SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
Diehl Graphsoft, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
1) Title of each class of securities to which
transaction applies:
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:
<PAGE>
2) Form, Schedule or Registration Statement no.:
3) Filing Party:
4) Date Filed:
<PAGE>
DIEHL GRAPHSOFT, INC.
10270 Old Columbia Road
Suite 100
Columbia, Maryland 21046
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 4, 1997
TO THE SHAREHOLDERS OF DIEHL GRAPHSOFT, INC.:
Notice is hereby given that the Annual Meeting of
Shareholders (the "Annual Meeting") of Diehl Graphsoft, Inc. (the
"Company"), will be held at the Columbia Inn, Wincopin Circle,
Columbia, Maryland 21044 at 10:00 a.m., on November 4, 1997 for
the following purposes:
1) To elect Directors to serve until the 1998 Annual Meeting of
Shareholders (Proposal 1);
2) To consider a proposal to adopt the Amended and Restated
Stock Option Plan (Proposal 2);
3) To consider a proposal to ratify the selection of Ernst &
Young LLP to audit the Company's books and records for the fiscal
year ending May 31, 1998 (Proposal 3); and
4) To consider and transact such other business as may properly
and lawfully come before the Annual Meeting or any adjournment
thereof.
All of the foregoing is more fully set forth in the Proxy
Statement accompanying this Notice.
The transfer books of the Company will close as of the end
of business on September 26, 1997 (the "Record Date") for
purposes of determining shareholders who are entitled to notice
of and to vote at the Annual Meeting, but will not be closed for
any other purpose.
All shareholders are cordially invited to attend the Annual
Meeting in person. If you cannot attend the Meeting, please take
the time to promptly sign, date and mail the enclosed proxy in
the envelope we have provided. If you attend the Annual Meeting
and decide that you want to vote in person, you may revoke your
proxy. The Board of Directors recommends that you vote in favor
of the nominees for directors and the described proposals to be
considered at the meeting.
<PAGE>
By Order of the Board of Directors
/s/
Joseph Schmelzle
Secretary
October 14, 1997
<PAGE>
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND
IS REVOCABLE AT ANY TIME PRIOR TO BEING EXERCISED. THE PROXY WILL
BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS THEREON. IF A
CHOICE IS NOT INDICATED, HOWEVER, THE PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES AS DIRECTORS, IN FAVOR OF THE AMENDED
AND RESTATED STOCK OPTION PLAN, IN FAVOR OF THE RATIFICATION OF
THE SELECTION OF AUDITORS AT THE ANNUAL MEETING, AND IN THE BEST
JUDGMENT OF THE PROXIES CONCERNING ANY OTHER MATTERS CONSIDERED
AT THE MEETING.
DIEHL GRAPHSOFT, INC.
10270 Old Columbia Road
Suite 100
Columbia, Maryland 21046
Annual Meeting of Shareholders
November 4, 1997
PROXY STATEMENT
SOLICITATION OF PROXIES
This proxy statement ("Proxy Statement") is furnished in
connection with the solicitation of proxies by the Board of
Directors of Diehl Graphsoft, Inc. (the "Company") for use at the
Company's 1997 Annual Meeting of Shareholders (the "Annual
Meeting") to be held at the Columbia Inn, located at Wincopin
Circle, Columbia, Maryland 21044, on November 4, 1997 at 10:00
a.m. local time.
All shareholders of record as of the close of business on
September 26, 1997 are entitled to notice of and to vote at the
Annual Meeting or any adjournment or postponement thereof.
The Company will pay the cost of proxy solicitation. In
addition to the solicitation of proxies by use of the mails,
directors, officers and other employees of the Company may
solicit proxies in person or by telephone, telegram, facsimile or
other electronic means. None of these individuals will receive
compensation for such services, which will be performed in
addition to their regular duties. The Company also has made
arrangements with brokerage firms, banks, nominees and other
fiduciaries to forward proxy solicitation material for shares
held of record by them to the beneficial owners of such shares.
The Company will reimburse such persons for their reasonable out-
of-pocket expenses in forwarding such material.
It is anticipated that this Proxy Statement and the enclosed
proxy will first be mailed to the Company's shareholders on or
about October 14, 1997.
A proxy for use at the Annual Meeting and a return envelope
are enclosed. Shares of the Company's common stock, par value
$0.01 per share ("Common Stock"), represented by a properly
executed proxy, if such proxy is received in time and not
revoked, will be voted at the Annual Meeting in accordance with
the instructions indicated in such proxy. Pursuant to the
<PAGE>
terms of the proxy, if no instructions are indicated, such shares
will be voted "FOR" the election of the nominee as director, in
favor of the Amended and Restated Stock Option Plan, in favor of
the ratification of the selection of auditors at the Annual
Meeting, and in the best judgment of the proxies concerning any
other matters considered at the meeting. Discretionary authority
is provided in the proxy as to any matters not specifically
referred to therein, although the Board of Directors does not
know of any other matters to be presented at the Annual Meeting.
However, if any such matters properly come before the Annual
Meeting, the persons named in the proxy are fully authorized to
vote thereon in accordance with their judgment and discretion.
A shareholder who has given a proxy may revoke it at any time
prior to its exercise at the Annual Meeting by: (1) giving
written notice of revocation to the Secretary of the Company; (2)
properly submitting to the Company a duly executed proxy bearing
a later date; or (3) voting in person at the Annual Meeting. All
written notices of revocation or other communications with
respect to revocation of proxies should be addressed as follows:
Diehl Graphsoft, Inc., 10270 Old Columbia Road, Suite 100,
Columbia, Maryland 21046, Attention: Corporate Secretary.
Annual Report
The Annual Report of the Company for the fiscal year ending
May 31, 1997, including Financial Statements, is enclosed with
this Proxy Statement. Shareholders may also obtain a copy of the
Annual Report on Form 10-KSB without charge upon written request
addressed to Joseph Schmelzle, Secretary, Diehl Graphsoft, Inc.,
10270 Old Columbia Road, Suite 100, Columbia, Maryland 21046.
<PAGE>
EQUITY SECURITIES AND CERTAIN HOLDERS THEREOF
All holders of record of the Company's Common Stock at the
close of business on September 26, 1997, will be eligible to vote
at the Annual Meeting. As of September 26, 1997, 3,142,729
shares of the Common Stock were outstanding. Each share of
Common Stock entitles the holder thereof to one vote on each
matter brought before the shareholders for a vote at the Annual
Meeting. As of September 26, 1997, the directors and officers of
the Company have the power to vote approximately 66% of the
outstanding shares of Common Stock. The Company's directors and
officers have advised the Company that they intend to vote the
shares under their control in favor of the proposals set forth in
this Proxy Statement.
The presence, in person or by proxy, of the stockholders
entitled to cast a majority of the votes will constitute a quorum
for the transaction of business at the Annual Meeting. Votes
cast in person or by proxy, abstentions and broker non-votes will
be considered in the determination of whether a quorum is
present.
The following table sets forth certain information with
respect to the beneficial ownership of Common Stock for (i) each
of the Company's directors and nominees, each of the Company's
executive officers named in the Summary Compensation Table below
(see "Executive Compensation and Other Information"), and all
directors, nominees and executive officers of the Company as a
group, and (ii) each person known by the Company to own more than
5% of the Company's Common Stock as of the Record Date, except
where another date is indicated below, based solely on the
contents of Schedules 13D filed with the Securities and Exchange
Commission as of the Record Date.
<PAGE>
Name and Address of Number of Shares Percent of
Beneficial Owner Owned (1) Class
Richard Diehl (2)
President and Director 1,933,055 60.51
Donald Webster
Vice President 20,000(3) *
Joseph Schmelzle
Treasurer/Secretary and 110,250 3.51
Director
Sean Flaherty
Vice President, 29,900(3) *
Engineering
Richard Hug
Director 1,000 *
Frederic Unger
Director 0 0
All officers and
directors 2,094,205 66.64
as a group (6 persons)
* Less than 1% of shares outstanding.
(1) The designated owner has voting and investment power with
respect to the shares.
(2) Mr. Diehl's address is c/o Diehl Graphsoft, 10270 Old
Columbia Road, Suite 100, Columbia, Maryland 21046.
(3) Includes options to purchase 20,000 shares of Common Stock.
Interests of Management and Others in Certain Transactions
The Company paid for accounting, management and financial
services rendered to corporations wholly-owned by Joseph
Schmelzle, $30,000 in fiscal 1996 and $28,500 in fiscal 1997.
These amounts were based on rates which the Company negotiated at
arms length.
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL 1)
Two directors are to be elected at the meeting to serve
their specified terms or until their successors are elected and
qualified. The Board of Directors has nominated the following
persons for election as Directors:
Year of
Name Class of Expiration of
Director Term
Frederic III 1999
Unger
Richard Hug I 2000
The shares represented by the proxies solicited hereby will be
voted "FOR" the election of the persons named unless
authorization to do so is withheld in the proxy. The election of
the nominees requires a plurality of the votes cast at the annual
meeting. Unless directed to the contrary, proxies will be voted
for the election of such nominees.
The directors are divided into three classes, denominated as
Class I, Class II, and Class III, with the terms of office of
each Class expiring at the 1997, 1998 and 1999 annual meetings of
stockholders, respectively. At each annual meeting following
such initial classification and election, directors elected to
succeed those directors whose terms expire shall be elected for a
term to expire at the third succeeding annual meeting of
stockholders after their election. The directors were initially
divided into classes as follows: Class I: Richard Hug; Class II:
Joseph Schmelzle; Class III: Richard Diehl. The directors voted
in December 1996, pursuant to Company Bylaws to expand the number
of members serving the Board from three to four, and to elect
Frederic Unger to fill the resulting vacancy as a Class III
director, to serve until the next annual shareholders meeting.
There are no family relationships among any of the Company's
directors and executive officers.
Each nominee informed the Company that he will be available
to serve as a director. The other members of the Board of
Directors who are not currently standing for election continue to
be available to serve. Each nominee has consented to the
nomination and has agreed to serve if elected. If any of the
nominees should not be available for election, the persons named
as proxies may vote for other persons in their discretion. The
Board of Directors has no reason to believe that any of the
nominees will be unable or unwilling to serve if elected.
The Board of Directors recommends a vote FOR each nominee.
<PAGE>
Direct Class
Name Age or of Recent Business Experience
Since Directo
r
Richard Hug 62 1996 I Mr. Hug had been employed by
Environmental Elements
Corporation since 1974, and
became Chairman and Chief
Executive Officer in 1985. He
resigned as Chief Executive
Officer in 1990 and as
Chairman in 1995. Mr. Hug
serves as President of The
Great American Car Wash, Inc.,
Deco-Sign Products Inc. and
Hug Enterprises, Inc., all
unrelated private companies in
which he holds ownership
interests.
Joseph 42 1985 II Mr. Schmelzle is a Certified
Schmelzle Public Accountant who has
served the Company as
Treasurer and Chief Financial
Officer since its inception,
and as Secretary since 1993.
He also serves as President of
JJ Schmelzle & Co., P.C. and
Joseph J. Schmelzle & Assoc.,
Inc., both unrelated private
companies which he owns, that
have provided accounting and
financial consulting services
since 1991. Mr. Schmelzle
received a B.S. from Clarkson
College in 1977, and an M.B.A.
from the University of
Rochester in 1979.
Richard 42 1985 III Mr. Diehl has served as
Diehl President and Chief Executive
Officer of the Company since
its inception. Mr. Diehl
received a B.S. from Towson
State University in 1980, and
an M.S. from Johns Hopkins
University in 1984.
Frederic 58 1996 III Mr. Unger is the founder and
Unger majority stockholder of
Digital Press, a Company which
he has served as President
since 1991. He has also
served as Director of AEC
Software since 1986, a Company
in which he was a founder and
still retains an equity
interest.
<PAGE>
Information as to the directors' beneficial ownership of
Common Stock is set forth above, under "Equity Securities and
Certain Holders Thereof."
The Board of Directors established an Audit Committee in
December 1996 to oversee actions taken by the Company's
independent auditors, to recommend the engagement of auditors,
and to review any internal audits the Company may perform. The
current members of the Audit Committee are Richard Diehl, Richard
Hug and Frederic Unger. The Audit Committee did not meet during
fiscal 1997.
During fiscal year 1997, the Board of Directors held four
meetings. No director attended fewer than 75 percent of the
aggregate of (1) the total number of meetings of the board of
directors (held during the period for which he has been a
director); and (2) the total number of meetings held by all
committees of the board on which he served (during the periods
that he served).
During fiscal year 1997, outside directors who are not
employed in any other capacity by the Company received annual
fees of $5,000, of which 50% is payable in Company stock, for
serving on the Board of Directors and the Audit Committee.
Inside directors, who also serve as officers of the Company,
receive no additional compensation for their services as
directors.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The following information is provided with respect to
officers who are not also directors of the Company.
Donald Webster, age 49, Vice President of the Operations,
has been with the Company since 1992. From 1987 until 1992, he
was the Director of Communication Services for Arthur Young & Co.
in its National Marketing Office in Reston, Virginia working
primarily with video production.
Sean Flaherty, age 28, Vice President of Engineering,
has been with the Company since 1985. He was initially employed
as a software programmer. In 1991, he was appointed Vice
President, assuming day to day responsibility for engineering
operations.
Cash Compensation
Cash compensation which was earned for services in all
capacities for 1995, 1996 and 1997 fiscal years and which the
Company paid to or accrued for the Chief Executive Officer during
the last fiscal year (the "Named Executive Officer") is set forth
in the following table. No other executive officer of the
Company is a Named Executive Officer, as none has the minimum
required annual salary and bonus to be deemed as such.
<PAGE>
Summary Compensation Table
Long-Term
Compensation Awards
Numbers of
Securities
Annual Compensation Underlying
Name and Principal Fisca Salary Bonus Options(#)
Position l ($) ($)
Year
Richard Diehl 1997 169,000 5,548 0
President 1996 169,000 23,914 0
1995 140,000 59,361 0
Option Grants
No options to purchase Common Stock have been granted to the
Named Executive Officer in fiscal 1997.
Fiscal 1997 Stock Option Exercises and Year-End Option Values
The Named Executive Officer did not exercise any stock
options during the last fiscal year and owns no stock options.
<PAGE>
Employment Agreements
Effective November 1, 1993, the Company entered into a two
year employment contract with Richard Diehl which provides for
salary of $140,000 per annum. In addition, Mr. Diehl receives
life insurance equal to twice his annual salary, disability
insurance, vacation pay, sick leave and use of a Company car.
This agreement has been renewed through October 31, 1997 at an
annual salary of $169,000 per annum.
CONSIDERATION OF PROPOSAL TO ADOPT AMENDED AND RESTATED STOCK
OPTION PLAN
(PROPOSAL NO. 2)
The Company's Board of Directors has amended and restated
the Stock Option Plan of Diehl Graphsoft, Inc. to (i) increase
the number of shares issuable pursuant to options granted under
the plan, (ii) expand the types of options available for award
under the plan, and (iii) otherwise modify the terms and
conditions of the plan. The Board of Directors has approved and
recommends that the stockholders approve the Diehl Graphsoft
Amended and Restated Stock Option Plan (the "Plan"). The purpose
of the Plan is to promote the long-term growth and profitability
of the Company (1) by providing employees and other key people
with incentives to improve stockholder value and to contribute to
the growth and financial success of the Company, and (ii) by
enabling the Company to attract, retain and reward the best
available persons for positions of substantial responsibility.
The complete text of the Plan appears as Exhibit 1 to this
Proxy Statement. The main features of the Plan are outlined
below, but the outline is qualified by reference to the complete
text of the Plan.
Persons eligible to participate in the Plan are all
employees, directors, officers and other key contributors
(including independent contractors, consultants and advisors) of
the Company, or any Parent or Subsidiary of the Company, as may
be selected by the Board of Directors from time to time.
Notwithstanding the foregoing, participation in the Plan with
respect to awards of incentive stock options qualifying under
Section 422 of the Internal Revenue Code ("ISOs"), shall be
limited to employees of the Company or of any Parent or
Subsidiary of the Company. The approximate number of persons
presently eligible to participate in the Plan is 50.
Options granted under the Plan may be either ISOs or non-
qualified stock options. The exercise price of all options will
be determined by the Board of Directors, provided, however, that
in no event shall the exercise price be less than one hundred
percent (100%) of the Fair Market Value of the shares determined
as of the date the stock option is granted. With respect to
ISOs, the aggregate Fair Market Value (determined as of the Grant
Date) of shares of Common Stock with respect to which all
incentive stock options, which first become exercisable by any
grantee in any calendar year under this or any other plan of the
Company and its Parent and Subsidiary corporations, may not
exceed $100,000 or such other amount as may be permitted from
time to time under Section 422 of the Code. To the extent that
such aggregate Fair Market Value shall exceed $100,000, or other
applicable amount, such stock options shall be treated as non-
qualified stock options.
<PAGE>
Subject to adjustments provided in the Plan, the shares of
stock that may be delivered or purchased with respect to options
granted under the Plan, including with respect to incentive stock
options intended to qualify under Section 422 of the Code, shall
not exceed an aggregate of 300,000 shares of Common Stock, $.01
par value, of the Company. The Company shall reserve said number
of shares for options under the Plan, subject to certain
adjustments provided in the Plan. On August 8, 1997, the bid
price for the Common Stock was 3 7/8 and the asked price was 4
3/8, as represented on the Nasdaq SmallCap Market.
The Plan shall be administered by the Board of Directors.
Members of the Board who are either eligible for options or have
been granted options may vote on any matters affecting the
administration of the Plan or the grant of options pursuant to
the Plan, except that no such member shall act upon the granting
of an option to himself or herself, but any such member may be
counted in determining the existence of a quorum at any meeting
of the Board during which action is taken with respect to the
granting of an option to him or her. The Board may, consistent
with the Plan, determine persons eligible to participate in the
plan, determine the types of options to be granted, determine the
conditions and restrictions, if any, subject to which grants will
be made, accelerate or otherwise change the time in which an
option may be exercised, establish objectives and conditions, if
any, for earning options and determining whether options will be
granted, and perform all other actions necessary to carry out the
purpose and intent of the Plan. Each employee to whom a grant is
made shall enter into a written option agreement with the Company
containing such provisions, consistent with the Plan, as may be
established by the Board. The term during which each option may
be exercised shall be determined by the Board; provided, however,
that in no event shall an option be exercisable more than ten
years from the date it is granted. Payment of the exercise price
of options must be made in cash or cash equivalents acceptable to
the Board. In certain circumstances, options can also be
exercised by an irrevocable instruction to a broker to sell
certain of the shares subject to the option to pay the exercise
price.
The following table presents options granted in fiscal 1997,
under the Plan, subject to shareholder approval of the Plan.
New Plan Benefits
Diehl Graphsoft Amended and Restated Stock Option Plan
Name and Position Dollar Value $ Number of
Units
Richard Diehl, 0
President N/A
Executive Group N/A 20,000
Non-Executive Director N/A 0
Group
Non-Executive Officer
Employee N/A 15,000
Group
<PAGE>
The number and type of shares which may be issued upon
exercise and the exercise price of options are subject to
adjustment in the event of any reclassification,
recapitalization, stock split, stock dividend, combination of
shares, or other similar event.
In the event of any proposed (i) sale, exchange or other
disposition of substantially all of the Company assets; or (ii)
merger, share exchange, consolidation or other reorganization or
business combination in which the Company is not the surviving or
continuing corporation, or in which the Company's stockholders
become entitled to receive cash, securities of the Company other
than voting common stock, or securities of another issuer
("Change in Control"), the Board shall take such action as it
deems appropriate and equitable to effectuate the purposes of the
Plan and to protect the grantees of options, which action may
include, but without limitation, any one or more of the
following: (i) accelerate or change the exercise dates of any
option; (ii) arrange with grantees for the payment of appropriate
consideration to them for the cancellation and surrender of any
option; and (iii) in any case where equity securities other than
Common Stock of the Company are proposed to be delivered in
exchange for or with respect to Common Stock of the Company,
arrange that any option shall become one or more options with
respect to such other equity securities. Notwithstanding the
foregoing, unless the holder of an option granted prior to the
effective date of the Plan, consents to a different course of
action with respect to his outstanding option, then upon a Change
in Control such holder shall be entitled to receive, for the
exercise price stated in the option, that number of shares or
other securities or property of the corporation resulting from
such Change in Control to which each share of Common Stock
deliverable upon exercise of the option would have been entitled,
upon such Change in Control, had the holder of such option
exercised his right to purchase and had said share of Common
Stock been issued and outstanding, and had such holder been the
holder of record of such share at the time of such event.
The Board is authorized to make adjustments in the terms and
conditions of, and the criteria included in, options in
recognition of unusual or nonrecurring events affecting the
Company, or the financial statements of the Company or any
Subsidiary, or of changes in applicable laws, regulations, or
accounting principles, whenever the Board determines that such
adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan.
In the event the Company dissolves and liquidates (other
than pursuant to a plan of merger or reorganization), then
notwithstanding any restrictions on exercise set forth in the
Plan, (i) each grantee shall have the right to exercise his
option at any time after the commencement of the proceedings for
such liquidation and dissolution up to ten (10) days prior to the
effective date of such liquidation and dissolution; and (ii) the
Board may make arrangements with the grantees for the payment of
appropriate consideration to them for the cancellation and
surrender of any option that is so canceled or surrendered at any
time up to ten (10) days prior to the effective date of such
liquidation and dissolution. The Board may establish a different
period (and different conditions) for such exercise,
cancellation, or surrender to avoid subjecting the grantee to
liability under Section 16(b) of the Exchange
<PAGE>
Act. Any option not so exercised, canceled, or surrendered shall
terminate on the last day for exercise prior to such effective
date. The Company shall give to each grantee written notice of
the commencement of any proceedings for such liquidation and
dissolution of the Company and the grantee's rights with respect
to his outstanding option.
No option granted under the Plan shall be transferable by a
grantee other than by will or the laws of descent and
distribution. An option may be exercised during the lifetime of
the grantee, only by the grantee or, during the period the
grantee is under a legal disability, by the grantee's guardian or
legal representative.
The Board, without further approval of the stockholders, may
modify or terminate the Plan or any portion thereof at any time,
except that no modification shall become effective without prior
approval of the stockholders of the Company if stockholder
approval is necessary to comply with any tax or regulatory
requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose
stockholder approval that is required to enable the Board to
grant incentive stock options pursuant to the Plan.
The Board shall be authorized to make minor or
administrative modifications to the Plan as well as modifications
to the Plan that may be dictated by requirements of federal or
state laws applicable to the Company or that may be authorized or
made desirable by such laws. The Board may amend or modify the
grant of any outstanding option in any manner to the extent that
the Board would have had the authority to make such option as so
modified or amended.
If the option awarded under the Plan is an ISO, the employee
will recognize no income and incur no regular income tax
liability upon grant or exercise of the ISO. However, the
employee may be subject to the alternative minimum tax upon the
exercise of the ISO. The Company will not be allowed a
deduction for federal income tax purposes as the result of the
exercise of an ISO, regardless of the applicability of the
alternative minimum tax to the employee. To be treated as an
ISO, the stock option must be exercised during the period of
employment or within three (3) months thereafter (or such longer
periods as apply for termination due to death or disability).
Upon the sale or exchange of the underlying shares after two
years from the grant of the option and after one year from the
exercise of the option by the employee, any gain to the employee
will be treated as a capital gain. Recently enacted federal
income tax legislation applies preferential tax rates to capital
gains arising with respect to capital assets held for longer than
twelve months, eighteen months or five years prior to sale or
exchange. If these holding periods are not satisfied, the
employee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value
of the shares at the date of the option exercise or the sale
price of the shares. The Company generally will be entitled to a
deduction in the same amount as the ordinary income recognized by
the employee subject to certain limitations on compensation
deductions. Any gain recognized on such a "disqualification"
caused by such premature disposition of the shares in excess of
the amount treated as ordinary income will be characterized as
capital gain.
<PAGE>
All other options which do not qualify as ISOs are referred
to as non-qualified options. An employee will not recognize
taxable income at the time the employee is granted a non-
qualified stock option. However, upon its exercise, the employee
will recognize ordinary income for tax purposes measured by the
excess of the then fair market value of the shares over the
option price. The Company will generally be entitled to a
deduction in the same amount as the ordinary income recognized by
the employee, subject to certain limitations on compensation
deductions, and provided the income is properly reported to the
employee for tax purposes. The employee will be required to
remit to the Company the applicable withholding tax liability
attributable to the income recognized by the employee upon
exercise of the option. Upon the subsequent sale of any such
shares by the employee, any difference between the sales price
and the fair market value at exercise, will be treated as capital
gain or loss.
To the extent payments which are contingent on a change in
control are determined to exceed certain Internal Revenue Code
limitations, they may be subject to a 20% non-deductible excise
tax and the Company's deduction with respect to the associated
compensation expense may be disallowed in whole or in part.
The affirmative vote of a majority of the votes cast at the
Meeting shall be required to approve the Plan.
The Board of Directors believes that the Plan is in the best
interests of the Company.
The Board of Directors recommends a vote FOR the adoption of
the Amended and Restated Stock Option Plan.
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 3)
Ernst & Young LLP served as independent auditors of the
Company for its fiscal year ended May 31, 1997. Ernst & Young
LLP has no direct or material indirect interest in the Company.
At a meeting held on September 2, 1997, the Company's Directors
selected Ernst & Young LLP as independent auditors of the Company
for the current fiscal year, subject to ratification by the
stockholders. If the appointment is not ratified, the Board of
Directors will appoint another firm as the Company's independent
auditor for the year ending May 31, 1998. The Board of Directors
also retains the power to appoint another independent auditor for
the Company to replace an auditor ratified by the stockholders in
the event that the Board of Directors determines that the
interests of the Company require such a change.
The affirmative vote of a majority of the votes cast at the
meeting shall be required to ratify the appointment of Ernst &
Young LLP as independent auditors of the Company for the fiscal
year ending May 31, 1998.
Ernst & Young LLP is not presently expected to have a
representative present at the meeting and, therefore, will not
make a statement or respond to questions at the meeting.
The Board of Directors recommends that the stockholders vote
FOR the ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending
May 31, 1998.
<PAGE>
SECTION 16A BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Frederic Unger was elected as a Board Member in December
1996, and inadvertently failed to file, on a timely basis a Form
3, required by Section 16(a) of the Exchange Act, for the most
recent fiscal year.
VOTE REQUIRED TO APPROVE MATTERS
The presence in person or by proxy of shareholders entitled
to cast a majority of the votes at the Annual Meeting will
constitute a quorum. Votes cast by proxy or in person at the
meeting will be tabulated by the inspectors of election appointed
for the meeting. Proxies marked with abstentions, broker non-
votes (i.e., proxies from brokers or nominees marked to indicate
that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares as to
the vote on a particular matter with respect to which the brokers
or nominees do not have discretionary power to vote), and
shareholders present at the meeting who abstain from voting, will
be treated as present for purposes of determining the presence of
a quorum.
The election of directors requires a plurality of votes cast
at the Annual Meeting. The adoption of the Amended and Restated
Option Plan requires the affirmative vote of a majority of the
votes cast at the Annual Meeting. The ratification of the
appointment of Ernst & Young LLP as independent accountants of
the Company requires the affirmative vote of a majority of the
votes cast at the meeting. Any abstentions or broker non-votes
will be disregarded for purposes of determining approval of the
aforementioned matters.
There is no reason to believe that any other business will
be presented at this Annual Meeting; however, if any other
business should properly and lawfully come before the Annual
Meeting, the proxies will vote in accordance with their best
judgment.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
For a shareholder proposal to be presented at the next
annual meeting, it must be received by the Company at its
principal executive offices not later than June 16, 1998, in
order to be included in the proxy statement and proxy for the
1998 annual meeting. Any such proposal should be addressed to
the Company's Secretary and delivered to the Company's principal
executive offices at 10270 Old Columbia Road, Suite 100,
Columbia, Maryland 21046.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, the Company knows of
no business other than that described herein that will be
presented for consideration at the meeting. If, however, any
other business shall come properly before the meeting, the proxy
holders intend to vote the proxies in accordance with their best
judgment.
<PAGE>
/s/
Joseph Schmelzle
Secretary
Columbia, Maryland
October 14, 1997
<PAGE>
DIEHL GRAPHSOFT, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN CONNECTION WITH THE 1997 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Richard Diehl and Joseph
Schmelzle, or either of them, the proxy or proxies of the
undersigned with full powers of substitution, to vote all shares
of Common Stock of Diehl Graphsoft, Inc. held of record by the
undersigned at the close of business on September 26, 1997 at
the Annual Meeting of Stockholders of the Company to be held on
November 4, 1997 at 10:00 a.m., Eastern Time and at any
adjournment or adjournments thereof, upon the matters set forth
herein. The undersigned hereby revokes any and all previous
proxies with respect to the matters covered by this proxy and
the voting of such shares at the Annual Meeting.
PLEASE MARK YOUR CHOICE IN BLUE OR BLACK INK, PLEASE SIGN, DATE
AND RETURN THIS PROXY PROMPTLY USING THE ACCOMPANYING ENVELOPE
x Please If properly executed, the shares represented
mark by this proxy will be voted in the manner
votes directed herein by the undersigned
as in stockholder, or to the extent directions are
this not given, such shares will be voted FOR each
example of the nominees and FOR each other proposal.
The Board of Directors recommends a vote "FOR" the nominees
listed below and a vote "FOR" Proposals 2 and 3.
1. ELECTION OF DIRECTORS.
Nominees: Richard Hug
Frederic Unger
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY FOR
(EXCEPT AS INDICATED) ALL NOMINEES LISTED
To withhold authority to vote for any nominee, write that
nominee's name in the space provided.
(continued, and to be signed, on other side)
<PAGE>
(continued from other side)
For Against Abstain
2 ADOPTION OF AMENDED AND
. RESTATED OPTION PLAN.
3 RATIFICATION OF APPOINTMENT
. OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
MARK HERE FOR
ADDRESS
_ CHANGE AND NOTE
SUCH CHANGE AT LEFT
Please sign and date this proxy exactly as your name appears
hereon. Persons acting in a fiduciary capacity should so
indicate. When signing as attorney-in-fact, executor,
administrator, trustee, guardian, corporate officer or partner,
please give full title. If stock is jointly held, each joint
owner should sign. PLEASE NOTE any change of address and
supply any missing Zip Code number.
Signature: Date:
Signature: Date:
Additional Signature of Joint Owner
(if any)
EXHIBIT 1
DIEHL GRAPHSOFT, INC.
AMENDED AND RESTATED STOCK OPTION PLAN
1. Establishment, Purpose and Types of Awards
DIEHL GRAPHSOFT, INC. (the "Corporation"), which formerly
established the STOCK OPTION PLAN OF DIEHL GRAPHSOFT, INC., now
finds it desirable to amend and restate said plan to (i) expand
the number of shares issuable pursuant to options granted under
the plan, (ii) expand the types of options available for award
under the plan, and (iii) otherwise modify the terms and
conditions of the plan, and does hereby establish the DIEHL
GRAPHSOFT, INC. AMENDED AND RESTATED STOCK OPTION PLAN
(hereinafter referred to as the "Plan").
The purpose of the Plan is to promote the long-term growth
and profitability of the Corporation (i) by providing employees
and other key people with incentives to improve stockholder value
and to contribute to the growth and financial success of the
Corporation, and (ii) by enabling the Corporation to attract,
retain and reward the best available persons for positions of
substantial responsibility.
The Plan permits the granting of nonqualified stock options
and incentive stock options qualifying under Section 422 of the
Code, or any combination of the foregoing (collectively,
"Options").
2. Definitions
Under this Plan, except where the context otherwise
indicates, the following definitions apply:
(a) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Change in Control" shall mean (i) any sale, exchange
or other disposition of substantially all of the Corporation's
assets; or (ii) any merger, share exchange, consolidation or
other reorganization or business combination in which the
Corporation is not the surviving or continuing corporation, or in
which the Corporation's stockholders become entitled to receive
cash, securities of the Corporation other than voting common
stock, or securities of another issuer.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations issued thereunder.
(d) "Common Stock" shall mean shares of common stock of the
Corporation, par value of $.01 per share.
(e) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
<PAGE>
(f) "Fair Market Value" of a share of the Corporation's
Common Stock for any purpose on a particular date shall be
determined in a manner such as the Committee shall in good faith
determine to be appropriate; provided, however, that if the
Common Stock is publicly traded, then Fair Market Value shall
mean the average of the closing bid and asked prices, regular
way, on such date as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on a national securities exchange or included
for quotation on the Nasdaq-National Market, or if the Common
Stock is not so listed or admitted to trading or included for
quotation, the average of the high bid and low asked prices,
regular way, in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer in use, the
principal other automated quotations system that may then be in
use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices,
regular way, as furnished by a professional market maker making a
market in the Common Stock as selected in good faith by the
Committee or by such other source or sources as shall be selected
in good faith by the Committee; and provided further, that in the
case of incentive stock options, the determination of Fair Market
Value shall be made by the Committee in good faith in conformance
with the Treasury Regulations under Section 422 of the Code. If,
as the case may be, the relevant date is not a trading day, the
determination shall be made as of the next preceding trading day.
As used herein, the term "trading day" shall mean a day on which
public trading of securities occurs and is reported in the
principal consolidated reporting system referred to above, or if
the Common Stock is not listed or admitted to trading on a
national securities exchange or included for quotation on the
Nasdaq-National Market, any day other than a Saturday, a Sunday
or a day in which banking institutions in the State of New York
are closed.
(g) "Grant Agreement" shall mean a written agreement
between the Corporation and a grantee memorializing the terms and
conditions of an Option granted pursuant to the Plan.
(h) "Grant Date" shall mean the date on which the Committee
formally acts to grant an Option to a grantee or such other date
as the Committee shall so designate at the time of taking such
formal action.
(i) "Option" shall mean a contractual right to purchase
from the Corporation a specified number of shares of Common Stock
at a specified price.
(j) "Parent" shall mean a corporation, whether now or
hereafter existing, within the meaning of the definition of
"parent corporation" provided in Section 424(e) of the Code, or
any successor thereto of similar import.
(k) "Rule 16b-3" shall mean Rule 16b-3 as in effect under
the Exchange Act on the effective date of the Plan, or any
successor provision prescribing conditions necessary to exempt
the issuance of securities under the Plan (and further
transactions in such securities) from Section 16(b) of the
Exchange Act.
<PAGE>
(l) "Subsidiary" and "subsidiaries" shall mean only a
corporation or corporations, whether now or hereafter existing,
within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f)
of the Code, or any successor thereto of similar import.
3. Administration
(a) Procedure. The Plan shall be administered by the
Board. Members of the Board who are either eligible for Options
or have been granted Options may vote on any matters affecting
the administration of the Plan or the grant of Options pursuant
to the Plan, except that no such member shall act upon the
granting of an Option to himself or herself, but any such member
may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to
the granting of an Option to him or her.
(b) Powers of the Board. The Board shall have all the
powers vested in it by the terms of the Plan, such powers to
include authority, in its sole and absolute discretion, to grant
Options under the Plan, prescribe Grant Agreements evidencing
such Options and establish programs for granting Options. The
Board shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the
Plan, including, but not limited to, the authority to:
(i) determine the eligible persons to whom, and
the time or times at which Options shall be granted,
(ii) determine the types of Options to be
granted,
(iii) determine the number of shares to be
covered by each Option,
(iv) impose such terms, limitations,
restrictions and conditions upon any such Option as the
Board shall deem appropriate,
(v) modify, extend or renew outstanding Options,
accept the surrender of outstanding Options and
substitute new Options,
(vi) accelerate or otherwise change the time in
which an Option may be exercised and to waive or
accelerate the lapse, in whole or in part, of any
restriction or condition with respect to such Option,
including, but not limited to, any restriction or
condition with respect to the exercisability of an
Option following termination of any grantee's
employment, and
(vii) to establish objectives and conditions, if
any, for earning Options and determining whether
Options will be granted after the end of a performance
period.
The Board shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of
the Plan and for the conduct of its
<PAGE>
business as the Board deems necessary or advisable and to
interpret same, all within the Board's sole and absolute
discretion.
(c) Limited Liability. To the maximum extent permitted by
law, no member of the Board shall be liable for any action taken
or decision made in good faith relating to the Plan or any Option
thereunder.
(d) Indemnification. To the maximum extent permitted by
law, the members of the Board shall be indemnified by the
Corporation in respect of all their activities under the Plan.
(e) Effect of Board's Decision. All actions taken and
decisions and determinations made by the Board on all matters
relating to the Plan pursuant to the powers vested in it
hereunder shall be in the Board's sole and absolute discretion
and shall be conclusive and binding on all parties concerned,
including the Corporation, its stockholders, any participants in
the Plan and any other employee of the Corporation, and their
respective successors in interest.
4. Shares Available for the Plan
Subject to adjustments as provided in Section 9 of the Plan,
the shares of stock that may be delivered or purchased with
respect to Options granted under the Plan, including with respect
to incentive stock options intended to qualify under Section 422
of the Code, shall not exceed an aggregate of 300,000 shares of
Common Stock of the Corporation. The Corporation shall reserve
said number of shares for Options under the Plan, subject to
adjustments as provided in Section 9 of the Plan. If any Option,
or portion of an Option, under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares without the
delivery of shares of Common Stock or other consideration, the
shares subject to such Option shall thereafter be shares with
respect to which further Options may be granted under the Plan.
5. Participation
Participation in the Plan shall be open to all employees,
directors, officers and other key contributors (including
independent contractors, consultants and advisors) of the
Corporation, or of any Parent or Subsidiary of the Corporation,
as may be selected by the Board from time to time.
Notwithstanding the foregoing, participation in the Plan with
respect to awards of incentive stock options shall be limited to
employees of the Corporation or of any Parent or Subsidiary of
the Corporation.
6. Stock Options
Subject to the other applicable provisions of the Plan, the
Board may from time to time grant to eligible participants awards
of nonqualified stock options or incentive stock options as that
term is defined in Section 422 of the Code. The Options granted
shall be subject to the following terms and conditions.
(a) Grant of Option. The grant of an Option shall be
evidenced by a Grant Agreement, executed by the Corporation and
the grantee, stating the
<PAGE>
number of shares of Common Stock subject to the Option evidenced
thereby andthe terms and conditions of such Option, in such form
as the Board may from time to time determine.
(b) Price. The price per share payable upon the exercise
of each Option ("exercise price") shall be determined by the
Board; provided, however, that in no event shall the exercise
price be less than 100% of the Fair Market Value of the shares
determined as of the date the stock option is granted.
(c) Payment. Options may be exercised in whole or in part
by payment of the exercise price of the shares to be acquired in
accordance with the provisions of the Grant Agreement, and/or
such rules and regulations as the Board may have prescribed,
and/or such determinations, orders, or decisions as the Board may
have made. Payment must be made in cash (or cash equivalents
acceptable to the Board).
If the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, the Board, subject to such limitations
as it may determine, may authorize payment of the exercise price,
in whole or in part, by delivery of a properly executed exercise
notice, together with irrevocable instructions, to: (i) a
brokerage firm approved by the Corporation to deliver promptly to
the Corporation the aggregate amount of sale or loan proceeds to
pay the exercise price and any withholding tax obligations that
may arise in connection with the exercise, and (ii) the
Corporation to deliver the certificates for such purchased shares
directly to such brokerage firm.
(d) Terms of Options. The term during which each Option
may be exercised shall be determined by the Board; provided,
however, that in no event shall an Option be exercisable more
than ten years from the date it is granted. Prior to the
exercise of the Option and delivery of the share certificates
represented thereby, the grantee shall have none of the rights of
a stockholder with respect to any shares represented by an
outstanding Option.
(e) Restrictions on Incentive Stock Options. Incentive
stock options granted under the Plan shall comply in all respects
with Code Section 422 and, as such, shall meet the following
additional requirements:
(i) Grant Date. An incentive stock option must be
granted within 10 years of the earlier of the Plan's
adoption by the Board of Directors or approval by the
Corporation's shareholders.
(ii) Exercise Price and Term. The exercise price of an
incentive stock option shall not be less than 100% of the
Fair Market Value of the shares on the date the stock option
is granted. Also, the exercise price of any incentive stock
option granted to a grantee who owns (within the meaning of
Section 422(b)(6) of the Code, after the application of the
attribution rules in Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of
shares of the Corporation or its Parent or Subsidiary
corporations (within the meaning of Sections 422 and 424 of
the Code) shall be not less than 110% of the Fair Market
Value of the Common Stock on the grant date and the term of
such stock option shall not exceed five years.
<PAGE>
(iii) Maximum Grant. The aggregate Fair Market
Value (determined as of the Grant Date) of shares of Common
Stock with respect to which all incentive stock options
first become exercisable by any grantee in any calendar year
under this or any other plan of the Corporation and its
Parent and Subsidiary corporations may not exceed $100,000
or such other amount as may be permitted from time to time
under Section 422 of the Code. To the extent that such
aggregate Fair Market Value shall exceed $100,000, or other
applicable amount, such stock options shall be treated as
nonqualified stock options. In such case, the Corporation
may designate the shares of Common Stock that are to be
treated as stock acquired pursuant to the exercise of an
incentive stock option by issuing a separate certificate for
such shares and identifying the certificate as incentive
stock option shares in the stock transfer records of the
Corporation.
(iv) Grantee. Incentive stock options shall only be
issued to employees of the Corporation, or of a Parent or
Subsidiary of the Corporation.
(v) Designation. No Option shall be an incentive
stock option unless so designated by the Board at the time
of grant or in the Grant Agreement evidencing such Option.
(f) Other Terms and Conditions. Options may contain such
other provisions, not inconsistent with the provisions of the
Plan, as the Board shall determine appropriate from time to time.
7. Withholding of Taxes
The Corporation may require, as a condition to the exercise
of any Option granted under the Plan, that the grantee pay to the
Corporation in cash any federal, state or local taxes of any kind
required by law to be withheld with respect to such exercise.
The Corporation, to the extent permitted or required by law,
shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee any
federal, state or local taxes of any kind required by law to be
withheld with respect to any exercise of an Option granted under
the Plan, or to retain or sell without notice a sufficient number
of the shares to be issued to such grantee to cover any such
taxes.
8. Transferability
No Option granted under the Plan shall be transferable by a
grantee otherwise than by will or the laws of descent and
distribution. An Option may be exercised during the lifetime of
the grantee, only by the grantee or, during the period the
grantee is under a legal disability, by the grantee's guardian or
legal representative.
9. Adjustments, Business Combinations, and Liquidations
In the event of a reclassification, recapitalization, stock
split, stock dividend, combination of shares, or other similar
event, the maximum number and kind of shares reserved for
issuance or with respect to which Options may
<PAGE>
be granted under the Plan as provided in Section 4 shall be
adjusted to reflect such event, and the Board shall make such
adjustments as it deems appropriate and equitable in the number,
kind and price of shares covered by outstanding Options made
under the Plan, and in any other matters which relate to Options
and which are affected by the changes in the Common Stock
referred to above.
In the event of any proposed Change in Control, the Board
shall take such action as it deems appropriate and equitable to
effectuate the purposes of this Plan and to protect the grantees
of Options, which action may include, but without limitation, any
one or more of the following: (i) acceleration or change of the
exercise dates of any Option; (ii) arrangements with grantees for
the payment of appropriate consideration to them for the
cancellation and surrender of any Option; and (iii) in any case
where equity securities other than Common Stock of the
Corporation are proposed to be delivered in exchange for or with
respect to Common Stock of the Corporation, arrangements
providing that any Option shall become one or more options with
respect to such other equity securities. Notwithstanding the
foregoing, unless the holder of an Option that was granted under
the Stock Option Plan Of Diehl Graphsoft, Inc. prior to the date
that this amendment and restatement of the Plan becomes effective
consents to a different course of action with respect to his
outstanding Option, then upon a Change in Control such holder
shall be entitled to receive, for the exercise price stated in
the Option, that number of shares or other securities or property
of the corporation resulting from such Change in Control to which
each share of Common Stock deliverable upon exercise of the
Option would have been entitled, upon such Change in Control, had
the holder of such Option exercised his right to purchase and had
said share of Common Stock been issued and outstanding, and had
such holder been the holder of record of such share at the time
of such event.
The Board is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Options in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in the preceding two paragraphs
of this Section 9) affecting the Corporation, or the financial
statements of the Corporation or any Subsidiary, or of changes in
applicable laws, regulations, or accounting principles, whenever
the Board determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
With respect to any Option that was granted under the Stock
Option Plan Of Diehl Graphsoft, Inc. prior to the date that this
amendment and restatement of the Plan becomes effective, in the
event that the Corporation shall at any time prior to the
exercise of such Option make any distribution of its assets to
holders of its Common Stock by liquidating or partial liquidating
dividend or by way of return of capital, or other than as a
dividend payable out of earnings or any surplus legally available
for dividends under the laws of the State of Maryland, then the
holder of such Option who thereafter exercises the same after the
date of record for the determination of those holders of Common
Stock entitled to such distribution of assets shall be entitled
to receive for the exercise price, in addition to each share of
Common Stock, the amount of such assets (or at the option of the
Corporation a sum equal to the value thereof at the time of such
distribution to holders of Common Stock as such value is
determined by the Board in good faith) which would have been
payable to such holder had he been the holder of
<PAGE>
record of such share of Common Stock receivable upon exercise of
such Option on the record date for the determination of those
entitled to such distribution.
In the event the Corporation dissolves and liquidates (other
than pursuant to a plan of merger or reorganization), then
notwithstanding any restrictions on exercise set forth in this
Plan or any Grant Agreement, (i) each grantee shall have the
right to exercise his Option at any time after the commencement
of the proceedings for such liquidation and dissolution up to ten
(10) days prior to the effective date of such liquidation and
dissolution; and (ii) the Board may make arrangements with the
grantees for the payment of appropriate consideration to them for
the cancellation and surrender of any Option that is so canceled
or surrendered at any time up to ten (10) days prior to the
effective date of such liquidation and dissolution. The Board
may establish a different period (and different conditions) for
such exercise, cancellation, or surrender to avoid subjecting the
grantee to liability under Section 16(b) of the Exchange Act.
Any Option not so exercised, canceled, or surrendered shall
terminate on the last day for exercise prior to such effective
date. The Corporation shall give to each grantee written notice
of the commencement of any proceedings for such liquidation and
dissolution of the Corporation and the grantee's rights with
respect to his outstanding Option.
10. Termination and Modification of the Plan
The Board, without further approval of the stockholders, may
modify or terminate the Plan or any portion thereof at any time,
except that no modification shall become effective without prior
approval of the stockholders of the Corporation if stockholder
approval is necessary to comply with any tax or regulatory
requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose
stockholder approval that is required to enable the Board to
grant incentive stock options pursuant to the Plan.
The Board shall be authorized to make minor or
administrative modifications to the Plan as well as modifications
to the Plan that may be dictated by requirements of federal or
state laws applicable to the Corporation or that may be
authorized or made desirable by such laws. The Board may amend
or modify the grant of any outstanding Option in any manner to
the extent that the Board would have had the authority to make
such Option as so modified or amended.
11. Fractional Shares
The Corporation shall not be required to issue fractional
shares of Common Stock upon exercise of any Options granted under
the Plan. If, by reason of any change made in the number of
shares purchasable upon the exercise of Options pursuant to the
provisions of Section 9 of the Plan, a grantee of an Option would
be entitled to purchase a fractional interest in a share of
Common Stock, such grantee shall only be entitled to receive from
the Corporation an amount in cash equal to the current market
value of such fractional interest.
<PAGE>
12. Non-Guarantee of Employment
Nothing in the Plan or in any Grant Agreement thereunder
shall confer any right on an employee to continue in the employ
of the Corporation or shall interfere in any way with the right
of the Corporation to terminate an employee at any time.
13. Termination of Employment
For purposes of maintaining a grantee's continuous status as
an employee and accrual of rights under any Option, transfer of
an employee among the Corporation and the Corporation's Parent or
Subsidiaries shall not be considered a termination of employment.
14. Written Agreement
Each Grant Agreement entered into between the Corporation
and a grantee with respect to an Option granted under the Plan
shall incorporate the terms of this Plan and shall contain such
provisions, consistent with the provisions of the Plan, as may be
established by the Board.
15. Non-Uniform Determinations
The Board's determinations under the Plan (including without
limitation determinations of the persons to receive Options, the
form, amount and timing of such Options, the terms and provisions
of such Options and the agreements evidencing same) need not be
uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Options under the Plan,
whether or not such persons are similarly situated.
16. Compliance with Securities Law
Common Stock shall not be issued with respect to an Option
granted under the Plan unless the exercise of such Option and the
issuance and delivery of share certificates for such Common Stock
pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933,
the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any national securities
exchange or Nasdaq System upon which the Common Stock may then be
listed or quoted, and shall be further subject to the approval of
counsel for the Corporation with respect to such compliance to
the extent such approval is sought by the Board. All
certificates for Common Stock delivered under the Plan pursuant
to any Option or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Board may deem
advisable under the Plan or the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock
exchange or Nasdaq System upon which such securities are then
listed or quoted, and any applicable Federal or state laws, and
the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
<PAGE>
17. No Limit on Other Compensation Arrangements
Nothing contained in the Plan shall prevent the Corporation
or its Parent or Subsidiary corporations from adopting or
continuing in effect other compensation arrangements (whether
such arrangements be generally applicable or applicable only in
specific cases) as the Board in its discretion determines
desirable, including without limitation the granting of stock
options, stock awards, stock appreciation rights or phantom stock
units otherwise than under the Plan.
18. No Trust or Fund Created
Neither the Plan nor any Option shall create or be construed
to create a trust or separate fund of any kind or a fiduciary
relationship between the Corporation and a grantee or any other
person. To the extent that any grantee or other person acquires
a right to receive payments from the Corporation pursuant to an
award under this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Corporation.
19. Governing Law
The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Board
relating to the Plan or such Grant Agreements, and the rights of
any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State
of Maryland, without regard to its conflict of laws rules and
principles.
20. Plan Subject to Charter and By-Laws
This Plan is subject to the Charter and By-Laws of the
Corporation, as they may be amended from time to time.
21. Effective Date; Termination Date
The Plan, as herein amended and restated, is effective as of
the date on which the Plan is adopted by the Board, subject to
approval of the stockholders within twelve months before or after
such date. All Options granted under the Stock Option Plan Of
Diehl Graphsoft, Inc. prior to the date that this amendment and
restatement of the Plan becomes effective shall be and remain
subject to the terms and provisions of the Stock Option Plan Of
Diehl Graphsoft, Inc. as in effect at the time of such grant. No
Option shall be granted under the Plan after the close of
business on the day immediately preceding the tenth anniversary
of the effective date of the Plan. Subject to other applicable
provisions of the Plan, all Options made under the Plan prior to
such termination of the Plan shall remain in effect until such
Options have been satisfied or terminated in accordance with the
Plan and the terms of such Options.
Date Approved by the Board:
Date Approved by the Shareholders:
