementation, consulting and other service revenue. Software
license revenue is recognized when a customer contract is fully executed and the
software has been shipped. Software maintenance revenue, whether bundled with a
product license or priced separately, is recorded as deferred revenue on the
balance sheet when invoiced and is recognized over the term of the maintenance
contract. Implementation, consulting and other services revenue is recognized as
the services are performed.
EXPENSE CLASSIFICATION. Selling and marketing expense primarily includes
employee costs, travel costs, facilities expenses, advertising and agency fees.
Cost of revenue and support includes personnel and other costs related to
implementation and consulting services revenue, customer support costs, direct
cost of producing software and royalty expense for products licensed from others
for use in the Company's product offerings. Internal research and product
development expense includes all such expense before computer software
capitalization and amortization.
FOREIGN CURRENCY TRANSLATION. All assets and liabilities of the Company's
foreign operations are translated at current exchange rates, and revenue and
expenses are translated at monthly exchange rates. Resulting translation
adjustments are reflected as a separate component of shareholders' equity.
Foreign currency transaction gains and losses are included in net income.
FINANCIAL INSTRUMENTS. The Company at various times enters into forward exchange
contracts to hedge certain exposures related to identifiable foreign currency
transactions that are relatively certain as to both timing and amount. Gains and
losses on the forward contracts are recognized concurrently with the gains and
losses from the underlying transactions. The forward exchange contracts used are
classified as "held for purposes other than trading." The Company does not use
any other types of derivative financial instruments to hedge such exposures, nor
does it use derivatives for speculative purposes. At June 30, 1998 and 1997, the
Company had forward foreign currency exchange contracts of $3.1 million and $1.8
million (notional amounts), respectively. The contracts outstanding at June 30,
1998 mature through July 31, 1998 and are intended to hedge various foreign
currency commitments due from foreign subsidiaries and the Company's
distributors. Due to the short-term nature of these financial instruments, the
fair value of these contracts is not materially different than their notional
amount at June 30, 1998 and 1997.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents includes investments in
highly liquid investments with maturities of ninety days or less.
COMPUTER SOFTWARE. The costs of developing and purchasing new software products
and enhancements to existing software products are capitalized after
technological feasibility is established. Capitalized development costs are
amortized using the straight-line method over a two-year service life. The
establishment of technological feasibility and the ongoing assessment of the
recoverability of these costs require considerable judgment by management with
respect to certain external factors, including, but not limited to, anticipated
future gross product revenue, estimated economic product lives and changes in
software and hardware technology. In the last several years, product upgrades
are being released on a more rapid basis. The rapid increase in product version
updates has led to an almost continuous product development cycle and has
reduced the time between establishing technological feasibility and general
release to the public. With these rapid changes expected, the Company believes
that the useful lives of these products will be reduced to a year or less. In
future years, based on the continuous product life cycles noted, the period
between establishing technological feasibility and the general availability of
such software will be short, and software costs qualifying for capitalization
will be insignificant. Accordingly, the Company will not capitalize any future
software development costs.
34
<PAGE> 35
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCiAL STATEMENTS - (CONTINUED)
DEPRECIATION. The cost of depreciable assets is charged to operations on a
straight-line basis. Principal service lives for computers and other equipment
are three to five years. Leasehold improvements are amortized over the expected
life of the asset or term of the lease, whichever is shorter.
GOODWILL. Goodwill represents the unamortized cost in excess of fair value of
net assets acquired and is amortized on a straight-line basis over forty years.
On an ongoing basis, management reviews the valuation and amortization of
goodwill. As part of this review, the Company considers the value of future cash
flows attributable to the acquired operations in evaluating potential impairment
of goodwill.
OTHER ASSETS. In fiscal 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which requires
an evaluation of long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. There was no adjustment to the Company's financial statements in
fiscal 1998 as a result of this evaluation.
INCOME TAXES. The Company accounts for estimated income taxes under the
provisions SFAS No. 109, "Accounting for Income Taxes." This statement provides
for an asset and liability approach under which deferred income taxes are
provided based upon enacted tax laws and rates applicable to the periods in
which the taxes become payable.
EARNINGS PER SHARE. Earnings per share of common stock is based on the daily
weighted average number of shares of common stock outstanding considering the
dilutive effect of outstanding stock options when appropriate. In fiscal 1998,
the Company adopted SFAS No. 128, "Earnings per Share."
STOCK PLANS. The Company accounts for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion (APB)
No. 25 "Accounting for Stock Issued to Employees," and related interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the stock at grant date over the amount an
employee must pay to acquire the stock. As supplemental information, the Company
has provided pro forma disclosure of the fair value of stock options granted
during fiscal 1998 and 1997 in accordance with the requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation." See Note 5 of Notes to Consolidated
Financial Statements.
COMPREHENSIVE INCOME. The Financial Accounting Standards Board has issued SFAS
No. 130 "Reporting Comprehensive Income" which establishes standards for
reporting comprehensive income and its components in a full set of financial
statements. Comprehensive income is defined as the total of net income and all
other nonowner changes in equity. The Company has not yet adopted this statement
but is required to adopt this statement for the fiscal year ending June 30,
1999.
SEGMENTS OF AN ENTERPRISE. The Financial Accounting Standards Board has issued
SFAS No. 131 "Disclosures About Segments of an Enterprise and Related
Information" which establishes standards for disclosures of certain segment
information based on the "management approach" which organizes segments within a
company the way the chief operating decision maker of that company organizes the
segments. The Company has not yet adopted this statement but is required to
adopt this statement for the fiscal year ending June 30, 1999.
ACCOUNTING FOR DERIVATIVES AND HEDGING. The Financial Accounting Standards Board
has issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. The Company has not yet adopted this
statement but is required to adopt the statement for the fiscal year ending June
30, 2000.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results may differ from these estimates.
35
<PAGE> 36
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCiAL STATEMENTS - (CONTINUED)
RECLASSIFICATIONS. Certain amounts in the 1996 and 1997 financial statements
have been reclassified to conform with 1998 presentations.
2. RESTRUCTURING AND UNUSUAL CHARGES
In fiscal 1998, the Company recorded a $10.7 million pretax charge for
restructuring and unusual charges related to the write off of capitalized
software, termination costs for certain executives, staff reduction and facility
costs related to the consolidation of the Company's helpline activities; and
planned actions to reduce facility and other costs. The restructuring charges
included total staff reductions of approximately 27 people.
In fiscal 1997, the Company recorded a $6.2 million pre-tax restructuring
charge for management actions or plans in connection with the consolidation of
the Company's product development activities in Ann Arbor, Michigan and
reductions in staff and non-revenue generating costs. This $6.2 million pre-tax
charge was composed of $2.4 million for personnel reductions, $2.6 million in
space and office costs and $1.2 million for non-compete and consulting
agreement. The restructuring charge includes staff reductions of approximately
70 employees.
During the year ended June 30, 1996, the Company recorded a $23,167,000 charge
to write off certain capitalized software.
3. BORROWINGS
(DOLLARS IN THOUSANDS)
1998 1997
Line of credit and overdraft facilities $ 1,470 $ 4,161
Capital lease obligations 1,202 514
--------- ---------
Total debt outstanding 2,672 4,675
Less: current portion 1,238 4,332
--------- ---------
Long-term debt $ 1,434 $ 343
========= =========
The Company has a $10 million credit agreement which matures on October 1, 2000.
Borrowings are secured by accounts receivable and the credit agreement contains
covenants regarding among other things, earnings, leverage, net worth and
payment of dividends. Under the terms of the agreement, the Company is not
permitted to pay cash dividends on its common stock. Permitted borrowings
available as of June 30, 1998 under the credit agreement were $10 million, of
which $823,000 was outstanding. Borrowings available at any time are based on
the lower of $10 million or a percentage of worldwide eligible accounts
receivable. At June 30, 1998, the interest rate, which was based on LIBOR plus
applicable margin, varied between 2.5% and 4.2%.
Separately, in August 1997, one of the Company's European subsidiaries entered
into a $1.2 million loan agreement, which matures on June 30, 2000. The Company
has outstanding borrowings under this agreement of $868,000 at June 30, 1998.
The interest rate was 12.5% at June 30, 1998.
See Note 9 of Notes to Consolidated Financial Statements regarding capital lease
obligations.
4. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Board of Directors has the authority to issue up to 5,000,000 shares of no
par value preferred stock. The shares can be issued in one or more series with
full, limited or no voting powers and with such special rights, qualifications,
limitations and restrictions as may be adopted by the Board of Directors.
36
<PAGE> 37
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
In September 1996, the Company's Board of Directors approved a Shareholder
Rights Plan ("Rights Plan"). Under the Rights Plan, the Company declared a
dividend of one preferred stock purchase right on each outstanding share of
common stock. Under certain conditions, each right may be exercised to purchase
one one-hundredth share of Series A Preferred Stock at an exercise price of
$110. Of the 5,000,000 preferred shares the Company is authorized to issue,
200,000 shares have been designated Series A Preferred. The Series A Preferred
has certain dividend, voting and liquidation preferences. No preferred shares
have been issued. The rights may only be exercised beginning ten business days
following a public announcement that a person or group acquires 15% or more of
the Company's common stock (subject to certain exceptions) or beginning ten
business days (or under certain circumstances a later date) following the
commencement or announcement of a tender or exchange offer which would cause
that result. In addition, under certain circumstances, the rights will entitle
shareholders (other than the acquiror) to purchase the Company's common stock,
or stock of the acquiror, at a discount to market prices. The rights, which do
not have voting rights, expire on September 30, 2006.
COMMON STOCK
Effective November 20, 1995, Comshare declared a three-for-two stock split of
the Company's common stock distributable to shareholders of record as of
November 13, 1995. All share and per share data included in the consolidated
financial statements and accompanying notes have been adjusted to reflect this
stock split.
In December 1995, the Company completed a public offering of its common stock
which involved the issuance and sale by the Company of 1,293,750 shares
resulting in net proceeds to the Company of approximately $25,150,000.
The shareholders approved the 1994 Executive Stock Purchase Program which
enables certain executives to purchase the Company common stock at then current
market prices directly from the Company via a promissory note. The program was
amended in fiscal 1998 to eliminate any future loans. The promissory note is
secured by the related common stock issued by the Company, and matures four
years from the date of issuance. Interest is at the prime rate plus 1% and may
be deferred until the promissory note matures. A total of 300,000 shares of the
Company's common stock has been reserved for issuance under the 1994 Executive
Stock Purchase Program. For the year ended June 30, 1997, a total of 30,813
shares at prices ranging from $11.50 to $16 were issued in exchange for notes
totaling $411,000. No shares were purchased under this program during fiscal
1998 and 1996. The aggregate principal balance of these promissory notes
outstanding and due to the Company was $551,000 and $1,056,000 at June 30, 1998
and 1997, respectively.
5. STOCK OPTIONS
The Company has three stock option plans: The 1988 Stock Option Plan (the "1988
Plan"), the 1994 Directors Stock Option Plan (the "Directors Plan") and the 1997
Global Employees Stock Option Plan (the "1997 Plan"). On March 10, 1997, the
Company granted an option for 10,000 shares to the Company's Chairman at an
exercise price of $15.75 per share which was the closing price of the common
stock on that date. The option vests on the date the current Chairman ceases
to be Chairman of the Board of the Company. The option vests immediately in the
event of a change in control of the Company. The option expires thirty months
from the grant date or six months after which the Chairman ceases to be Chairman
of the Board of the Company, whichever occurs earlier.
1988 STOCK OPTION PLAN
The 1988 Plan, which expired on June 26, 1998, provided for the grant of both
incentive stock options and non-qualified options to officers and key employees.
Options under the 1988 Plan were granted at 100% of market price on the date of
grant, are exercisable at the rate of 25% per year after one year from the date
of grant and have a term of five years. No stock appreciation rights were
granted under the 1988 Plan.
The number of options outstanding and exercisable under the 1988 Plan was
744,634 and 144,385 at June 30, 1998, respectively, and no further grants can be
made under the 1988 Plan.
37
<PAGE> 38
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCiAL STATEMENTS - (CONTINUED)
1994 DIRECTORS STOCK OPTION PLAN
The Directors Plan provides for the grant of options to purchase up to 150,000
shares of the Company's common stock to non-employee directors of the Company.
Options under the Directors Plan are granted at 100% of the market price on the
date of grant, are exercisable at a rate of 25% per year after one year from the
date of grant and have a term of five years.
At June 30, 1998 the Company has reserved 146,250 shares of common stock for the
exercise of directors' stock options. The number of options outstanding and
exercisable under the Directors Plan was 70,500 and 37,875 at June 30, 1998,
respectively.
1997 GLOBAL EMPLOYEES STOCK OPTION PLAN
The 1997 Plan provides for the issuance of options to purchase 500,000 shares of
the Company's common stock to non-officer employees of the Company. Options
under the 1997 Plan are granted at 100% of the market price on the date of
grant, exercisable at a rate of 25% per year after one year from date of grant
and have a term of five years.
At June 30, 1998, the Company has reserved 500,000 shares of common stock for
the exercise of employee stock options. The number of options outstanding under
the 1997 Global Employee's Stock Option Plan was 151,100 at June 30, 1998, and
none as of June 30, 1997.
SUMMARY OF ACTIVITY
Stock option activity under all plans is summarized below:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------- -------------------------- --------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------ ------------ ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 675,384 $ 13.45 762,756 $ 10.70 818,025 $ 6.71
Granted 772,150 7.61 265,500 18.01 177,750 24.02
Exercised (79,625) 4.63 (179,501) 5.63 (167,394) 5.51
Canceled (391,675) 10.95 (173,371) 16.36 (65,625) 8.32
------------ ------------- -----------
Outstanding at end of year 976,234 10.51 675,384 13.45 762,756 10.70
Options exercisable at year end 182,260 247,511 215,443
Weighted average fair value of
options granted during the year $ 3.69 $ 7.91 $ 8.23
</TABLE>
38
<PAGE> 39
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A summary of outstanding and exercisable stock options as of June 30, 1998 is as
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------ ------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
--------------- ----------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$6.19 to $7.67 203,150 4.35 $6.63 3,750 $7.67
7.75 to 7.75 205,750 4.99 7.75 - -
8.00 To 8.00 19,700 4.87 8.00 - -
8.25 to 8.25 151,000 4.12 8.25 - -
8.33 to 8.56 92,000 3.38 8.39 28,125 8.33
8.67 to 11.25 109,634 1.96 9.44 72,510 8.99
13.00 to 17.50 83,750 3.38 15.18 24,875 15.01
20.50 to 24.50 54,500 2.39 23.80 29,750 23.94
26.00 to 26.00 7,500 2.51 26.00 3,750 26.00
27.25 to 27.25 44,250 2.93 27.25 18,250 27.25
27.50 to 27.50 5,000 3.05 27.50 1,250 27.50
$6.19 to $27.50 976,234 3.82 $ 10.51 182,260 $14.40
======= =======
</TABLE>
PRO FORMA DISCLOSURE UNDER SFAS 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION"
Using the intrinsic value method of accounting for the value of stock options
granted during fiscal 1998 and 1997, no compensation cost was recorded in the
accompanying consolidated statement of operations. Had compensation costs been
determined based on the fair value at the date of grant for awards in fiscal
1998 and 1997 consistent with the provisions of SFAS 123, net income and net
income per share would have been reduced to the pro forma amounts indicated
below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Net income (loss) - as reported $ 5,266 $ (17,117)
Net income (loss) - pro forma 4,774 (17,785)
Net income (loss) per share - as reported 0.53 (1.75)
Net income (loss) per share - pro forma 0.48 (1.82)
</TABLE>
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model. Because the SFAS 123 method of accounting
has not been applied to options granted prior to July 1, 1995, the resulting pro
forma compensation cost may not be representative of that to be expected in
future years. The following weighted average assumptions were used in valuing
the option grants:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
STOCK OPTION PLANS:
Expected life (years) 3.32 3.26
Risk free interest rate 5.65% 6.10%
Expected stock price volatility 0.65 0.56
Expected dividend yield - -
</TABLE>
39
<PAGE> 40
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<S> <C> <C>
EMPLOYEE STOCK PURCHASE PLAN:
Expected life (years) 0.50 0.50
Risk free interest rate 5.65% 6.10%
Expected stock price volatility 0.65 0.56
Expected dividend yield - -
</TABLE>
The following table reconciles the net income and weighted average number of
shares used in the Basic EPS calculation to the net income and weighted average
number of shares used to compute Diluted EPS (in thousands, except per share
amounts).
<TABLE>
<CAPTION>
1998
----
<S> <C>
Net income used for Basic EPS $5,266
Net (loss) effect of assumed conversion of stock options (218)
------
Net income used for Dilutive EPS $5,048
======
Weighted average number of shares outstanding used for Basic EPS 9,903
Stock Options 171
------
Weighted average number of shares outstanding and common
equivalent shares used for Dilutive EPS 10,074
======
</TABLE>
6. EMPLOYEE STOCK PURCHASE PLAN
Under the Employee Stock Purchase Plan (the "ESPP"), 300,000 shares of the
Company's common stock have been reserved for issuance. The ESPP allows
participating employees to purchase shares of the Company's common stock through
payroll deductions at 85% of the lower of fair market value at the beginning or
the end of the six month period beginning either July 1 or January 1.
Substantially all employees are eligible to participate in the ESPP. Under the
ESPP, 60,576 shares, 18,233 shares and 26,218 shares were issued in fiscal 1998,
1997 and 1996, respectively.
7. BENEFIT PLANS
The Company has a profit sharing plan covering substantially all United States
employees. The profit sharing plan provides for a minimum annual Company
contribution of 2% of an employee's qualified compensation and matching
contributions based on employee 401(k) contributions. The Company also has a
deferred compensation plan for United States officers for the payment of
benefits which would not otherwise be eligible under its tax-qualified
retirement plans. The Company's contributions, other than the above, are
discretionary and are determined by the Board of Directors. The total
contributions for both plans were $589,000, $826,000 and $1,183,000 in fiscal
1998, 1997 and 1996, respectively.
A subsidiary in the United Kingdom maintains, through a trustee, a defined
benefit pension plan for substantially all of its employees hired before January
1, 1994 and a defined contribution plan for employees hired after January 1,
1994. Effective April 1, 1997, the defined benefit plan was frozen, with no
further contributions or benefits accruing under the plan. The resulting
curtailment loss was partially included in the restructuring related costs
during fiscal 1997. As of the same date, the defined contribution plan was
amended, providing a minimum annual company contribution of 2-1/2% of the
employee's compensation, and matching contributions up to an additional 2-1/2%
of compensation based on employee contributions. The defined contribution plan
now covers substantially all United Kingdom employees. Prior to April 1, 1997,
the defined contribution plan provided that participating employees contribute a
minimum of 5% of their pensionable salary with the Company contributing an equal
5%.
The components of pension expense for the fiscal years ended June 30 are as
follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost for benefits earned during the year $ - $ 473 $ 429
Interest cost on projected benefit obligation 1,486 1,519 1,340
Actual return on assets (2,352) (3,468) (1,899)
Net amortization and deferral 601 1,913 722
---------- ----------- ------------
Net pension expense $ (265) $ 437 $ 592
========== =========== ============
</TABLE>
40
<PAGE> 41
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The funded status of the pension plan as of June 30 is as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
Actuarial present value of benefit obligations
<S> <C> <C>
Vested benefits $21,099 $19,280
Non-vested benefits - -
------- -------
Accumulated benefit obligation 21,099 19,280
------- -------
Projected benefit obligation 21,099 19,280
Plan assets at fair value 21,167 20,730
------- -------
Plan assets over projected benefit obligation 68 1,450
Amounts not recognized in balance sheet:
Unamortized net loss 2,240 599
------- -------
Amount unamortized 2,240 599
------- -------
Net pension assets $ 2,308 $ 2,049
======= =======
</TABLE>
The actuarial present value of the projected benefit obligation was determined
using a weighted average discount rate of 6.85% and 7.75% in 1998 and 1997,
respectively. No assumption was required regarding an annual increase in future
compensation for fiscal 1998 since no future benefit may be earned under the
plan. An assumption of 6.5% for annual increases in future compensation was used
for fiscal 1997 and 1996 calculations. The long-term weighted average rate of
return on assets used was 8.5% for fiscal 1998, 1997 and 1996.
The Company provides defined retirement benefits to the employees of the other
foreign subsidiaries through various contribution plans. The amount charged to
expense for these benefits was $31,000 in fiscal 1998, $146,000 in fiscal 1997
and $228,000 in fiscal 1996.
8. INCOME TAXES
A summary of income (loss) before provision (benefit) for income taxes and
components of the provision (benefit) for income taxes for the years ended June
30 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
Income (loss) before provision (benefit) for income taxes:
<S> <C> <C> <C>
Domestic $ 23,217 $ (8,650) $ (12,428)
Foreign (2,482) (17,138) (3,922)
----------- ---------- ----------
$ 20,735 (25,788) (16,350)
=========== ========== ==========
Domestic provision (benefit) for income taxes:
Current $ 3,650 $ - $ 731
Deferred 11,800 (2,907) (5,781)
Foreign provision (benefit) for income taxes:
Current - - 1,000
Deferred 19 (5,764) (2,409)
----------- ---------- ----------
Provision (benefit) for income taxes $ 15,469 $ (8,671) $ (6,459)
=========== ========== ==========
</TABLE>
41
<PAGE> 42
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The differences between the United States Federal statutory income tax provision
(benefit) and the consolidated income tax provision (benefit) for the years
ended June 30 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Federal statutory provision (benefit) $ 7,257 $ (8,768) $ (5,559)
Non-deductible meals and entertainment 119 181 256
State income taxes, net of federal tax benefit 33 22 146
Increase in valuation reserve 9,084 - 872
Recognition of tax credits - - (1,222)
Tax reserves released - (312) (1,200)
Tax rate difference (850) - -
Other, net (174) 206 248
----------- ----------- -----------
Actual income tax provision (benefit) $ 15,469 $ (8,671) $ (6,459)
=========== =========== ===========
</TABLE>
Deferred income taxes represent temporary differences in the recognition of
certain items for income tax and financial reporting purposes. The components of
the net deferred income tax asset as of June 30 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred income tax assets:
Research and development $ 2,774 $ 1,721
Tax credits 366 2,964
Depreciation and amortization 421 729
Net operating loss 7,492 11,305
Deferred revenue 128 429
Employee benefits 773 752
Accrued liabilities 856 856
Capitalized Software 3,453 -
Other 2,084 1,276
----------- -----------
18,347 20,032
Valuation allowance (10,678) (1,594)
----------- -----------
7,669 18,438
Deferred income tax liabilities:
Employee benefits (681) (790)
Other (355) (115)
----------- -----------
(1,036) (905)
----------- -----------
Net deferred income tax asset $ 6,633 $ 17,533
=========== ===========
</TABLE>
Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the deferred tax assets is
not assured, management believes it is more likely than not that the deferred
tax assets will be realized through future taxable income or by using a tax
strategy currently available to the Company. On a quarterly basis, management
will assess whether it remains more likely than not that the deferred tax assets
will be realized. This assessment could be impacted by a combination of
continuing operating losses and a determination that the tax strategy is no
longer sufficient to realize some or all of the deferred tax assets.
42
<PAGE> 43
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
At June 30, 1998, for income tax purposes, certain of the Company's foreign
subsidiaries had available net operating loss carryforwards of approximately $20
million, which do not expire. In addition, the Company has general business
credits, which will expire between 2007 and 2013.
9. LEASES
The Company leases most of its office space, transportation and computer
equipment under noncancelable capital and operating leases. Initial lease terms
vary in length and several of the leases contain renewal options. The Company
leases certain equipment under long-term lease agreements that are classified as
capital leases, and the leased assets are included in "Property and equipment"
in the accompanying Consolidated Balance Sheet. These capital leases terminate
at various dates through fiscal 2000. Other leases are classified as operating
leases and are not capitalized. Future minimum lease payments under all
noncancelable capital and operating leases are as follows (in thousands):
<TABLE>
<CAPTION>
Operating Capital
Fiscal Year ending June 30, Total Lease Lease
-------------------------- ----------- ------------ ------------
<C> <C> <C> <C>
1999 $ 5,056 $ 4,339 $ 718
2000 4,627 3,968 658
2001 3,701 3,701 -
2002 3,147 3,147 -
2003 2,787 2,787 -
2004 and thereafter 8,373 8,373 -
========== =========== ===========
Total minimum payments $ 27,691 $ 26,315 $ 1,376
========== =========== ===========
Less: amount representing interest (174)
-----------
Present value of capital lease obligations 1,202
Less: current portion (591)
-----------
Long-term capital lease obligations $ 611
===========
Total rental expense was $9,162,600 in fiscal 1998, $7,818,000 in fiscal 1997
and $8,513,000 in fiscal 1996.
</TABLE>
43
<PAGE> 44
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
10. GEOGRAPHIC OPERATIONS AND SEGMENT INFORMATION
The following table summarizes selected financial information of the Company's
operations by geographic location (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
--------------------------
1998 1997 1996
---- ---- ----
Revenue from customers:
<S> <C> <C> <C>
North America $ 41,217 $ 48,684 $ 55,782
International 48,536 44,147 63,202
========== =========== ==========
Total revenue $ 89,753 $ 92,831 $ 118,984
========== =========== ==========
Operating income:
North America $ 18,368 $ 5,377 $ 15,720
International (693) (2,262) 12,438
---------- ----------- ----------
Total operating income 17,675 3,115 28,158
Unallocated expenses, net of gain
on sale of Retail Business 3,060 (28,903) (44,508)
---------- ----------- ----------
Income (loss) before taxes $ 20,735 $ (25,788) $ (16,350)
========== =========== ==========
Identifiable assets:
North America $ 59,242 $ 39,048 $ 53,635
International 29,450 32,628 35,539
---------- ----------- ----------
Total identifiable assets 88,692 71,676 89,174
Computer software - 9,075 9,064
========== =========== ==========
Total assets $ 88,692 $ 80,751 $ 98,238
========== =========== ==========
</TABLE>
Unallocated expenses, net of gain on sale of Retail Business consist of general
corporate expenses, internal research and product development expenses, interest
expense, interest income and gain on sale of Retail Business. Unallocated
amounts in fiscal 1998 include a $35,386,000 gain on sale of Retail Business and
$10,690,000 of restructuring and unusual related expenses. Unallocated expenses
include $6,245,000 and $23,167,000 of restructuring and unusual charges in
fiscal 1997 and 1996, respectively.
The presentation of information on a geographical basis requires the use of
estimation techniques and does not take into account the extent to which the
Company's marketing and management skills are geographically located.
The Company operates in one business segment: the development and marketing of
computer software and related services.
No customer accounted for more than 5% of total revenues in the fiscal years
ended June 30, 1998, 1997 and 1996.
44
<PAGE> 45
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
11. QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows (unaudited and in
thousands except per share data):
<TABLE>
<CAPTION>
INCOME NET
(LOSS) NET INCOME
FROM INCOME (LOSS)
REVENUE OPERATIONS (LOSS) PER SHARE
------- ---------- ------ ---------
1998
<S> <C> <C> <C> <C>
First Quarter $ 21,796 $ (3,438) $ (3,505) $ (0.36)
Second Quarter 24,081 74 83 0.01
Third Quarter 23,853 56 73 0.01
Fourth Quarter 20,023 (11,416) 8,615 0.87
--------- ---------- -------
Year ended June 30 $ 89,753 $ (14,724) $ 5,266 $ 0.53
========= ========== =======
1997
First Quarter $ 19,984 $ (7,709) $ (4,931) $ (0.51)
Second Quarter 26,195 (4,173) (2,762) (0.28)
Third Quarter 24,045 (10,198) (6,923) (0.71)
Fourth Quarter 22,607 (3,892) (2,501) (0.25)
--------- --------- -------
Year ended June 30 $ 92,831 $ (25,972) $(17,117) $ (1.75)
========= ========== ========
1996
First Quarter $ 28,653 $ 2,628 $ 1,510 $ 0.17
Second Quarter 32,183 (18,979) (12,864) (1.48)
Third Quarter 31,534 2,759 2,038 0.20
Fourth Quarter 26,614 (3,200) (575) (0.06)
--------- --------- -------
Year ended June 30 $ 118,984 $ (16,792) $ (9,891) $ (1.09)
========= ========== ========
</TABLE>
During the quarter ended June 30, 1998, the Company realized an after-tax
gain of $19,986,000 from the sale of the Company's Retail Business. The
Company also recorded $9,076,000 restructuring and unusual charges. The
Retail Business accounted for approximately $17,800,000 of the Company's 1998
revenue.
During the quarter ended September 30, 1997, the Company recorded a
$1,614,000 pre-tax restructuring and unusual charges for the cost of
termination of certain executives and others.
During the quarter ended March 31, 1997, the Company recorded a $6,245,000
restructuring charge for management actions or plans in connection with the
consolidation of the Company's product development activities in Ann Arbor,
Michigan and reductions in staff and non-revenue generating costs.
During the quarter ended June 30, 1996, the Company realized a $1,200,000 tax
benefit related to the settlement of certain tax issues and the amendment of
certain tax returns to claim credits which had previously not been claimed.
During the quarter ended December 31, 1995, the Company recorded a non-cash
charge of $23,167,000 to write off certain capitalized software.
45
<PAGE> 46
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSN - (CONTINUED)
12. LITIGATION
Between August 9, 1996 and September 5, 1996, following the Company's
announcement of certain violations of the Company's revenue recognition
policies, four separate shareholder class action suits were filed in the United
States District Court for the Eastern District of Michigan against the Company
and certain of its officers and directors on behalf of shareholders who had
purchased the Company's common stock between April 17, 1996 and August 6, 1996.
The Court consolidated the four suits into one class action, In Re Comshare,
Incorporated Securities Litigation, and the plaintiffs amended their complaint
to expand the class to shareholders who had purchased the Company's common stock
between August 2, 1995 and August 6, 1996. The action alleged that the
plaintiffs sustained losses as a result of the defendants' alleged untrue
statements of material facts and alleged omissions to state material facts
necessary in order to make the statements made not misleading. The complaint
sought unspecified damages and costs. On September 18, 1997, the Court dismissed
all of the claims. The plaintiffs have appealed the dismissal of the action to
the U.S. Court of Appeals for the Sixth Circuit.
13. SALE OF RETAIL BUSINESS
On June 4, 1998, the Company sold certain software products, accounts
receivable, customer contracts, intellectual property, intangibles, permits and
business records related to its Arthur (TM) strategic merchandise management
applications for the retail industry and its Boost Sales and Margin Planning
software product for the consumer packaged goods industry to JDA Software, Inc.
for $44 million in cash and the assumption of certain liabilities related to the
Retail Business. The Company also received $1 million of prepaid royalties. The
sale of the Retail Business resulted in a pre-tax gain of $35,386,000 and an
after-tax gain of $19,986,000.
14. REPURCHASE OF COMPANY STOCK
In September 1998, the Board of Directors authorized the repurchase of up to
1,000,000 shares of the Company's outstanding Common Stock. Pursuant to this
repurchase program, the Company has repurchased 78,500 shares of the Company's
Common Stock for a total cost of approximately $387,000, as of September 18,
1998. The Company may buy shares of its Common Stock on the open market or in
privately negotiated transactions from time to time, based on market prices.
46
<PAGE> 47
COMSHARE, INCORPORATED
SCHEDULE II
CONSOLIDATED SCHEDULE
OF VALUATION & QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Additions/
Balance Charged to Deductions Balance
DESCRIPTION Beginning Costs and from Translation Other End of
---------- of Period Expenses Reserves Adjustments Related Period
--------- ---------- ----------- ------------ ------- -------
Allowance for doubtful accounts
for the years ended June 30:
<S> <C> <C> <C> <C> <C> <C>
1998 $ 1,053 $ 762 $ 29 $ (14) $ - $ 1,830
======= ====== ====== ======= ====== ======
1997 $ 1,411 $ 526 $ (916) $ 32 $ - $ 1,053
======= ====== ======= ======= ====== ======
1996 $ 887 $ 578 $ (52) $ (2) $ - $ 1,411
======= ====== ======= ======== ====== ======
</TABLE>
47
<PAGE> 48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Comshare, Incorporated
Date: September 28, 1998 By: /s/ Kathryn A. Jehle
------------------ --------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer, Assistant Secretary
and a Director
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Dennis G. Ganster President, Chief Executive September 28, 1998
- --------------------- Officer and a Director ------------------
Dennis G. Ganster (Principal Executive Officer)
/s/ Kathryn A. Jehle Senior Vice President, September 28, 1998
- --------------------- Chief Financial Officer, ------------------
Kathryn A. Jehle Treasurer, Assistant Secretary
and a Director
(Principal Financial Officer)
/s/ Nicholas Bray Senior Director of Finance, September 28, 1998
- --------------------- Chief Accounting Officer, ------------------
Nicholas Bray (Principal Accounting Officer)
/s/ Daniel T. Carroll Chairman of the Board and a September 28, 1998
- --------------------- Director ------------------
Daniel T. Carroll
/s/ Geoffrey B. Bloom Director September 28, 1998
- --------------------- ------------------
Geoffrey B. Bloom
/s/ Richard L. Crandall Director September 28, 1998
- ----------------------- ------------------
Richard L. Crandall
/s/ Stanley R. Day Director September 28, 1998
- ------------------ ------------------
Stanley R. Day
/s/ W. John Driscoll Director September 28, 1998
- -------------------- ------------------
W. John Driscoll
/s/ Alan G. Merten Director September 28, 1998
- ------------------ ------------------
Alan G. Merten
/s/ John F. Rockart Director September 28, 1998
- ------------------- ------------------
John F. Rockart
</TABLE>
48
<PAGE> 49
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.01 Asset Purchase Agreement by and among JDA Software Group, Inc., and JDA
Software, Inc., and Comshare, Incorporated, dated as of June 4, 1998 -
incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K
Report filed June 19, 1998.
2.02 Software License Agreement by and between JDA Software, Inc., and
Comshare, Incorporated, dated as of June 4, 1998 - incorporated by
reference to Exhibit 2.2 to the Registrant's Form 8-K Report filed June
19, 1998.
3.01 Restated Articles of Incorporation of the Registrant, as amended.
3.02 Bylaws of the Registrant, as amended.
4.01 Specimen form of Common Stock Certificate - incorporated by reference
to Exhibit 4(c) to the Registrant's Form S-1 Registration Statement No.
2-29663.
4.02 Credit agreement dated September 23, 1997, among Comshare,
Incorporated, its Borrowing Subsidiary (as defined therein) and Harris
Trust and Savings Bank - incorporated by reference to Exhibit 4.02 to
the Registrant's Form 10-K Report for the fiscal year ended June 30,
1997.
4.03 Rights Agreement, dated as of September 16, 1996, between Comshare,
Incorporated and KeyBank National Association, as Rights Agent -
incorporated by reference to Exhibit 2 to the Registrant's Registration
Statement on Form 8-A, filed on September 17, 1996.
4.04 Form of certificate representing Rights (included as Exhibit B to the
form of Rights Agreement filed as Exhibit 4.03). Pursuant to the Rights
Agreement, Rights Certificates will not be mailed until after the
earlier of (i) the tenth business day (or such later date as may be
determined by the Board of Directors, with the concurrence of a
majority of the Continuing Directors, prior to such time as any person
becomes an Acquiring Person) after the date of the commencement of, or
first public announcement of the intent to commence, a tender or
exchange offer by any person or group of affiliated or associated
persons (other than the Company or certain entities affiliated with or
associated with the Company), if, upon consummation thereof, such
person or group of affiliated or associated persons would be the
beneficial owner of 15% or more of such outstanding shares of common
stock - incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, filed on September 17, 1996.
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended - incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1993.
10.02 Comshare, Incorporated 1988 Stock Option Plan, as amended -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1990 and Exhibit 10.22
to the Registrant's Form 10-Q Report for the quarter ended September
30, 1994.
10.03 Amended and Restated Profit Sharing Plan of Comshare, Incorporated,
effective as of October 1, 1995 - incorporated by reference to Exhibit
4.1 to the Registrant's Form S-8 Registration Statement No. 33-65109.
10.04 Interim Trust Deed establishing the Comshare Money Purchase Plan for
employees of the United Kingdom, effective March 1, 1994 - incorporated
by reference to Exhibit 10.08 to the Registrant's Form 10-K for the
fiscal year ended June 30, 1994.
10.05 Employment and NonCompetition Agreement between Comshare, Incorporated
and T. Wallace Wrathall, effective as of April 1, 1994 - incorporated
by reference to Exhibit 10.23 to the Registrant's Form 10-Q Report for
the quarter ended December 31, 1994.
49
<PAGE> 50
10.06 Amended and Restated Employee Agreement between Comshare, Incorporated
and Richard L. Crandall effective July 1, 1994, as amended -
incorporated by reference to Exhibit 10.10 to the Registrant's Form
10-K for the fiscal year ended June 30, 1994.
10.07 Non-Competition Agreement between Comshare, Incorporated and Richard L.
Crandall - incorporated by reference to Exhibit 10.11 of the
Registrant's Form 10-K for the fiscal year ended June 30, 1994.
(Portions of this exhibit have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for
confidential treatment pursuant to Rule 24b-2).
10.08 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle
regarding terms of employment dated April 18, 1994 - incorporated by
reference to Exhibit 10.12 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.09 Description of Incentive Arrangements for certain executive officers
for fiscal years 1994 and 1995-1997.
10.10 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll - incorporated by
reference to Exhibit 10.22 to the Registrant's Form 10-Q Report for the
quarter ended March 31, 1997.
10.11 Trust Agreement under the Benefit Adjustment Plan of Comshare,
Incorporated, effective April 25, 1988, as amended - incorporated by
reference to Exhibit 10.31 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1993.
10.12 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary
for maintaining the Profit Sharing Plan of Comshare, Incorporated
effective March 31, 1992, as amended - incorporated by reference to
Exhibit 10.15 to the Registrant's Form 10-K for the fiscal year ended
June 30, 1994.
10.13 1994 Executive Stock Purchase Program of Comshare, Incorporated -
incorporated by reference to Exhibit 10.19 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.14 Employee Stock Purchase Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.20 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.15 1994 Directors Stock Option Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.16 Letter agreement between Comshare, Incorporated and Geoffrey R. Cluett
dated April 29, 1997 regarding term of employment and non-compete
agreement - incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1997.
10.17 Agreement between Comshare, Incorporated and T. Wallace Wrathall dated
October 24, 1997 - incorporated by reference to Exhibit 10.1 to the
Registrant's Form 10-Q Report for the quarter ended September 30, 1997.
10.18 Executive Bonus Program, effective October 1, 1997 - incorporated
by reference to Exhibit 10.1 to the Registrant's Form 10-Q Report
for the quarter ended December 31, 1997.
10.19 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Dennis G. Ganster.
10.20 Comshare, Incorporated Change in Control Severance Agreement dated
as of June 1, 1998 between Comshare, Incorporated and Kathryn A.
Jehle.
10.21 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and David King.
50
<PAGE> 51
10.22 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Stanley Starkey.
10.23 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Norman Neuman.
10.24 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Geoffrey Cluett.
10.25 Comshare, Incorporated 1998 Global Employee Stock Option Plan.
10.26 Summary of 1998 Senior Executive Incentive Plan.
10.27 Summary of 1999 Senior Executive Incentive Plan.
10.28 Lease dated September, 1994, between Comshare, Incorporated, Tenant and
MGI Holding, Inc., Landlord for office space located at 555 Briarwood
Circle, Ann Arbor, Michigan 48108 - incorporated by reference to
Exhibit 10.18 to the Registrant's Form 10-Q Report for the quarter
ended September 30, 1994.
10.29 Agreement between Taurusbuild Limited, Comshare and Svenska
Handelsbanken related to the lease of office space for the Company's
London office facility - incorporated by reference to Exhibit 10.17 of
the Registrant's Form 10-K Report for the fiscal year ended June 30,
1994.
10.30 Software License Agreement by and between Arbor Software Corporation
and Comshare, Incorporated dated December 23, 1993 - incorporated by
reference to Exhibit 10.20 to Amendment Number 3 to the Registrant's
Form 10-K Report, filed November 8, 1995, for the fiscal year ended
June 30, 1995. (Portions of this exhibit have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment pursuant to Rule 24b-2).
10.31 First Amendment to License Agreement by and between Arbor Software
Corporation and Comshare, Incorporated dated March 1, 1994 -
incorporated by reference to Exhibit 10.20 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1995. (Portions of this
exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment
pursuant to Rule 24b-2).
10.32 Second Amendment to License Agreement by and between Arbor Software
Corporation and Comshare, Incorporated - incorporated by reference to
Exhibit 10 of the Registrant's Form 8-K Report filed on December 24,
1997. (Portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment pursuant to Rule 24b-2).
10.33 Third Amendment to License Agreement by and between Hyperion and
Comshare, Incorporated. (Portions of this exhibit have been omitted and
filed separately with the Securities and Exchange Commission pursuant
to a request for confidential treatment pursuant to Rule 24b-2.)
11.1 Computation of per share earnings.
21.01 Subsidiaries of the Registrant.
23.01 Consent of Independent Public Accountants.
27.00 Financial Data Schedule.
99.00 Amended and Restated Profit Sharing Plan of Comshare, Incorporated,
Form 11-K Annual Report - filed pursuant to Section 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended June 30,
1998.
51
<PAGE> 52
(This page is intentionally left blank)
52
<PAGE> 1
EXHIBIT 3.02
RESTATED
BYLAWS
OF
COMSHARE, INCORPORATED
EFFECTIVE AUGUST 14, 1998
ARTICLE I
OFFICES
1.01 Principal Office. The principal office of the
corporation shall be at such place within the State of Michigan as the Board
of Directors shall determine from time to time.
1.02 Other Offices. The corporation may also have offices at
such other places as the Board of Directors from time to time determines or
the business of the corporation requires.
1.03 Fiscal Year. The fiscal year of the corporation shall
begin on the first day of July and end on the 30th day of June in each year.
ARTICLE II
SEAL
2.01 Seal. The corporation may have a seal in such form as
the Board of Directors may from time to time determine. The seal may be used
by causing it or a facsimile to be impressed, affixed, reproduced or
otherwise.
<PAGE> 2
ARTICLE III
CAPITAL STOCK
3.01 Issuance of Shares. The shares of capital stock of the
corporation shall be issued in such amounts, at such times, for such
consideration and on such terms and conditions as the Board shall deem
advisable, subject to the provisions of the Articles of Incorporation of the
corporation and the further provisions of these Bylaws, and subject also to
any requirements or restrictions imposed by the laws of the State of
Michigan.
3.02 Certificates for Shares. The shares of the corporation
shall be represented by certificates signed by the Chairman of the Board,
President or a Vice President and also may be signed by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary of the corporation,
and may be sealed with the seal of the corporation or a facsimile thereof.
The signatures of the officers may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than
the corporation itself or its employee. In case an officer who has signed or
whose facsimile signature has been placed upon a certificate ceases to be
such officer before the certificate is issued, it may be issued by the
corporation with the same effect as if he or she were such officer at the
date of issuance. A certificate representing shares shall state upon its
face that the corporation is formed under the laws of the State of Michigan,
the name of the person to whom it is issued, the number and class of shares,
and the designation of the series, if any, which the certificate represents,
and such other provisions as may be required by the laws of the State of
Michigan.
3.03 Transfer of Shares. The shares of the capital stock of
the corporation are transferable only on the books of the corporation upon
surrender of the certificate therefor, properly endorsed for transfer, and
the presentation of such evidences of ownership and validity of the
assignment as the corporation may require.
3.04 Registered Shareholders. The corporation shall be
entitled to treat the person in whose name any share of stock is registered
as the owner thereof for purposes of dividends and other distributions in
the course of business, or in the course of recapitalization, merger, plan
of share exchange, reorganization, sale of assets, liquidation or otherwise
and for the purpose of votes, approvals and consents by shareholders, and
for the purpose of notices to shareholders, and for all other purposes
whatever, and shall not be bound to recognize any equitable or other claim
to or interest in such shares on the part of any other person, whether or
not the corporation shall have notice thereof, save as expressly required by
the laws of the State of Michigan.
- 2 -
<PAGE> 3
3.05 Lost or Destroyed Certificates. Upon the presentation to
the corporation of a proper affidavit attesting the loss, destruction or
mutilation of any certificate or certificates for shares of stock of the
corporation, the Board of Directors shall direct the issuance of a new
certificate or certificates to replace the certificates so alleged to be lost,
destroyed or mutilated. The Board of Directors may require as a condition
precedent to the issuance of new certificates any or all of the following: (a)
presentation of additional evidence or proof of the loss, destruction or
mutilation claimed; (b) advertisement of loss in such manner as the Board of
Directors may direct or approve; (c) a bond or agreement of indemnity, in such
form and amount and with such sureties, or without sureties, as the Board of
Directors may direct or approve; (d) the order or approval of a court or judge.
ARTICLE IV
SHAREHOLDERS AND MEETINGS OF SHAREHOLDERS
4.01 Place of Meetings. All meetings of shareholders shall be
held at the principal office of the corporation or at such other place as shall
be determined by the Board of Directors and stated in the notice of meeting.
4.02 Annual Meeting. The annual meeting of the shareholders of
the corporation shall be held in the fifth calendar month after the end of the
corporation's fiscal year, or at such other date as the Board of Directors shall
determine from time to time, and shall be held at such place and time of day as
shall be determined by the Board of Directors. Directors shall be elected at
each annual meeting and such other business transacted as may come before the
meeting.
4.03 Special Meetings. Special meetings of shareholders may be
called only by the Chairman of the Board (if such office is filled), or by the
President or pursuant to a resolution of the Board of Directors. Business
transacted at a special meeting of shareholders shall be confined to the purpose
or purposes of the meeting as stated in the notice of the meeting.
4.03.5 Business to Be Conducted at Meetings of Shareholders;
Shareholder Nominations and Proposals. At any meeting of shareholders or any
such adjourned meeting, only such business shall be conducted as shall have been
properly brought before such meeting or any such adjourned meeting. To be
properly brought before any meeting of shareholders or any such adjourned
meeting, business must be (a) specified in the notice of meeting (or any
supplement
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thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before such meeting or any such adjourned meeting by
or at the direction of the Board of such Directors, or (c) otherwise properly
brought before such meeting or any such adjourned meeting by a shareholder. For
business to be properly brought by a shareholder before any meeting of
shareholders or any such adjourned meeting the shareholder must have given
timely notice thereof in writing to the Secretary. To be timely, a shareholder's
notice must be directed to the Secretary and delivered to or mailed and received
at the principal executive offices of the corporation not less than fifty-five
days nor more than seventy days prior to such meeting; provided, however, that
in the event less than sixty-five days' prior public disclosure of the date of
such meeting is made to the shareholders or in the event the only public
disclosure of the date of the meeting is written notice in accordance with this
Article IV, Section 4.04, notice by such shareholder to be timely must be so
received not later than the close of business on the tenth day following the day
on which such notice of the date of such meeting was mailed or such public
disclosure was made. A shareholder's notice to the Secretary shall set forth as
to each matter the shareholder proposes to bring before such meeting (a) a brief
description of the business desired to be brought before such meeting and the
reasons for conducting such business at such meeting, (b) the name and address,
as they appear on the corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the securities of the
corporation which are beneficially owned by such shareholder, and (d) any
material interest of such shareholder in such business.
No business shall be conducted at any meeting of shareholders or
any such adjourned meeting except in accordance with the procedures set forth in
this Article IV, Section 4.03.5. The Chairman of the shareholder meeting or any
adjourned meeting may refuse to acknowledge any business attempted to be brought
before any meeting or any adjourned meeting not made in compliance with the
foregoing procedure.
Only individuals who are nominated in accordance with the
procedures set forth in this Article IV, Section 4.03.5 shall be eligible for
election as directors. Nominations of individuals for election to the Board of
Directors may be made by or at the direction of the Board of Directors or by any
shareholder of the corporation entitled to vote in the election of directors
generally but only if such shareholder complies with the notice procedures set
forth in this Article IV, Section 4.03.5.
Nominations by shareholders can only be made pursuant to timely
notice in writing to the Secretary. To be timely, a shareholder's notice shall
be directed to the Secretary and delivered to or mailed and received at the
principal executive offices of the corporation not less than fifty-five days nor
more than seventy days prior to such meeting; provided, however, that in the
event less than
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sixty-five days' prior public disclosure of the date of such meeting is made to
the shareholders or in the event the only public disclosure of the date of the
meeting is written notice in accordance with this Article IV, Section 4.04,
notice by such shareholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of such meeting was mailed or such public disclosure was made. Such
shareholder's notice shall set forth (a) as to each individual whom such
shareholder proposes to nominate for election or re-election as director, (i)
the name, age, business address and residence address of such individual, (ii)
the principal occupation or employment of such individual, (iii) the class and
number of shares, or the amount of any securities of the corporation which are
beneficially owned by such individual, (iv) any other information relating to
such individual that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to the
Securities Exchange Act of 1934, as amended and (v) such individual's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; and (b) as to the shareholder giving the notice, (i) the
name and address, as they appear on the corporation's books, of such shareholder
and (ii) the class and number of shares of the securities of the corporation
which are beneficially owned by such shareholder. At the request of the Board of
Directors, any individual nominated by the Board of Directors for election as a
director shall furnish to the Secretary that information required to be set
forth in a shareholder's notice of nomination which pertains to the nominee. No
individual shall be eligible for election as a director of the corporation
unless nominated in accordance with the procedures set forth in this Article IV,
Section 4.03.5. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
4.04 Notice of Meetings. Except as otherwise provided by
statute, written notice of the time, place and purposes of a meeting of
shareholders shall be given not less than 10 nor more than 60 days before the
date of the meeting to each shareholder of record entitled to vote at the
meeting, either personally or by mailing such notice to his or her last address
as it appears on the books of the corporation. No notice need be given of an
adjourned meeting of the shareholders provided the time and place to which such
meeting is adjourned are announced at the meeting at which the adjournment is
taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting. However, if after the adjournment
a new record date is fixed for the adjourned meeting a notice of the adjourned
meeting shall be given to each shareholder of record on the new record date
entitled to notice as provided in this Bylaw.
4.05 Record Dates. The Board of Directors may fix in advance a
date as the record date for the purpose of determining shareholders entitled to
notice of and to vote at a meeting of shareholders or an adjournment thereof, or
to express consent to or dissent from a proposal without a meeting, or for the
purpose of determining shareholders entitled to receive payment of a
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dividend or allotment of a right, or for the purpose of any other action. The
date fixed shall not be more than 60 nor less than 10 days before the date of
the meeting, nor more than 60 days before any other action. In such case only
such shareholders as shall be shareholders of record on the date so fixed shall
be entitled to notice of and to vote at such meeting or adjournment thereof, or
to express consent to or dissent from such proposal, or to receive payment of
such dividend or to receive such allotment of rights, or to participate in any
other action, as the case may be, notwithstanding any transfer of any stock on
the books of the corporation, or otherwise, after any such record date. Nothing
in this Bylaw shall affect the rights of a shareholder and his transferee or
transferor as between themselves.
4.06 List of Shareholders. The Secretary of the corporation or
the agent of the corporation having charge of the stock transfer records for
shares of the corporation shall make and certify a complete list of the
shareholders entitled to vote at a shareholders' meeting or any adjournment
thereof. The list shall be arranged alphabetically within each class and series,
with the address of, and the number of shares held by, each shareholder; be
produced at the time and place of the meeting; be subject to inspection by any
shareholder during the whole time of the meeting; and be prima facie evidence as
to who are the shareholders entitled to examine the list or vote at the meeting.
4.07 Quorum. Unless a greater or lesser quorum is required in
the Articles of Incorporation or by the laws of the State of Michigan, the
shareholders present at a meeting in person or by proxy who, as of the record
date for such meeting, were holders of a majority of the outstanding shares of
the corporation entitled to vote at the meeting shall constitute a quorum at the
meeting. The shareholders present in person or by proxy at a meeting at which
such a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. If a quorum is not present or represented at the commencement of any
meeting of shareholders, the shareholders entitled to vote thereat who are
present in person or by proxy shall have the power to adjourn the meeting from
time to time without notice other than announcement at the meeting, until the
requisite amount of voting stock shall be present. At such adjourned meeting at
which the requisite amount of voting stock shall be represented, any business
may be transacted which might have been transacted at the meeting as originally
noticed.
4.08 Proxies. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
other persons to act for the shareholder by proxy. A proxy shall be signed by
the shareholder or the shareholder's authorized agent or
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representative and shall not be valid after the expiration of three years from
its date unless otherwise provided in the proxy. A proxy is revocable at the
pleasure of the shareholder executing it except as otherwise provided by the
laws of the State of Michigan.
4.09 Inspectors of Election. The Board of Directors, in advance
of a shareholders' meeting, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the shareholders' meeting may, and on request of a
shareholder entitled to vote thereat shall, appoint one or more inspectors. In
case a person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the person presiding thereat. If appointed, the inspectors shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum and the validity
and effect of proxies, and shall receive votes, ballots or consents, hear and
determine challenges and questions arising in connection with the right to vote,
count and tabulate votes, ballots or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting or a shareholder
entitled to vote thereat, the inspectors shall make and execute a written report
to the person presiding at the meeting of any of the facts found by them and
matters determined by them. The report shall be prima facie evidence of the
facts stated and of the vote as certified by the inspectors.
4.10 Voting. Each outstanding share is entitled to one vote on
each matter submitted to a vote, unless otherwise provided in the Articles of
Incorporation. Votes shall be cast in writing signed by the shareholder or the
shareholder's proxy except when an alternative electronic method of casting
ballots is made available by the corporation, in which case votes may be cast by
telephonic or other electronic means. When an action, other than the election of
directors, is to be taken by a vote of the shareholders, it shall be authorized
by a majority of the votes cast by the holders of shares entitled to vote
thereon, unless a greater vote is required by the Articles of Incorporation or
by the laws of the State of Michigan. Except as otherwise provided by the
Articles of Incorporation, directors shall be elected by a plurality of the
votes cast at any election.
ARTICLE V
DIRECTORS
5.01 Number. The business and affairs of the corporation shall
be managed by its Board of Directors. The number of Directors of the Corporation
shall be not less than three nor
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more than ten as may be determined by the Board from time to time. The Directors
need not be residents of Michigan or shareholders of the Corporation.
5.02 Election and Resignation. Directors shall be elected at
each annual meeting of the shareholders, each to hold office until the next
annual meeting of shareholders and until the director's successor is elected and
qualified, or until the director's resignation or removal. A director may resign
by written notice to the corporation. The resignation is effective upon its
receipt by the corporation or a subsequent time as set forth in the notice of
resignation.
5.03 Vacancies. Vacancies in the Board of Directors occurring by
reason of death, resignation, removal, increase in the number of directors or
otherwise shall be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors, unless filled by
proper action of the shareholders of the corporation. Each person so elected
shall be a director for a term of office continuing only until the next election
of directors by the shareholders. A vacancy that will occur at a specific date,
by reason of a resignation effective at a later date or otherwise, may be filled
before the vacancy occurs, but the newly elected director may not take office
until the vacancy occurs.
5.04 Annual Meeting. The Board of Directors shall meet each year
immediately after the annual meeting of the shareholders, or within three (3)
days of such time excluding Sundays and legal holidays if such later time is
deemed advisable, at the place where such meeting of the shareholders has been
held or such other place as the Board may determine, for the purpose of election
of officers and consideration of such business that may properly be brought
before the meeting; provided, that if less than a majority of the directors
appear for an annual meeting of the Board of Directors the holding of such
annual meeting shall not be required and the matters which might have been taken
up therein may be taken up at any later special or annual meeting, or by consent
resolution.
5.05 Regular and Special Meetings. Regular meetings of the Board
of Directors may be held at such times and places as the majority of the
directors may from time to time determine at a prior meeting or as shall be
directed or approved by the vote or written consent of all the directors.
Special meetings of the Board may be called by the Chairman of the Board (if
such office is filled) or the President and shall be called by the President or
Secretary upon the written request of any two directors.
5.06 Notices. No notice shall be required for annual or regular
meetings of the Board, or any committee of the Board, or for adjourned meetings,
whether regular or special. Two
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days' written notice shall be given for special meetings of the Board or any
committee of the Board, and such notice shall state the time, place and purpose
or purposes of the meeting. If notice is given by radiogram, cablegram, or
telecopy, only one day's notice shall be necessary.
5.07 Quorum. A majority of the Board of Directors then in
office, or of the members of a committee thereof, constitutes a quorum for the
transaction of business. The vote of a majority of the directors present at any
meeting at which there is a quorum shall be the acts of the Board or of the
committee, except as a larger vote may be required by the laws of the State of
Michigan. A member of the Board or of a committee designated by the Board may
participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can communicate with each other. Participation in a meeting in this
manner constitutes presence in person at the meeting.
5.08 Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, establish an executive
committee, consisting of three or more members of the Board, to exercise all
powers and authorities of the Board in management of the business and affairs of
the corporation during the intervals between meetings of the Board, provided,
however, that such committee shall not have power or authority to:
(a) amend the Articles of Incorporation;
(b) adopt an agreement of merger of consolidation;
(c) recommend to shareholders the sale, lease
or exchange of all or substantially all
of the corporation's property and assets;
(d) recommend to shareholders a dissolution
of the corporation or revocation of a
dissolution;
(e) amend these Bylaws;
(f) fill vacancies in the Board; or
(g) unless expressly authorized by the Board,
declare a dividend or authorize the
issuance of stock.
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5.09 Compensation Committee. The Board of Directors may, by
resolution adopted by a majority of the whole Board, appoint one or more of its
members as a Compensation Committee. The Compensation Committee shall, from time
to time, recommend to the Board the salaries or range of salaries for members of
the Board of Directors who are officers or employees of the corporation and of
all officers of the corporation. It shall also perform such functions as may be
delegated to it under the provisions of any bonus, stock option or special
compensation plan of the corporation.
5.10 Other Committees. The Board of Directors from time to time
may, by resolution, adopted by a majority of the whole Board appoint such other
committees of one or more directors to have such authority as shall be specified
by the Board in the resolution making such appointments. The Board of Directors
may designate one or more directors as alternate members of any committee who
may replace an absent or disqualified member at any meeting thereof.
5.11 Dissents. A director who is present at a meeting of the
Board of Directors, or a committee thereof of which the director is a member, at
which action on a corporate matter is taken is presumed to have concurred in
that action unless the director's dissent is entered in the minutes of the
meeting or unless the director files a written dissent to the action with the
person acting as secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
corporation promptly after the adjournment of the meeting. Such right to dissent
does not apply to a director who voted in favor of such action. A director who
is absent from a meeting of the Board, or a committee thereof of which the
director is a member, at which any such action is taken is presumed to have
concurred in the action unless the director files a written dissent with the
Secretary of the corporation within a reasonable time after the director has
knowledge of the action.
5.12 Compensation. The Board of Directors, by affirmative vote
of a majority of directors in office and irrespective of any personal interest
of any of them, may establish reasonable compensation of directors for services
to the corporation as directors or officers.
ARTICLE VI
NOTICES, WAIVERS OF NOTICE AND MANNER OF ACTING
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6.01 Notices. All notices of meetings required to be given to
shareholders, directors or any committee of directors may be given by mail,
telecopy, telegram, radiogram or cablegram to any shareholder, director or
committee member at such person's last address as it appears on the books of the
corporation. Such notice shall be deemed to be given at the time when the same
shall be mailed or otherwise dispatched.
6.02 Waiver of Notice. Notice of the time, place and purpose of
any meeting of shareholders, directors or committee of directors may be waived
by telecopy, telegram, radiogram, cablegram or other writing, either before or
after the meeting, or in such other manner as may be permitted by the laws of
the State of Michigan. Attendance of a person at any meeting of shareholders, in
person or by proxy, or at any meeting of directors or of a committee of
directors, constitutes a waiver of notice of the meeting except as follows:
(a) In the case of a shareholder, unless the
shareholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting, or unless
with respect to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in
the meeting notice, the shareholder objects to considering the
matter when it is presented.
(b) In the case of a director, unless he or she at
the beginning of the meeting, or upon his or her arrival,
objects to the meeting or the transacting of business at the
meeting and does not thereafter vote for or assent to any action
taken at the meeting.
6.03 Action Without a Meeting. Any action required or permitted
at any meeting of shareholders or directors or committee of directors may be
taken without a meeting, without prior notice and without a vote, if all of the
shareholders or directors or committee members entitled to vote thereon consent
thereto in writing, before or after the action is taken.
ARTICLE VII
OFFICERS
7.01 Number. The Board of Directors shall elect or appoint a
President and Chief Executive Officer, Chief Financial Officer, a Secretary, and
a Treasurer, and may select a
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Chairman of the Board, and one or more Senior Vice Presidents, Vice Presidents,
Assistant Secretaries or Assistant Treasurers. The President and Chairman of the
Board, if any, shall be members of the Board of Directors. Any two or more of
the above offices, except those of President and Vice President, may be held by
the same person. No officer shall execute, acknowledge or verify an instrument
in more than one capacity if the instrument is required by law, the Articles of
Incorporation or these Bylaws to be executed, acknowledged, or verified by two
or more officers.
7.02 Term of Office, Resignation and Removal. An officer shall
hold office for the term for which such officer is elected or appointed and
until a successor is elected or appointed and qualified, or until such officer's
resignation or removal. An officer may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
at a subsequent time specified in the notice of resignation. An officer may be
removed by the Board with or without cause. The removal of an officer shall be
without prejudice to his contract rights, if any. The election or appointment of
an officer does not of itself create contract rights.
7.03 Vacancies. The Board of Directors may fill any vacancies
in any office occurring for whatever reason.
7.04 Authority. All officers, employees and agents of the
corporation shall have such authority and perform such duties in the conduct and
management of the business and affairs of the corporation as may be designated
by the Board of Directors and these Bylaws.
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ARTICLE VIII
DUTIES OF OFFICERS
8.01 Chairman of the Board. The Chairman of the Board, if such
office is filled, shall preside at all meetings of the shareholders and of the
Board of Directors at which the Chairman is present.
8.02 President. The President shall be the Chief Executive
Officer of the corporation. The President shall see that all orders and
resolutions of the Board are carried into effect, and the President shall have
the general powers of supervision and management usually vested in the chief
executive officer of a corporation, including the authority to vote all
securities of other corporations and business organizations held by the
corporation. In the absence or disability of the Chairman of the Board, or if
that office has not been filled, the President also shall perform the duties of
the Chairman of the Board as set forth in these Bylaws.
8.03 Vice Presidents. The Senior Vice Presidents and Vice
Presidents, in order of their seniority, shall, in the absence or disability of
the President, perform the duties and exercise the powers of the President and
shall perform such other duties as the Board of Directors or the President may
from time to time prescribe. One of the Senior Vice Presidents or Vice
Presidents shall be designated as the Chief Financial Officer.
8.04 Secretary. The Secretary shall attend all meetings of the
Board of Directors and of shareholders and shall record all votes and minutes of
all proceedings in a book to be kept for that purpose, shall give or cause to be
given notice of all meetings of the shareholders and of the Board of Directors,
and shall keep in safe custody the seal of the corporation and, when authorized
by the Board, affix the same to any instrument requiring it, and when so affixed
it shall be attested by the signature of the Secretary, or by the signature of
the Treasurer or an Assistant Secretary. The Secretary may delegate any of the
duties, powers and authorities of the Secretary to one or more Assistant
Secretaries, unless such delegation is disapproved by the Board.
8.05 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities; shall keep full and accurate accounts of
receipts and disbursements in books of the corporation; and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall render to the President and directors, whenever they may
require it, an account of his or her
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transactions as Treasurer and of the financial condition of the corporation. The
Treasurer may delegate any of his or her duties, powers and authorities to one
or more Assistant Treasurers unless such delegation is disapproved by the Board
of Directors.
8.06 Assistant Secretaries and Treasurers. The Assistant
Secretaries, in order of their seniority, shall perform the duties and exercise
the powers and authorities of the Secretary in case of the Secretary's absence
or disability. The Assistant Treasurers, in the order of their seniority, shall
perform the duties and exercise the powers and authorities of the Treasurer in
case of the Treasurer's absence or disability. The Assistant Secretaries and
Assistant Treasurers shall also perform such duties as may be delegated to them
by the Secretary and Treasurer, respectively, and also such duties as the Board
of Directors may prescribe.
ARTICLE IX
SPECIAL CORPORATE ACTS
9.01 Orders for Payment of Money. All checks, drafts, notes,
bonds, bills of exchange and orders for payment of money of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
9.02 Contracts and Conveyances. The Board of Directors of the
corporation may in any instance designate the officer and/or agent who shall
have authority to execute any contract, conveyance, mortgage or other instrument
on behalf of the corporation, or may ratify or confirm any execution. When the
execution of any instrument has been authorized without specification of the
executing officers or agents, the Chairman of the Board, the President or any
Vice President, and the Secretary or Assistant Secretary or Treasurer or
Assistant Treasurer, may execute the same in the name and on behalf of this
corporation and may affix the corporate seal thereto.
9.03 Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances. The corporation may lend money to, or
guarantee an obligation of, or otherwise assist an officer or employee of the
corporation or of its subsidiary, including an officer or employee who is a
director of the corporation or its subsidiary, when, in the judgment of the
Board of Directors, the loan, guaranty, or assistance may reasonably be expected
to benefit the corporation, or is pursuant to a plan authorizing loans,
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guarantees, or assistance, which plan the Board has reasonably determined will
benefit the corporation. The loan, guaranty, or assistance may be with or
without interest, and may be unsecured, or secured in a manner as the Board
approves, including without limitation, a pledge of shares of stock of the
corporation.
ARTICLE X
BOOKS AND RECORDS
10.01 Maintenance of Books and Records. The proper officers and
agents of the corporation shall keep and maintain such books, records and
accounts of the corporation's business and affairs, minutes of the proceedings
of its shareholders, Board and committees, if any, and such stock ledgers and
lists of shareholders, as the Board of Directors shall deem advisable, and as
shall be required by the laws of the State of Michigan and other states or
jurisdictions empowered to impose such requirements. Books, records and minutes
may be kept within or without the State of Michigan in a place which the Board
shall determine.
10.02 Reliance on Books and Records. In discharging his or her
duties, a director or an officer of the corporation, when acting in good faith,
may rely upon information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by any of the
following:
(a) One or more directors, officers, or employees of the
corporation, or of a business organization under joint control
or common control, whom the director or officer reasonably
believes to be reliable and competent in the matters presented.
(b) Legal counsel, public accountants, engineers, or other
persons as to matters the director or officer reasonably
believes are within the person's professional or expert
competence.
(c) A committee of the Board of which he or she is not a
member if the director or officer reasonably believes the
committee merits confidence.
A director or officer is not entitled to rely on the information set forth above
if he or she has knowledge concerning the matter in question that makes reliance
otherwise permitted unwarranted.
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ARTICLE XI
AMENDMENTS
11.01 Amendments. The Board of Directors shall have the power to
make, alter, amend or repeal the Bylaws of the corporation by a vote of not less
than a majority of the entire Board then in office at any meeting of the Board.
The holders of the Common Stock shall have power to make, alter, amend or repeal
the Bylaws at any regular or special meeting if the substance of such amendment
be contained in the notice of the meeting of shareholders.
16
<PAGE> 1
EXHIBIT 10.09
COMSHARE, INCORPORATED
INCENTIVE BONUS ARRANGEMENTS
FOR EXECUTIVE OFFICERS
For fiscal 1995-1997, the Company established the Executive Officer Annual
Incentive Award Program to benefit its executive officers. A description of the
arrangements is set forth below.
Fiscal 1995-1997
The executive officers of the Company are the participants in the Comshare
Executive Officer Annual Incentive Award Program (the "Program") for fiscal
years 1995-1997. Under the Program, the Company's senior executives may be paid
bonuses from an award pool to be allocated among the executives pro rata in
accordance with their base salaries.
1995-1997 Bonus Pools. The 1995-1997 Bonus Pools are determined in accordance
with an earnings per share base line, based upon earnings per share targets in
fiscal years 1995, 1996, and 1997. The award pool determination is an addition
or subtraction of $10,000 for each cent per share that earnings per share
results deviate from the earnings per share target base line; provided, however,
that the Board of Directors has discretion to adjust the award pool for items
including, but not limited to, unusual items which impact earnings per share
results.
The 1995-1997 Bonus Pools are adjusted downward for each fiscal year of the
Program if certain revenue and free cash flow targets are not achieved. If in
the next fiscal year (other than fiscal year 1998) cash and free cash flow goals
are exceeded, the downward adjustment can be reversed to the extent of the
adjustment in the prior year.
Two-thirds of the amount of bonuses payable under the Program in fiscal years
1995, 1996 and 1997 is paid out in the year earned and one-third of the amount
of bonuses payable under the Program in fiscal years 1995 and 1996 is deferred
and, except for the deferred portion of the fiscal year 1997 bonus pool, added
to the participant's bonus for the next fiscal year or is used to offset any
negative bonus amounts generated under the Program in a subsequent fiscal year.
If performance in any fiscal year is below threshold levels, a negative bonus
pool amount will result. This negative bonus pool amount will be allocated among
the participants and will first be used to reduce the deferred portion of the
bonus pool from the prior fiscal year, if any, and the remainder will reduce the
bonus pool amount for the next fiscal year. Payments, if any, will be made on or
about July 31 following the fiscal year in which they are earned to executive
officers employed by the Company on the date of payment.
One-third of the amount of the bonus payable under the Program in fiscal year
1997 (the "1997 LTIP Award") will be deferred and separately maintained. It will
not be credited toward amounts to be paid under the Program in fiscal year 1998,
nor will it be reduced by a negative bonus pool amount
<PAGE> 2
in fiscal year 1998. The 1997 LTIP Award will be increased or decreased annually
by a percentage of the 1997 LTIP Award equal to the percentage increase (if in
excess of certain minimum levels and if earnings per share increases by certain
minimum levels), or percentage decrease, in the Company's revenues for the
fiscal year as compared to the prioir year's revenue. All 1997 LTIP Award
amounts remaining in the bonus pool at July 31, 2000 will be paid to the
participants employed by the Company at that time, or, if earlier, upon a
participant's retirement under normal circumstances on or after age 60.
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<PAGE> 1
EXHIBIT 10.19
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and Dennis G. Ganster, who is currently employed by
the Company in the position of President and Chief Executive Officer (the
"Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
<PAGE> 2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
2
<PAGE> 3
(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
3
<PAGE> 4
(A) Any reassignment of the Executive to duties
inconsistent with the Executive's position, title, duties, responsibilities
and status with the Company immediately prior to the Change in Control, or
a change in the Executive's reporting responsibilities, including a change
in the identity or the corporate position to which the Executive reports,
or a change in title (except for a promotion) in effect immediately prior
to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company to
continue any bonus, stock or incentive plans in effect immediately prior to
the Change in Control (without the implementation of comparable successor
plans that provide the same benefits), or any removal of the Executive from
participation in such aforementioned plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control, or
the discontinuance of any fringe benefits or other perquisites that the
Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place
of employment more than 50 miles from his or her place of employment prior
to the Change in Control, or required business traveling by the Executive
on a significantly more frequent basis and for significantly longer periods
of time than the Executive was required to travel immediately prior to the
Change in Control, unless the increase in required business traveling is on
account of the Executive's promotion; or
(E) The Company's breach of any provision in this
Agreement.
(b) An Executive who believes that he is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, may apply in writing to the Company for confirmation of such entitlement
prior to the Executive's actual separation from employment, by following the
claims procedure set forth in Section 14 hereof. The submission of such a
request by an Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 14
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections
5 and 10(a) hereof and with respect to any one or more Changes in Control that
may occur during the term of this Agreement, the Executive shall be entitled to
a cash severance benefit equal to three times minus $1 of the Executive's
average annual gross income (as defined in Treasury Regulation 1.280G-1(34))
from the Company and its related entities (or the amount that would have been
the average annual gross income if the Executive had been a United States
citizen or resident), calculated over the
4
<PAGE> 5
Executive's five taxable years immediately preceding the taxable year of the
Change in Control ("Base Period"). If the Executive was not employed by the
Company or a related entity for any full taxable year during the Base Period,
then the Executive's gross income from the Company or a related entity for such
year shall be annualized. If the Executive was not employed by the Employer or a
related entity during all five taxable years within the Base Period, the portion
of the 5-year period during which the Executive performed services for the
Company or a related entity shall constitute the Base Period for such Executive.
(b) The value of the cash severance benefit provided in
paragraph (a) above, when aggregated with any other "golden parachute" amounts
(defined under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") as compensation that becomes payable or accelerated due to a Change
in Control) pursuant to any other plans, agreements or policies of the Company
and its subsidiaries, shall be reduced to the highest amount permissible under
Sections 280G and 4999 of the Code before the Executive becomes subject to the
excess parachute payment excise tax under Section 4999 of the Code and the
Company loses all or part of its compensation deduction for such payments.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the
Executive's cash severance benefit under Section 6(a) shall be paid in a lump
sum cash payment within 10 days following the Executive's Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof) for whatever reason, shall include interest at the
prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall
be determined by reference to the prime rate established by Harris Trust and
Savings Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive's Termination of Employment (or applicable due
date under Section 10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
5
<PAGE> 6
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to immediate payment of the
severance compensation provided under Section 6, irrespective of whether the
Executive's employment has then terminated. For purposes of implementing the
foregoing, the date on which any succession becomes effective shall be deemed to
constitute the date of the Executive's Termination of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which the Executive is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
6
<PAGE> 7
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be
the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box
1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800.
The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Company. The Company shall have the right to designate one or more Company
employees as the Administrator and the Named Fiduciary at any time, and to
change the address and telephone number of the same. The Company shall give the
Executive written notice of any change in the Administrator and Named Fiduciary,
or in the address or telephone number of the same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
7
<PAGE> 8
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon such arbitration. All
decisions of the arbitrator(s) shall be final and binding on the claimant and
the Company without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have waived any right to commence litigation
proceedings outside of arbitration without the express written consent of the
Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or litigation
is brought to enforce any provision of this Agreement and the Executive
prevails, then the Executive shall be entitled to recover from the Company the
Executive's reasonable costs and reasonable expenses of such arbitration or
litigation, including reasonable fees and disbursements of counsel (both at
trial and in appellate proceedings). If the Company prevails, then each party
shall be responsible for its/his respective costs, expenses and attorneys fees,
and the costs of arbitration shall be equally divided. In the event that it is
determined that the Executive is entitled to compensation, legal fees and
expenses hereunder, the Executive also shall be entitled to interest thereon,
payable to the Executive at the prime rate of interest plus two percent. For
purposes of this Section 15, "prime rate" shall be determined by reference to
the prime rate established by Harris Trust and Savings Bank as in effect from
time to time during the period from the date such amounts should have been paid
to the date of actual payment. For purposes of determining the date when legal
fees and expenses are payable, such amounts are not due until 30 days after
notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision may
be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement for a
member of a select group of the Company's management and any exemptions under
ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
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<PAGE> 9
19. NOTICES. Any notice required or permitted by this Agreement shall
be in writing, sent by registered or certified mail, return receipt requested,
addressed to the Board and the Company at the Company's then principal office,
or to the Executive at the Executive's last address on file with the Company, as
the case may be, or to such other address or addresses as any party hereto may
from time to time specify in writing for the purpose of this Agreement in a
notice given to the other parties in compliance with this Section 19. Notices
shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. To the extent that
any provision or benefit under this Agreement is not deemed to be in accordance
with any applicable law, ordinance, rule or regulation, the noncomplying
provision shall be construed, or benefit limited, to the extent necessary to
comply with all applicable laws, ordinances and regulations and any such
provision or benefit shall not affect the validity of any other provision or
benefit provided by this Agreement. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or control or
affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire agreement and
understanding of the parties with respect to the subject matter of the Agreement
and it may not be altered or amended except by an agreement in writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Daniel T. Carroll
--------------------------------
Its Chairman of the Board
--------------------------------
/s/ Dennis G. Ganster
-----------------------------------
DENNIS G. GANSTER
9
<PAGE> 1
EXHIBIT 10.20
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and Kathryn A. Jehle, who is currently employed by
the Company in the position of Senior Vice President and Chief Financial Officer
(the "Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
<PAGE> 2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
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(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
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(A) Any reassignment of the Executive to duties inconsistent
with the Executive's position, title, duties, responsibilities and
status with the Company immediately prior to the Change in Control, or
a change in the Executive's reporting responsibilities, including a
change in the identity or the corporate position to which the Executive
reports, or a change in title (except for a promotion) in effect
immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately
prior to the Change in Control (without the implementation of
comparable successor plans that provide the same benefits), or any
removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the Executive
of any qualified or nonqualified retirement or welfare plan maintained
by the Company immediately prior to the Change in Control, or the
discontinuance of any fringe benefits or other perquisites that the
Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place of
employment more than 50 miles from his or her place of employment prior
to the Change in Control, or required business traveling by the
Executive on a significantly more frequent basis and for significantly
longer periods of time than the Executive was required to travel
immediately prior to the Change in Control, unless the increase in
required business traveling is on account of the Executive's promotion;
or
(E) The Company's breach of any provision in this Agreement.
(b) An Executive who believes that he is entitled to a Termination
of Employment for Good Reason as defined in subparagraph (a)(ii) above, may
apply in writing to the Company for confirmation of such entitlement prior to
the Executive's actual separation from employment, by following the claims
procedure set forth in Section 14 hereof. The submission of such a request by an
Executive shall not constitute "Cause" for the Company to terminate the
Executive as defined under Section 3(c) hereof. If the Executive's request for a
Good Reason Termination of Employment is denied under both the request and
appeal procedures set forth in paragraphs (b) and (c) of Section 14 hereof, then
the parties shall use their best efforts to resolve the claim within 90 days
after the claim is submitted to arbitration pursuant to Section 14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections 5
and 10(a) hereof and with respect to any one or more Changes in Control that may
occur during the term of this Agreement, the Executive shall be entitled to a
cash severance benefit equal to two times the Executive's annual base salary, as
in effect at the time of the Change in Control.
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(b) The value of the cash severance benefit provided in paragraph
(a) above, when aggregated with any other "golden parachute" amounts (defined
under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")
as compensation that becomes payable or accelerated due to a Change in Control)
pursuant to any other plans, agreements or policies of the Company and its
subsidiaries, shall be reduced to the highest amount permissible under Sections
280G and 4999 of the Code before the Executive becomes subject to the excess
parachute payment excise tax under Section 4999 of the Code and the Company
loses all or part of its compensation deduction for such payments.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the Executive's
cash severance benefit under Section 6(a) shall be paid in a lump sum cash
payment within 10 days following the Executive's Termination of Employment, as
defined in Section 5. Any payment made later than 10 days following the
Executive's Termination of Employment (or applicable due date under Section
10(a) hereof) for whatever reason, shall include interest at the prime rate plus
two percent, which shall begin accruing on the 10th day following the
Executive's Termination of Employment (or applicable due date under Section
10(a) hereof). For purposes of this Section 7, "prime rate" shall be determined
by reference to the prime rate established by Harris Trust and Savings Bank (or
its successor), in effect from time to time commencing on the 10th day following
the Executive's Termination of Employment (or applicable due date under Section
10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall be
under no duty or obligation to seek or accept other employment after Termination
of Employment and shall not be required to mitigate the amount of any payments
provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and assigns
of the Company. The Company shall take whatever actions are necessary to ensure
that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to immediate payment of the
severance compensation provided under Section 6, irrespective of whether the
Executive's employment has then terminated. For purposes of implementing the
foregoing, the
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date on which any succession becomes effective shall be deemed to constitute the
date of the Executive's Termination of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the Executive
from participation in any other compensation or benefit programs in which the
Executive is specifically eligible to participate either prior to or following
the execution of this Agreement, or any such programs that generally are
available to other executive personnel of the Company, nor shall it affect the
kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be the
Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box 1588,
Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800. The
"Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be the
Company. The Company shall have the right to designate one or more Company
employees as the Administrator and the Named Fiduciary at any time, and to
change the address and telephone number of the same. The Company shall give the
Executive written notice of any change in the Administrator and Named Fiduciary,
or in the address or telephone number of the same.
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(b) The Administrator shall make all determinations as to the right
of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b) and
(c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon such arbitration. All
decisions of the arbitrator(s) shall be final and binding on the claimant and
the Company without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have
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waived any right to commence litigation proceedings outside of arbitration
without the express written consent of the Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or litigation
is brought to enforce any provision of this Agreement and the Executive
prevails, then the Executive shall be entitled to recover from the Company the
Executive's reasonable costs and reasonable expenses of such arbitration or
litigation, including reasonable fees and disbursements of counsel (both at
trial and in appellate proceedings). If the Company prevails, then each party
shall be responsible for its/his respective costs, expenses and attorneys fees,
and the costs of arbitration shall be equally divided. In the event that it is
determined that the Executive is entitled to compensation, legal fees and
expenses hereunder, the Executive also shall be entitled to interest thereon,
payable to the Executive at the prime rate of interest plus two percent. For
purposes of this Section 15, "prime rate" shall be determined by reference to
the prime rate established by Harris Trust and Savings Bank as in effect from
time to time during the period from the date such amounts should have been paid
to the date of actual payment. For purposes of determining the date when legal
fees and expenses are payable, such amounts are not due until 30 days after
notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision may
be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement for a
member of a select group of the Company's management and any exemptions under
ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
19. NOTICES. Any notice required or permitted by this Agreement shall
be in writing, sent by registered or certified mail, return receipt requested,
addressed to the Board and the Company at the Company's then principal office,
or to the Executive at the Executive's last address on file with the Company, as
the case may be, or to such other address or addresses as any party hereto may
from time to time specify in writing for the purpose of this Agreement in a
notice given to the other parties in compliance with this Section 19. Notices
shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. To the extent that
any provision or benefit under this Agreement is not deemed to be in accordance
with any applicable law, ordinance, rule or regulation, the noncomplying
provision shall be construed, or benefit limited,
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to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire agreement and
understanding of the parties with respect to the subject matter of the Agreement
and it may not be altered or amended except by an agreement in writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Daniel T. Carroll
-------------------------------
Its Chairman of the Board
------------------------------
/s/ Kathryn A. Jehle
----------------------------------
KATHRYN A. JEHLE
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EXHIBIT 10.21
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and David King, who is currently employed by the
Company in the position of Senior Vice President and Chief Technology Officer
(the "Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
<PAGE> 2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
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(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
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(A) Any reassignment of the Executive to duties
inconsistent with the Executive's position, title, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a change in the Executive's reporting
responsibilities, including a change in the identity or the corporate
position to which the Executive reports, or a change in title (except
for a promotion) in effect immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately
prior to the Change in Control (without the implementation of
comparable successor plans that provide the same benefits), or any
removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control,
or the discontinuance of any fringe benefits or other perquisites that
the Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place
of employment more than 50 miles from his or her place of employment
prior to the Change in Control, or required business traveling by the
Executive on a significantly more frequent basis and for significantly
longer periods of time than the Executive was required to travel
immediately prior to the Change in Control, unless the increase in
required business traveling is on account of the Executive's promotion;
or
(E) The Company's breach of any provision in this
Agreement.
(b) An Executive who believes that he is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, may apply in writing to the Company for confirmation of such entitlement
prior to the Executive's actual separation from employment, by following the
claims procedure set forth in Section 14 hereof. The submission of such a
request by an Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 14
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections
5 and 10(a) hereof and with respect to any one or more Changes in Control that
may occur during the term of this Agreement, the Executive shall be entitled to
a cash severance benefit equal to two times the Executive's annual base salary,
as in effect at the time of the Change in Control.
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(b) The value of the cash severance benefit provided in
paragraph (a) above, when aggregated with any other "golden parachute" amounts
(defined under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") as compensation that becomes payable or accelerated due to a Change
in Control) pursuant to any other plans, agreements or policies of the Company
and its subsidiaries, shall be reduced to the highest amount permissible under
Sections 280G and 4999 of the Code before the Executive becomes subject to the
excess parachute payment excise tax under Section 4999 of the Code and the
Company loses all or part of its compensation deduction for such payments.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the
Executive's cash severance benefit under Section 6(a) shall be paid in a lump
sum cash payment within 10 days following the Executive's Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof) for whatever reason, shall include interest at the
prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall
be determined by reference to the prime rate established by Harris Trust and
Savings Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive's Termination of Employment (or applicable due
date under Section 10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to immediate payment of the
severance compensation provided under Section 6, irrespective of whether the
Executive's employment has then terminated. For purposes of implementing the
foregoing, the
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date on which any succession becomes effective shall be deemed to constitute the
date of the Executive's Termination of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which the Executive is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be
the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box
1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800.
The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Company. The Company shall have the right to designate one or more Company
employees as the Administrator and the Named Fiduciary at any time, and to
change the address and telephone number of the same. The Company shall give the
Executive written notice of any change in the Administrator and Named Fiduciary,
or in the address or telephone number of the same.
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(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon such arbitration. All
decisions of the arbitrator(s) shall be final and binding on the claimant and
the Company without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have
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waived any right to commence litigation proceedings outside of arbitration
without the express written consent of the Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then the Executive shall be entitled to recover from the
Company the Executive's reasonable costs and reasonable expenses of such
arbitration or litigation, including reasonable fees and disbursements of
counsel (both at trial and in appellate proceedings). If the Company prevails,
then each party shall be responsible for its/his respective costs, expenses and
attorneys fees, and the costs of arbitration shall be equally divided. In the
event that it is determined that the Executive is entitled to compensation,
legal fees and expenses hereunder, the Executive also shall be entitled to
interest thereon, payable to the Executive at the prime rate of interest plus
two percent. For purposes of this Section 15, "prime rate" shall be determined
by reference to the prime rate established by Harris Trust and Savings Bank as
in effect from time to time during the period from the date such amounts should
have been paid to the date of actual payment. For purposes of determining the
date when legal fees and expenses are payable, such amounts are not due until 30
days after notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company's management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
19. NOTICES. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company's then
principal office, or to the Executive at the Executive's last address on file
with the Company, as the case may be, or to such other address or addresses as
any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 19. Notices shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only to the extent permitted
by, all applicable laws, ordinances, rules and regulations. To the extent that
any provision or benefit under this Agreement is not deemed to be in accordance
with any applicable law, ordinance, rule or regulation, the noncomplying
provision shall be construed, or benefit limited,
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to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire agreement
and understanding of the parties with respect to the subject matter of the
Agreement and it may not be altered or amended except by an agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Daniel T. Carroll
---------------------------------
Its Chairman of the Board
--------------------------------
/s/ David King
------------------------------------
DAVID KING
9
<PAGE> 1
EXHIBIT 10.22
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and Stanley Starkey, who is currently employed by
the Company in the position of Senior Vice President, Americas Operations (the
"Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
<PAGE> 2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
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<PAGE> 3
(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between
the Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
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<PAGE> 4
(A) Any reassignment of the Executive to duties
inconsistent with the Executive's position, title, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a change in the Executive's reporting
responsibilities, including a change in the identity or the corporate
position to which the Executive reports, or a change in title (except
for a promotion) in effect immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately
prior to the Change in Control (without the implementation of
comparable successor plans that provide the same benefits), or any
removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control,
or the discontinuance of any fringe benefits or other perquisites that
the Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place
of employment more than 50 miles from his or her place of employment
prior to the Change in Control, or required business traveling by the
Executive on a significantly more frequent basis and for significantly
longer periods of time than the Executive was required to travel
immediately prior to the Change in Control, unless the increase in
required business traveling is on account of the Executive's promotion;
or
(E) The Company's breach of any provision in this
Agreement.
(b) An Executive who believes that he is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, may apply in writing to the Company for confirmation of such entitlement
prior to the Executive's actual separation from employment, by following the
claims procedure set forth in Section 14 hereof. The submission of such a
request by an Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 14
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections
5 and 10(a) hereof and with respect to any one or more Changes in Control that
may occur during the term of this Agreement, the Executive shall be entitled to
a cash severance benefit equal to two times the Executive's annual base salary,
as in effect at the time of the Change in Control.
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<PAGE> 5
(b) The value of the cash severance benefit provided in
paragraph (a) above, when aggregated with any other "golden parachute" amounts
(defined under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") as compensation that becomes payable or accelerated due to a Change
in Control) pursuant to any other plans, agreements or policies of the Company
and its subsidiaries, shall be reduced to the highest amount permissible under
Sections 280G and 4999 of the Code before the Executive becomes subject to the
excess parachute payment excise tax under Section 4999 of the Code and the
Company loses all or part of its compensation deduction for such payments.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the
Executive's cash severance benefit under Section 6(a) shall be paid in a lump
sum cash payment within 10 days following the Executive's Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof) for whatever reason, shall include interest at the
prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall
be determined by reference to the prime rate established by Harris Trust and
Savings Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive's Termination of Employment (or applicable due
date under Section 10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to
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<PAGE> 6
immediate payment of the severance compensation provided under Section 6,
irrespective of whether the Executive's employment has then terminated. For
purposes of implementing the foregoing, the date on which any succession becomes
effective shall be deemed to constitute the date of the Executive's Termination
of Employment.
(b) This Agreement shall be binding upon the Executive and
shall inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which the Executive is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be
the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box
1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800.
The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Company. The Company shall have the right to designate one or more Company
employees as the Administrator and the Named Fiduciary at any time, and to
change the address and telephone number of the same. The Company shall give the
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<PAGE> 7
Executive written notice of any change in the Administrator and Named Fiduciary,
or in the address or telephone number of the same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses
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<PAGE> 8
at the hearing. Any court having jurisdiction may enter a judgment based upon
such arbitration. All decisions of the arbitrator(s) shall be final and binding
on the claimant and the Company without appeal to any court. Upon execution of
this Agreement, the Executive shall be deemed to have waived any right to
commence litigation proceedings outside of arbitration without the express
written consent of the Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then the Executive shall be entitled to recover from the
Company the Executive's reasonable costs and reasonable expenses of such
arbitration or litigation, including reasonable fees and disbursements of
counsel (both at trial and in appellate proceedings). If the Company prevails,
then each party shall be responsible for its/his respective costs, expenses and
attorneys fees, and the costs of arbitration shall be equally divided. In the
event that it is determined that the Executive is entitled to compensation,
legal fees and expenses hereunder, the Executive also shall be entitled to
interest thereon, payable to the Executive at the prime rate of interest plus
two percent. For purposes of this Section 15, "prime rate" shall be determined
by reference to the prime rate established by Harris Trust and Savings Bank as
in effect from time to time during the period from the date such amounts should
have been paid to the date of actual payment. For purposes of determining the
date when legal fees and expenses are payable, such amounts are not due until 30
days after notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company's management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
19. NOTICES. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company's then
principal office, or to the Executive at the Executive's last address on file
with the Company, as the case may be, or to such other address or addresses as
any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 19. Notices shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only
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<PAGE> 9
to the extent permitted by, all applicable laws, ordinances, rules and
regulations. To the extent that any provision or benefit under this Agreement is
not deemed to be in accordance with any applicable law, ordinance, rule or
regulation, the noncomplying provision shall be construed, or benefit limited,
to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire
agreement and understanding of the parties with respect to the subject matter
of the Agreement and it may not be altered or amended except by an agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Daniel T. Carroll
---------------------------------
Its Chairman of the Board
--------------------------------
/s/ Stanley Starkey
------------------------------------
STANLEY STARKEY
9
<PAGE> 1
EXHIBIT 10.23
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and Norman Neuman, who is currently employed by the
Company in the position of Senior Vice President, Marketing (the "Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
<PAGE> 2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
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(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
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(A) Any reassignment of the Executive to duties
inconsistent with the Executive's position, title, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a change in the Executive's reporting
responsibilities, including a change in the identity or the corporate
position to which the Executive reports, or a change in title (except
for a promotion) in effect immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately
prior to the Change in Control (without the implementation of
comparable successor plans that provide the same benefits), or any
removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control,
or the discontinuance of any fringe benefits or other perquisites that
the Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place
of employment more than 50 miles from his or her place of employment
prior to the Change in Control, or required business traveling by the
Executive on a significantly more frequent basis and for significantly
longer periods of time than the Executive was required to travel
immediately prior to the Change in Control, unless the increase in
required business traveling is on account of the Executive's promotion;
or
(E) The Company's breach of any provision in this
Agreement.
(b) An Executive who believes that he is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, may apply in writing to the Company for confirmation of such entitlement
prior to the Executive's actual separation from employment, by following the
claims procedure set forth in Section 14 hereof. The submission of such a
request by an Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 14
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections
5 and 10(a) hereof and with respect to any one or more Changes in Control that
may occur during the term of this Agreement, the Executive shall be entitled to
a cash severance benefit equal to two times the Executive's annual base salary,
as in effect at the time of the Change in Control.
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(b) The value of the cash severance benefit provided in
paragraph (a) above, when aggregated with any other "golden parachute" amounts
(defined under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") as compensation that becomes payable or accelerated due to a Change
in Control) pursuant to any other plans, agreements or policies of the Company
and its subsidiaries, shall be reduced to the highest amount permissible under
Sections 280G and 4999 of the Code before the Executive becomes subject to the
excess parachute payment excise tax under Section 4999 of the Code and the
Company loses all or part of its compensation deduction for such payments.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the
Executive's cash severance benefit under Section 6(a) shall be paid in a lump
sum cash payment within 10 days following the Executive's Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof) for whatever reason, shall include interest at the
prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall
be determined by reference to the prime rate established by Harris Trust and
Savings Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive's Termination of Employment (or applicable due
date under Section 10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding any other provisions in this Agreement, if the Company fails to
obtain an agreement evidencing the assumption of the Company's obligations by
any such successor, the Executive shall be entitled to
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immediate payment of the severance compensation provided under Section 6,
irrespective of whether the Executive's employment has then terminated. For
purposes of implementing the foregoing, the date on which any succession becomes
effective shall be deemed to constitute the date of the Executive's Termination
of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which the Executive is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be
the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box
1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800.
The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Company. The Company shall have the right to designate one or more Company
employees as the Administrator and the Named Fiduciary at any time, and to
change the address and telephone number of the same. The Company shall give the
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Executive written notice of any change in the Administrator and Named Fiduciary,
or in the address or telephone number of the same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses
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at the hearing. Any court having jurisdiction may enter a judgment based upon
such arbitration. All decisions of the arbitrator(s) shall be final and binding
on the claimant and the Company without appeal to any court. Upon execution of
this Agreement, the Executive shall be deemed to have waived any right to
commence litigation proceedings outside of arbitration without the express
written consent of the Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then the Executive shall be entitled to recover from the
Company the Executive's reasonable costs and reasonable expenses of such
arbitration or litigation, including reasonable fees and disbursements of
counsel (both at trial and in appellate proceedings). If the Company prevails,
then each party shall be responsible for its/his respective costs, expenses and
attorneys fees, and the costs of arbitration shall be equally divided. In the
event that it is determined that the Executive is entitled to compensation,
legal fees and expenses hereunder, the Executive also shall be entitled to
interest thereon, payable to the Executive at the prime rate of interest plus
two percent. For purposes of this Section 15, "prime rate" shall be determined
by reference to the prime rate established by Harris Trust and Savings Bank as
in effect from time to time during the period from the date such amounts should
have been paid to the date of actual payment. For purposes of determining the
date when legal fees and expenses are payable, such amounts are not due until 30
days after notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company's management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
19. NOTICES. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company's then
principal office, or to the Executive at the Executive's last address on file
with the Company, as the case may be, or to such other address or addresses as
any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 19. Notices shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only
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to the extent permitted by, all applicable laws, ordinances, rules and
regulations. To the extent that any provision or benefit under this Agreement is
not deemed to be in accordance with any applicable law, ordinance, rule or
regulation, the noncomplying provision shall be construed, or benefit limited,
to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire agreement
and understanding of the parties with respect to the subject matter of the
Agreement and it may not be altered or amended except by an agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Daniel T. Carroll
--------------------------------
Its Chairman of the Board
-------------------------------
/s/ Norman Neuman
-----------------------------------
NORMAN NEUMAN
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EXHIBIT 10.24
COMSHARE, INCORPORATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of June 1, 1998, is between Comshare,
Incorporated (the "Company") and Geoffrey Cluett, who is currently employed by
the Company in the position of Senior Vice President, Europe, Middle East and
Africa (the "Executive").
WITNESSETH:
WHEREAS, the Company recognizes that the Executive has contributed to
the growth and success of the Company; and
WHEREAS, the Company believes that it is in the best interests of the
Company and its shareholders if the Executive is assured of appropriate
financial protection in the event of a Change in Control (as defined in Section
4 below), thus ensuring that the Executive shall have an incentive to perform
valuable services for the Company and shall not be distracted in the event of a
Change in Control;
WHEREAS, the Company believes that the assurance of appropriate
financial protection to the Executive in the event of a Change in Control shall
encourage the Executive to remain in the employ of the Company through the
transition period following a Change in Control, which is in the best interests
of the Company and its shareholders; and
WHEREAS, the Executive is willing to provide dedicated services to the
Company on the condition that the Executive receives adequate assurance of
appropriate financial protection in the event of a Change in Control;
NOW THEREFORE, in consideration of the premises and mutual covenants,
the parties hereto agree as follows:
AGREEMENT
1. OPERATION OF AGREEMENT. This Agreement sets forth the severance
compensation that the Company shall pay the Executive if the Executive's
employment with the Company terminates under one of the applicable provisions
set forth herein following a Change in Control. As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.
2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its
execution by both parties and shall terminate upon the first of the following
events to occur: (a) three years from the date hereof if a Change in Control has
not occurred within such three-year period; (b) the
<PAGE> 2
termination of the Executive's employment with the Company prior to a Change in
Control; (c) the expiration of two years following a Change in Control (or two
years following the later of one or more successive Changes in Control that
occur within the two year period immediately following the initial Change in
Control); (d) the termination of the Executive's employment with the Company
following a Change in Control due to the Executive's death, Disability (as
defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below);
(e) the termination of the Executive's employment by the Company for Cause (as
defined in Section 3(c) below) following a Change in Control; or (f) termination
of employment by the Executive for other than Good Reason (as defined in Section
5) following the date of a Change in Control. Unless the Agreement has first
terminated under clauses (a) through (f) hereof, commencing on the third
anniversary of the date of this Agreement, and on each one-year anniversary
thereafter, this Agreement shall be extended for one additional year, unless at
least 30 days prior to any such anniversary, the Company notifies the Executive
in writing that it shall not extend the term of this Agreement.
3. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing for a continuous period
exceeding six months the duties assigned to the Executive immediately prior to
the Change in Control. The determination of Disability shall be made by a
medical board-certified physician mutually acceptable to the Company and the
Executive (or the Executive's legal representative, if one has been appointed),
and if the parties cannot mutually agree to the selection of a physician, then
each party shall select such a physician and the two physicians so selected
shall select a third physician who shall make this determination.
(b) "Retirement" shall mean retirement on or after age 65.
(c) "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.
4. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
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(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as of June 1, 1998, or by any tax-qualified
retirement plan for the benefit of employees of the Company; or
(d) a merger, consolidation or other similar transaction between the
Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Directors, as defined
below.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of June 1, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of June 1, 1998, or
whose election or nomination was previously approved as provided above. In the
event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the Change in Control and (B) who also were members
of the Board of Directors of the Company as of June 1, 1998 or are new directors
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors in office at the time of such election or nomination who either were
directors as of June 1, 1998 or whose election or nomination for election was
previously approved as provided above.
5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to
Section 10(a) hereunder, the Executive shall be entitled to severance payments
under this Agreement only if there has been a Change in Control and the
Executive has incurred a Termination of Employment.
(a) For purposes of this Agreement during the two-year period
following any Change in Control that occurs during the term of this Agreement,
"Termination of Employment" shall be defined as:
(i) The Executive's involuntary termination by the Company for
any reason other than death, Disability, Retirement or Cause; or
(ii) The Executive's termination for "Good Reason," defined as
the occurrence of any of the following events without the Executive's written
consent:
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(A) Any reassignment of the Executive to duties
inconsistent with the Executive's position, title, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a change in the Executive's reporting
responsibilities, including a change in the identity or the corporate
position to which the Executive reports, or a change in title (except
for a promotion) in effect immediately prior to the Change in Control;
(B) Any reduction in the Executive's base salary in effect
immediately prior to the Change in Control, or failure by the Company
to continue any bonus, stock or incentive plans in effect immediately
prior to the Change in Control (without the implementation of
comparable successor plans that provide the same benefits), or any
removal of the Executive from participation in such aforementioned
plans;
(C) The discontinuance or reduction in benefits to the
Executive of any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control,
or the discontinuance of any fringe benefits or other perquisites that
the Executive received immediately prior to the Change in Control;
(D) Required relocation of the Executive's principal place
of employment more than 50 miles from his or her place of employment
prior to the Change in Control, or required business traveling by the
Executive on a significantly more frequent basis and for significantly
longer periods of time than the Executive was required to travel
immediately prior to the Change in Control, unless the increase in
required business traveling is on account of the Executive's promotion;
or
(E) The Company's breach of any provision in this
Agreement.
(b) An Executive who believes that he is entitled to a
Termination of Employment for Good Reason as defined in subparagraph (a)(ii)
above, may apply in writing to the Company for confirmation of such entitlement
prior to the Executive's actual separation from employment, by following the
claims procedure set forth in Section 14 hereof. The submission of such a
request by an Executive shall not constitute "Cause" for the Company to
terminate the Executive as defined under Section 3(c) hereof. If the Executive's
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 14
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
14(d).
6. SEVERANCE PAYMENT.
(a) Upon satisfaction of the requirements set forth in Sections
5 and 10(a) hereof and with respect to any one or more Changes in Control that
may occur during the term of this Agreement, the Executive shall be entitled to
a cash severance benefit equal to two times the Executive's annual base salary,
as in effect at the time of the Change in Control.
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<PAGE> 5
(b) The value of the cash severance benefit provided in
paragraph (a) above, when aggregated with any other "golden parachute" amounts
(defined under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") as compensation that becomes payable or accelerated due to a Change
in Control) pursuant to any other plans, agreements or policies of the Company
and its subsidiaries, shall be reduced to the highest amount permissible under
Sections 280G and 4999 of the Code before the Executive becomes subject to the
excess parachute payment excise tax under Section 4999 of the Code and the
Company loses all or part of its compensation deduction for such payments. If
the Executive's compensation is not subject to Code Section 4999 at the time of
his Termination of Employment, but the amount of his cash severance benefit
under Section 6(a) would have been reduced under this Section 6(b) if he had
been subject to Code Section 4999, then his severance benefit shall be reduced
as if he had been subject to Code Section 4999 at the time of his Termination of
Employment.
7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the
Executive's cash severance benefit under Section 6(a) shall be paid in a lump
sum cash payment within 10 days following the Executive's Termination of
Employment, as defined in Section 5. Any payment made later than 10 days
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof) for whatever reason, shall include interest at the
prime rate plus two percent, which shall begin accruing on the 10th day
following the Executive's Termination of Employment (or applicable due date
under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall
be determined by reference to the prime rate established by Harris Trust and
Savings Bank (or its successor), in effect from time to time commencing on the
10th day following the Executive's Termination of Employment (or applicable due
date under Section 10(a) hereof).
8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall
be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or otherwise.
9. TAX WITHHOLDING. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
Termination of Employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
10. BINDING EFFECT.
(a) This Agreement shall be binding upon the successors and
assigns of the Company. The Company shall take whatever actions are necessary to
ensure that any successor to its operations (whether by purchase, merger,
consolidation, sale of substantially all assets or otherwise) assumes the
obligations under this Agreement and shall cause such successor to evidence the
assumption of such obligations in an agreement satisfactory to the Executive.
Notwithstanding
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any other provisions in this Agreement, if the Company fails to obtain an
agreement evidencing the assumption of the Company's obligations by any such
successor, the Executive shall be entitled to immediate payment of the severance
compensation provided under Section 6, irrespective of whether the Executive's
employment has then terminated. For purposes of implementing the foregoing, the
date on which any succession becomes effective shall be deemed to constitute the
date of the Executive's Termination of Employment.
(b) This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by the Executive's legal
representatives and heirs. However, the rights of the Executive under this
Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise
encumbered, except by operation of law.
11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended except by instrument in writing signed by the parties hereto.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall continue in full force and effect.
13. LIMITATION ON RIGHTS.
(a) This Agreement shall not be deemed to create a contract of
employment between the Company and the Executive and shall create no right in
the Executive to continue in the Company's employment for any specific period of
time, or to create any other rights in the Executive or obligations on the part
of the Company, except as set forth herein. This Agreement shall not restrict
the right of the Company to terminate the Executive, or restrict the right of
the Executive to terminate employment.
(b) This Agreement shall not be construed to exclude the
Executive from participation in any other compensation or benefit programs in
which the Executive is specifically eligible to participate either prior to or
following the execution of this Agreement, or any such programs that generally
are available to other executive personnel of the Company, nor shall it affect
the kind and amount of other compensation to which the Executive is entitled.
(c) The rights of the Executive under this Agreement shall be
solely those of an unsecured general creditor of the Company.
14. CLAIMS PROCEDURE.
(a) The administrator for purposes of this Agreement shall be
the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box
1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800.
The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be
the Company. The Company shall have the right to
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<PAGE> 7
designate one or more Company employees as the Administrator and the Named
Fiduciary at any time, and to change the address and telephone number of the
same. The Company shall give the Executive written notice of any change in the
Administrator and Named Fiduciary, or in the address or telephone number of the
same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the claimant") shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within 10 days after receipt of the claim, unless special circumstances require
an extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension
exceed a period of 10 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of this Agreement upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best
of the Administrator's ability in a manner that may be understood without legal
or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within 10 days following the
date of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as the claimant shall consider relevant to a determination
of the claim, and the claimant may include a request for a hearing in person
before the Administrator. Prior to submitting the request, the claimant shall be
entitled to review such documents as the Administrator shall agree are pertinent
to the claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of the claimant's choice. All requests for review
shall be promptly resolved. The Administrator's decision with respect to any
such review shall be set forth in writing and shall be mailed to the claimant
not later than 10 days following receipt by the Administrator of the claimant's
request unless special circumstances, such as the need to hold a hearing,
require an extension of time for processing, in which case the Administrator's
decision shall be so mailed not later than 20 days after receipt of such
request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this Section, but who has not obtained full relief on the claim for
benefits, may, within 60 days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan,
in accordance with the arbitration rules of the American Arbitration
Association, as then in effect. If the parties are unable to mutually agree upon
an arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the
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<PAGE> 8
Agreement's provisions. The arbitrator(s) shall have the power to compel
attendance of witnesses at the hearing. Any court having jurisdiction may enter
a judgment based upon such arbitration. All decisions of the arbitrator(s) shall
be final and binding on the claimant and the Company without appeal to any
court. Upon execution of this Agreement, the Executive shall be deemed to have
waived any right to commence litigation proceedings outside of arbitration
without the express written consent of the Company.
15. LEGAL FEES AND EXPENSES. In the event any arbitration or
litigation is brought to enforce any provision of this Agreement and the
Executive prevails, then the Executive shall be entitled to recover from the
Company the Executive's reasonable costs and reasonable expenses of such
arbitration or litigation, including reasonable fees and disbursements of
counsel (both at trial and in appellate proceedings). If the Company prevails,
then each party shall be responsible for its/his respective costs, expenses and
attorneys fees, and the costs of arbitration shall be equally divided. In the
event that it is determined that the Executive is entitled to compensation,
legal fees and expenses hereunder, the Executive also shall be entitled to
interest thereon, payable to the Executive at the prime rate of interest plus
two percent. For purposes of this Section 15, "prime rate" shall be determined
by reference to the prime rate established by Harris Trust and Savings Bank as
in effect from time to time during the period from the date such amounts should
have been paid to the date of actual payment. For purposes of determining the
date when legal fees and expenses are payable, such amounts are not due until 30
days after notification to the Company of such amounts.
16. NONALIENATION OF BENEFITS. Except in so far as this provision
may be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization or attachment of any benefits under this Agreement
shall be valid or recognized by the Company.
17. ERISA. This Agreement is an unfunded compensation arrangement
for a member of a select group of the Company's management and any exemptions
under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
18. REPORTING AND DISCLOSURE. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
19. NOTICES. Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Board and the Company at the Company's then
principal office, or to the Executive at the Executive's last address on file
with the Company, as the case may be, or to such other address or addresses as
any party hereto may from time to time specify in writing for the purpose of
this Agreement in a notice given to the other parties in compliance with this
Section 19. Notices shall be deemed given when received.
20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term
or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is
intended to be performed in accordance with, and only
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to the extent permitted by, all applicable laws, ordinances, rules and
regulations. To the extent that any provision or benefit under this Agreement is
not deemed to be in accordance with any applicable law, ordinance, rule or
regulation, the noncomplying provision shall be construed, or benefit limited,
to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of
any other provision or benefit provided by this Agreement. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
21. GOVERNING LAW. To the extent not preempted by Federal law, this
Agreement shall be governed and construed in accordance with the laws of the
State of Michigan.
22. ENTIRE AGREEMENT. This document represents the entire agreement
and understanding of the parties with respect to the subject matter of the
Agreement and it may not be altered or amended except by an agreement in
writing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMSHARE, INCORPORATED
By: /s/ Daniel T. Carroll
-------------------------------
Its Chairman of the Board
------------------------------
/s/ Geoffrey Cluett
-----------------------------------
GEOFFREY CLUETT
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<PAGE> 1
EXHIBIT 10.25
COMSHARE, INCORPORATED
1998 GLOBAL EMPLOYEE STOCK OPTION PLAN
1. Purpose. This Stock Option Plan, which shall be known as the "1998
Global Employee Stock Option Plan" (the "Plan"), provides for the granting to
such employees of Comshare, Incorporated (the "Company") and its subsidiaries as
may be selected by the Compensation Committee of the Board of Directors of the
Company (the "Committee"), options to purchase Common Stock of the Company. The
word "Company" when used in this Plan with reference to employment shall include
subsidiaries of the Company. The word "subsidiary" when used in this Plan shall
mean any corporation a majority of the voting stock of which is owned or
controlled, directly or indirectly, by the Company.
2. Administration. The Committee shall administer the Plan. Subject to
the provisions of the Plan, the Committee may adopt rules and regulations for
the administration of the Plan and may make such interpretations of and
determinations under, and take such action in connection with, the Plan or the
options granted hereunder as it deems necessary or advisable. Each
interpretation, determination or other action made or taken pursuant to the Plan
by the Committee shall be final and conclusive for all purposes and upon all
persons.
3. Stock. The stock to be issued under the Plan shall be authorized and
unissued shares of Common Stock of the Company, par value $1.00 per share (the
"Stock"). The total amount of Stock on which options may be granted under the
Plan shall not exceed 900,000 shares, subject to adjustment as provided in
Paragraph 13 hereof. Stock released from option upon the termination,
cancellation, expiration, forfeiture or surrender of any option prior to
complete exercise of the option may again be subjected to options under the
Plan.
4. Grant of Options. The Committee, at any time and from time to time
prior to the termination of the Plan as provided in Paragraph 15 hereof, may
grant options to such employees of the Company and its subsidiaries, as the
Committee may select and for such number of shares as the Committee shall
designate, subject to the provisions of this Paragraph and Paragraphs 2 and 3
hereof. Provided, however, that no employee shall be eligible to receive
aggregate option grants under this Plan in any one fiscal year to purchase more
than 100,000 shares of Stock. The Committee may designate any option granted
hereunder as either an incentive stock option or a nonqualified stock option, or
the Committee may designate a portion of an option as an incentive stock option
or a nonqualified stock option. An incentive stock option is an option intended
to meet the requirements of Section 422 of the Internal Revenue Code of 1986
(the "Code"). A nonqualified stock option is an option granted under the Plan
other than an incentive stock option. Each option granted under the Plan shall
meet all of the terms and conditions of the Plan, except that an incentive stock
option shall comply with the additional provisions of Paragraph 5 hereof. The
date on which an option shall be granted shall be the date of the Committee's
authorization of the option or such later date as may be determined by the
Committee at the time the option is authorized. Any individual may hold more
than one (1) option under this Plan. No individual shall be ineligible for an
option under this Plan because he has received or is eligible to receive an
option under any other plan or arrangement of
<PAGE> 2
the Company. Each option shall be evidenced by a stock option agreement in such
form and containing such provisions not inconsistent with the Plan as the
Committee shall approve ("Stock Option Agreement").
5. Incentive Stock Options. Any option intended to constitute an
incentive stock option shall comply with the requirements of this Paragraph 5.
No incentive stock option shall be granted to any participant who owns (within
the meaning of Section 424(d) of the Code) stock of the Company or any
subsidiary possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or a subsidiary unless, at the date
of grant, the exercise price for the option is at least one hundred and ten
percent (110%) of the fair market value of the shares subject to the option and
the option, by its terms, is not exercisable more than five (5) years after the
date of grant. The aggregate fair market value of the underlying Stock
(determined as of the time the options are granted) to which incentive stock
options under the Plan (and a plan of a subsidiary corporation) may first be
exercised by a participant in any one (1) calendar year shall not exceed one
hundred thousand dollars ($100,000).
6. Option Price. The option price for each share of stock for which an
option is granted under the Plan shall not be less than one hundred percent
(100%) of the fair market value of the Stock on the date the option is granted.
Unless determined otherwise by the Committee, the fair market value shall be the
last sale price of the Company's Stock on the NASDAQ National Marketing System,
as reported in The Wall Street Journal for the grant date. In the absence of any
trading on the grant date, unless determined otherwise by the Committee, the
fair market value shall be the last sale price of the Company's Stock on the
NASDAQ National Market System for the immediately preceding date on which there
was trading, as reported in The Wall Street Journal. The Committee may not
reprice an outstanding option granted under the Plan or cancel an outstanding
option followed by the grant of a replacement option having the same effect as a
repricing, without the consent of shareholders.
7. Term of Options and Rights. Except in the event of a Change in
Control, as set forth in Section 10, no option granted under this Plan may be
exercised prior to the date twelve (12) months from the date of grant of such
option. The Committee may determine with respect to each option granted under
the Plan the time or times when the option may be exercised, and may require
that the exercise of an option shall be subject to the satisfaction of
conditions relating to the optionee's position and duties with the Company and
the performance thereof. Unless specified otherwise in an optionee's Stock
Option Agreement, options granted hereunder shall vest twenty-five percent (25%)
annually over four (4) consecutive years commencing on the first (1st)
anniversary of the grant date and shall not be exercisable after the tenth
(10th) anniversary of the grant date. Any provision of the Plan notwithstanding,
no option shall be exercised on or after the date ten (10) years from the date
of grant of such option.
8. Termination of Employment. Upon the expiration of a period of ninety
(90) days after the termination of the employment of an optionee for any reason
other than death or disability as defined in Section 22(e) of the Code, all
rights to purchase shares pursuant to an exercisable
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<PAGE> 3
option shall expire and terminate. The Committee may determine, however, with
respect to any option granted under the Plan, that the option shall terminate at
a time prior to the expiration of such ninety (90) day period. Termination of
employment shall be defined as the last day on which an optionee performs
services for the Company and shall not include severance pay periods, paid
vacation periods or periods during which compensation in lieu of notice is paid
following an optionee's actual termination of employment. Absence from the
Company or a subsidiary as a result of authorized leaves of absence for military
or government service or for other special purposes approved by the Committee
shall not constitute a termination of employment under this Paragraph.
9. Death or Disability of an Option Holder. In the event of an option
holder's (a) termination of employment due to disability, as defined in Section
22(e) of the Code, or (b) the death of an option holder while an employee of the
Company or within any period not exceeding the one (1) month period following
his termination of employment during which his option may be exercised, such
option may, subject to the terms thereof and the other terms of the Plan
(specifically including Section 7 hereof), be exercised by the option holder or
the legal representative of such holder's estate (on behalf of his estate or the
person or persons to whom the option passed by will or by the laws of descent
and distribution) at any time prior to the first (1st) anniversary of the option
holder's termination of employment due to disability or the death of such
holder, but only to the extent that such holder was entitled to exercise such
option at the date of his death or termination of employment due to disability.
10. Change in Control. The portion of any outstanding option (including
any option that has not been outstanding for twelve (12) months) that has not
expired or been exercised, terminated, canceled, forfeited or surrendered shall
become exercisable in full in the event of a Change in Control. For this
purpose, Change in Control shall be defined as the occurrence of any of the
following events:
(a) the election of a Board of Directors of the Company, a majority
of the members of which were nominees of a person (including an individual, a
corporation, partnership, joint venture, trust or other entity) or a group of
persons acting together (other than persons who were members of the Board of
Directors or officers of the Company as of August 14, 1998 or a tax-qualified
retirement plan approved by the Board of Directors of the Company (including at
least a majority of the Incumbent Directors ("Exempted Persons")), following the
acquisition by such person, group of persons or plan of ownership (directly or
indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of
the outstanding Common Stock of the Company;
(b) the acquisition of ownership by a person or group of persons
described in subparagraph (a) above (other than Exempted Persons) of fifty-one
(51%) percent, or more of the outstanding Common Stock of the Company;
(c) a sale of all or substantially all of the assets of the Company
to any entity not controlled by persons who were members of the Board of
Directors or officers of the Company as
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of August 14, 1998 or by any tax-qualified retirement plan for the benefit of
employees of the Company; or
(d) a merger, consolidation or other similar transaction between
the Company and another entity if a majority of the members of the Board of
Directors of the surviving company are not Continuing Members.
The term "Incumbent Directors" means members of the Board of Directors of the
Company as of August 14, 1998 or new directors whose election by the Board of
Directors, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors in office at the time
of such election or nomination, who either were directors as of August 14, 1998,
or whose election or nomination was previously approved as provided above. In
the event that a majority of the Incumbent Directors do not approve the
tax-qualified retirement plan or there are no Incumbent Directors, the
tax-qualified retirement plan shall not be an Exempted Person. The term
"Continuing Directors" means persons (A) who are members of the Board of
Directors immediately before the change in control and (B) who also were members
of the Board of Directors of the Company as of August 14, 1998 or are new
directors whose election by the Board of Directors, or nomination for election
by the Company's shareholders, was approved by a vote of at least a majority of
the directors in office at the time of such election or nomination who either
were directors as of August 14, 1998 or whose election or nomination for
election was previously approved as provided above.
11. Exercise of Options.
(a) Full payment for shares purchased pursuant to options granted
under the Plan shall be made at the time of exercise of the options, unless the
exercise is pursuant to the cashless exercise procedure described herein.
Options may be exercised in whole or in part.
(b) Payment for shares being purchased upon the exercise of options
granted under the Plan may be made in cash or by personal check, certified or
bank cashier's check, or by surrendering to the Company Permitted Shares, duly
endorsed for transfer (or with duly executed stock powers attached), or in any
combination of cash, personal check, certified or bank cashier's checks, or
Permitted Shares. Payment by check from an optionee who has terminated
employment with the Company shall be in the form of a certified or bank
cashier's check and not by a personal check. Permitted Shares surrendered as
payment for shares purchased pursuant to the exercise of options granted under
the Plan shall be valued, for such purpose, at the last sale price of the
Company's Stock on the NASDAQ National Market System, as reported in The Wall
Street Journal for the close of business on the last trading day preceding the
date on which the certificate(s) for such shares, duly endorsed for transfer or
accompanied by appropriate stock powers, are surrendered for such purpose to the
Company.
(c) At the discretion of the Committee, as set forth in an
optionee's Stock Option Agreement, any option granted under the Plan may be
deemed exercised by delivery to the Company
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<PAGE> 5
of a properly executed exercise notice, acceptable to the Company, together with
irrevocable instructions to the optionee's broker to deliver to the Company
sufficient cash to pay the exercise price and any applicable income and
employment withholding taxes, in accordance with a written agreement between the
Company and the brokerage firm ("cashless exercise procedure"). For purposes of
the cashless exercise procedure, fair market value of the Company's Stock on the
date of exercise shall be the per share amount actually paid to the optionee by
the brokerage house (before application of brokerage commissions and other
applicable fees) upon the sale of the Stock used to satisfy the exercise price.
(d) A person exercising an option shall reimburse the Company for
any income or employment tax withholding requirements and provide the Company
with such information and data as the Company may deem necessary. To satisfy the
applicable withholding requirements, prior to the date on which an exercise
becomes taxable, an optionee may make a written irrevocable election to tender
Permitted Shares, provided that the shares have an aggregate fair market value
sufficient to satisfy in whole or in part the applicable withholding taxes. For
purposes of this Paragraph, the term fair market value shall mean the last sale
price of the Company's Stock on the NASDAQ National Market System, as reported
in The Wall Street Journal for the close of business on the last trading date
preceding the date on which the exercise becomes taxable. An optionee subject to
Section 16 of the Securities Exchange Act of 1934, as amended, may be subject to
special notice and timing requirements in connection with the tender of
Permitted Shares to satisfy withholding requirements.
(e) The Company may require an employee, as a condition of
exercise, to establish to the satisfaction of the Company that all shares
acquired upon the exercise of an option shall be acquired for investment and not
for resale. The Company may permit the subsequent sale or other disposition of
any Stock so acquired if it is satisfied that such sale or other disposition
would not contravene applicable securities law. Anything to the contrary herein
notwithstanding, the Company's obligation to sell and deliver Stock pursuant to
the exercise of an option is subject to such compliance with federal and state
laws, rules and regulations applying to the authorization, issuance or sale of
securities as the Company deems necessary or advisable. The Company shall not be
required to sell and deliver stock unless and until it receives satisfactory
assurance that the issuance or transfer of such shares will not violate any of
the provisions of the Securities Act of 1933 or the Securities Exchange Act of
1934, or the rules and regulations of the Securities Exchange Commission
promulgated thereunder or those of any stock exchange or nationally-recognized
trading market on which the Stock may be listed or traded, the provisions of any
state laws governing the sale of securities, or that there has been compliance
with the provisions of such acts, rules, regulations and laws. No Stock shall be
issued until counsel for the Company has determined that the Company has
complied with all requirements under applicable securities laws.
(f) "Permitted Shares" are shares of the Company's Stock to be
delivered to pay the exercise price of the option or satisfy applicable income
or employment tax withholding requirements (the "Delivered Shares"):
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<PAGE> 6
(i) which have been owned by the optionee for at least six (6)
months prior to the date of delivery, or
(ii) if they have not been owned by the optionee for at least
six (6) months prior to the date of delivery, the optionee then owns, and has
owned for at least six months prior thereto, a number of shares of the Company's
Stock at least equal in number to the Delivered Shares.
Shares of the Company's Stock which have been treated during the prior six (6)
months as owned by the optionee for purposes of determining whether shares of
the Company's Stock constitute Delivered Shares as provided in (ii) above:
(i) may not be used as Delivered Shares, and
(ii) may not be counted as owned by the optionee in determining
whether shares of the Company's Stock are Permitted Shares.
12. Options Not Transferable. No option granted under the Plan shall be
transferable by the optionee other than by will or the laws of descent and
distribution, and an option may be exercised during an optionee's lifetime only
by the optionee.
13. Adjustments.
(a) In the event of any stock dividend on the Stock, subdivision or
combination of shares of the Stock, reclassification of the Stock, and (in
accordance with the provisions of the next Paragraph of this Paragraph 13) in
the event of a merger or consolidation in which the Company shall be the
surviving corporation, the aggregate number and class of shares available for
the granting of options under the Plan, the number and class of shares subject
to each outstanding option and the option prices shall be proportionately
adjusted.
(b) After any merger of one or more corporations into the Company,
or after any consolidation of the Company and one or more corporations in which
the Company shall be the surviving corporation, each optionee shall, at no
additional cost, be entitled upon any exercise of his option, to receive
(subject to any required action by shareholders), in lieu of the number of
shares as to which such option shall then be so exercised, the number and class
of shares of stock or other securities to which such optionee would have been
entitled pursuant to the terms of the agreement of merger or consolidation if at
the time of such merger or consolidation such optionee had been a holder of
record of a number of shares of Stock of the Company equal to the number of
shares as to which such option shall then be so exercised. Comparable rights
shall accrue to each optionee in the event of successive mergers or
consolidations of the character described above. Anything contained herein to
the contrary notwithstanding, upon the dissolution or liquidation of the Company
or upon any merger or consolidation in which the Company is not the surviving
corporation, any option granted under this Plan shall terminate.
6
<PAGE> 7
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Board of Directors of the
Company (the "Board") in its sole discretion. Any such adjustment may provide
for the elimination of any fractional share which might otherwise become subject
to an option.
14. No Rights as Shareholder. The holder of an option shall not have
any rights as a shareholder of the Company with respect to any of the shares
covered by such option until issuance of a stock certificate or certificates
upon the exercise of such option in full or in part and then only with respect
to the shares represented by such certificate or certificates. No adjustment
shall be made for dividends or other rights with respect to such shares for
which the record date is prior to the date the certificate is issued.
15. Termination and Amendment of Plan. The Board may terminate the Plan
at any time, but the Plan shall in any event terminate on the date ten (10)
years after the earlier of approval by the Board or the Company's shareholders.
No option may be granted after the termination of the Plan, but the termination
of the Plan shall not affect the rights of the holders of any option theretofore
granted and then outstanding. The Board may amend or modify the Plan at any
time, but no such amendment or modification, without the approval of the
shareholders, shall (a) change the eligibility requirements to participate in
the Plan, (b) increase the amount of Stock on which options may be granted,
except as permitted under Paragraph 13, (c) change the manner of determining the
option price, or (d) permit repricing transactions under the Plan. No such
amendment or modification shall affect the rights of the holder of any option
theretofore granted and then outstanding without the optionee's consent or the
consent of the transferee of the option or right.
16. Effect of Plan on Employment. Neither the adoption of the Plan nor
the granting of any option pursuant to it shall be deemed to create any right in
any individual to be retained or continued in the employment of the Company or
any of its subsidiaries.
17. Use of Proceeds. The proceeds received from the sale of stock
pursuant to the Plan shall be used for general corporate purposes.
18. Shareholder Approval. This Plan shall be submitted to the
shareholders for their approval within twelve (12) months after the date of
adoption of the Plan by the Board. Any option granted hereunder prior to such
approval shall be subject to the condition that this Plan be approved by the
shareholders of the Company. If such approval is not obtained, options granted
hereunder shall terminate.
BOARD APPROVAL: 8/14/98
SHAREHOLDER APPROVAL: / /
--- --- ---
7
<PAGE> 8
[Updated 7/98]
ADDENDUM FOR UK EMPLOYEES
1. Purpose
This addendum to the Comshare, Incorporated 1998 Global Employee Stock
Option Plan ("the Plan") is for the benefit of United Kingdom resident employees
of Comshare, Incorporated, a Michigan corporation ("Comshare") and of companies
of which it has control (as defined in Section 187(2) of the Income and
Corporation Taxes Act 1988 ("ICTA")) including, without limitation, its United
Kingdom subsidiary, Comshare, Limited. The terms and conditions of this Addendum
are established in order to render the Plan capable of approval as an approved
share option scheme under Schedule 9 of ICTA ("Schedule 9").
This Addendum to the Plan should be read in conjunction with the Plan
and is subject to the terms and conditions of the Plan except to the extent that
the terms and conditions of the Plan differ from or conflict with the terms set
out hereunder.
The terms and conditions set out in this Addendum apply to any grant of
options under the Plan to individuals who are resident in the United Kingdom for
United Kingdom tax purposes ("U.K. Individuals") if, at the date of grant, such
options are specified as having been granted subject to the terms and conditions
of this Addendum.
2. Group Scheme and Eligibility
A U.K. Individual shall not be entitled to be granted options under the
Plan unless he is a full-time director or "qualifying employee" (as defined in
paragraph 27(4) of Schedule 9) of Comshare or a company under the control (as
defined in Section 187(2) of ICTA) of Comshare. A director is deemed to work
full time if he is employed on terms which require him to devote not less than
twenty-five hours a week (exclusive of permitted breaks) to his duties.
A U.K. Individual may not be granted and may not exercise an option if
his participation is excluded by paragraph 8 of Schedule 9.
3. Stock Subject to the Plan
No option may be granted to a U.K. Individual over Stock which does not
satisfy the requirements of paragraphs 10 to 14 of Schedule 9. Options over
Stock granted under this Addendum may not be exercised at a time when, upon
exercise, the Stock would fail to satisfy the requirements of paragraphs 10 to
14 of Schedule 9.
--
i
<PAGE> 9
4. Limitation of Rights
No U.K. Individual shall be granted options under the Plan which would,
at the time they are obtained, cause the aggregate market value (as defined in
paragraph 28 of Schedule 9) of the shares which he may acquire in pursuance of
rights obtained under the Plan or under any other plans approved under Schedule
9 (not being a savings-related share option scheme approved under Schedule 9)
and established by Comshare or by any associated company (as defined in Section
840 of ICTA) of Comshare (and not exercised) to exceed or further exceed
(pound)30,000 and for these purposes if the market values of the shares are
expressed in a currency other than pounds sterling such market values will be
converted into pounds sterling at the appropriate exchange rate for that
currency at the close of business the date on which the relevant options are
granted as published by The Wall Street Journal.
5. Share Price
The price at which an option will be exercisable will not be manifestly
less than the fair market value of the shares obtainable under the Plan at the
date of the grant of the option. For these purposes, "market value" of the
shares will be their market value as determined in accordance with the
provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and will be
agreed in advance of each grant of options with the Inland Revenue Share
Valuation Division. In any event the price will be such that the approved status
of the Plan is retained.
6. Capital Adjustments
The price at which stock may be acquired on the exercise of any option
and the number of shares thereunder may be adjusted as described under Section
13 of the Plan, entitled "Adjustments", only in the event of a variation in the
share capital of Comshare within the meaning of Paragraph 29 of Schedule 9 and
only if the prior approval of the Inland Revenue has been obtained for such
adjustment. Section 13(b) of the Plan does not apply to options granted under
this Addendum.
7. Exercise of Options
The option price may be paid by cash or cash equivalent only and,
therefore, neither by surrender of Permitted Shares as described under Section
11(b) of the Plan nor by the "cashless exercise procedure" as described in
Section 10(c) of the Plan.
8. Amendment of the Scheme
The terms of this Addendum shall not be amended, nor shall any
amendment to the Plan extend to that is governed by this Addendum, except to the
extent that such amendments have been approved by the Board of Inland Revenue.
--
ii
<PAGE> 10
9. Exercisability of Terms of Options
A U.K. Individual may exercise his option from time to time in
accordance with the terms of the option. Shares will be allotted or transferred
within thirty days after notice of exercise is given in accordance with the
procedure described under Section 11 of the Plan, entitled "Exercise of
Options".
10. Definitions
For the above purposes the following terms shall have the meaning
listed below:
a. "Individual" shall mean an employee of Comshare or any company
under the control (as defined in Clause 1) of Comshare who is
eligible to receive options under this Addendum.
b. The "Plan" shall mean the Comshare, Incorporated 1998 Global
Employee Stock Option Plan.
--
iii
<PAGE> 11
ADDENDUM FOR EMPLOYEES OF
COMSHARE SA SUBSIDIARY IN FRANCE
1. Purpose
This Addendum to the Comshare, Incorporated 1998 Global Employee Stock
Option Plan ("the Plan") applies to Comshare SA employees residing in France.
2. Effective Date
The terms and conditions set out in this Addendum apply to any grant of
options under the Plan to individuals who are residents in France and employees
of the subsidiary Comshare SA.
3. Term of Options and Rights
No option granted under this Plan may be exercised prior to the date
five (5) years from the date of grant of such option. The Committee may
determine with respect to each option granted under the Plan the time or times
when the option may be exercised, and may require that the exercise of the
option shall be subject to the satisfaction of conditions relating to the
optionee's position and duties with the Company and the performance thereof.
Unless otherwise specified in an optionee's Stock Option Agreement,
options granted to employees of the subsidiary Comshare SA residing in France
shall not vest until the satisfaction of a five (5) year period from the date of
grant. Upon the completion of the five year period from the date of grant, the
options will be 100% vested and may be exercised. The options shall not be
exercisable after the tenth (10th) anniversary of the grant date.
--
iv
<PAGE> 1
EXHIBIT 10.26
SUMMARY OF 1998 SENIOR EXECUTIVE INCENTIVE PLAN
A bonus equal to 50% of Dennis Ganster's base compensation and 40% of
the base compensation of the other senior executives is payable for the fiscal
year 1998 if the Company achieves a targeted earnings per share level.
Additional bonus amounts may be paid, at the discretion of the Compensation
Committee if the target is exceeded. Twenty-five percent of the bonus is payable
in Common Stock, valued at the lower of the closing price of the Common Stock on
February 6, 1998 or June 30, 1998, up to a maximum of 25,000 shares. The
remainder of the bonus is payable in cash. Participating senior executives must
be employed by the Company at the date of the payment of the bonus.
<PAGE> 1
EXHIBIT 10.27
SUMMARY OF 1999 SENIOR EXECUTIVE INCENTIVE PLAN
A bonus equal to 50% of Dennis Ganster's base compensation and 40% of
the base compensation of the other senior executives is payable for the fiscal
year 1999 upon achievement of performance goals. Fifty percent of the bonus is
payable upon achievement of targeted revenue growth and fifty percent is payable
upon achievement of targeted earnings per share levels (or, in some cases,
twenty-five percent upon achievement of targeted earnings per share and
twenty-five percent upon achievement of targeted profit levels at the operation
for which the executive is responsible). Additional bonus amounts may be paid,
at the discretion of the Compensation Committee if the target is exceeded.
Twenty-five percent of the bonus is payable in Common Stock, up to a maximum of
25,000 shares. The remainder of the bonus is payable in cash. Participating
senior executives must be employed by the Company at the date of the payment of
the bonus.
<PAGE> 1
EXHIBIT 10.33
THIRD AMENDMENT TO LICENSE AGREEMENT
This THIRD AMENDMENT to License Agreement ("Third Amendment") is entered into as
of the 11th day of September, 1998 by and between HYPERION SOLUTIONS
CORPORATION, a Delaware corporation ("Hyperion") and COMSHARE, INCORPORATED, a
Michigan corporation ("Comshare").
RECITALS
Arbor Software Corporation, a Delaware Corporation ("Arbor") and Comshare
entered into a License Agreement dated as of December 23, 1993 (the "License
Agreement").
Arbor and Comshare entered into the First Amendment to License Agreement
effective as of March 1, 1994.
Arbor and Comshare entered into the Second Amendment to License Agreement dated
as of December 12, 1997 (the "Second Amendment").
Arbor changed its name to Hyperion Solutions Corporation effective August 24,
1998 pursuant to a merger with Hyperion Software Corporation.
Hyperion and Comshare wish to further amend the License Agreement (i) to provide
terms under which Comshare may relicense the Hyperion software product known as
the Hyperion Integration Server ("HIS") and (ii) to provide terms under which
the term of the License Agreement may be extended.
NOW THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Clause (ii) in the definition of "Software" as set forth in Section 2(a)
of the Second Amendment is hereby deleted and is replaced with the
following:
(ii) the Hyperion software products known as the "Essbase Web Gateway"
and the "Hyperion Integration Server";
2. Section I.A.1.a. of Exhibit D to the Second Amendment ("Exhibit D") is
amended by replacing subsections (4) and (5) as follows and by adding a
new sub-section (6):
* Indicates that material has been omitted and confidential
treatment has been requested therefore. All such omitted
material has been filed separately with the SEC pursuant
to Rule 24b-2.
<PAGE> 2
(4) Essbase Adjustment Module;
(5) Essbase Web Gateway; or
(6) Hyperion Integration Server.
The purpose of this change to Exhibit D is to provide that HIS may not
be delivered by Comshare to a customer as part of a "Limited Use"
sublicense (as described in Sections I.A of Exhibit D) nor for use with
an Essbase Data Analysis Server licensed under a "Limited Use"
sublicense.
3. In the event that a Comshare customer that has licensed any Software
under a "Limited Use" sublicense wishes to sublicense HIS, the customer
must purchase an upgrade for all of such customer's existing "Limited
Use" sublicenses to "Full Use" sublicenses in the manner prescribed in
Section I.C.5 of Exhibit D at or prior to the time the customer is
provided HIS. For Comshare customers that in connection with their
sublicense of HIS upgrade all of their "Limited Use" licenses to "Full
Use" during the period beginning on the effective date of this Third
Amendment and ending on August 31, 1999, the upgrade fee shall be:
(i) for direct customers, equal to the greater of (x) * of
current CUR or (y) * of the sublicense fees invoiced by
Comshare for the upgrade; and
(ii) for customers of Comshare's agents, resellers and
distributors outside the United States that satisfy the
criteria of Section I.C.3 of Exhibit D, equal to the
greater of (x) * of current CUR or (y) * of the
sublicense fees due to Comshare for the upgrade.
4. Notwithstanding the provisions of Sections I.B.4 and 1.C.5 of Exhibit D,
the upgrade fee payable for any upgrade of a sublicense shall be
computed using the sublicense fees paid for all of the Software licensed
under the sublicense to be upgraded, not just the sublicense fees paid
for the Essbase Data Analysis Server.
5. The parties agree that any sublicense of HIS for use with an Essbase
Data Analysis Server provided under an "Application Specific Use"
sublicense shall be limited to the creation and maintenance of Essbase
multi-dimensional data structures (i.e., "cubes") for use solely with
the pre-packaged Comshare application for which it is licensed and
Comshare shall notify the customer in a written document manually
executed by the customer of such restriction. Such restriction is not
intended to limit the customer's use of HIS to "drill through" from a
multi-dimensional cube to relational data.
6. Notwithstanding the provision of Section I.C.1 of Exhibit D, the
applicable sublicense fee for Comshare's distribution of HIS shall be *
of Hyperion's CUR; provided that the fee of * of CUR shall apply to
sublicenses of HIS distributed by Comshare through its agents, resellers
and distributors located outside the United States in accordance with
Section
* Indicates that material has been omitted and confidential
treatment has been requested therefore. All such omitted
material has been filed separately with the SEC pursuant
to Rule 24b-2. 2
<PAGE> 3
I.C.3 of Exhibit D. Sublicense fees payable by Comshare to Hyperion for
sublicenses of HIS shall be included in the sublicense fees used to
calculate any applicable reductions of Section I(A), I(B) and I(C) Rates
under Section I.D of Exhibit D, provided that the sublicense fee rate
payable by Comshare for the distribution of HIS shall not be subject to
any volume discounts.
7. In the event (i) of a Corporate Transaction, as described in Section
I.C.6 of Exhibit D, or (ii) that Comshare assigns to a third party its
rights under the License Agreement with respect to the distribution of
HIS as provided in Section I.C.7 of Exhibit D, the applicable royalty
rate for the distribution of HIS shall increase to * of Hyperion's then
current list price for HIS established by Hyperion for the applicable
territory or region.
8. Section 2 of the License Agreement is hereby deleted and replaced with
the following:
2. Term.
(a) This Agreement, as amended, shall be effective as of December 23,
1993, (The "Effective Date") and shall continue in effect until
December 31, 2002, provided that the term may be extended, as
provided in Section 2(b) below. In all events, this Agreement may
be terminated whether or not extended, as provided in Section
8(a). As used herein, "Year 1" means the period from the
Effective Date through December 31, 1994; "Year 2" means the
period from January 1, 1995 through December 31, 1995; and "Year
3" and succeeding Years mean the succeeding calendar years.
(b) If the cumulative amount of sublicense fees and maintenance
royalties payable and paid by Comshare to Hyperion under the
Agreement with respect to a calendar year indicated below equal
or exceeds the target amount indicated next to such year (the
"Target Amount"), the term of this Agreement shall be extended
beyond December 31, 2002 by one (1) additional period of twelve
(12) months. In the event that the sublicense fees and
maintenance royalties payable by Comshare with respect to a given
fiscal year do not equal or exceed the amount indicated, Comshare
may not, without Hyperion's written consent, extend the term of
the Agreement by voluntarily paying the amount otherwise required
to extend the term of the Agreement. In all events the term of
the Agreement will terminate no later than December 31, 2004,
unless the parties otherwise agree in writing. As used herein,
the "Base Amount" equals * times the total license and
maintenance fees payable and paid by Comshare to Hyperion under
the Agreement with respect to sublicenses granted and services
provided during the fiscal quarters ended September 30, and
December 31, 1998.
* Indicates that material has been omitted and confidential
treatment has been requested therefore. All such omitted material
has been filed separately with the SEC pursuant to Rule 24b-2.
3
<PAGE> 4
---------------------------------------------------------------
Year ended Cumulative Sublicense Fees &
December 31, Maintenance Fees ("Target Amount")
---------------------------------------------------------------
1999 * times the Base Amount
---------------------------------------------------------------
2000 * times the Target Amount for the 1999
calendar year
---------------------------------------------------------------
9. Comshare hereby consents, notwithstanding the restrictions of Section
6(c) of the License Agreement (as amended by Section 15 of the Second
Amendment), to the distribution by Hyperion, directly or indirectly, of
the Software or of any other Hyperion products or services, through JDA
Software, Inc., an Arizona corporation ("JDA Software"), provided that
Hyperion shall not authorize JDA Software to sublicense a "stand-alone"
version of the Essbase Data Analysis Server in any distribution
territory in which JDA Software distributes its products through an
entity that is also then a Comshare Distributor. Nothing herein,
however, shall limit JDA Software's right in any distribution territory
to upgrade to a "full use" license any Software previously licensed to a
JDA Software customer or sublicense the Software under terms that limit
its use to the application software product with which it is sold, and
any such sublicense or upgrade shall not constitute the sublicense a
"stand-alone" version of the Essbase Data Analysis Server.
10. The following are the addresses for sending notices as provided in
Section 16(c) of the License Agreement:
If to Hyperion, to:
Hyperion Solutions Corporation
1344 Crossman Avenue
Sunnyvale, CA 94089
Attn: Sr. Vice President, Worldwide Sales
With a copy to: General Counsel
Telecopy: (408) 744-0400
If to Comshare, to:
Comshare Incorporated
555 Briarwood Circle
Ann Arbor, MI 48108
Attn: President
With a copy to: General Counsel
Telecopy: (734) 994-4140
* Indicates that material has been omitted and confidential
treatment has been requested therefore. All such omitted
material has been filed separately with the SEC pursuant
to Rule 24b-2. 4
<PAGE> 5
11. Unless otherwise defined herein, capitalized words used in this Third
Amendment shall have the meanings set forth in the License Agreement. To
the extent any provision of this Third Amendment conflicts with the
License Agreement or any prior amendment thereto, the terms of this
Third Amendment shall prevail. Unless expressly modified herein, all
provisions of the License Agreement, as previously amended, remain in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Third Amendment to be executed
by their duly authorized representatives as of the date first written above.
HYPERION SOLUTIONS CORPORATION COMSHARE, INCORPORATED
By: /s/ John Dillon By: /s/ Kathryn A. Jehle
------------------------- -------------------------
Name: John Dillon Name: Kathryn A. Jehle
Title: President & CEO Title: Senior Vice President &
CFO
5
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
Years Ended June 30,
----------------------------------------
1998 1997 1996
---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C>
NET INCOME (LOSS)
Net income (loss) - Basic EPS $ 5,266 $ (17,117) $ (9,891)
Net income (loss) - Diluted EPS 5,048 (17,117) (9,891)
SHARES USED IN PER COMMON SHARE
Basic EPS $ 9,903 9,770 9,048
Diluted EPS 10,047 9,770 9,048
NET INCOME (LOSS) PER COMMON SHARE
Basic EPS 0.53 (1.75) (1.09)
Diluted EPS $ 0.50 $ (1.75) $ (1.09)
</TABLE>
<PAGE> 1
EXHIBIT 21.01
SUBSIDIARIES OF COMSHARE, INCORPORATED
<TABLE>
<CAPTION>
Subsidiaries of the Incorporated
Registrant (a) In
- ------------------- ------------
<S> <C>
Comshare (U.S.), Inc. Michigan
Comshare South Pacific Pty Ltd. Australia
Comshare, Ltd. Canada
Comshare International B.V. Netherlands
Comshare Holdings Company United Kingdom
Comshare, Ltd. United Kingdom
Comshare, GmbH Germany
Comshare S.A. France
Comshare International Ltd. United Kingdom
CS Iberia sl (b) Spain
CS srl (b) Italy
CSI International Holdings, Inc. (b) Delaware
CS Holdings, Inc. (b) Delaware
</TABLE>
- ----------------------
(a) All subsidiaries are wholly owned by their immediate parent.
(b) Subsidiaries have been dissolved as of June 30, 1998.
<PAGE> 1
EXHIBIT 23.01
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report on the June 30, 1998 consolidated financial statements
of Comshare, Incorporated and subsidiaries dated September 18, 1998, included
in this Form 10-K, into the Company's previously filed Form S-8 and S-3
registration statements (File No. 33-6730, File No. 33-9755-3, File No.
33-28437, File No. 33-27002, File No. 33-37564, File No. 33-85720, File No. 33-
87706, File No. 33-87708, File No. 33-86908 and File No. 33-65109).
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
Detroit, Michigan
September 25, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 49,102,000
<SECURITIES> 0
<RECEIVABLES> 21,354,000<F1>
<ALLOWANCES> 1,830,000
<INVENTORY> 0
<CURRENT-ASSETS> 75,034,000
<PP&E> 19,074,000
<DEPRECIATION> 15,792,000
<TOTAL-ASSETS> 88,692,000
<CURRENT-LIABILITIES> 45,503,000
<BONDS> 0
0
0
<COMMON> 10,003,000
<OTHER-SE> 28,402,000
<TOTAL-LIABILITY-AND-EQUITY> 88,692,000
<SALES> 0
<TOTAL-REVENUES> 89,753,000
<CGS> 0
<TOTAL-COSTS> 104,477,000
<OTHER-EXPENSES> 35,980,000<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 521,000
<INCOME-PRETAX> 20,735,000
<INCOME-TAX> 15,469,00
<INCOME-CONTINUING> 5,266,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,266,000
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.50
<FN>
<F1>Accounts receivable are stated at net of allowance for doubtful accounts.
<F2>Comprised of $665,000 of interest income, $35,386,000 gain on sale of Retail
Business and $71,000 of exchange loss.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.00
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
X OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED JUNE 30, 1998
- ----
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM _________
TO ___________________ COMMISSION FILE NUMBER ________________________
Profit Sharing Plan of Comshare, Incorporated
Full Title of the plan.
Comshare, Incorporated, 555 Briarwood Circle, Ann Arbor, MI 48108
Name of issuer of securities held pursuant to the
plan and the address of its principal executive offices.
<PAGE> 2
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
FINANCIAL STATEMENTS AS OF JUNE 30, 1998 AND 1997
AND FOR THE THREE YEARS ENDED JUNE 30, 1998
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator
of the Profit Sharing Plan
of Comshare, Incorporated:
We have audited the accompanying statements of net assets available for benefits
of the PROFIT SHARING PLAN OF COMSHARE, INCORPORATED (the "Plan") as of June 30,
1998 and 1997, and the related statements of changes in net assets available for
benefits for the years ended June 30, 1998, 1997 and 1996. These financial
statements and the schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
June 30, 1998 and 1997 and the changes in net assets available for benefits for
the years ended June 30, 1998, 1997 and 1996 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for purposes
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
September 24, 1998.
<PAGE> 4
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Statements of Net Assets Available for Benefits as of
June 30, 1998 and 1997
Statements of Changes in Net Assets Available for Benefits for the Years Ended
June 30, 1998, 1997 and 1996
Notes to Financial Statements
SCHEDULES
I. Item 27a - Schedule of Assets Held
for Investment Purposes as of June 30, 1998
II. Item 27d - Schedule of Reportable Transactions for the Year Ended June
30, 1998
<PAGE> 5
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Vanguard
Vanguard Vanguard Vanguard Vanguard Vanguard International
Money Market- Bond Index Index 500 Wellington U.S. Growth Value Comshare
Prime Portfolio Fund Portfolio Fund Portfolio Portfolio Stock Fund
--------------- ------------ ----------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
RECEIVABLES:
Employer's contribution $ 35,303 $ 22,020 $ 135,376 $ 47,014 $ 81,956 $ 20,911 $ 17,077
Participants' contributions 12,950 7,476 54,180 17,467 30,458 6,565 3,122
Accrued loan repayments 2,337 1,245 5,589 2,159 1,567 117 994
----------- ----------- ----------- ----------- ----------- ----------- -----------
50,590 30,741 195,145 66,640 113,981 27,593 21,193
INVESTMENTS, at market:
Registered Investment Companies 2,175,116 2,037,147 14,142,676 3,063,642 4,139,597 1,162,573 --
Company Stock Fund -- -- -- -- -- -- 1,967,236
Loans to participants -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
2,175,116 2,037,147 14,142,676 3,063,642 4,139,597 1,162,573 1,967,236
NET ASSETS AVAILABLE
FOR BENEFITS $ 2,225,706 $ 2,067,888 $14,337,821 $ 3,130,282 $ 4,253,578 $ 1,190,166 $ 1,988,429
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Loan 1998
Fund Total
---- -----
<S> <C> <C>
RECEIVABLES:
Employer's contribution $ -- $ 359,657
Participants' contributions -- 132,218
Accrued loan repayments -- 14,008
----------- -----------
505,883
INVESTMENTS, at market:
Registered Investment Companies -- 26,720,751
Company Stock Fund -- 1,967,236
Loans to participants 613,565 613,565
----------- -----------
613,565 29,301,552
NET ASSETS AVAILABLE
FOR BENEFITS $ 613,565 $29,807,435
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 6
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Vanguard
Vanguard Vanguard Vanguard Vanguard Vanguard International
Money Market- Bond Index Index 500 Wellington U.S. Growth Value Comshare
Prime Portfolio Fund Portfolio Fund Portfolio Portfolio Stock Fund
--------------- ---------- --------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RECEIVABLES:
Employer's contribution $ 60,999 $ 26,017 $ 137,162 $ 47,505 $ 64,742 $ 16,580 $ 14,693
Participants' contributions 13,511 7,250 49,207 18,990 28,971 8,436 8,476
Accrued loan repayments 3,178 923 6,398 2,304 3,076 522 1,725
----------- ----------- ----------- ----------- ----------- ----------- -----------
77,688 34,190 192,767 68,799 96,789 25,538 24,894
INVESTMENTS, at market:
Registered Investment Companies 2,721,591 1,395,409 13,291,055 2,465,188 3,314,385 860,658 --
Company Stock Fund -- -- -- -- -- -- 1,727,122
Loans to participants -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
2,721,591 1,395,409 13,291,055 2,465,188 3,314,385 860,658 1,727,122
NET ASSETS AVAILABLE
FOR BENEFITS $ 2,799,279 $ 1,429,599 $13,483,822 $ 2,533,987 $ 3,411,174 $ 886,196 $ 1,752,016
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Loan 1997
Fund Total
---- -----
<S> <C> <C>
RECEIVABLES:
Employer's contribution $ -- $ 367,698
Participants' contributions -- 134,841
Accrued loan repayments -- 18,126
----------- -----------
-- 520,665
INVESTMENTS, at market:
Registered Investment Companies -- 24,048,286
Company Stock Fund -- 1,727,122
Loans to participants 718,567 718,567
----------- -----------
718,567 26,493,975
NET ASSETS AVAILABLE
FOR BENEFITS $ 718,567 $27,014,640
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 7
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Vanguard Vanguard Vanguard Vanguard Vanguard
Money Market- Bond Index Index 500 Wellington U.S. Growth
INVESTMENT INCOME: Prime Portfolio Fund Portfolio Fund Portfolio
--------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ -- $ 47,812 $ 2,862,094 $ 212,265 $ 803,392
Interest and dividend income 124,206 100,370 288,750 225,350 114,946
Realized gain (loss) on investments -- 7,799 435,455 37,457 92,904
------------ ------------ ------------ ------------ ------------
124,206 155,981 3,586,299 475,072 1,011,242
CONTRIBUTIONS:
Employer 77,475 52,477 308,122 104,902 175,660
Participants 154,792 99,246 683,480 227,131 451,792
------------ ------------ ------------ ------------ ------------
232,267 151,723 991,602 332,033 627,452
LOAN ORIGINATIONS (25,941) (32,490) (60,753) (31,662) (12,979)
LOAN REPAYMENTS 42,235 18,861 91,026 42,569 35,538
INTERFUND TRANSFERS, NET (549,030) 564,764 (1,836,406) 328,025 360,978
DISTRIBUTIONS TO PARTICIPANTS (397,310) (220,550) (1,917,769) (549,742) (1,179,827)
------------ ------------ ------------ ------------ ------------
Increase (decrease) in Net Assets (573,573) 638,289 853,999 596,295 842,404
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 2,799,279 1,429,599 13,483,822 2,533,987 3,411,174
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 2,225,706 $ 2,067,888 $ 14,337,821 $ 3,130,282 $ 4,253,578
============ ============ ============ ============ ============
<CAPTION>
Vanguard
International
Value Comshare Loan 1998
INVESTMENT INCOME: Portfolio Stock Fund Fund Total
------------- ---------- ---- -----
<S> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ (53,849) $ (353,282) $ -- $ 3,518,432
Interest and dividend income 86,000 -- 58,693 998,315
Realized gain (loss) on investments (29,857) (85,949) -- 457,809
------------ ------------ ------------ ------------
2,294 (439,231) 58,693 4,974,556
CONTRIBUTIONS:
Employer 42,866 29,363 -- 790,865
Participants 104,965 65,310 -- 1,786,716
------------ ------------ ------------ ------------
147,831 94,673 -- 2,577,581
LOAN ORIGINATIONS (2,587) (11,280) 177,692 --
LOAN REPAYMENTS 5,401 13,762 (249,392) --
INTERFUND TRANSFERS, NET 382,613 749,056 -- --
DISTRIBUTIONS TO PARTICIPANTS (231,582) (170,567) (91,995) (4,759,342)
------------ ------------ ------------ ------------
Increase (decrease) in Net Assets 303,970 236,413 (105,002) 2,792,795
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 886,196 1,752,016 718,567 27,014,640
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 1,190,166 $ 1,988,429 $ 613,565 $ 29,807,435
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 8
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Vanguard Vanguard Vanguard Vanguard Vanguard
Money Market- Bond Index Index 500 Wellington U.S. Growth
INVESTMENT INCOME: Prime Portfolio Fund Portfolio Fund Portfolio
--------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ -- $ 13,776 $ 2,988,259 $ 292,461 $ 486,517
Interest and dividend income 158,926 99,058 257,917 180,140 260,689
Realized gain (loss) on investments -- 3,367 147,785 22,078 57,140
------------ ------------ ------------ ------------ ------------
158,926 116,201 3,393,961 494,679 804,346
CONTRIBUTIONS:
Employer 109,690 59,534 321,794 111,672 152,579
Participants 193,117 114,355 715,440 279,178 442,913
------------ ------------ ------------ ------------ ------------
302,807 173,889 1,037,234 390,850 595,492
LOAN ORIGINATIONS (79,667) (23,769) (135,939) (48,973) (53,371)
LOAN REPAYMENTS 77,471 19,113 95,655 36,872 42,061
INTERFUND TRANSFERS, NET 843,753 (422,305) (363,905) (449,832) 308,703
DISTRIBUTIONS TO PARTICIPANTS (1,640,541) (185,293) (1,246,043) (323,371) (1,408,716)
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
Available for Benefits (337,251) (322,164) 2,780,963 100,225 288,515
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 3,136,530 1,751,763 10,702,859 2,433,762 3,122,659
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 2,799,279 $ 1,429,599 $ 13,483,822 $ 2,533,987 $ 3,411,174
============ ============ ============ ============ ============
<CAPTION>
Vanguard
International
Value Comshare Loan 1997
INVESTMENT INCOME: Portfolio Stock Fund Fund Total
------------- ---------- ---- -----
<S> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ (10,758) $ (1,581,935) $ -- $ 2,188,320
Interest and dividend income 188,680 -- 67,303 1,212,713
Realized gain (loss) on investments (59,278) (749,905) -- (578,813)
------------ ------------ ------------ ------------
118,644 (2,331,840) 67,303 2,822,220
CONTRIBUTIONS:
Employer 41,359 22,063 -- 818,691
Participants 136,118 89,656 -- 1,970,777
------------ ------------ ------------ ------------
177,477 111,719 -- 2,789,468
LOAN ORIGINATIONS (7,120) (58,658) 407,497
LOAN REPAYMENTS 18,271 34,110 (323,553) --
INTERFUND TRANSFERS, NET (199,170) 282,756 -- --
DISTRIBUTIONS TO PARTICIPANTS (342,947) (267,340) (68,342) (5,482,593)
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
Available for Benefits (234,845) (2,229,253) 82,905 129,095
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 1,121,041 3,981,269 635,662 26,885,545
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 886,196 $ 1,752,016 $ 718,567 $ 27,014,640
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 9
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Vanguard Vanguard Vanguard Vanguard Vanguard
Money Market- Bond Index Index 500 Wellington U.S. Growth
INVESTMENT INCOME: Prime Portfolio Fund Portfolio Fund Portfolio
--------------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ -- $ (30,758) $ 1,674,861 $ 196,661 $ 472,563
Interest and dividend income 178,792 107,802 219,446 120,986 82,532
Realized gain on investments -- 937 141,928 47,203 31,118
------------ ------------ ------------ ------------ ------------
178,792 77,981 2,036,235 364,850 586,213
CONTRIBUTIONS:
Employer 97,516 95,724 434,895 180,635 156,646
Participants 242,547 166,416 587,678 265,954 238,877
------------ ------------ ------------ ------------ ------------
340,063 262,140 1,022,573 446,589 395,523
TRANSFER OF ASSETS FROM
OTHER PLANS -- -- -- -- --
LOAN ORIGINATIONS (67,911) (36,006) (93,771) (28,087) (28,488)
LOAN REPAYMENTS 77,916 21,485 123,139 50,137 47,321
INTERFUND TRANSFERS, NET (798,285) (168,273) 845,839 152,052 569,951
DISTRIBUTIONS TO PARTICIPANTS (392,844) (63,287) (1,309,944) (475,426) (106,104)
------------ ------------ ------------ ------------ ------------
Increase (decrease) in Net Assets (662,269) 94,040 2,624,071 510,115 1,464,416
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 3,798,799 1,657,723 8,078,788 1,923,647 1,658,243
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 3,136,530 $ 1,751,763 $ 10,702,859 $ 2,433,762 $ 3,122,659
============ ============ ============ ============ ============
<CAPTION>
Vanguard
International
Value Comshare Loan 1996
INVESTMENT INCOME: Portfolio Stock Fund Fund Total
------------- ---------- ---- -----
<S> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ 10,636 $ 1,424,698 $ -- $ 3,748,661
Interest and dividend income 95,269 -- 53,701 858,528
Realized gain on investments 5,530 177,244 -- 403,960
------------ ------------ ------------ ------------
111,435 1,601,942 53,701 5,011,149
CONTRIBUTIONS:
Employer 56,055 18,778 -- 1,040,249
Participants 109,048 40,930 -- 1,651,450
------------ ------------ ------------ ------------
165,103 59,708 -- 2,691,699
TRANSFER OF ASSETS FROM
OTHER PLANS -- 3,183,333 -- 3,183,333
LOAN ORIGINATIONS (7,880) (61,411) 323,554 --
LOAN REPAYMENTS 21,707 3,122 (344,827) --
INTERFUND TRANSFERS, NET (15,567) (585,717) --
DISTRIBUTIONS TO PARTICIPANTS (56,811) (219,708) (11,190) (2,635,314)
------------ ------------ ------------ ------------
Increase (decrease) in Net Assets 217,987 3,981,269 21,238 8,250,867
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 903,054 -- 614,424 18,634,678
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 1,121,041 $ 3,981,269 $ 635,662 $ 26,885,545
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 10
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE PLAN
The information discussed below is a summary only and reference should be
made to the Profit Sharing Plan of Comshare, Incorporated (the "Plan") or
inquiries made of the Plan Administrator for more complete information.
(a) General
The Plan is a defined contribution plan covering eligible
employees of Comshare, Incorporated (the "Company"). The Plan
provides retirement benefits and is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA). The
Company administers the Plan and pays all plan administration
costs, including fees paid to the Trustee. The operating expenses
of the investment advisor are netted from the returns of the
funds.
The Employee Stock Ownership Plan (ESOP) of Comshare, Incorporated
was merged with the Plan effective October 1, 1995. All of the
assets of the ESOP which consisted primarily of Comshare common
stock were transferred to the Plan and placed in the new Comshare
Stock Fund.
(b) Trustee and Investment Advisor
As of June 30, 1998 the Plan held all investments with Vanguard
Fiduciary Trust Company (the "Trustee" and "Investment Advisor").
In accordance with the Trust Agreement, the Trustee holds and
administers the Plan's assets and executes transactions therewith
for the purpose of providing benefits as described in the Plan
agreement. The Investment Advisor executes all investment
transactions.
(c) Management Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
(d) Contributions
The Plan provides for annual employer fixed contributions equal to
2% of eligible participants' compensation. In addition, the
Company may make discretionary contributions, the amount of which
is determined by the Board of Directors. There were no
discretionary contributions in 1998 or 1997. The discretionary
contributions in 1996 were $234,000. To qualify for such employer
contributions for any given Plan year, a participant must be
credited with 1,000 or more hours of service during the Plan year
and be employed by the Company on the last day of the Plan year.
<PAGE> 11
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(continued)
Participants may make before-tax contributions, subject to
Internal Revenue Service limitations. Participants are eligible
for employer matching contributions equal to 50% of the
participant's before-tax contributions up to 6% of their
compensation.
(e) Investment Options
As of June 30, 1998 the investment options available to
participants are as follows: (1) Vanguard Money Market - Prime
Portfolio, a money market fund, consisting of investments with
maturities of one year or less; (2) Vanguard Bond Index Fund, an
intermediate bond fund, consisting primarily of investments in
U.S. Government and corporate bonds; (3) Vanguard Index 500
Portfolio, a diversified equity fund, consisting of investments in
the stocks included in the Standard & Poors' 500 Index; (4)
Vanguard Wellington Fund, a balanced fund, consisting of
investments in both stocks and bonds; (5) Vanguard United States
Growth Portfolio, a growth stock fund, consisting of investments
in common stocks of companies with above-average growth potential;
(6) Vanguard International Value Portfolio, an international
equity fund, consisting of investments in stocks of companies
based outside the United States; and (7) Comshare Stock Fund, a
fund investing in the common stock of Comshare, Inc. There are no
guaranteed rates of returns for these funds.
Participants may change their investment election daily for new
contributions or loans repaid to the Plan. Contributions to the
Plan are invested directly by the Trustee into the investment
options based on participant elections.
(f) Vesting and Eligibility
All full-time employees and certain part-time employees are
eligible to make employee before-tax contributions to the Plan at
the beginning of the calendar quarter following the date of hire.
Eligible participants begin sharing in employer contributions
after completing one year of service. As of June 30, 1998 there
were 253 active participants.
Participants vest in employer discretionary contributions
according to a five year schedule. Participants completing at
least 1,000 hours of service in a given plan year are credited
with an increase in vesting for such plan year. Full vesting also
occurs upon retirement at age 65, or after death or total
disability. Employer matching contributions vest according to a
five year schedule (prior to 1/1/98 a seven year schedule was in
effect) for participants with targeted compensation greater than
the social security wage base. All other participants are fully
vested in employer matching contributions.
Employee contributions and employer fixed contributions are always
fully vested.
<PAGE> 12
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(continued)
(g) Loans and Hardship Withdrawals
The Plan provides for hardship withdrawals in certain
circumstances and for loans to participants. Loans are limited to
50% of a participant's vested balance, and bear interest
comparable to competitive bank rates for loans of similar purpose.
Loans are repaid through payroll withholding, and typically mature
within five years with a maximum maturity of twenty years. A 10%
excise tax is imposed upon hardship withdrawals.
(h) Benefit Distributions
Distribution of the vested amounts in a participant's account can
be made upon termination of employment or upon retirement.
Benefits are paid, at the option of the participant, in a lump sum
payment or in periodic payments of substantially equal amounts for
a specified number of years, not to exceed ten.
(i) Benefits Payable
As of June 30, 1998 and 1997, the net assets available for
benefits included $6,046,158 and $1,501,183, respectively, for
benefits payable that were due but undistributed to participants
as a result of termination of employment or retirement. These
amounts are shown as liabilities on Form 5500 and are the only
reconciling item between the financial statements and Form 5500.
In June of 1998, Comshare sold its Arthur Retail Business to JDA
Software Group, Incorporated. As a result of the sale, employees
working in the Arthur business were terminated by Comshare and
hired by JDA . Of the benefits payable of $6,046,158 as of June
30, 1998, the portion related to terminated Arthur employees was
$3,578,111.
(j) Allocation to Participants' Accounts
The Trustee maintains the detailed accounts of the net assets
available for benefits in the Plan. The Trustee values the fund
for each investment option at market value on a daily basis. The
net change in each fund's market value for the period is allocated
to the accounts of participants within that fund in the same
proportion that the balance of each participant's account bears to
the total of the fund on the last day of the period. Interest
income on loans to participants is credited directly to the
individual participant's account. Company discretionary
contributions and forfeitures are allocated to eligible
participants' accounts in the same proportion that the
participant's eligible compensation bears to the total eligible
compensation of all participants for the year.
(k) Plan Termination
Although it has not expressed the intent to do so, the Company has
the right to terminate the Plan subject to the provisions of
ERISA. In the event the Plan is terminated, the participants will
become fully vested and will receive the balances in their
individual accounts.
(l) Federal Income Tax Status
The Plan obtained its latest determination letter dated September
16, 1996, in which the Internal Revenue Service stated that the
Plan, as amended and restated effective July 1, 1994, was in
compliance with the applicable requirements of the Internal
Revenue Code (the "Code").
<PAGE> 13
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(continued)
The Plan has subsequently been amended and restated effective
October 1, 1995 to reflect the merger with the ESOP. The Plan
administrator is applying for a new determination letter. The Plan
administrator and the Plan's tax counsel believe that the Plan is
currently designed and being operated in compliance with the
applicable requirements of the Code.
Therefore, they believe that the Plan was qualified and the
related trust was tax-exempt as of the financial statement date.
(m) Forfeitures
Non-vested account balances of terminated employees are forfeited
at the end of the quarter following the date of termination.
Forfeitures were $61,836, $33,657 and $62,517 for the years ended
June 30, 1998, 1997 and 1996, respectively. Forfeitures are
allocated on a pro-rata basis to remaining participants.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The financial statements have been prepared on the accrual basis
of accounting.
(b) Investments
Investment transactions are recorded by the Trustee on a trade
date basis. Investments are stated in the Statement of Net Assets
Available for Benefits at market value. Realized gains and losses
on sale of investments and unrealized appreciation (depreciation)
of investments are computed based on the difference between the
market value of the investments at the beginning of the year, or
at the time of purchase if acquired during the year, and the
market value of investments when sold or at Plan year-end.
(3) REPORTABLE TRANSACTIONS
Transactions, or a series of transactions, in excess of 5% of Net Assets
Available for Benefits at the beginning of the Plan year are reportable
transactions under the provisions of ERISA. A list of such transactions is
included in Schedule II.
(4) SUBSEQUENT EVENTS
As of September 24, 1998, the Company's stock was trading at $3.875 per
share compared to $7.8125 per share at June 30, 1998. The investments in
the Comshare Stock Fund consist primarily of the Company's stock which is
valued in the accompanying Statement of Net Assets Available for Benefits
at the June 30, 1998 share price.
<PAGE> 14
SCHEDULE I
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
EIN: 38-1804887 PN: 001
ITEM 27a - SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
(c) Description of Investment
(a) (b) Identity of Issue, Including Maturity Date, (e)
Borrower, Lessor, Rate of Interest, Collateral, (d) Current
or Similar Party Par or Maturity Value Cost Value
---------------------- ----------------------------- -------------- ------------
MUTUAL FUNDS:
<S> <C> <C> <C> <C>
* Vanguard Group 2,175,116 units of Money $ 2,175,116 $ 2,175,116
Market - Prime Portfolio
* Vanguard Group 200,309 units of Bond 1,985,398 2,037,147
Index Fund
* Vanguard Group 134,308 units of Index 7,257,078 14,142,676
500 Portfolio
* Vanguard Group 96,859 units of Wellington 2,447,186 3,063,642
Fund
* Vanguard Group 116,412 units of U.S. Growth 2,779,921 4,139,597
Portfolio
* Vanguard Group 44,407 units of International 1,226,593 1,162,573
Value Portfolio
* Vanguard Group 510,971 units of Comshare Stock 2,066,786 1,967,236
Fund ------------- ------------
Total Mutual Funds 19,938,078 28,687,987
------------- ------------
LOANS:
Loans to plan participants Interest rates range 613,565 613,565
from 7.0% to 12.25%; ------------- ------------
maturing through December, 2016
TOTAL INVESTMENTS $ 20,551,643 $ 29,301,552
============= ============
</TABLE>
* Represents a party-in-interest
<PAGE> 15
SCHEDULE II
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
EIN: 38-1804887 PN: 001
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
(a) (b) (c) (d) (g)
Identity of Party Description of Purchase Selling Cost of
Involved Asset Price Price Asset
----------------- -------------- -------- ------- -------
<S> <C> <C> <C> <C>
Vanguard Group Vanguard Money Market - Prime Portfolio $ 906,292 N/A N/A
Vanguard Group Vanguard Bond Index Fund- Total Bond Market 986,508 N/A N/A
Vanguard Group Vanguard Index 500 Portfolio 1,958,943 N/A
N/A
Vanguard Group Vanguard U.S. Growth Portfolio 1,351,921 N/A
N/A
Vanguard Group Vanguard Wellington Fund 1,046,064 N/A
N/A
Vanguard Group Comshare Stock Fund 1,338,965 N/A N/A
Vanguard Group Vanguard Money Market - Prime Portfolio N/A $1,452,767 $1,452,767
Vanguard Group Vanguard Bond Index Fund- Total Bond Market N/A 400,381 391,978
Vanguard Group Vanguard Index 500 Portfolio N/A 4,404,871 2,593,837
Vanguard Group Vanguard U.S. Growth Portfolio N/A 1,423,006 995,736
Vanguard Group Vanguard Wellington Fund N/A 697,332 548,509
Vanguard Group Comshare Stock Fund N/A 659,618 717,578
<CAPTION>
(a) (b) (h)
Identity of Party Description of Current Value
Involved Asset of Asset on (i)
----------------- -------------- Transaction Date Net Gain(Loss)
---------------- --------------
<S> <C> <C> <C>
Vanguard Group Vanguard Money Market - Prime Portfolio $ 906,292 N/A
Vanguard Group Vanguard Bond Index Fund- Total Bond Market 986,508 N/A
Vanguard Group Vanguard Index 500 Portfolio 1,958,943 N/A
Vanguard Group Vanguard U.S. Growth Portfolio 1,351,921 N/A
Vanguard Group Vanguard Wellington Fund 1,046,064 N/A
Vanguard Group Comshare Stock Fund 1,338,965 N/A
Vanguard Group Vanguard Money Market - Prime Portfolio 1,452,767 --
Vanguard Group Vanguard Bond Index Fund- Total Bond Market 400,381 $ 8,403
Vanguard Group Vanguard Index 500 Portfolio 4,404,871 1,811,034
Vanguard Group Vanguard U.S. Growth Portfolio 1,423,006 427,270
Vanguard Group Vanguard Wellington Fund 697,332 148,823
Vanguard Group Comshare Stock Fund 659,618 (57,960)
</TABLE>
<PAGE> 16
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report on the June 30, 1998 financial statements of the Profit
Sharing Plan of Comshare, Incorporated dated September 24, 1998; included in
this Form 11-K into the Company's previously filed Form S-8 and S-3 registration
statements (File No. 33-6730, File No. 33-9755-3, File No. 33-28437, File No.
33-27002, File No. 33-37564, File No. 33-85720, File No. 33-87706, File No.
33-87708, File No. 33-86908 and File No. 33-65109).
Arthur Andersen LLP
Detroit, Michigan
September 25, 1998.
