SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11)c) or Rule 14a-12
Timberline Software Corporation
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
_________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
5) Total fee paid:
_________________________________________________________________
[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[TIMBERLINE SOFTWARE LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
The annual meeting of shareholders of Timberline Software Corporation
will be held at 4:00 p.m. on Tuesday, April 25, 2000, at the principal offices
of the corporation located at 15195 N.W. Greenbrier Parkway, Beaverton,
Oregon. At the meeting we will ask you to:
1. To elect four directors;
2. Ratify the appointment of Deloitte & Touche LLP as our independent
auditors;
3. Approve the 2000 Stock Incentive Plan; and
4. To transact such other business as may properly come before the
annual meeting or any adjournments thereof.
If you were a shareholder of record at the close of business on March
15, 2000, you may vote at the annual meeting or any adjournments thereof.
Further information regarding voting rights and the business to be
transacted at the annual meeting is given in the accompanying proxy statement.
We appreciate your continued interest as a shareholder in the affairs of our
company.
BY ORDER OF THE BOARD OF DIRECTORS
Carl C. Asai, Corporate Secretary
March 22, 2000
Beaverton, Oregon
YOUR VOTE IS IMPORTANT
We cordially invite all shareholders to attend the annual meeting
personally. Whether or not you are able to attend, please be sure to sign,
date and promptly return your proxy in the enclosed pre-paid envelope.
You may revoke your proxy at any time before the vote is taken at the
meeting. You may revoke your proxy by submitting a proxy bearing a later date,
or by notifying the Corporate Secretary of Timberline Software Corporation
(personally in writing or by mail) of your wish to revoke your proxy. You may
also revoke your proxy by oral request if you are present at the meeting,
although attending the meeting will NOT, of itself, revoke a previously
submitted proxy.
<PAGE>
13
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF TIMBERLINE SOFTWARE CORPORATION
April 25, 2000
We are planning to hold our annual shareholders meeting at 4:00 p.m. on
Tuesday, April 25, 2000, at the principal offices of the corporation located
at 15195 N.W. Greenbrier Parkway, Beaverton, Oregon. At the meeting we will
ask you to vote on the election of four directors, ratification of our
independent auditors for 2000, and the adoption of the 2000 Stock Incentive
Plan.
We are sending you this proxy statement to provide you with important
information about the business to take place at the meeting. We are providing
this information so that you will be fully informed when you vote your shares.
If you owned shares of common stock of record as of March 15, 2000, you
may vote at the annual meeting. To have a quorum to conduct business, there
must be a majority of the outstanding shares represented at the meeting, in
person or by proxy. An abstention from a given matter will not affect the
presence of the shares as to determination of a quorum.
The Board of Directors is soliciting proxies to be used at the meeting.
You do not need to attend the meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy form.
You may revoke your proxy at any time before the vote is taken at the
meeting. You may revoke your proxy by submitting a proxy bearing a later date
or by notifying the Corporate Secretary of Timberline Software Corporation
(personally in writing or by mail) of your wish to revoke your proxy. You may
also revoke your proxy by oral request if you are present at the meeting.
You may still attend the meeting even if you have submitted a proxy. You
should be aware that simply attending the meeting will not, of itself, revoke
a proxy.
We are mailing this proxy statement on or about March 22, 2000. We are
paying the entire cost of solicitation of proxies, including expenses incurred
by banks, brokers, and other nominees in forwarding soliciting materials to
their principals and obtaining authorization for the execution of proxies.
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Business of the Meeting
Agenda Item 1. Election of Directors
At the meeting, you will be asked to vote on the election of four
directors. Directors are elected by a plurality of votes, which means that
nominees receiving the most votes are elected, regardless of how many votes
they receive. You may not accumulate votes in the election of directors.
Rather, each shareholder may cast votes for each of the open positions equal
to the number of shares held.
Our bylaws provide for a Board of Directors consisting of not less than
two and not more than nine directors, with the exact number determined from
time to time by resolution of the Board of Directors. The Board of Directors
has set the number of directors at four.
The Board of Directors is nominating Thomas P. Cox, James A. Meyer,
Curtis L. Peltz, and Donald L. Tisdel, for election to serve one-year terms.
All of the nominees are currently serving as directors.
If you submit a completed proxy, the individuals named as proxy holders
will vote your shares as you instruct. If you do not specify your choices,
then the persons named in the proxy will vote for the election of the nominees
listed above.
If any of the nominees is not available for election, your shares will
be voted for a substitute nominee chosen by the Board of Directors. We believe
all nominees will be available for election. We recommend a vote FOR the
election of all nominees.
Information about our Directors
Thomas P. Cox, age 65, has been a director of Timberline since 1998.
Prior to his retirement, he served as Executive Vice President, a position he
held since April 1998. Mr. Cox joined Timberline in 1982 as Vice President --
Finance and became Senior Vice President -- Finance in 1986.
James A. Meyer, age 63, serves as our Chairman of the Board of
Directors and has been a director since 1980. Mr. Meyer is a private
business investor.
Curtis L. Peltz, age 47, serves as our President and Chief Executive
Officer, positions he has held since 1997 and 1998, respectively. Mr. Peltz
has been with Timberline since 1978 in various management and programming
positions.
Donald L. Tisdel, age 65, has been a director of Timberline since 1983.
Mr. Tisdel is Managing Director of Northwest Capital Appreciation, Inc., a
merchant banking firm facilitating financing and acquisitions of
intermediate-size businesses. Since 1996, Mr. Tisdel has been involved in the
management of Northwest Capital Partners I, L.P., an investment partnership.
Board Meetings and Committees
The Board of Directors met 12 times during 1999, and each director
attended at least 75 percent of those meetings, as well as meetings of
committees on which such director served.
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The Board of Directors has a standing audit committee that meets with
our independent auditors to plan for and review the annual audit reports. The
members of the audit committee are Messrs. Meyer and Tisdel.
The Board of Directors has a compensation committee that makes
recommendations to the full Board about compensation for executive officers,
including salaries, bonuses and other benefits. The compensation committee
consists of Messrs. Cox, Meyer, and Tisdel.
The Board of Directors has an administrative committee that is
responsible for general oversight of management. In addition, the
administrative committee administers the stock incentive plans. The
administrative committee consists of Messrs. Cox, Meyer, and Tisdel.
Compensation of Directors
Each director who is not an employee is paid $900 for each Board of
Directors meeting attended. In addition, under the 1998 Stock Incentive Plan,
Messrs. Cox, Meyer, and Tisdel each received, following the 1999 annual
meeting of shareholders, non-statutory stock options covering 6,667 shares of
common stock, exercisable at the fair market value of the common stock as of
the date of grant.
Information about Executive Officers
The following is information about our executive officers other than
Curtis L. Peltz, President and Chief Executive Officer, about whom information
is provided above.
Carl C. Asai, age 47, was appointed Senior Vice President -- Finance in
December 1999, and serves as Chief Financial Officer, and Corporate Secretary,
and Treasurer. Mr. Asai has been with Timberline since 1984 when he joined as
corporate controller, becoming Vice President -- Finance in April 1998. Prior
to that time, Mr. Asai was employed by the predecessor firm of Deloitte &
Touche LLP for ten years in various accounting and auditing positions.
James O. Campbell, age 43, was appointed Senior Vice President -- Sales
in December 1999. Mr. Campbell has held various sales management positions
since joining Timberline in 1989.
Thomas W. Coleman, age 44, was appointed Senior Vice President -- Product
Development in December 1999. Mr. Coleman has held various positions in
customer support, technical publications, quality assurance and product
development, since 1983.
John M. Geffel, age 47, was appointed Senior Vice President -- Marketing
and Operations in December 1999. Mr. Geffel has held various marketing
positions since joining Timberline in 1983.
Matthew S. Lange, age 36, is Senior Vice President -- Product Management.
Mr. Lange first joined Timberline in 1995, serving in customer support,
quality assurance and product management areas. From September 1997 to April
1999, Mr. Lange was employed by Tektronix as a quality assurance manager in
the color printing and imaging division. In April 1999, Mr. Lange returned to
Timberline and in December was appointed Senior Vice President -- Product
Management.
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Carol A Vega, age 42, was appointed Senior Vice President -- Client
Services in December 1999. Ms. Vega has served in customer support, quality
assurance and publications departments since joining Timberline in 1978. She
has served in senior management positions in the customer support area since
1996.
Executive Compensation
The following table shows compensation earned for the past three years
by Curtis L. Peltz, Chief Executive Officer, and each of the four highest
compensated executive officers that earned in excess of $100,000 per year.
<TABLE>
<CAPTION>
Summary Compensation Table
- --------------------------------------------------------------------------------------------------------
Other All
Annual Compensation Annual Other
------------------- Compensa- Compensa-
Name and Principal Position Year Salary Bonus tion(2) tion(3)
- -------------------------------------------------- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Curtis L. Peltz, ................................. 1999 $210,000 $100,000 $ 8,311 $ 11,246
President, Chief
Executive Officer 1998 $151,915 $ 33,000 $ 5,936 $ 3,577
1997 $127,182 -- $ 349 $ 5,036
Carl C. Asai, Sr. Vice ........................... 1999(4) $111,612 $ 8,816 $ 5,132 $ 7,737
President -- Finance,
Chief Financial Officer
James O. Campbell, Sr. ...........................
Thomas W. Coleman, Sr. ........................... 1999(4) $104,520 $ 8,352 $ 4,741 $ 7,028
Vice President --
Product Development
John M. Geffel, Sr. .............................. 1999(4) $100,614 $ 19,710 $ 5,188 $ 7,177
Vice President --
Marketing and Operations
</TABLE>
(1) Includes amounts paid in 2000 but attributable to 1999.
(2) Represents profit-sharing payments made during the fiscal year.
(3) Represents matching contributions to the 401(k) plan and unused vacation
pay accrued during the fiscal year and paid in the following year
(4) This person became an executive officer in 1999.
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<PAGE>
<TABLE>
<CAPTION>
Options Granted in Last Fiscal Year
--------------------------------------------------------------------
Potential
Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants For Option Term(1)
----------------------------------------------- -------------------
Number of Percentage of
Securities Total Options Exercise
Underlying Granted to Price
Options Employees in (Dollars Expiration
Granted Fiscal Year per Share) Date 5% 10%
-------- --------- ---------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Curtis L. Peltz 47,158 9.2% $8.91 4/01/09 $264,137 $669,375
Carl C. Asai 5,792 1.1% $8.91 4/01/09 $32,442 $82,213
James O. Campbell 8,480 1.7% $8.91 4/01/09 $47,497 $120,368
John M. Geffel 5,808 1.1% $8.91 4/01/09 $32,531 $82,440
</TABLE>
(1) The potential realizable value of the options granted is calculated by
multiplying the difference between the exercise price of the option and
the market value per share of the underlying stock (assuming a 5% or
10%, as the case may be, compounded annual increase of the stock price
from the date of grant to the final expiration of the option) by the
number of shares underlying the options granted.
<TABLE>
<CAPTION>
Aggregate Option Exercises Last Fiscal Year and Fiscal Year-End
Option Values (1)
---------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying In-the-Money Options
Unexercised at FY-End (2)
Options at FY-End
--------------------- -----------------------
Number
of
Shares
Name Acquired
on Value Exercis- Unexercis- Exercis- Unexercis-
Exercise Realized able able able able
- ----------------- ---------- --------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Curtis L. Peltz 20,000 $236,738 66,667 91,603 $663,337 $655,910
Carl C. Asai -- -- 11,067 6,504 $130,935 $30,956
John M. Geffel 2,666 $30,442 6,996 5,808 $86,663 $26,317
</TABLE>
(1) All share amounts have been adjusted to reflect the 4-for-3 stock split
paid November 19, 1999.
(2) On December 31, 1999, the market price of the common stock was $13.44
per share. For purposes of the foregoing table, stock options with an
exercise price less than that amount are considered to be "in-the-money"
and have a value equal to the difference between that amount and the
exercise price of the stock option, multiplied by the number of shares
covered by the stock option.
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Report of the Compensation Committee on Executive Compensation
The compensation committee consists of three non-employee directors and
makes recommendations to the Board of Directors as to compensation for the
executive officers. The primary objectives of the committee's executive
compensation policy are (i) to provide a total compensation package that is
competitive in the industry in order to attract and retain qualified
executives responsible for the company's success, and (ii) to reward
achievement of corporate goals and increasing shareholder value. The
compensation package includes a competitive base salary, cash bonuses, equity
compensation to provide incentives for future success, and a competitive
benefits package.
The committee reviews executive compensation on an annual basis, and
focuses its review on salary, bonuses and equity compensation. The committee
sets base salaries at levels it believes are fair and adequate to attract and
retain qualified executive officers. Adjustments to base salary are based on
the evaluation of each executive officer's performance, the overall financial
performance of the company, and each officer's ability to develop and execute
strategies to further the corporate goals. The committee believes that base
salaries paid to executive officers in 1999 were reasonable.
The committee believes that incentive compensation in the form of cash
bonuses and equity compensation are important components of the total
compensation package. These components provide incentives to achieve financial
performance goals that serve to enhance shareholder value. In particular,
stock options motivate executive officers to implement strategic plans that
will enhance the value of their equity in the company by aligning their
interests with those of all shareholders.
Based on the stated objectives and policy of the committee, Curtis L.
Peltz, President and Chief Executive Officer, received a base salary of
$210,000 and a cash bonus of $100,000 for achieving Timberline's corporate
goals in 1998. The committee believes this compensation was reasonable,
considering the financial performance of the company during 1998 and 1999.
Compensation Committee:
Thomas P. Cox
James A. Meyer
Donald L. Tisdel
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires that all
executive officers, directors and persons who beneficially own more than 10
percent of the common stock file reports of their beneficial ownership of
common stock and periodically report changes in their ownership. These reports
must be filed with the Securities and Exchange Commission with a copy sent to
us.
Based solely upon our review of the copies of the filings that we
received with respect to the fiscal year ended December 31, 1999, we believe
that all reporting persons made all required Section 16(a) filings with
respect to such fiscal year on a timely basis, with the exception of Carl
Asai, whose Form 3 initial statement of ownership was filed 15 days after it
was due.
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STOCK PERFORMANCE GRAPH
The following graph illustrates the comparison of the five-year
cumulative total return of Timberline common stock to the Nasdaq U.S. Stocks
Index and to the Nasdaq Computer & Data Processing Index. The graph assumes
the investment of $100 on December 31, 1994, in Timberline common stock and
each of the comparison indices, and assumes reinvestment of all dividends.
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C> <C>
TIMBERLINE SOFTWARE 100.00 134.94 208.16 361.11 542.44 713.70
NASDAQ STOCK MARKET (U.S.) 100.00 141.33 173.89 213.07 300.25 542.43
NASDAQ COMPUTER & DATA PROCESSING 100.00 152.28 187.95 230.90 412.23 871.27
</TABLE>
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Stock ownership of certain beneficial owners and management
The following table shows the number of shares that each of the
directors and named executive officers beneficially owned as of March 15,
2000, and the directors and executive officers as a group. The numbers
indicate shares held directly with sole voting and investment power, unless
otherwise indicated.
Percentage of
Shares
Name Number of Shares Outstanding
James A. Meyer 167,555 (1) 1.30%
Donald L. Tisdel 38,860 (2) *
Thomas P. Cox 177,884 (3) 1.39%
Curtis L. Peltz 130,544 (4) 1.01%
Carl C. Asai 27,790 (5) *
James O. Campbell 21,522 (6) *
Thomas W. Coleman 2,720 (7) *
John M. Geffel 8,448 (8) *
All directors and executive
officers as a group (10 persons) 595,811 (9) 4.57%
* less than 1.0%
(1) Includes 7,000 shares covered by options exercisable within 60 days
after March 15.
(2) Includes 32,002 shares covered by options exercisable within 60 days
after March 15.
(3) Includes 2,666 shares covered by options exercisable within 60 days
after March 15. Also includes 61,994 shares held by his spouse.
(4) Includes 100,678 shares covered by options exercisable within 60 days
after March 15.
(5) Includes 12,515 shares covered by options exercisable within 60 days
after March 15.
(6) Includes 21,522 shares covered by options exercisable within 60 days
after March 15.
(7) Includes 2,720 shares covered by options exercisable within 60 days
after March 15.
(8) Includes 8,448 shares covered by options exercisable within 60 days
after March 15.
(9) Includes 207,941 shares covered by options exercisable within 60 days
after March 15.
The following is the only person we are aware of that has beneficial
ownership of 5% or more of the common stock other than as set forth in the
table above:
Percentage of Shares
Name and address Number of Shares Outstanding
Kayne Anderson Investment 1,391,938(1) 10.98%
Management, LLC
1800 Avenue of the Stars
Los Angeles, California 90067
(1) Based solely on information as of December 31, 1999 provided on Schedule
13G filed with the Securities and Exchange Commission. Shares are owned
by several accounts managed, with discretion to purchase or sell
securities, by Kayne Anderson Investment Management, LLC, a registered
investment adviser. Kayne Anderson Investment Management, LLC disclaims
beneficial ownership of the shares reported.
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Agenda Item 2. Ratification of the Appointment of Independent Auditors
We have appointed Deloitte & Touche LLP as our independent auditors for
the fiscal year 2000, subject to ratification by the shareholders. Deloitte &
Touche LLP served as our independent auditors for the year ended December 31,
1999. Representatives of Deloitte & Touche LLP are expected to be present at
the annual meeting and will be given an opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
We recommend a vote in favor of the ratification of the appointment of
Deloitte & Touche LLP as our independent auditors.
Agenda Item 3. Approval of 2000 Stock Incentive Plan
In 1998, we adopted, and our shareholders approved, the 1998 Stock
Incentive Plan that provided for awards of various types of equity incentives
to employees, directors and other individuals that provide services of value
to us. To date, we have used that plan solely to grant non-statutory stock
options (options that do not qualify as incentive stock options under the
Internal Revenue Code) to executive officers and a broad range of our
employees. Under that plan, non-employee directors are entitled to automatic
grants of non-statutory stock options each year immediately following the
annual meeting of shareholders. The 1998 plan authorized the issuance of up to
approximately 889,000 shares, adjusted for previous stock splits, of which
approximately 387,000 shares are available for future grants. We anticipate
that the remaining authorized shares will be exhausted this year.
We believe that it is important and beneficial to our company to give
our employees an opportunity to participate in the ownership of the company.
In 1999, we granted options to substantially all of our employees, and we
expect to continue to do so. Equity compensation, in addition to regular
salaries, enables us to attract and retain highly qualified employees in an
extremely competitive market. Stock options provide employees with incentives
to increase productivity and profitability, thereby enhancing shareholder
value. Accordingly, we have decided to adopt a new stock incentive plan that
will permit us to continue our program of equity participation and compensate
our valued employees at a competitive level without placing undue demands on
our capital resources.
We have approved, and are recommending to shareholders, the adoption of
the 2000 Stock Incentive Plan. We discuss the more important features of the
plan below, but you should read the entire plan before you vote. A copy of the
plan is attached as an appendix to this proxy statement.
The plan provides for the possible issuance of up to 1,500,000 shares of
common stock upon exercise of incentive stock or non-qualified stock options,
or as grants of restricted stock. In the event any option granted expires
without being exercised, the unexercised shares formerly subject to that
option would again become available for options to be granted.
The plan became effective on February 24, 2000, subject to approval by
our shareholders, and will terminate 10 years after the effective date.
Termination of the plan will not affect any options that are outstanding at
that time. The plan is administered by the administrative committee of the
Board of Directors or, if no committee is appointed, by the full Board of
Directors.
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Each person receiving an option or a restricted stock grant must execute
a written agreement which sets forth the terms and conditions of the option or
grant, as determined in the sole discretion of the committee. Options are
exercisable for a set period of time not to exceed ten years from the date of
the grant, and may be subject to a vesting schedule, becoming incrementally
exercisable over a period of time. Restricted stock grants are subject to
vesting over a period of time, with unvested shares subject to repurchase by
the company at a pre-determined price in the event the grantee terminates his
or her employment.
In the event of a transaction involving a change of control of the
company, such as a merger or acquisition of the company, option holders would
be immediately entitled to exercise all of their options, notwithstanding any
vesting schedule. In addition, an optionee with at least 15 years of service
who retires upon reaching age 65 may, notwithstanding any vesting schedule,
immediately exercise all of his or her options. The age of retirement for
purposes of this benefit is reduced from 65 one year for each year of service
in excess of 15 years. Options expire 10 years after the date of grant and are
subject to earlier cancellation in the event an optionee ceases to be an
employee.
Options may be exercised only while the recipient is employed, or is
serving as a director, or within three months after termination of service
unless the person is disabled or dies, in which case all options terminate
after one year from the date of the disability or death. Options are not
transferable except by will or the laws of descent and distribution.
Options are designated as either "Incentive Stock Options," as defined
in Section 422 of the Internal Revenue Code, or "Non-Qualified Stock Options"
and are exercisable at a per share price not less than 100% of the fair market
value of the common stock on the date of the grant. Incentive stock options
granted to any person with beneficial ownership of 10% or more of the
outstanding shares must be exercisable at a per share price not less than 110%
of the fair market value of the common stock on the date of the grant. The
plan permits, at the discretion of the committee, the option holder to pay the
exercise price of any options with cash, company stock held by the option
holder for at least six months, or by the application of shares that could be
received upon exercise of the options (a "net" exercise, except that for
purposes of the plan, such shares will be treated as having been issued and
redeemed and not longer available for reissuance), with such shares valued at
the difference between the option exercise price and the fair market value of
the underlying shares. The plan also permits broker-assisted cashless
exercises of stock options.
Non-qualified stock options do not result in income to the grantee under
federal income tax law currently in effect until the option is exercised. At
the time of exercise of a non-qualified stock option, the recipient of the
option will realize ordinary income, and the corporation will be entitled to a
deduction for tax purposes, in the amount by which the market value of the
shares issued on exercise of the option exceeds the exercise price.
Incentive stock options have no tax consequences for the option
recipient or the corporation upon grant or exercise, except for possible
application of the alternative minimum tax under certain circumstances to the
option recipient. Upon sale of the shares received from the exercise of
incentive stock options, any gain realized is treated as capital gain if two
years have elapsed from the date of the grant and one year has elapsed from
the date of exercise. If these holding periods are not satisfied, the sale is
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deemed a disqualifying disposition, and that portion of any gain realized,
which is represented by the difference between the exercise price and the fair
market value of the shares as of the date of exercise of the option, is
treated as ordinary income and the corporation will be entitled to a
corresponding compensation expense deduction for income tax purposes.
Recommendation of the Board of Directors and Vote of Shareholders
Under the rules of the Nasdaq National Market, any plan providing for
the issuance of shares to directors and officers of the company must be
approved by the shareholders. The Board of Directors of Timberline unanimously
recommends that the shareholders vote in favor of the adoption of the 2000
Stock Incentive Plan. The persons named proxy holders intend to and will vote
your shares in favor of adoption of the plan, unless you instruct otherwise.
Agenda Item 4. Other Business
We are not aware of any other matters to be brought before the
shareholders at the annual meeting. In the event other matters are presented
for a vote at the annual meeting, the person or persons holding the proxies
will vote them in their discretion in accordance with their judgment on such
matters.
At the annual meeting, we will report on our business and shareholders
will have the opportunity to ask questions.
Voting at the Annual Meeting
Who may vote
If you were a shareholder of record of Timberline as of the close of
business on March 15, 2000, you are entitled to vote at the meeting.
Voting by proxy
You do not have to attend the meeting. You may vote your shares by proxy
if you wish. You may mark the enclosed proxy card to indicate your vote on the
matters presented at the meeting, and the individuals whose names appear on
the proxy card will vote your shares as you instruct.
If you submit a proxy with no instructions, the named proxy holders will
vote your shares in favor of the nominees for directors, in favor of
ratification of Deloitte & Touche LLP as our independent auditors, and in
favor of adoption of the 2000 Stock Incentive Plan. In addition, the named
proxy holders will vote in their discretion on such other matters that may be
considered at the shareholders' meeting. The Board of Directors has named
Curtis L. Peltz and Carl C. Asai as the proxy holders. Their names appear on
the proxy form accompanying this proxy statement. You may name another person
to act as your proxy if you wish, but it is not necessary to do so.
Revoking a proxy
You may revoke your proxy at any time before the vote is taken at the
meeting. You may revoke your proxy by submitting a proxy bearing a later date
or by notifying the Corporate Secretary of Timberline Software Corporation
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<PAGE>
(personally in writing or by mail) of your wish to revoke your proxy. You may
also revoke your proxy by oral request if you are present at the meeting.
You may still attend the meeting even if you have submitted a proxy. You
should be aware that simply attending the meeting will not, of itself, revoke
a proxy.
Please complete, date, and sign the accompanying proxy and return it
promptly to us in the enclosed, postage-paid envelope, even if you plan to
attend the meeting.
Number of shares that may vote
The authorized capital stock of Timberline consists of 20 million shares
of common stock. As of March 15, 2000, there were 12,833,969 shares of common
stock outstanding and entitled to vote at the meeting.
How we determine a quorum
Shareholders holding at least a majority of the outstanding shares of
common stock must either attend the meeting or submit proxies to have a
quorum. If you come to the meeting or submit a proxy, but you abstain from
voting on a given matter, we will still count your shares as present for
determining a quorum.
How we count votes
The named proxies will vote your shares as you instruct on your proxy.
We will not count abstentions or broker non-votes for or against a matter
submitted to a vote of shareholders. Each share is entitled to one vote.
A broker non-vote occurs when a broker or other nominee holder, such as
a bank, submits a proxy representing shares that another person actually owns,
and that person has not given voting instructions to the broker or other
nominee. On some matters, such as the election of directors, a broker or other
nominee can vote those shares without instructions from the beneficial owner.
On other matters, such as adoption of the stock incentive plan, a broker may
only vote those shares if the beneficial owner gives the broker voting
instructions. We will count broker non-votes as present for establishing a
quorum.
Election of directors
Directors are elected by a plurality of votes, which means that the
nominees that receive the most votes will be elected, regardless of how many
votes each nominee gets. You may not accumulate your votes in electing
directors, but rather, you may vote the total number of shares that you own
for each open director position.
Ratification of the appointment of independent auditors
The proposal to ratify the appointment of Deloitte & Touche LLP will be
approved if more shares are voted in favor of the proposal than voted against
the proposal. Abstentions and broker non-votes will have no effect on the vote
on the proposal.
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2000 Stock Incentive Plan
The proposal to adopt the 2000 Stock Incentive Plan will be approved if
more shares are voted in favor of the proposal than voted against the
proposal. Therefore, we will not count abstentions and broker non-votes as
votes for or against the proposal.
What if I do not mark my proxy?
If you submit a signed proxy without giving voting instructions, the
named proxies will vote your shares in their discretion. Those individuals
named on the enclosed proxy form intend to vote for the Board of Directors'
nominees for director, for ratification of the appointment of Deloitte &
Touche LLP, and in favor of the adoption of the 2000 Stock Incentive Plan. If
you do not sign your proxy, we will not count you as present for determining a
quorum, and we will not count your votes.
How many shares do directors and officers own?
Directors and executive officers beneficially owned 595,811 shares, of
which 387,870 are entitled to vote. Those shares constitute 3.0% percent of
the total shares outstanding and entitled to be voted at the meeting. We
expect all directors and executive officers to vote for the Board's nominees
for directors, for ratification of the appointment of Deloitte & Touche LLP as
our independent auditors, and in favor of the adoption of the 2000 Stock
Incentive Plan, although they are not obligated to do so.
Shareholder Proposals
If you wish to include a proposal in our proxy statement for the 2001
annual meeting of shareholders, you must deliver the proposal and supporting
information, as required by the rules of the Securities and Exchange
Commission, to the Corporate Secretary of Timberline at 15195 N.W. Greenbrier
Parkway, Beaverton, Oregon 97006 on or before November 15, 2000, for your
proposal to be included in our proxy statement for that meeting.
Annual Reports and Financial Statements
We are enclosing with this proxy statement a copy of our Annual Report
to Shareholders for the year ended December 31, 1999. You may obtain
additional copies of the Annual Report and our annual report on Form 10-K
filed with the Securities and Exchange Commission by writing to Carl C. Asai,
Senior Vice President and Chief Financial Officer, at the address indicated
above. The Annual Report is not part of the proxy solicitation materials.
March 22, 2000
By Order of the Board of Directors
Carl C. Asai, Corporate Secretary
Your vote is important. Please send in your proxy immediately, using the
envelope provided.
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Appendix
TIMBERLINE SOFTWARE CORPORATION
2000 STOCK INCENTIVE PLAN
ARTICLE I - Purpose of the Plan
The purpose of this Stock Incentive Plan (the "Plan") is to advance the
interests of Timberline Software Corporation, an Oregon business corporation
(the "Company") and its shareholders by enabling the Company to attract and
retain the services of people with training, experience and ability and to
provide additional incentive to employees and non-employee directors of the
Company and others who provide services to the Company by giving them an
additional opportunity to participate in the ownership of the Company.
ARTICLE II - Definitions
As used herein, the following definitions will apply:
(a) "Available Shares" means the number of shares of Common Stock available
at any time for issuance pursuant to Incentive Stock Options,
Non-Qualified Stock Options or Restricted Stock Grants as provided in
Article III.
(b) "Award" means any grant of an Incentive Stock Option, grant of a
Non-Qualified Stock Option or the making of a Restricted Stock Grant.
(c) "Board of Directors" means the Board of Directors of the Company.
(d) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the committee appointed by the Board of Directors
under Article V to administer this Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Timberline Software Corporation, an Oregon business
corporation, and, unless the context otherwise requires, any majority
owned subsidiary of the Company and any successor or assignee of the
Company by merger, consolidation, acquisition of all or substantially
all of the assets of the Company or otherwise.
(h) "Disabled" means a mental or physical impairment which has lasted or
which is expected to last for a continuous period of 12 months or more
and which renders an Optionee unable, in the Committee's sole
discretion, of performing the duties which were assigned to the Optionee
during the 12 month period prior to such determination. The Committee's
determination of the existence of an individual's disability will be
effective when communicated in writing to the Optionee and will be
conclusive on all of the parties.
(i) "Effective Date" means the date on which this Plan is approved by the
Board of Directors.
(j) "Employee" means any person employed by the Company.
(k) "Exercise Price" means the price per share at which a shares of Common
Stock may be purchased upon exercise of an Incentive Stock Option or
Non-Qualified Stock Option.
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(l) "Fair Market Value" means:
1) If the Common Stock is traded on a national securities exchange or
on either the Nasdaq National Market or Nasdaq SmallCap Market,
the last reported sales price per share of Common Stock for such
date, or if no transactions occurred on such date, on the last
date on which trades occurred;
2) If the Common Stock is not traded on a national securities
exchange or on Nasdaq but bid and asked prices are regularly
quoted on the OTC Bulletin Board Service, by the National
Quotation Bureau or any other comparable service, the average
between the highest bid and lowest asked prices per share of
Common Stock as reported by such service for such date or, if such
date was not a business day, on the preceding business day; or
3) If there is no public trading of the Common Stock within the terms
of subparagraphs 1 or 2 of this subsection, the price per a share
of Common Stock, as determined by the Committee in its sole
discretion.
(m) "Grantee " means any individual who receives a Restricted Stock Grant.
(n) "Incentive Stock Option" means an option to purchase shares of Common
Stock that the Committee indicates is intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code and is granted under Article VI of this Plan.
(o) "Non-Qualified Stock Option" means an option to purchase shares of
Common Stock that the Committee either indicates is intended to be a
nonqualified stock option or indicates is not intended to qualify as an
incentive stock option, or otherwise fails to qualify as an incentive
stock option, within the meaning of Section 422 of the Internal Revenue
Code and is granted subject to the terms and conditions of Article VII.
(p) "Optionee" means any individual who is granted either an Incentive Stock
Option or a Non-Qualified Stock Option.
(q) "Reserved Shares" means the number of shares of Common Stock reserved
for issuance pursuant to Awards as provided in Section 3.1 of Article
III.
(r) "Restricted Stock Grant" means a grant of shares of Common Stock subject
to the terms and conditions of Article IX.
(s) "Retirement" means voluntary termination of service by an Employee with
15 or more years of service with the Company who has attained the age of
65 at such termination, provided that an Employee with at least 15 years
of service with the Company shall be deemed to have met the definition
of Retirement upon voluntary termination at an age that, if added to the
number of years of service exceeding 15 years, would total 65. By way of
example, an Employee with 20 years of service shall be entitled to the
benefits for Retirement under this plan upon reaching the age of 60.
Retirement does not include termination for cause, as such term is
defined or interpreted by the Committee in its sole discretion.
(t) "Securities Act" means the Securities Act of 1933, as amended.
(u) "Significant Shareholder" means any person who owns stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the
Company. For purposes of this definition a person shall be considered as
owning all stock owned, directly or indirectly by or for such person's
brothers and sisters, spouse, ancestors and lineal descendants. In
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addition, stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries to
the extent required by Section 422 of the Internal Revenue Code.
ARTICLE III - Stock Subject to the Plan
3.1 Aggregate Number of Reserved Shares. Subject to adjustment in
accordance with Section 10.1, the total number of shares of Common Stock
reserved for issuance pursuant to all Awards is initially established at
1,500,000 shares.
3.2 Number of Available Shares. At any point in time, the number of
Available Shares shall be the number of Reserved Shares minus:
(a) the number of outstanding shares of Common Stock covered by Restricted
Stock;
(b) the number of outstanding shares of Common Stock issued upon the
exercise of Incentive Stock Options and Non-Qualified Stock Options; and
(c) the number of shares covered by Incentive Stock Options and
Non-Qualified Stock Options that have been granted and that have not yet
expired, been terminated or been cancelled to the extent that such
options have not been exercised.
If an Incentive Stock Option or Non-Qualified Stock Option expires,
terminates or is cancelled for any reason without having been exercised in
full, the shares of Common Stock covered by such option that were not
purchased through the exercise of such option will be added back to the
Available Shares. However, shares of Common Stock used by an Optionee to
satisfy withholding obligations upon the exercise of a Non-Qualified Stock
Option shall nonetheless, for purposes of this Plan, be considered as having
been issued upon the exercise of such option.
3.3 Reservation of Shares. Available Shares shall consist of authorized
but unissued shares of Common Stock. The Company will, at all times, reserve
for issuance shares of Common Stock equal to the sum of (i) the number of
shares covered by Incentive Stock Options and Non-Qualified Stock Options that
have been granted and which have not yet expired, been terminated or been
cancelled to the extent that such options have not been exercised at such time
and (ii) the number of Available Shares.
3.4 Annual Limit on Number of Shares to Any One Person. No person will
be eligible to receive Awards that, in aggregate, exceed 100,000 shares in any
calendar year except in connection with the hiring or commencement of services
from such person in which case such limit shall be 200,000 shares during such
calendar year.
ARTICLE IV - Commencement and Duration of the Plan
4.1 Effective Date of the Plan. This Plan will be effective as of the
Effective Date, subject to the provisions of Section 4.2.
4.2 Shareholder Approval of the Plan. This Plan will be submitted for
the approval of the shareholders of the Company within twelve (12) months of
the Effective Date. This Plan will be deemed approved by the shareholders if
approved by a majority of the votes cast at a duly held meeting of the
Company's shareholders at which a quorum is present in person or by proxy.
Awards may be made prior to such shareholder approval provided that such
Awards are conditioned upon such approval and state by their terms that they
will be null and void if such shareholder approval is not obtained.
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4.3 Termination of the Plan. This Plan will terminate ten years from the
Effective Date. In addition, the Board of Directors will have the right to
suspend or terminate this Plan at any time. Any termination of this Plan will
not affect the exercisability of any Incentive Stock Options or Non-Qualified
Stock Options granted prior to such termination. Termination of the Plan will
not terminate or otherwise affect any Incentive Option Agreement (as defined
in Section 6.1), Non-Qualified Option Agreement (as defined in Section 7.1) or
Restricted Stock Agreement (as defined in Section 9.1) then in effect.
ARTICLE V - Administration
Subject to the provisions of this Plan and any additional terms or
conditions which may, from time to time, be imposed by the Board of Directors,
the Committee will administer this Plan and will have the authority, in its
sole discretion, to grant Awards in accordance with Articles VI, VII and IX,
respectively. The Committee may, from time to time, adopt rules and
regulations relating to the administration of this Plan and may, but is not
required to, seek the advice of legal, tax, accounting and compensation
advisors. Decisions of the Committee with respect to the administration of
this Plan, the interpretation or construction of this Plan or the
interpretation or construction of any written agreement evidencing an Award
will be final and conclusive, subject only to review by the full Board of
Directors. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in this Plan or in any agreement evidencing an
Award in the manner and to the extent it deems appropriate.
The Board of Directors shall appoint the Committee, which shall consist
of at least two members of the Board of Directors. For purposes of this
paragraph, directors who are not "outside directors" as such term is defined
in Treasury Regulation sec. 1.162-27(e)(3) and directors who are not
"non-employee directors" as such term is defined in Rule 16b-3 issued by the
Securities and Exchange Commission under Section 16 of the Securities Exchange
Act of 1934, as amended, shall be referred to as "nonqualified directors."
Nonqualified directors may serve on the Committee. However, nonqualified
directors shall be deemed (notwithstanding any statement to the contrary which
may be contained in minutes of a meeting of the Committee) to have abstained
from any action requiring, under Section 162(m) of the Internal Revenue Code,
the approval of a committee consisting solely of outside directors, or from
any action requiring, under Rule 16b-3, the approval of a committee consisting
solely of non-employee directors. The assent of any such nonqualified director
shall be ignored for purposes of determining whether or not any such actions
were approved by the Committee. If the Committee proposes to take an action by
unanimous consent in lieu of a meeting and such action would require under
Section 162(m) the approval of a committee consisting solely of outside
directors or such action would require under Rule 16b-3 the approval of a
committee consisting solely of non-employee directors, the nonqualified
director shall, for purposes of such consent, be deemed to not be a member of
the Committee.
If no Committee is appointed, the Board of Directors shall act as the
Committee and will have all the powers, duties and responsibilities of the
Committee as set forth in this Plan. In addition, the Board of Directors may
at any time by resolution abolish the Committee and assume the duties and
responsibilities of the Committee.
ARTICLE VI - Incentive Stock Option Terms and Conditions
Incentive Stock Options will be subject to the following terms and
conditions.
6.1 Requirement for a Written Incentive Stock Option Agreement. Each
Incentive Stock Option will be evidenced by a written option agreement
("Incentive Option Agreement"). The Committee will determine from time to time
the form of Incentive Option Agreement to be used. The terms of the Incentive
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Option Agreement must be consistent with this Plan and any inconsistencies
will be resolved in accordance with the terms and conditions specified in this
Plan. Except as otherwise required by this Section 6, the terms and conditions
of Incentive Stock Options do not need to be identical.
6.2 Who May be Granted an Incentive Stock Option. An Incentive Stock
Option may be granted to any Employee who, in the judgment of the Committee,
has performed or will perform services of importance to the Company in the
management, operation and development of the business of the Company or of one
or more of its subsidiaries. The Committee, in its sole discretion, shall
determine when and to which Employees Incentive Stock Options are granted.
6.3 Number of Shares Covered by an Incentive Stock Option. Each
Incentive Option Agreement shall specify the number of shares of Common Stock
that may be purchased upon exercise of the Incentive Stock Option, as
determined by the Committee in its sole discretion.
6.4 Vesting Schedule under an Incentive Stock Option. Each Incentive
Option Agreement shall specify when and to what extent the Incentive Stock
Option is exercisable, and may provide that the Incentive Stock Option is
immediately exercisable as to all of the shares of Common Stock covered by
such option or is only exercisable in accordance with a vesting schedule.
Notwithstanding any vesting schedule set forth in the Incentive Option
Agreement, an Incentive Stock Option shall, upon Retirement of the Optionee,
but subject to the limitations set forth in the following paragraph, become as
of the effective date of Retirement immediately exercisable as to all shares
covered by such Incentive Stock Option.
Notwithstanding the foregoing, to the extent that an Incentive Stock
Option (together with other incentive stock options within the meaning of
Section 422 of the Internal Revenue Code held by such Optionee with an equal
or lower exercise price per share) purports to become exercisable for the
first time during any calendar year as to shares of Common Stock with a Fair
Market Value (determined at the time of grant) in excess of $100,000, such
excess shares shall be considered to be covered by a Non-Qualified Stock
Option and not an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code. Any Incentive Stock Option that was not either
approved by (i) a committee of non-employee directors within the requirements
of Rule 16b-3 or (ii) the full board of directors of the Company, shall,
notwithstanding the acceleration of vesting upon Retirement of the Optionee
provided for in this Section 6.4, Section 10.2 hereof, or the terms set forth
in the Incentive Option Agreement, not be exercisable until at least six
months after the date of grant.
6.5 Exercise Price of an Incentive Stock Option. Each Incentive Option
Agreement shall specify the Exercise Price of the Incentive Stock Option. The
Exercise Price will be 100% of Fair Market Value as of the date on which the
Incentive Stock Option was granted. However, if the Optionee is a Significant
Shareholder, the Exercise Price will be 110% of Fair Market Value as of the
date on which the Incentive Stock Option was granted.
6.6 Duration of an Incentive Stock Option--Generally. Each Incentive
Option Agreement shall set forth the term of the Incentive Stock Option
provided that such term will not exceed 10 years from the date on which such
option was granted. Notwithstanding the foregoing, if the Optionee is a
Significant Shareholder, the term will not exceed 5 years from the date on
which the Incentive Stock Option was granted. The Optionee shall have no
further right to exercise an Incentive Stock Option following the expiration
of such term.
6.7 The Effect of Termination of Employment on the Term of an Incentive
Stock Option. If an Optionee, while possessing an Incentive Stock Option that
has not expired or been fully exercised, ceases to be an Employee of the
Company for any reason other than as a result of the death or disability of
the Optionee (as provided for in Section 6.8 and 6.9, respectively), the
Incentive Stock Option may be exercised, to the extent not previously
exercised and subject to any vesting provisions of the Incentive Option
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Agreement, at any time within three months following the date the Optionee
ceased to be an Employee of the Company, except that this provision will not
extend the time within which an Incentive Stock Option may be exercised beyond
the expiration of the term of such option. The Incentive Option Agreement may
provide that if the Optionee's employment is terminated by the Company for
cause, as determined by the Company's President or Board of Directors in their
reasonable discretion, the Incentive Stock Option will terminate immediately
upon the Company's notice to the Optionee of such termination.
6.8 The Effect of the Death of an Optionee on the Term of an Incentive
Stock Option. If an Optionee, while possessing an Incentive Stock Option that
has not expired or been fully exercised, ceases to be an Employee of the
Company as a result of the death of the Optionee, the Incentive Stock Option
may be exercised, to the extent not previously exercised and subject to any
vesting provisions of the Incentive Option Agreement, at any time within 12
months following the date of the Optionee's death, except that this provision
will not extend the time within which an Incentive Stock Option may be
exercised beyond the expiration of the term of such option.
6.9 The Effect of the Disability of an Optionee on the Term of an
Incentive Stock Option. If an Optionee, while possessing an Incentive Stock
Option that has not expired or been fully exercised, ceases to be an Employee
of the Company as a result of the Optionee becoming Disabled, the Incentive
Stock Option may be exercised, to the extent not previously exercised and
subject to any vesting provisions of the Incentive Option Agreement, at any
time within 12 months following the date of the Optionee becoming Disabled,
except that this provision will not extend the time within which an Incentive
Stock Option may be exercised beyond the expiration of the term of such
option.
6.10 Transferability. No Incentive Stock Option may be transferred by
the Optionee other than by will or the laws of descent and distribution upon
the death of the Optionee.
6.11 Tax Treatment and Savings Clause. Nothing contained in this Plan,
any Incentive Option Agreement, any document provided by the Company to an
Optionee, or any statement made by or on behalf of the Company, shall
constitute a representation or warranty of the tax treatment of any option or
that such option shall qualify as an incentive stock option under Section 422
of the Internal Revenue Code. Any option that is designated as an Incentive
Stock Option but which, either in whole or in part, fails for any reason to
qualify as an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code, or which fails to satisfy requirements which apply only
to Incentive Stock Options, shall be treated as an incentive stock option to
the fullest extent permitted under Section 422 of the Internal Revenue Code
and this Plan and shall otherwise, notwithstanding such designation, be
treated as a Non-Qualified Stock Option.
ARTICLE VII - Nonqualified Stock Option Terms And Conditions
Non-Qualified Stock Options shall be subject to the following terms and
conditions.
7.1 Requirement for a Written Non-Qualified Stock Option Agreement. Each
Non-Qualified Stock Option will be evidenced by a written option agreement
("Non-Qualified Option Agreement"). The Committee will determine from time to
time the form of Non-Qualified Option Agreement to be used. The terms of the
Non-Qualified Option Agreement must be consistent with this Plan and any
inconsistencies will be resolved in accordance with the terms and conditions
specified in this Plan. Except as otherwise required by this Section 7, the
terms and conditions of Non-Qualified Stock Options do not need to be
identical.
7.2 Who May be Granted an Non-Qualified Stock Option. A Non-Qualified
Stock Option may be granted to any Employee, any director of the Company and
any other individual who, in the judgment of the Committee, has performed or
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will perform services of importance to the Company in the management,
operation and development of the business of the Company or of one or more of
its subsidiaries. The Committee, in its sole discretion, shall determine when
and to whom Non-Qualified Stock Options are granted.
7.3 Number of Shares Covered by a Non-Qualified Stock Option. Each
Non-Qualified Option Agreement shall specify the number of shares of Common
Stock that may be purchased upon exercise of the Non-Qualified Stock Option,
as determined by the Committee in its sole discretion.
7.4 Vesting Schedule Under a Non-Qualified Stock Option. Each
Non-Qualified Option Agreement shall specify when and to what extent the
Non-Qualified Stock Option is exercisable, and may provide that the
Non-Qualified Stock Option is immediately exercisable as to all of the shares
of Common Stock covered by such option or is only exercisable in accordance
with a vesting schedule. Notwithstanding any vesting schedule set forth in the
Non-Qualified Option Agreement, upon Retirement of the Optionee, a
Non-Qualified Stock Option shall, subject to the following sentence of this
Section 7.4, become as of the effective date of Retirement immediately
exercisable as to all shares covered by such Non-Qualified Stock Option. Any
Non-Qualified Stock Option granted that was not either approved by (i) a
committee of non-employee directors within the requirements of Rule 16b-3 or
(ii) the full board of directors of the Company, shall, notwithstanding the
preceding sentence, Section 10.2 hereof, or the terms set forth in the
Non-Qualified Option Agreement not be exercisable until at least six months
after the date of such grant.
7.5 Exercise Price of a Non-Qualified Stock Option. The Exercise Price
of a Non-Qualified Stock Option will be 100% of Fair Market Value as of the
date on which the Non-Qualified Stock Option was granted. However, if it is
subsequently determined that the Exercise Price as stated in the Non-Qualified
Option Agreement is less than 100% of Fair Market Value as of the date the
option was granted, such fact will not invalidate a Non-Qualified Stock
Option.
7.6 Duration of a Non-Qualified Stock Option--Generally. Each
Non-Qualified Option Agreement shall set forth the term of the Non-Qualified
Stock Option, provided that such term will not exceed 10 years from the date
on which such option was granted. The Optionee shall have no further right to
exercise a Non-Qualified Stock Option following the expiration of such term.
7.7 The Effect of Termination of the Optionee's Employment or Service as
a Director on the Term of a Non-Qualified Stock Option. If an Optionee, while
possessing a Non-Qualified Stock Option that has not expired or been fully
exercised, ceases to be an Employee of the Company (or, in the case of an
Optionee who is not an Employee but is a director of the Company, ceases to be
a director of the Company) for any reason other than as a result of the death
or disability of the Optionee (as provided for in Section 7.8 and 7.9,
respectively), the Non-Qualified Stock Option may be exercised, to the extent
not previously exercised and subject to any vesting provisions of the
Non-Qualified Option Agreement, at any time within three months following the
date the Optionee ceased to be an Employee (or a director as the case may be)
of the Company, except that this provision will not extend the time within
which an Non-Qualified Stock Option may be exercised beyond the expiration of
the term of such option. The Non-Qualified Option Agreement may provide that
if the Optionee's employment is terminated by the Company for cause, as
determined by the Company's President or Board of Directors in their
reasonable discretion, the Non-Qualified Stock Option will terminate
immediately upon the Company's notice to the Optionee of such termination.
7.8 The Effect of the Death of an Optionee on the Term of a
Non-Qualified Stock Option. If an Optionee, while possessing a Non-Qualified
Stock Option that has not expired or been fully exercised, ceases to be an
Employee, ceases to serve as a director of the Company or ceases to provide
services to the Company as a result of the Optionee's death, the Non-Qualified
Stock Option may be exercised, to the extent not previously exercised and
subject to any vesting provisions of the Non-Qualified Option Agreement, at
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any time within 12 months following the date of the Optionee's death, except
that this provision will not extend the time within which a Non-Qualified
Stock Option may be exercised beyond the expiration of the term of such
option.
7.9 The Effect of the Disability of an Optionee on the Term of a
Non-Qualified Stock Option. If an Optionee, while possessing a Non-Qualified
Stock Option that has not expired or been fully exercised, ceases to be an
Employee, ceases to serve as a director of the Company or ceases to provide
services to the Company as a result of the Optionee becoming Disabled, the
Non-Qualified Stock Option may be exercised, to the extent not previously
exercised and subject to any vesting provisions of the Non-Qualified Option
Agreement, at any time within 12 months following the date of the Optionee
becoming Disabled, except that this provision will not extend the time within
which a Non-Qualified Stock Option may be exercised beyond the expiration of
the term of such option.
7.10 Transferability. The Non-Qualified Option Agreement may permit a
transfer of the Non-Qualified Stock Option by gift to the Optionee's spouse,
children or a trust for the exclusive benefit of any combination of the
Optionee, the Optionee's spouse and the Optionee's children, if such transfer
is conditioned upon the Optionee and the transferee of such Non-Qualified
Stock Option executing and delivering to the Company a form of
Transfer/Assumption of Non-Qualified Option Agreement as the Company may
request. Notwithstanding any transfer of a Non-Qualified Stock Option, the
Optionee shall remain liable to the Company for any income tax withholding
amounts which the Company is required to withhold at the time that the
transferred Non-Qualified Stock Option is exercised. If the Non-Qualified
Option Agreement does not expressly permit transfer of the Non-Qualified Stock
Option, the Non-Qualified Stock Option may not be transferred by the Optionee,
other than by will or the laws of descent and distribution upon the death of
the Optionee, without the prior written consent of the Committee, which
consent may be withheld in the Committee's sole discretion.
ARTICLE VIII - Exercise of Options
8.1 Notice of Exercise. An Incentive Stock Option or Non-Qualified Stock
Option may only be exercised by delivery to the Company of written notice
signed by the Optionee (or, in the case of exercise after death of the
Optionee, by the executor, administrator, heir or legatee of the Optionee, as
the case may be) directed to the President of the Company (or such other
person as the Company may designate) at the principal business office of the
Company. The notice will specify (i) the number of shares of Common Stock
being purchased, (ii) the method of payment of the Exercise Price, (iii) the
method of payment of the Tax Withholding if the option is a Non-Qualified
Stock Option, and (iv), unless a registration under the Securities Act is in
effect with respect to the Plan at the time of such exercise, the notice of
exercise shall contain such representations as the Company determines to be
necessary or appropriate in order for the sale of shares of Common Stock being
purchased pursuant to such exercise to qualify for exemptions from
registration under the Securities Act.
8.2 Payment of Exercise Price. No shares of Common Stock will be issued
upon the exercise of any Incentive Stock Option or Non-Qualified Stock Option
unless and until payment or adequate provision for payment of the Exercise
Price of such shares has been made in accordance with this subsection. Unless
the Committee, in its sole discretion, determines otherwise, payment of the
Exercise Price shall be in cash, by delivery of a full-recourse promissory
note, by the surrender of other securities issued by the Company (provided
that such other securities have been held by the Optionee for at least six
months prior to the date on which the Option is being exercised) in accordance
with Section 8.4,or by any combination of the foregoing. The Committee may, in
its sole discretion, permit an Optionee to elect to pay the Exercise Price by
authorizing a duly registered and licensed broker-dealer to sell the shares of
Common Stock to be issued upon such exercise (or, at least, a sufficient
portion thereof) and instructing such broker-dealer to immediately remit to
the Company a sufficient portion of the proceeds from such sale to pay the
entire Exercise Price.
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8.3 Payment of Tax Withholding Amounts. Unless the Committee, in its
sole discretion, determines otherwise, each Optionee must, upon the exercise
of a Non-Qualified Stock Option (including Non-Qualified Stock Options
transferred by the Optionee), either with the delivery of the notice of
exercise or upon notification of the amount due, pay to the Company or make
adequate provision for the payment of all amounts determined by the Company
to be required to satisfy applicable federal, state and local tax withholding
requirements ("Tax Withholding"). The Non-Qualified Option Agreement may
provide for, or the Committee may allow in its sole discretion, the payment
by the Optionee of the Tax Withholding in cash, by the Company withholding
such amount from other amounts payable by the Company to the Optionee,
including salary, by surrender of other securities of the Company in
accordance with Section 8.4, by the application of shares that could be
received upon exercise of the Non-Qualified Stock Option, or any combination
of the foregoing. This application of shares shall be accomplished by
crediting toward the Optionee's Tax Withholding obligation the difference
between the Fair Market Value and the Exercise Price of the shares being so
applied. Any such application shall be considered an exercise of the
Non-Qualified Stock Option to the extent shares are so applied, and, as such,
may add to the Optionee's withholding obligation.
By receiving and exercising a Non-Qualified Stock Option, the Optionee
shall be deemed to have consented to the Company withholding the amount of any
Tax Withholding from any amounts payable by the Company to the Optionee. The
Committee may, in its sole discretion, permit an Optionee to elect to pay the
Tax Withholding by authorizing a duly registered and licensed broker-dealer to
sell the shares to be issued upon such exercise (or, at least, a sufficient
portion thereof) and instructing such broker-dealer to immediately remit to
the Company a sufficient portion of the proceeds from such sale to pay the Tax
Withholding. No shares will be issued upon an exercise of a Non-Qualified
Stock Option unless and until payment or adequate provision for payment of the
Tax Withholding has been made. If the Company determines that additional
withholding is or becomes required beyond any amount paid or provided for by
the Optionee, the Optionee will pay such additional amount to the Company
immediately upon demand by the Company. If the Optionee fails to pay the
amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the Optionee, including salary.
8.4 Payment of Exercise Price or Withholding with Other Securities. To
the extent permitted in Section 8.2 and Section 8.3 above, the Exercise Price
and Tax Withholding may be paid by the surrender of other securities of the
Company. The notice of exercise shall indicate that payment is being made by
the surrender of other securities of the Company. Payment shall be made by
either (i) delivering to the Company the certificates or instruments
representing such other securities, duly endorsed for transfer, or (ii)
delivering to the Company an attestation in such form as the Company may deem
to be appropriate with respect to the Optionee's ownership of other securities
of the Company. Other securities of the Company shall, for purposes of this
Section 8, be valued at the publicly reported price, if any, for the last sale
on the last business day preceding the day the Company receives the Optionee's
notice of exercise, or, if there are no publicly reported prices of such other
securities of the Company, at the fair market value of such other securities
as determined in good faith by the Board of Directors. To the extent permitted
in Section 8.3 above, Tax Withholding may, if the Optionee so notifies the
Company at the time of the notice of exercise, be paid by the application of
shares which could be received upon exercise of any other stock option issued
by the Company. This application of shares shall be accomplished by crediting
toward the Optionee's Tax Withholding obligation the difference between the
Fair Market Value and the Exercise Price of the stock option specified in the
Optionee's notice. Any such application shall be considered an exercise of the
other stock option to the extent that shares are so applied and, as such, may
add to the Optionee's withholding obligation.
8.5 Compliance with Securities Laws. No shares will be issued with
respect to the exercise of any Incentive Stock Option or Non-Qualified Stock
Option unless the exercise and the issuance of the shares will comply with all
relevant provisions of law, including, without limitation, the Securities Act,
any registration under the Securities Act in effect with respect to the Plan,
all applicable state securities laws, the Securities Exchange Act of 1934, as
amended, the Internal Revenue Code, the respective rules and regulations
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promulgated thereunder, and the requirements of any stock exchange upon which
the Common Stock may then be listed, and will be further subject to the
approval of counsel for the Company with respect to such compliance. The
Company will not be liable to any Optionee or any other person for failure to
issue shares upon the exercise of an option where such failure is due to the
inability of the Company to obtain all permits, exemptions or approvals from
regulatory authorities which are deemed by the Company's counsel to be
necessary. The Board may require any action or agreement by an Optionee as may
from time to time be necessary to comply with the federal and state securities
laws. The Company will not be obliged to prepare, file or maintain a
registration under the Securities Act with respect to the Plan or to take any
actions with respect to registration under any state securities laws.
8.6 Issuance of Shares. Notwithstanding the good faith compliance by the
Optionee with all of the terms and conditions of an Incentive Option Agreement
or Non-Qualified Option Agreement and with this Article VIII, the Optionee
will not become a shareholder and will have no rights as a shareholder with
respect to the shares covered by such option until the issuance of shares
pursuant to the exercise of such option is recorded on the stock transfer
record of the Company. Notwithstanding the foregoing, the Company shall not
unreasonably delay the issuance of a stock certificate and shall exercise
reasonable efforts to cause such stock certificate to be issued to the
Optionee as soon as is practicable after the compliance by the Optionee with
all of the terms and conditions of the Incentive Option Agreement or
Non-Qualified Option Agreement, as the case may be, and with this Article
VIII.
8.7 Notice of any Disqualifying Disposition and Provision for Tax
Withholding. Any Optionee that exercises an Incentive Stock Option and then
makes a "disqualifying disposition" (as such term is defined under Section 422
of the Internal Revenue Code) of the shares so purchased, shall immediately
notify the Company in writing of such disqualifying disposition and shall pay
or make adequate provision for all Tax Withholding as if such Incentive Stock
Option was a Non-Qualified Stock Option in accordance with Section 8.3.
ARTICLE IX - Restricted Stock Grants
Restricted Stock Grants shall be subject to the following terms and
conditions:
9.1 Requirement for a Written Restricted Stock Agreement. Each
Restricted Stock Grant will be evidenced by a written Restricted Stock
agreement ("Restricted Stock Agreement"). The Committee will determine from
time to time the form of Restricted Stock Agreement to be used. The terms of
the Restricted Stock Agreement must be consistent with this Plan and any
inconsistencies will be resolved in accordance with the terms and conditions
specified in this Plan. Except as otherwise required by this Section 9, the
terms and conditions of Restricted Stock Grants do not need to be identical.
9.2 Who May Receive a Restricted Stock Grant. A Restricted Stock Grant
may be made to any Employee, any director of the Company or any other
individual who provides services to the Company where, in the judgment of the
Committee, the services performed or to be performed by such Grantee are of
importance to the Company in the management, operation and development of the
business or businesses of the Company or one or more of its Subsidiaries. The
Committee, in its sole discretion, shall determine when and to whom Restricted
Stock Grants are made.
9.3 Number of Shares Covered by a Restricted Stock Grant. Each
Restricted Stock Agreement shall specify the number of shares covered by each
Restricted Stock Grant.
9.4 Consideration for a Restricted Stock Grant. The Committee, in its
sole discretion, will determine the consideration payable by a Grantee for the
shares covered by a Restricted Stock Grant. Consideration may consist of
services rendered by the Grantee to the Company, or payment, in cash or
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delivery of a promissory note, for all or any portion of the Fair Market Value
of the shares covered by the Restricted Stock Grant, or any combination of the
foregoing.
9.5 Vesting Schedule under a Restricted Stock Grant. Each Restricted
Stock Agreement shall specify when and to what extent the shares covered by
the Restricted Stock Grant shall become vested in the Grantee, and may provide
that the shares become vested immediately or vest according to a schedule. The
Committee, in its sole discretion, shall determine the terms and conditions
upon which shares covered by any Restricted Stock Grant shall vest. The
Restricted Stock Agreement shall provide that the Company may repurchase at a
specified price any unvested shares. The unvested portion of a Restricted
Stock Grant may not be transferred by the Grantee under any circumstances
without the prior written consent of the Committee, which consent may be
withheld in its sole discretion.
ARTICLE X - Changes in Capital Structure
10.1 Adjustments of Number of Shares and Exercise Price. Except as
provided in Section 10.2, if the outstanding shares of Common Stock are
hereafter increased, decreased, changed into or exchanged for a different
number or kind of shares of Common Stock or for other securities of the
Company or of another corporation, by reason of any reorganization, merger,
consolidation, reclassification, stock split-up, combination of shares, or
dividend payable in shares of Common Stock, the Committee will make such
adjustment as it deems appropriate in the number of shares of Common Stock
available for issuance pursuant to subsequent Awards. In addition, the
Committee will at such time make such adjustment in the number of shares of
Common Stock covered by outstanding Incentive Stock Options and outstanding
Non-Qualified Stock Options, as well as make an adjustment in the Exercise
Price of each such option as the Committee deems appropriate. Any
determination by the Committee as to what adjustments may be made, and the
extent thereof, will be final, binding on all parties and conclusive.
10.2 Acceleration of Vesting. In the event of any dissolution or
liquidation of the Company, or any merger or consolidation with one or more
corporations in which the Company is not the surviving entity, or in which the
security holders of the Company prior to such transaction do not receive in
the transaction securities with voting rights with respect to the election of
directors equal 50% or more of the votes of all classes of outstanding
securities of the surviving corporation immediately after such transaction,
each outstanding Incentive Stock Option and each outstanding Non-Qualified
Stock Option shall become immediately exercisable in its entirety,
notwithstanding any vesting schedule included in the respective Incentive
Option Agreement or Non-Qualified Option Agreement, but subject to Section 6.4
or Section 7.4, as applicable, fifteen (15) days prior to such event and
shall, unless the event fails to occur, continue to be exercisable in such
manner for forty-five (45) days after such event, unless, as an expressed term
of such transaction, adequate provision is made for the continuation of the
rights of holders of such outstanding option after the consummation of such
transaction.
ARTICLE XI - Underwriters Lock-Up
Each written agreement evidencing an Award will specify that the
Optionee or Grantee, by accepting the Award agrees that in the event the
Company undertakes a firmly underwritten public offering of its securities,
the Optionee or Grantee will, if requested to do so by the managing
underwriter in such offering, enter into an agreement not to sell or dispose
of any securities of the Company owned or controlled by the Optionee or
Grantee provided that such restriction will not extend beyond 12 months from
the effective date of the registration statement filed in connection with such
offering.
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ARTICLE XII - Employment Rights
Nothing in this Plan nor in any written agreement evidencing an Award
will confer upon any Optionee or Grantee any right to employment by the
Company or to limit or affect in any way the right of the Company, in its sole
discretion, (a) to terminate the employment of such Optionee or Grantee at any
time, with or without cause, (b) to change the duties of such Optionee or
Grantee, or (c) to increase or decrease the compensation of the Optionee or
Grantee at any time. Unless the written agreement evidencing an Award
expressly provides otherwise, vesting under such agreement shall be
conditioned upon:
1) for Employees of the Company, the continued employment of the
Optionee or Grantee;
2) for independent contractors, the Optionee or Grantee continuing to
provide services to the Company on substantially the same terms
and conditions as such services were provided at the time of the
Award; or
3) for directors who are not Employees, the Optionee or Grantee
continuing to serve as a director of the Company;
and nothing in this Plan shall be construed as creating a contractual or
implied right or covenant by the Company to continue such employment, service
as an independent contractor or service as a director.
ARTICLE XIII - Amendment of Plan
The Board of Directors may, at any time and from time to time, modify or
amend this Plan as it deems advisable except that any amendment increasing the
number of shares of Common Stock issuable under the Plan, or any amendment
that expands the group of persons eligible to receive Awards, shall only
become effective if and when such amendment is approved by the shareholders of
the Company. Except as provided in Section 10 hereof, no amendment shall be
made to the terms or conditions of an outstanding Incentive Stock Option,
Non-Qualified Stock Option or Restricted Stock Grant without the written
consent of the Optionee or Grantee.
Effective as of approval by the Board of Directors of the Company at a meeting
held on February 24, 2000.
Approved by the shareholders of the Company on ________________, 20___.
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[FRONT]
TIMBERLINE SOFTWARE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2000ANNUAL MEETING OF SHAREHOLDERS -- APRIL 25, 2000
The undersigned hereby appoints Curtis L. Peltz and Carl C. Asai, and each of
them, proxies with full power of substitution, and authorizes them to
represent and to vote on behalf of the undersigned all shares which the
undersigned would be entitled to vote if personally present at the 2000 Annual
Meeting of Shareholders of TIMBERLINE SOFTWARE CORPORATION to be held on April
25, 2000 and any adjournments thereof, with respect to the following:
(Continued, and to be marked, dated and signed on the other side)
[REVERSE]
1. PROPOSAL to Elect Directors (INSTRUCTION: To withhold authority to vote
for any individual, write the name of that individual on the line set
forth below the listing of nominees.)
Thomas P. Cox, James A. Meyer, Curtis L. Peltz, Donald L. Tisdel
_________________________________________________________________________
[_] FOR all nominees listed (except as marked to the contrary)
[_] WITHHOLD AUTHORITY to vote for all nominees listed
2. PROPOSAL to ratify selection of Deloitte & Touche LLP as independent
auditors.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve the Company's 2000 Stock Incentive Plan
[_] FOR [_] AGAINST [_] ABSTAIN
Either or both of the proxies (or substitutes) present at the meeting may
exercise all powers granted hereby.
THIS PROXY, WHEN PROPERTY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES FOR DIRECTORS AND FOR PROPOSALS 2 AND 4. IN ADDITION, THE
PROXIES MAY VOTE IN THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
Signature(s) ________________________ Signature(s) _________________________
Date_________________________ NOTE: Please date and sign above exactly as your
name or names appear herein. If more than one name appears above, all should
sign. Joint owners should each sign personally. Corporate proxies should be
signed in full corporate name by an authorized officer and attested. Persons
signing in a fiduciary capacity should indicate their full title and
authority.
