<PAGE> 1
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 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ENTERPRISE SOFTWARE, 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ENTERPRISE SOFTWARE, INC.
38705 SEVEN MILE ROAD
LIVONIA, MICHIGAN 48152
(248) 380-6070
DECEMBER 7, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Enterprise Software, Inc. (the "Company") to be held on January 6, 1999 at 11:00
a.m., Eastern Standard Time, at the Waldorf=Astoria Hotel, 301 Park Avenue, New
York, New York 10022.
The attached Notice of Annual Meeting and proxy statement describe the
formal business to be transacted at this meeting. Directors and officers of the
Company, as well as representatives of KPMG Peat Marwick LLP, the Company's
independent auditors, will be present at the meeting to respond to appropriate
questions.
The Board of Directors of the Company has determined that the matters to be
considered at the annual meeting are in the best interests of the Company and
its stockholders. The Board unanimously recommends a vote "FOR" the election of
each of the director nominees identified in the attached proxy statement and
"FOR" each of the other proposals identified in the Notice of Annual Meeting and
discussed in the proxy statement.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE OUTSTANDING SHARES OF VOTING STOCK MUST
BE REPRESENTED, EITHER IN PERSON OR BY PROXY, AT THE ANNUAL MEETING IN ORDER TO
TRANSACT BUSINESS.
On behalf of the Board of Directors and all of the employees of the Company
and its subsidiaries, I wish to thank you for your continued support. We
appreciate your interest.
Sincerely yours,
Andre A. Blay signature
Andre A. Blay
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
ENTERPRISE SOFTWARE, INC.
38705 SEVEN MILE ROAD
LIVONIA, MICHIGAN 48152
(248) 380-6070
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 6, 1999
------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Enterprise Software, Inc., a Delaware corporation (the "Company"), will be held
at the Waldorf=Astoria Hotel, 301 Park Avenue, New York, New York 10022 on
Wednesday, January 6, 1999, at 11:00 a.m., Eastern Standard Time, in order to
act upon the following matters:
1. To elect seven persons to the Company's Board of Directors to serve
until the next annual meeting of stockholders or until their successors
are duly elected and qualified;
2. To approve the Enterprise Software, Inc. Employee Stock Purchase and
Savings Plan, pursuant to which employees of the Company and its
subsidiaries may purchase limited amounts of shares of common stock of
the Company at 85% of market value;
3. To ratify the appointment by the Board of Directors of KPMG Peat Marwick
LLP as the independent accountants of the Company for the fiscal year
ending March 31, 1999; and
4. To consider such other matters as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed November 18, 1998 as the record date for
the determination of stockholders entitled to notice of and to vote at the
annual meeting and at any adjournments thereof. Only record holders of the
common stock of the Company as of the close of business on that date will be
entitled to vote at the meeting or any such adjournments. In the event that
there are not sufficient votes to approve or ratify any of the foregoing
proposals at the time of the annual meeting, the meeting may be adjourned in
order to permit further solicitation of proxies by the Company. A list of
stockholders entitled to vote at the meeting will be available at the offices of
D. F. King & Co., Inc., 77 Water Street, New York, New York 10005 and at the
Company's principal office in Livonia, Michigan for a period of ten days prior
to the meeting, and such list also will be available at the meeting.
By Order of the Board of Directors
Livonia, Michigan H. Bradley Eden
December 7, 1998 Secretary
YOUR VOTE IS IMPORTANT WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE> 4
ENTERPRISE SOFTWARE, INC.
PROXY STATEMENT
------------------------------
GENERAL
PERSONS MAKING THE SOLICITATION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Enterprise Software, Inc., a Delaware corporation (the
"Company"), of proxies for use at its Annual Meeting of Stockholders to be held
on Wednesday, January 6, 1999 and any adjournments thereof (the "Annual
Meeting"). This proxy statement is first being sent or given to stockholders on
December 7, 1998.
A form of proxy is enclosed for your use. The shares represented by each
properly executed and unrevoked proxy on the enclosed form will be voted as
directed by the stockholder executing the proxy. If no direction is made, the
shares represented by each properly executed and unrevoked proxy on that form
will be voted "FOR" (i) the election of management's nominees for the Board of
Directors identified in this proxy statement, (ii) the approval of the
Enterprise Software, Inc. Employee Stock Purchase and Savings Plan (the "Stock
Purchase Plan"), pursuant to which eligible employees of the Company or a
subsidiary may purchase limited amounts of shares of common stock of the Company
at 85% of market value, and (iii) the ratification of the appointment by the
Board of KPMG Peat Marwick LLP as the independent accountants of the Company for
the fiscal year ending March 31, 1999. You are requested to sign, date and
return the enclosed proxy form in order to ensure that your shares are
represented at the meeting.
The cost of the Board's solicitation of proxies, including the cost of
preparation and mailing of the Notice of Annual Meeting, this proxy statement,
the enclosed proxy form and the accompanying Annual Report to Stockholders for
the fiscal year ended March 31, 1998 ("fiscal 1998"), will be borne by the
Company. It is anticipated that brokerage houses, fiduciaries, nominees, and
others will be reimbursed for their out-of-pocket expenses in forwarding proxy
material to beneficial owners of stock held in their names. Directors, officers
or employees of the Company or a subsidiary may solicit proxies by telephone or
in person without additional compensation. The Company has engaged D. F. King &
Co., Inc., 77 Water Street, New York, New York 10005, to solicit proxies, will
pay compensation to that solicitor for such services in the amount of $3,500 and
will reimburse its expenses.
REVOCABILITY OF PROXY
Any proxy given by a stockholder of the Company may be revoked at any time
before it is voted at the Annual Meeting by a written notice to the Secretary of
the Company, by giving a later dated proxy or upon request if the stockholder is
present at the meeting.
SHARES ENTITLED TO VOTE; QUORUM REQUIREMENTS
Holders of record of the Company's Common Stock, $.001 par value (the
"common stock"), at the close of business on November 18, 1998 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 5,406,260 shares of common stock issued and outstanding.
Holders of shares of common stock are entitled to cast one vote per share on
each matter presented for consideration and action by the stockholders. The
presence, in person or by proxy, of stockholders entitled to cast at least a
majority of the outstanding shares of common stock will constitute a quorum for
the transaction of business at the Annual Meeting. For purposes of determining
whether a quorum is present, the inspectors of election appointed for the
meeting will treat abstaining shares as shares that are present and entitled to
vote.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table provides information regarding each person known by the
Company to own beneficially, as of the Record Date (unless otherwise indicated
by footnote), more than five percent of the Company's outstanding common stock.
The sources of information concerning parties named in the table are indicated
in notes to the table. Where a source of information is dated prior to the
4-to-1 reverse split of the common stock that occurred last July (the "Reverse
Stock Split"), the number of shares reported has been adjusted to reflect the
Reverse Stock Split.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
------------------------------------ ---------------- ----------------
<S> <C> <C>
Cary S. Fitchey, Robert Lautz.............................. 738,099 13.65%
Graeme Jenner, Peter Rhodes-Dimmer,
Judith K. Thome, Steven Michael Ross,
William D. Killion (through Killer Barn, Inc.),
William Kunkel and Robert E. Derham(1)
18930 Pacific Coast Highway
Malibu, California 90265(2)
AWM Investment Company, Inc................................ 326,500 6.03
Austin W. Marxe and certain related
Limited partnerships(3)
153 East 53rd Street, 51st Floor
New York, New York 10222
InterEquity Capital Partners, L.P.......................... 295,863 5.47
Irvin Schlass and certain of his relatives,
Stephen Raphael and certain of his relatives(4)
220 Fifth Avenue
New York, New York 10001
Andre A. Blay(5)........................................... 283,570(6) 5.25
38705 Seven Mile Road
Suite 435
Livonia, Michigan 48152
</TABLE>
- ---------------
(1) Information reported is based on a Schedule 13D/A (the "Fitchey Schedule")
filed with the Securities and Exchange Commission ("SEC") on August 21,
1998. According to the Fitchey Schedule, Mr. Fitchey is the Managing Partner
of British Pacific Partners, Mr. Lautz is a consultant for Peerling Capital,
Mr. Jenner is a consultant, Mr. Rhodes-Dimmer is a business project manager,
Ms. Thome and Mr. Ross are retired, Mr. Kunkel is a Senior Vice President of
CBS International Media, and Mr. Derham is the Managing Director of Travel
Technology Group, Ltd. Also according to the Fitchey Schedule, Killer Barn,
Inc. is owned and controlled by Mr. William D. Killion. Based on the Fitchey
Schedule, Mr. Fitchey has sole voting and dispositive power over 34,500 of
the reported shares, Mr. Lautz has sole voting and dispositive power over
76,110 of the reported shares, Mr. Jenner has sole voting and dispositive
power over 31,034 of the reported shares, Mr. Rhodes-Dimmer has sole voting
and dispositive power over 54,495 of the reported shares, Ms. Thome has sole
voting and dispositive power over 56,327 of the reported shares, Mr. Ross
has sole voting and dispositive power over 53,097 of the reported shares,
Mr. Killion (through Killer Barn, Inc.) has sole voting and dispositive
power over 382,500 of the reported shares, Mr. Kunkel has sole voting and
dispositive power over 11,761 of the reported shares and Mr. Derham has sole
voting and dispositive power over 38,275 of the reported shares. However,
the Fitchey Schedule also reports that each named individual also has shared
voting power over the same number of shares identified for him or her above.
2
<PAGE> 6
(2) The address above is the address reported in the Fitchey Schedule for Mr.
Fitchey. Different addresses are listed in a "Schedule A" to the Fitchey
Schedule for the other persons named above.
(3) Information reported is based on a Schedule 13G (the "AWM Schedule") filed
with the SEC February 12, 1998 by AWM Investment Company, Inc. ("AWM"), Mr.
Marxe, Special Situations Fund III, L.P. ("SS Fund"), and MGP Advisers
Limited Partnership, L.P. ("MGP"). According to the AWM Schedule: AWM, an
investment advisor, is a general partner of and advisor to MGP and also is
an advisor to Special Situations Cayman Fund, L.P. ("Cayman"); MGP, also an
investment advisor, is a general partner of and advisor to SS Fund; and Mr.
Marxe is the Chief Executive Officer of AWM, a general partner and the
principal limited partner of MGP and principally responsible for the
selection, acquisition, and disposition of portfolio securities by AWM on
behalf of MPG, SS Fund, and Cayman. Based on the AWM Schedule, AWM and Mr.
Marxe may be viewed as sharing voting and dispositive power over all of the
reported shares, partially with MGP and SS Fund, and partially with Cayman.
(4) Information reported is based on a Schedule 13D filed with the SEC on June
18, 1998, as amended by a Schedule 13D/A filed with the SEC on August 25,
1998 (as so amended, the "InterEquity Schedule") by InterEquity Capital
Partners, L.P. ("InterEquity"), Mr. Schlass, Natalie Schlass, Jack
Schleifer, Mr. Raphael, Marjorie Raphael, Lucille Raphael, Jacqueline
Raphael, and Joanne Alonso. According to the InterEquity Schedule:
InterEquity is a small business development company, the sole general
partner of which is InterEquity Capital Corporation ("ICC"); Mr. Schlass is
the Chairman and Chief Executive Officer and Mr. Raphael is a director of
ICC; Natalie Schlass and Mr. Schleifer are relatives of Mr. Schlass; and the
other reporting persons are relatives of Mr. Raphael. Based on the
InterEquity Schedule, InterEquity beneficially owns 101,863 of the reported
shares (possibly with shared voting and/or dispositive power over some of
them), Natalie Schlass has shared voting and dispositive power over 11,250
of the reported shares; Mr. Schlass beneficially owns 17,000 of the reported
shares (with shared voting and/or dispositive power over some of them); Mr.
Schleifer has sole voting and dispositive power over 68,875 of the reported
shares; Mr. Raphael has sole voting and dispositive power over 42,125 of the
reported shares; Marjorie Raphael has sole voting and dispositive power over
500 of the reported shares; Lucille Raphael has sole voting and dispositive
power over 49,250 of the reported shares; Jacqueline Raphael has sole voting
and dispositive power over 500 of the reported shares; and Joanne Alonso has
sole voting and dispositive power over 4,500 of the reported shares.
(5) Information reported has been provided by Mr. Andre Blay.
(6) Includes shares held in the Andre A. Blay Living Trust or the Robert A. Blay
Trust, for each of which Andre Blay acts as sole trustee, and shares held in
the Andre A. Blay Individual Retirement Account, for which he acts as sole
custodian. Does not include 37,650 shares owned beneficially and of record
by Nancy Blay, his spouse.
3
<PAGE> 7
OFFICERS AND DIRECTORS
The following table provides information concerning the beneficial
ownership of Company common stock as of the Record Date by each director nominee
and each current executive officer of the Company, in each case based on
information provided by him, and by all director nominees and current executive
officers as a group.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES(1) PERCENT OF CLASS(1)
---- ------------------- -------------------
<S> <C> <C>
Andre A. Blay.......................................... 283,570(2) 5.25%
Thomas H. Baur......................................... 221,757 4.10
Robert Beauregard...................................... 18,500 *
H. Bradley Eden........................................ 3,841 *
Richard L. Schleufer................................... 18,797 *
Joseph J. Porfeli...................................... 119,000 2.16
James S. Ware.......................................... 5,150 *
David W. Martin........................................ 8,468 *
Robert A. Blay......................................... 0 *
All director nominees and current executive officers as
a group (9 persons).................................. 679,083 12.56
</TABLE>
- ---------------
* Less than 1%.
(1) Pursuant to applicable SEC regulations, for purposes of reporting shares and
the percentage of outstanding shares owned by a named individual, shares
subject to options or warrants owned by that individual and currently
exercisable or which will become exercisable within the next 60 days (but no
shares subject to options or warrants owned by any other individual) are
treated as outstanding. For purposes of reporting with respect to the group,
shares subject to options or warrants reported for any named individual are
treated as outstanding. Unless otherwise indicated by other notes to this
table, each individual named has sole voting power and sole dispositive
power over the shares reported for him.
(2) See note (6) to the immediately preceding table.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors, who will constitute the entire
Board of Directors, are to be elected to serve until the next annual meeting of
stockholders or until their successors shall be elected and shall qualify. The
Board's nominees for those positions are the five incumbent directors, Andre A.
Blay, Thomas H. Baur, H. Bradley Eden, Robert Beauregard, and Richard L.
Schleufer, and two new nominees, Joseph J. Porfeli and James S. Ware. All such
nominees have consented to being named in this proxy statement and have agreed
to serve as directors if elected. Proxies in the form enclosed will be voted
"FOR" the election of each of the above named nominees except to the extent
authority to do so is withheld. If for any reason any nominee should become
unavailable for election as a director prior to the Annual Meeting (an event not
now anticipated), the proxies will be voted for such substitute nominee as may
be recommended by management.
In order for there to be a valid election of directors, a majority of the
issued and outstanding shares of common stock entitled to vote at the Annual
Meeting must cast at least one vote for some person nominated to be a director.
If that does not occur, the election will not be valid and each incumbent
director will remain in office until his successor is elected and qualified or
until his resignation or removal. Assuming the criterion described above is
satisfied, directors will be elected at the Annual Meeting by a plurality of the
votes cast, and the nominees receiving the highest through seventh-highest
numbers of affirmative votes will be elected as directors. Only votes actually
cast for a nominee will be counted for these purposes. Thus, if a share
abstains, authority to vote the share is withheld or the share is the subject of
a broker non-vote with respect to all
4
<PAGE> 8
persons nominated as directors, that share will not be counted for purposes of
determining whether a majority of all outstanding shares have voted in the
election, but if that criterion is satisfied, any abstention, withholding of
authority or broker non-vote with respect to a given nominee will have no effect
on the outcome of the election.
MANAGEMENT OF THE COMPANY
Set forth below is certain information with respect to each of the Board's
director nominees and each of the current executive officers of the Company:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ---- --- ------------------------- --------
<S> <C> <C> <C>
Andre A. Blay............... 61 Chairman of the Board and Chief Executive Officer 1996
Thomas H. Baur.............. 53 Director 1995
Robert Beauregard........... 59 Director 1997
H. Bradley Eden............. 39 Director and Secretary 1997
Richard L. Schleufer........ 45 Director; Chief Executive Officer of the Company's 1996
subsidiaries, Enterprise Systems Group Limited
("ESGL") and Cable Computerized Management Systems,
Inc. ("CCMS")
Joseph J. Porfeli........... 50 Director nominee; President of the Company's --
subsidiary, REVIVE Technologies Incorporated
("REVIVE")
James S. Ware............... 63 Director nominee --
David W. Martin............. 48 Chief Financial Officer; Group Financial Director of --
ESGL and its subsidiaries
Robert A. Blay.............. 40 Vice President of International Operations and --
Assistant Secretary; Managing Director of the
Company's European and African operations; Director
of ESGL and its U.K. subsidiaries
</TABLE>
ANDRE A. BLAY became Chairman of the Board of the Company in April 1997 and
its Chief Executive Officer in July 1997. He has been a director of the Company
since the Company's acquisition of Starcom Television Services, Inc. ("Starcom")
in February 1996. Until it was acquired by the Company, Mr. Blay served as a
director of Starcom. Mr. Blay also is a major shareholder and director of Media
Station, Inc., a multimedia company based in Ann Arbor, Michigan and is an
advisor to the Enterprise Development Fund and the Michigan State University
Foundation. In 1969 Mr. Blay founded Magnetic Video Corp., the world's first
pre-recorded video cassette company, which subsequently was acquired by
Twentieth Century Fox. In 1981, he founded The Blay Corp., which subsequently
was acquired by Coca-Cola. Mr. Blay also has produced motion pictures for
Universal, Columbia and Paramount.
THOMAS H. BAUR is the Chairman and largest stockholder of Travel Technology
Group, a private corporate travel management company. He has been a director of
the Company since March 1995. From 1975 until the acquisition by the Company of
Mediatech, Inc. ("Mediatech") in February 1995, Mr. Baur was the Chairman and
Chief Executive Officer of Mediatech. From the time of that acquisition until
July 18, 1997, when the Company sold all of its interest in Mediatech to an
unaffiliated third party, he was the President of Mediatech. He now serves as a
consultant to the buyer of Mediatech. Mr. Baur is a member of the board of
directors of the Chicago Museum of Broadcast Communication and was a founder of
the International Television Association and the Chicago Coalition. In 1989 he
received the Arthur Andersen & Co. small business award for excellence.
ROBERT BEAUREGARD is President of The Beauregard Group, Inc., a marketing
and communications consulting company, a position he has held since founding
that company in 1994. From 1988 to 1994, he was the group publisher and then
President of Sports Publishing Group, Inc., a Times Mirror Magazine company,
5
<PAGE> 9
and from 1964 until joining Times Mirror, he held various executive offices with
several J. Walter Thompson advertising agency companies in Canada, Europe and
the United States. Mr. Beauregard has been a director of the Company since
August 1997.
H. BRADLEY EDEN is the Chairman of Eden Capital, LLC ("Eden"), a holding
company formed by Mr. Eden in 1996 to hold ownership interests in various
investment advisory firms. Before forming Eden, he served as President of Fund
Evaluation Group, an investment consulting firm that he co-founded in 1985. Mr.
Eden has been a director of the Company since June 1997. He became Secretary of
the Company during 1998.
RICHARD L. SCHLEUFER has been a director of the Company since the Company
acquired ESGL in May 1996. He was appointed Chief Executive Officer of both ESGL
and CCMS in June 1996, after serving since 1987 as President and Chief Executive
Officer of Enterprise Systems Group, Inc., an indirect North American subsidiary
of ESGL. Mr. Schleufer joined Enterprise Systems Group, Inc. in 1986 as its Vice
President of Finance and Administration.
JOSEPH J. PORFELI is a nominee for election to the Board of Directors. He
has served as President of REVIVE since the Company acquired it in September
1998, and served as Chairman, President and Chief Executive Officer of REVIVE's
predecessor (also called REVIVE Technologies Incorporated) from 1997 until the
Company acquired REVIVE. Before joining REVIVE, Mr. Porfeli served for more than
four years as President and Chief Executive Officer of EIS International, a
provider of software, systems and servers for the call center industry.
JAMES S. WARE is a nominee for election to the Board of Directors. He
retired in 1996 after serving since 1995 as a consultant to Durco International
Inc., a Dayton, Ohio based manufacturer of fluid handling equipment. Prior to
that time he had served since 1983 as Chairman, President and Chief Executive
Officer of Durametallic Corporation, a privately-held manufacturer of seals for
industrial machinery based in Kalamazoo, Michigan. He currently serves on the
board of directors of Cello-Foil Corp., a privately-held consumer products
packaging manufacturer, and also serves on the board of trustees of the Michigan
State University Foundation and the board of trustees of the Western Michigan
University Foundation.
DAVID W. MARTIN has been Chief Financial Officer of the Company since June
1998. He also is the Group Financial Director of ESGL and its subsidiaries,
positions he has held since September 1989. Mr. Martin joined ESGL in 1982.
ROBERT A. BLAY became Assistant Secretary in November 1997 and Vice
President of International Operations in September 1998, after relocating to
London, England. Also in September 1998, he became Managing Director of the
Company's European and African operations. Prior to becoming Vice President of
International Operations, Mr. Blay served since November 1997 as Vice President
of Business Development. Prior to joining the Company he had served for over
five years in various executive capacities for various other software and
media-related companies.
All directors of the Company hold office until the next annual meeting of
its stockholders or until their successors are elected or appointed. Mr. Porfeli
is being nominated for election to the Company's Board of Directors pursuant to
a provision of the Agreement of Merger for the September 1, 1998 acquisition of
REVIVE.
Officers of the Company are elected by and serve at the discretion of the
Board of Directors. No director or officer of the Company is related to any
other Company director or officer, except that Andre Blay is the father of
Robert Blay.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During fiscal 1998, the Board of Directors held ten meetings. No incumbent
director attended fewer than 75% of the aggregate of all meetings of the Board
and all meetings of Board committees on which he served that were held during
his fiscal 1998 period of service. The Audit Committee of the Board reviews the
independence, professional services, fees, plans and results of the independent
auditors' engagement and
6
<PAGE> 10
recommends their retention or discharge to the Board of Directors. The Audit
Committee held two meetings during fiscal 1998 and all members of the Audit
Committee participated in those meetings. The Audit Committee currently consists
of Messrs. Schleufer, Eden and Beauregard. The Compensation Committee of the
Board of Directors reports to the Board on issues relating to executive
compensation and administers certain Company stock related plans. During fiscal
1998, the Compensation Committee held five meetings and, all members of the
committee participated in each of them. The Compensation Committee currently
consists of Messrs. Andre Blay, Baur, Eden and Beauregard. The Board of
Directors has no other standing committees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and any beneficial owner of more than ten
percent of its outstanding common stock to file with the SEC initial reports of
beneficial ownership and subsequent reports of changes in beneficial ownership
of Company equity securities. SEC regulations also require such persons to
furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on a review of Section 16(a) forms filed with the SEC and
submitted to the Company with respect to fiscal 1998 by persons subject to
Section 16(a) reporting concerning Company equity securities during that fiscal
year and a review of written statements from some of them to the effect that
other Section 16(a) forms were not required, the Company believes that all
Section 16(a) forms required of such persons with respect to fiscal 1998 were
timely filed, except that Mr. Graeme R. Jenner (who was an executive officer and
a director of the Company for part of the fiscal year) was late in filing a
report concerning his beneficial ownership of Company equity securities as of
the time he first became subject to such reporting requirements; Messrs.
Beauregard, Eden and Robert Blay also were late in filing such reports; Mr.
Beauregard was late in reporting two purchases of shares of Company common stock
that occurred in October 1997 and six share purchases that occurred in December
1997; Mr. Eden was late in reporting a share purchase that occurred in September
1997; Mr. Baur was late in reporting four sales of shares that occurred in
September 1997 and three share purchases that occurred last March; Mr. Schleufer
was late in reporting a share purchase that occurred last March; Mr. Andre Blay
was late in reporting four share purchases that occurred last February and four
share purchases that occurred last March; and the following former executive
officers or directors of the Company: Mr. Jenner, Mr. Richard J. Parent, Mr.
Robert E. Derham, Mr. Carey S. Fitchey, and Mr. William A. Kunkel, did not file
a Form 5 with respect to fiscal 1998 and also did not advise the Company in
writing that such a filing was not required.
7
<PAGE> 11
EXECUTIVE COMPENSATION
CERTAIN SUMMARY INFORMATION. The following table provides information
concerning the compensation for services in all capacities to the Company for
fiscal 1998 and the immediately preceding fiscal year (if he also was an
executive officer of the Company during that year) of Andre Blay, who has been
the Company's Chief Executive Officer ("CEO") since late July 1997, Graeme
Jenner, who served as CEO from the beginning of fiscal 1998 until succeeded by
Mr. Blay, and each other individual who served as an executive officer of the
Company during fiscal 1998 and whose total salary and bonus for that year
exceeded $100,000 (Messrs. Blay and Jenner and such other individuals, the
"named executives"). No information for the fiscal year ended March 31, 1996 is
presented in this table because none of the named executives was an executive
officer of the Company during that year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
ANNUAL LONG-TERM COMPENSATION
COMPENSATION(1) COMPENSATION ($)
------------------------ ------------ ------------
AWARDS
------------
SHARES OF
COMMON STOCK
NAME AND FISCAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS #(2)
------------------ ------ --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Andre A. Blay.......................... 1998 $196,800(3) $50,000 -0- $ -0-
Chairman of the Board and CEO
Graeme R. Jenner....................... 1998 $215,314(4) $ -0- -0- $495,527(7)
Former CEO 1997 $169,600(5) 50,000(6) $120,460
Richard L. Schleufer................... 1998 $219,600(8) $50,000 -0- $ -0-
Chief Executive Office of 1997 $169,600(8) $80,000 31,250 $ -0-
ESGL and CCMS
Richard J. Parent...................... 1998 $138,500(9) $ -0- 7,500(10) $161,947(11)
Former Chief Financial Officer 1997 $117,479 $ -0- 20,000(12) $ -0-
</TABLE>
- ---------------
(1) Does not include any information concerning perquisites or other personal
benefits, the incremental cost to the Company of which, for each named
executive in each fiscal year, was less than 10% of the total salary and
bonus reported for the executive for the fiscal year.
(2) Share numbers have been adjusted for the Reverse Stock Split.
(3) Includes a $6,800 automobile allowance and includes $125,000 paid as
consulting fees to Mackinac Media, Inc., which is affiliated with Mr. Andre
Blay.
(4) Includes a $3,750 automobile allowance.
(5) Includes a $4,500 automobile allowance.
(6) In connection with the termination of Mr. Jenner's employment in July 1997,
all of these options were purchased and thereafter canceled by the Company.
(7) Consists of $395,527 paid to Mr. Jenner as severance benefits in connection
with his employment termination and $100,000 paid for the purchase of
options referred to in note (6).
(8) Includes a $9,600 automobile allowance.
(9) Includes a $6,000 automobile allowance.
(10) These options expired unexercised in connection with the termination of Mr.
Parent's employment in January 1998.
(11) Consists of $84,000 of severance benefits paid to Mr. Parent in fiscal 1998
in connection with his employment termination and $77,947 paid him for the
purchase of options referred to in note (12). For additional information
concerning Mr. Parent's severance benefits, see "Employment Contracts,
Termination of Employment, and Change in Control Arrangements" below.
(12) These options were purchased by the Company and thereafter canceled in
connection with Mr. Parent's employment termination.
8
<PAGE> 12
CERTAIN INFORMATION CONCERNING STOCK OPTIONS AND SARS. No stock
appreciation rights ("SARs") were granted by the Company during fiscal 1998 or
any prior fiscal year. The following table provides information concerning
options to purchase the Company's common stock granted to named executives by
the Company during fiscal 1998. The number of shares and exercise price reported
in this table have been adjusted for the Reverse Stock Split.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR (PER SHARE) DATE
---- --------------- ------------------- -------------- ----------
<S> <C> <C> <C> <C>
Andre A. Blay........................... -0- N/A N/A N/A
Graeme R. Jenner........................ -0- N/A N/A N/A
Richard L. Schleufer.................... -0- N/A N/A N/A
Richard J. Parent....................... 7,500 37.5% $6.52 N/A(1)
</TABLE>
- ---------------
(1) These options expired unexercised in connection with Mr. Parent's employment
termination.
During fiscal 1998, none of the named executives exercised any option to
purchase Company common stock that had been granted to him by the Company. The
following table provides information concerning their holdings of such options
at the end of the fiscal year. Share numbers reported in this table give effect
to the Reverse Stock Split. Values have been calculated by multiplying those
numbers by the Nasdaq closing price of the common stock at fiscal year end,
adjusted for the Reverse Stock Split, and subtracting the aggregate exercise
price for the optioned shares.
FISCAL YEAR END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR AT FISCAL YEAR
END(#) END($)
------------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ------------- -------------
<S> <C> <C>
Andre A. Blay.......................................... 123,598/0 $849,736/$0
Graeme R. Jenner....................................... 0/0 $0/$0
Richard L. Schleufer................................... 31,250/0 $62,500/$0
Richard J. Parent...................................... 0/0 $0/$0
</TABLE>
- ---------------
(1) All of the options reported in this table were repriced during fiscal 1998.
For additional information concerning that repricing, see "Report Concerning
Certain Option Repricings" below. During the current fiscal year, all of the
options reported in this table were further repriced and then canceled and
replaced with SARs. Additional information concerning that repricing and
those SARs will be provided in the Company's proxy material for its annual
meeting to be held in the fiscal year ending March 31, 2000 ("fiscal 2000").
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS. Andre Blay has an employment agreement with the Company. Its
stated term expires on August 31, 2002, though either party can terminate it
with or without cause on 30 days' notice. Under the agreement, Mr. Blay is
entitled to receive a base salary at the rate of $240,000 per year until August
31, 1998, $300,000 per year from September 1, 1998 through August 31, 1999, and
$360,000 per year after August 31, 1999, and a discretionary annual bonus in an
amount to be determined by the Compensation Committee and the Board of Directors
based on his achievement of personal performance goals to be established each
year by the Committee or the Board. The agreement also contemplated that the
Company would grant Mr. Blay options to purchase 600,000 shares (150,000 after
the Reverse Stock Split) of its common stock, but due to the stockholders'
failure to
9
<PAGE> 13
approve a new stock option plan at their July 2, 1998 meeting, none of these
options were granted. However, during the current fiscal year, the Company
instead has granted certain SARs to Mr. Blay. Additional information concerning
this SAR grant will be provided in the Company's proxy material for its annual
meeting to be held in fiscal 2000. If the Company terminates Mr. Blay's
employment (other than for "cause," as defined in the agreement) during the two
years following a "change of control" (as there defined), it must make a cash
payment to him in an amount equal to the greater of twice his annual base salary
or his annual base salary multiplied by the number of years remaining in the
agreement's stated term. Except in connection with a change of control, if the
Company terminates his employment (other than for cause or due to death or
disability), he is entitled to continue to receive his base salary for one year
following termination. The Company must require any assignee of substantially
all of its business or assets to assume the agreement, and if it does not, it
must pay Mr. Blay the same amount it would have been required to pay if it had
terminated his employment within two years following a change of control.
Richard Schleufer also has an employment agreement with the Company. Its
stated term expires on May 23, 2003, though either party can terminate it with
or without cause on 30 days' notice. Under the agreement, Mr. Schleufer is
entitled to receive a base salary at the rate of $250,000 per year and a
discretionary annual bonus in an amount to be determined by the Compensation
Committee and the Board of Directors based on his achievement of personal
performance goals to be established each year by the Committee or the Board. The
agreement also contemplates that the Company would grant Mr. Schleufer options
to purchase 300,000 shares (75,000 after the Reverse Stock Split) of its common
stock, but due to the stockholders' failure to approve a new stock option plan,
none of these options were granted. However, during the current fiscal year, the
Company instead has granted certain SARs to Mr. Schleufer. Additional
information concerning this SAR grant will be provided in the Company's proxy
material for its annual meeting to be held in fiscal 2000. If the Company
terminates Mr. Schleufer's employment (other than for "cause," as defined)
during the two years following a "change of control" (as defined), it must make
a cash payment to him in an amount equal to the greater of twice his annual base
salary or his annual base salary multiplied by the number of years remaining in
the agreement's stated term. Except in connection with a change of control, if
the Company terminates his employment (other than for cause or due to death or
disability), he is entitled to continue to receive his base salary for one year
following termination. The Company must require any assignee of substantially
all of its business or assets to assume the agreement, and if it does not, it
must pay Mr. Schleufer the same amount it would have been required to pay if it
had terminated his employment within two years following a change of control.
While he was Chief Executive Officer of the Company, Graeme Jenner had an
employment agreement with the Company, the initial term of which had not expired
by the time he left the Company. The agreement contemplated that he would
receive a severance payment equal to at least one year's salary if he were
terminated by the Company prior to the end of the agreement's term. In
connection with negotiating a mutually agreeable termination of his employment,
the Company agreed to pay Mr. Jenner the $395,527 cash severance benefits
reported for him as fiscal 1998 "All Other Compensation" in the Summary
Compensation Table above and to purchase for $100,000 the options that had been
granted to him in the preceding fiscal year, which amount also is reported under
that item of the Summary Compensation Table. In addition to these severance and
option repurchase payments, the Company also repurchased certain promissory
notes from Mr. Jenner in connection with the termination of his employment. For
additional information concerning that repurchase, see "Compensation Committee
Interlocks and Insider Participation" below.
While he was Chief Financial Officer of the Company, Richard Parent also
had an employment agreement with the Company, the term of which also had not
expired by the time he left the Company. The agreement contemplated that he
would receive severance benefits equal to at least one year's salary if he were
terminated by the Company before the agreement expired. In connection with
negotiating a mutually agreeable termination of Mr. Parent's employment, the
Company agreed to pay him cash severance benefits totaling $126,000 (half at
termination and the remainder in $10,500 increments over the next six months)
and to purchase for $77,947 the options on Company common stock that had been
granted to him in the preceding fiscal year. The severance payments made to Mr.
Parent in fiscal 1998 and the purchase price for the options are reported for
him in the Summary Compensation Table as fiscal 1998 "All Other Compensation."
10
<PAGE> 14
DIRECTOR COMPENSATION
Beginning in the current fiscal year, directors of the Company other than
those who also are employees of the Company or a subsidiary are paid $1,000 for
each Board meeting attended. The Company also reimburses non-employee directors
for travel expenses incurred to attend Board meetings. In certain years before
fiscal 1998, non-employee directors automatically were granted options to
purchase Company common stock generally in January of the year. During fiscal
1998, the terms of certain of these options that had been previously granted to
persons who then were non-employee directors were modified to lower the exercise
price per share. See "Report on Certain Option Repricings' below. In November
1998, each of Messrs. Beauregard and Eden were granted 12,500 stock appreciation
rights at a strike price of $4.50 per right. In the absence of a change in
control, one-quarter of these SARs is exercisable on each anniversary of the
date of grant, and they expire on the fifth anniversary of the grant date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Certain decisions concerning the fiscal 1998 compensation of executive
officers of the Company, including the named executives, were made by the
Compensation Committee of the Board of Directors of the Company. All other such
decisions were made by the full Board of Directors.
The current members of the Compensation Committee are Mr. Andre Blay, Mr.
Baur, Mr. Eden, and Mr. Beauregard. Mr. Blay was a member of the committee
throughout fiscal 1988, Mr. Baur joined the committee after Mediatech was sold
in July 1997, and Messrs. Eden and Beauregard joined the committee in October
1997. The only other persons who served on the committee or on the Board of
Directors at any time during fiscal 1998 are the Company's former directors Cary
Fitchey and William Kunkel, each of whom served on the committee and the Board
from the beginning of the fiscal year until leaving the Board, Mr. Schleufer,
who served on the Board throughout fiscal 1998, and Mr. Jenner, who served on
the Board from the beginning of the fiscal year until his employment
termination.
Andre Blay is the Chairman of the Board (since April 1997) and Chief
Executive Officer (since July 1997) of the Company. The fiscal 1998 "Salary"
reported for Mr. Blay in the Summary Compensation Table includes $125,000 paid
as consulting fees to Mackinac Media, Inc., which is controlled by Mr. Blay.
Before the Company sold Mediatech in July 1998, Mr. Baur was employed as
the President of Mediatech. While Mediatech was owned by the Company, Mediatech
leased office, production and warehousing facilities in Chicago, Illinois from
real estate partnerships affiliated with Mr. Baur. Rental payments made for
these premises in fiscal 1998 totaled $184,886. In November 1998, Mr. Baur was
granted 50,000 stock appreciation rights at a strike price of $4.50 per right.
In the absence of a change in control, one-quarter of these SARs is exercisable
on each anniversary of the date of grant, and they expire on the fifth
anniversary of the grant date. These SARs were granted to Mr. Baur to replace
25,000 options with an exercise price of $5.52 per share, which options were
canceled.
Mr. Jenner was the Chief Executive Officer of the Company prior to Andre
Blay. In addition to the severance and option repurchase payments made to Mr.
Jenner in connection with his employment termination, the Company in that
connection paid $348,310 to Mr. Jenner to purchase certain promissory notes that
had been issued to Mr. Jenner or affiliates of Mr. Jenner in May 1996 in
connection with the Company's acquisition of ESGL (Mr. Jenner and those
affiliates had been among the stockholders of ESGL at the time of that
acquisition). When these promissory notes were purchased by the Company, the
aggregate principal of and interest on the notes was $409,777.
Mr. Schleufer is an executive officer of the Company and an employee of a
Company subsidiary, and Mr. Fitchey is a former employee and former executive
officer of Coral, Inc., a predecessor of the Company.
11
<PAGE> 15
REPORT ON CERTAIN OPTION REPRICINGS
The report that follows is provided to stockholders by the Board of
Directors of the Company.
On June 5, 1997, the Board of Directors of the Company (the members of
which then were Mr. Andre Blay and Messrs. Baur, Jenner, Schleufer, Fitchey and
Kunkel) authorized a downward adjustment to the per share exercise price of
certain common stock options that had been previously granted by the Company to
each of the persons (other than Mr. Baur) who at the time of the repricing were
serving on the Board and to Richard Parent, Robert Derham, and David Martin.
Stated as if the Reverse Stock Split by then had occurred, the numbers of shares
covered by the affected options and their original exercise prices were as
follows: for Mr. Andre Blay, 112,500 shares at $6.75 per share and 11,458 shares
at $23.75 per share; for Mr. Jenner, 31,250 shares at $25.52 per share and
18,750 shares at $9.00 per share; for Mr. Schleufer, 12,500 shares at $9.00 per
share and 18,750 shares at $25.52 per share; for each of Mr. Fitchey and Mr.
Kunkel, 6,250 shares at $13.00 per share; for Mr. Kunkel, 12,500 shares at $7.75
per share; for Mr. Parent, 25,000 shares at $9.00 per share and 7,500 shares at
$7.00 per share; for Mr. Derham, 6,250 shares at $9.00 per share and 18,250
shares at $24.00 per share; and for Mr. Martin, 12,500 shares at $25.52 per
share and 1,250 shares at $9.00 per share.
At the times the repriced options originally were granted, the Company's
business was focused on the digital service industry. By the time of the
repricing, the Company's focus was changing to its current business: software
development. In light of this substantial change in the Company's business, the
members of the Board considered it more appropriate and in the long term best
interests of the Company to provide the option grantees with the incentive to
remain with the Company and devote their best efforts to its success by
repricing the options to a level in line with the then-current market valuation
of the Company. Consequently, the closing price of the Company's common stock on
the day immediately preceding the repricing, $1.63 ($6.52 if adjusted for the
Reverse Stock Split), was used as the new per share exercise price for all of
the repricings.
APPROVAL OF STOCK PURCHASE PLAN
On November 16, 1998, the Board of Directors adopted, subject to approval
of the Company's stockholders at the Annual Meeting, the Enterprise Software,
Inc. Employee Stock Purchase and Savings Plan. The Stock Purchase Plan provides
eligible employees with an opportunity to purchase shares of Company common
stock at a discount to market prices through regular payroll deductions.
The full text of the Stock Purchase Plan is provided in Annex 1 to this
proxy statement, and the plan summary that follows is qualified in its entirety
by reference to that text. Stockholders are advised to review that text in its
entirety in connection with their deliberations upon the proposal to approve
this plan.
PLAN SUMMARY
PURPOSE OF THE PLAN. The purpose of the Stock Purchase Plan is to
encourage employee stock ownership, thereby enhancing employee commitment to the
Company and providing an opportunity to share in the Company's success.
PLAN ADMINISTRATION. The Stock Purchase Plan would be administered by the
Compensation Committee of the Board of Directors or by another Board committee
designated for that purpose (the Compensation Committee or such other committee,
the "Administrator"). It is expected that the Compensation Committee initially
will act as the Administrator.
The Stock Purchase Plan authorizes the Administrator may employ such
agents, attorneys, accountants or any other persons and delegate to them such
powers, rights and duties as the Committee may consider necessary to properly
carry out the administration of the plan. The plan also affords the
Administrator full discretionary authority to interpret it and to issue rules
for administering it, and provides that any determination by the Administrator
pursuant to the plan shall be final and conclusive.
12
<PAGE> 16
ELIGIBLE PARTICIPANTS. All employees (including employees who also are
directors or officers) of the Company or of any subsidiary of the Company
designated by the Administrator (a "designated subsidiary") will be eligible to
participate in the Stock Purchase Plan, except for any employee who (i) normally
works less than 20 hours a week or less than five months a year, (ii) has not
been employed by the Company or a designated subsidiary (or a predecessor
company), for at least one year, (iii) beneficially owns 5% or more of the
Company's common stock or (iv) is a "highly compensated" employee (as defined in
Section 414(q) of the Internal Revenue Code of 1986, as amended) that the
Administrator determines should not participate.
The Board currently anticipates that if the Stock Purchase Plan is approved
all of the Company's current subsidiaries initially will be designated as
subsidiaries whose employees will be eligible to participate in the plan. As of
November 1, 1998, there were approximately 297 employees of the Company or such
a subsidiary, including the two named executives who are among the current
executive officers of the Company and the three other current executive officers
of the Company. Andre A. Blay currently is disqualified from participating in
the Stock Purchase Plan because he beneficially owns more than 5% of the
Company's common stock. None of the other executives currently are disqualified
from participating in the Stock Purchase Plan by any of the exceptions
identified in (i)-(iii) above, and although these executives (as well as certain
other employees) likely could be excluded from participation by the
Administrator as "highly compensated" employees, it is not expected that any of
them will be so excluded, at least initially. None of the current directors or
director nominees who is not also an employee of the Company or a designated
subsidiary will be eligible to participate in the plan.
SECURITIES TO BE USED. The maximum number of shares of Company common
stock that in the aggregate may be purchased by eligible employees under the
Stock Purchase Plan is 200,000, subject to adjustment in certain events as more
fully described under "Adjustments" below. All shares used for the plan will be
purchased from the Company, either from authorized but unissued shares, or from
shares or issued and held in the Company's treasury.
METHOD OF PURCHASE AND PURCHASE PRICE. The Stock Purchase Plan
contemplates that from time to time the Company may extend an offer to each
eligible employee to purchase shares of common stock from the Company at a
discounted price. In preparation for such an offering, each eligible employee
may elect to have a specified amount, not to be more than 20% of Compensation
(as defined by the Administrator in accordance with Section 423 of the Internal
Revenue Code), withheld from the employee's regular paychecks for purposes of
purchasing shares pursuant to the Stock Purchase Plan. Withheld compensation
will be deposited in an interest bearing account established by or on behalf of
the employee (a "Purchase Savings Account").
With respect to a given offering of common stock under the Stock Purchase
Plan, the Company may grant to each eligible employee an option to purchase such
number of shares of Company common stock as shall have an aggregate purchase
price not in excess of (i) 20% of the employee's Compensation, plus the amount
of interest paid on funds in the employee's Purchase Savings Account, (ii)
$50,000 or (iii) such lesser amount as the Administrator may determine.
Alternatively, the Company may grant each eligible employee an option to
purchase a fixed or maximum number of shares of common stock, provided that the
aggregate purchase price must comply with the limitations set forth in the
preceding sentence. In either case, no employee may purchase shares pursuant to
the plan with an aggregate fair market value in excess of $25,000 in any given
calendar year.
Each eligible employee must specify on or before the expiration of an
offering (each such expiration date, a "Purchase Date") whether the employee
desires to purchase all, a portion or none of the shares of common stock that
the employee is entitled to purchase in the offering. On the applicable Purchase
Date, the Company will cause the funds, including any interest earnings, then on
deposit in the employee's Purchase Savings Account to be applied to the purchase
price of the shares of Common Stock the employee has elected to purchase. Any
funds remaining in the Purchase Savings Account after that purchase will be paid
to the employee and, in the discretion of the Administrator, the Purchase
Savings Account will be closed. However, if, on the applicable Purchase Date,
the Fair Market Value (as defined in the plan) of one share of common stock is
less than the discounted purchase price for one share of common stock (further
discussed below), then either (i) the Administrator will establish one or more
additional Purchase Dates with respect to such
13
<PAGE> 17
offering or (ii) the Company will cause the funds then on deposit in such
employee's Purchase Savings Account to be paid to the employee and, in the
discretion of the Administrator, the Purchase Savings Account will be closed.
Unless the Administrator designates a higher percentage for a given
offering, the purchase price for each share purchased in an offering under the
Stock Purchase Plan will be the lesser of 85% of the Fair Market Value of a
share of common stock on the first date of the pertinent offering period or 85%
percent of the Fair Market Value of a share on the applicable Purchase Date with
respect to such offering period. On November 23, 1998, the Nasdaq-reported bid,
asked, and closing sale prices for a share of Company common stock were $7.00,
$7.125 and $6.875, respectively.
An employee eligible to participate in an offering under the Stock Purchase
Plan may elect not to participate at any time on or before the expiration of the
offering by delivering a specified written notice to the Company. If such a
notice is delivered, as soon as practicable thereafter, all funds, including any
interest, then on deposit in the employee's Purchase Savings Account will be
paid to the employee and the employee's Purchase Savings Account will be closed.
ADJUSTMENTS. The aggregate number of shares of common stock that may be
offered under the Stock Purchase Plan, the number of shares of common stock that
an employee is entitled to purchase as a result of the employee's participation
in an offering and the purchase price per share for each such offering are to be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of common stock resulting from a subdivision or
consolidation of shares or other capital adjustment, or the declaration and
subsequent payment of a dividend in shares of common stock, or any other
increase or decrease in such shares of common stock effected without receipt of
consideration by the Company; provided, however, that any fractional shares of
Company resulting from any such adjustment will be eliminated.
EFFECT OF EMPLOYMENT TERMINATION. If a participating employee's employment
with the Company or a designated subsidiary terminates during the term of an
offering, the employee's participation under the Stock Purchase Plan will
terminate immediately and within a reasonable time thereafter all funds,
including any interest, then on deposit in the employee's Purchase Savings
Account will be paid to the employee. However, if any termination of employment
is for reasons of total and permanent disability or normal or early retirement,
each as defined by the Administrator with respect to the offering, the employee
will have the right within three months from the date of his or her retirement
or disability (or, if earlier, the expiration of the offering) to elect to
purchase all or fewer than all of the shares of common stock which the employee
is entitled to purchase or to receive the proceeds of his or her Purchase
Savings Account in cash.
EFFECT OF CHANGE IN CONTROL. If a Change of Control occurs during an
ongoing offering under the Stock Purchase Plan, each participating employee will
have a right to either purchase, using the funds, including any interest, then
on deposit in his or her Purchase Savings Account, all or fewer than all of the
shares of common stock that the employee is entitled to purchase in the
offering, or to be promptly paid in cash all funds on deposit in the employee's
Purchase Savings Account. As defined in the Stock Purchase Plan, a "Change of
Control" means any one or more of the following events: (i) the acquisition of
ownership by a person, firm or corporation, or a group acting in concert, of 50
percent, or more, of the outstanding common stock of the Company in a single
transaction or a series of related transactions within a one-year period, (ii) a
sale of all or substantially all of the assets of the Company and its
subsidiaries to any person, firm or corporation, (iii) a change, within a one
year period, in a majority of the members of the Board, or (iv) a merger or
similar transaction between the Company and another entity if shareholders of
the Company do not own a majority of the voting stock of the corporation
surviving the transaction and a majority in value of the total outstanding stock
of such surviving corporation after the transaction.
AMENDMENT, SUSPENSION OR DISCONTINUANCE OF THE STOCK PURCHASE PLAN. The
Stock Purchase Plan authorizes the Company's Board of Directors to amend,
suspend or discontinue the plan in any respect, without stockholder approval,
except that any amendment will be subject to stockholder approval if applicable
tax or other laws or rules or regulations promulgated thereunder so require.
14
<PAGE> 18
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code.
The following is a summary of certain Federal income tax consequences of
transactions under the plan based on current Federal income tax laws. This
summary does not describe state or local tax consequences.
An employee who elects to purchase shares under the Stock Purchase Plan
would not recognize any income due to his or her discounted purchase price when
the purchased shares are transferred to the employee, nor would the Company be
entitled to any tax deduction. However, if the employee disposes of the
purchased shares within two years of the date on which the employee was granted
the right to purchase them under the Plan or one year from the date of transfer,
the employee will be required to include in income, as compensation for the year
in which the disposition occurs, an amount equal to the excess of the fair
market value of the shares on the date the employee purchased them over the
price paid for them by the employee. In that case, subject to the normal
Internal Revenue Code requirements that compensation be reasonable and to such
special limitations upon the deduction of compensation paid to executives named
in the Company's Summary Compensation Table for the pertinent year as may be
imposed under Section 162(m) of the Code, the Company will be entitled to a
deduction from income equal to the amount the employee is required to include in
income as compensation as a result of the disposition.
In contrast, if the employee does not dispose of the purchased shares until
after the two and one year holding periods described above have ended, the
employee will be required to include in income, as compensation for the year in
which the disposition occurs, an amount equal to the lesser of (i) the excess of
the fair market value of such shares at the time of the disposition over the
amount paid for the shares, or (ii) the excess of the fair market value of the
shares on the date they were acquired by the employee over the amount paid for
the shares, but the Company will not be entitled to any deduction for such
compensation.
Employees will not be entitled to any deduction or exclusion from
compensation income for the amounts withheld from their pay through payroll
deduction. In other words, the full amount of payroll compensation to
participating employees will be subject to tax and deductible by the Company to
the same extent as if they had not elected to have these deductions made.
Interest earnings on participating employees' Stock Purchase Accounts also will
be taxable to the employees, but not as compensation, so the Company will not be
entitled to any corresponding deductions with respect to those earnings.
POTENTIAL BENEFITS TO EXECUTIVE OFFICERS
Due to the nature of the Stock Purchase Plan, the potential benefits that
any executive officer who is a named executive, any other executive officer or
any other employee eligible to participate ultimately may receive under the plan
cannot be predicted in advance.
VOTE REQUIRED FOR APPROVAL
Stockholder approval of the Stock Purchase Plan is not required by the
Company's Certificate of Incorporation or Bylaws or by applicable Delaware
corporate law, but it is required in order for the plan to qualify as an
employee stock purchase plan under Section 423 of the Internal Revenue Code. In
order for the proposal to approve the Plan to be carried, two criteria must be
satisfied. First, a majority of all outstanding shares of common stock entitled
to vote on the proposal must actually vote upon the proposal. For this purpose,
any share abstaining or subject to a broker non-vote will not be counted as
having been voted upon the proposal, but any share voted against the proposal
would have the same effect as a share voted for the proposal. Second, a majority
of the shares present or represented by proxy at the Annual Meeting and entitled
to vote upon the proposal must be voted "FOR" the proposal. For this purpose, an
abstaining share would have the same effect as a vote against the proposal, but
a share subject to a broker non-vote would have no effect on the outcome of the
vote.
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If the proposal to approve the Stock Purchase Plan is not carried, it will
not be given effect, but the Board may consider whether or not to adopt a
similar plan that does not qualify under Section 423 of the Internal Revenue
Code.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL
TO APPROVE THE ENTERPRISE SOFTWARE, INC. EMPLOYEE STOCK PURCHASE AND SAVINGS
PLAN.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP
("KPMG") as the Company's independent auditors for the year ending March 31,
1999, subject to ratification by the stockholders. KPMG also audited the
Company's financial statements for fiscal 1998 (in this regard, see
"MISCELLANEOUS-Change in Accountants"). A representative of KPMG is expected to
attend the Annual Meeting. He or she will have an opportunity to make a
statement, if he or she desires to do so, and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of KPMG as the Company's
independent public accountants is not required by the Company's Certificate of
Incorporation, its Bylaws or otherwise. The Board is submitting the selection of
KPMG to the stockholders for ratification as a matter of good corporate
practice.
The criteria for determining whether the ratification proposal will be
carried are the same as the criteria concerning the Stock Purchase Plan proposal
discussed above. If the stockholders fail to ratify the selection of KPMG, the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Board in its discretion may direct the appointment of a
different independent accounting firm at any time during or after the close of
the fiscal year if it determines that such a change would be in the best
interests of the Company and its stockholders.
MISCELLANEOUS
OTHER MATTERS
Management is not aware of any matters that may be presented for action at
the Annual Meeting other than the matters identified in the accompanying Notice
of Annual Meeting and matters incident to the conduct of the meeting. If any
other matters should properly come before the meeting, the persons named in the
enclosed proxy forms will vote the shares represented thereby in accordance with
their judgment. Matters incident to the conduct of the meeting also may be voted
upon by the proxy holders in accordance with their judgment.
CHANGE IN ACCOUNTANTS
On January 5, 1998 the Company, upon recommendation of its Audit Committee
and approval by its Board of Directors, engaged KPMG to perform future
independent audits of the Company. KPMG thereby replaced BDO Seidman, LLP ("BDO
Seidman") as the Company's independent accountants.
The change in accountants did not result from any dissatisfaction or
disagreement with BDO Seidman. Instead, the change resulted from the Company
putting its audit work out to bid. BDO Seidman participated in the bidding
process.
In connection with the audit of the year ended March 31, 1997, and the
subsequent interim period through January 5, 1998, there were no disagreements
with BDO Seidman on any matter of accounting principles or practices, financial
statement disclosure or audit scope or procedure which, if not resolved to the
satisfaction of BDO Seidman, would have caused it to make reference in
connection with their opinion to the subject matter of the disagreement.
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STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING OF STOCKHOLDERS
Any stockholder of the Company who desires to submit a proposal for
inclusion in the Company's proxy materials for its annual meeting of
stockholders to be held in fiscal 2000 must submit the proposal to the Company
no later than July 10, 1999. The Company retains the right to omit any such
proposal from its proxy materials if the proposal does not otherwise satisfy the
requirements for inclusion of SEC Rule 14a-8. Any such proposal should be sent
to Enterprise Software, Inc., 38705 Seven Mile Road, Livonia, Michigan 48152;
attention: Secretary.
Any stockholder proposal with respect to the fiscal 2000 annual meeting
that is submitted outside the processes of Rule 14a-8 will be considered
"untimely" for purposes of SEC Rule 14a-4(c)(1) if it is not submitted to the
Company on or before October 23, 1999. Management proxies for the fiscal 2000
annual meeting may confer discretionary authority to vote on any such untimely
proposal without express direction from stockholders giving such proxies.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-KSB
The Company will furnish without charge a copy of the Company's Annual
Report on Form 10-KSB for fiscal 1998, as amended, to any stockholder desiring a
copy. To obtain such a copy, a stockholder may write to Enterprise Software,
Inc., 38705 Seven Mile Road, Livonia, Michigan 48152, Attention: Secretary, or
may call the Secretary at (248) 380-6070.
By Order of the Board of Directors
Andre A. Blay
Andre A. Blay
Chairman of the Board and
Chief Executive Officer
December 7, 1998
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ANNEX 1
ENTERPRISE SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
1. PURPOSE
The purpose of the Enterprise Software, Inc. Employee Stock Purchase and
Savings Plan is to encourage employee stock ownership, thereby enhancing
employee commitment to Enterprise Software, Inc. ("Corporation") and providing
an opportunity to share in the Corporation's success.
2. DEFINITIONS
(a) "Bank" shall mean the financial institution designated from time to
time for such purpose by the Committee.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Change of Control" for purposes of the Plan shall mean one or more of
the following events: (i) the acquisition of ownership by a person, firm or
corporation, or a group acting in concert, of 50 percent, or more, of the
outstanding Common Stock of the Corporation in a single transaction or a series
of related transactions within a one-year period, (ii) a sale of all or
substantially all of the assets of the Corporation and its Subsidiaries to any
person, firm or corporation, (iii) a change, within a one year period, in a
majority of the Board, or (iv) a merger or similar transaction between the
Corporation and another entity if shareholders of the Corporation do not own a
majority of the voting stock of the corporation surviving the transaction and a
majority in value of the total outstanding stock of such surviving corporation
after the transaction.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the Board or any other
committee designated by the Board to administer this Plan.
(f) "Common Stock" means the common stock of the Corporation, par value
$.001 per share.
(g) "Compensation" means compensation as defined by the Committee in
accordance with Section 423 of the Code and applicable regulations, including
total compensation or base compensation for any pay period during, or at the
beginning of, an Offering Period.
(h) "Corporation" means Enterprise Software, Inc., a Delaware Corporation.
(i) "Fair Market Value" means the closing price of the Corporation's Common
Stock as reported in the Wall Street Journal for the date in question; provided,
however, the Committee may specify some other definition of Fair Market Value
that complies with the applicable requirements of the Code.
(j) "Maximum Share Limit" means 200,000 shares of Common Stock.
(k) "Offering Period" means the term of any offering under the Plan as
determined by the Committee which shall be at least 6 months in duration, but no
more than 26 months in duration.
(l) "Participating Corporation" means any subsidiary corporation of the
Corporation designated by the Committee if on the first date of the Offering
Period, the Corporation or a subsidiary of the Corporation, individually or
collectively, owns 50% or more of the total combined voting power of all classes
of stock of such corporation.
(m) "Plan" means this Enterprise Software, Inc. Employee Stock Purchase and
Savings Plan.
(n) "Purchase Date" means the last day of an Offering Period or any other
day or days the Committee may prescribe under Paragraph 8(d)(ii).
(o) "Purchase Savings Account" means an account opened at the Bank by a
participating employee pursuant to directions set forth in writing on a form
prescribed by the Committee.
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The masculine pronoun wherever used herein is deemed to include the
feminine, and the singular shall be deemed to include the plural whenever the
context requires.
3. ADMINISTRATION
The Plan shall be administered by the Committee.
The Committee may employ such agents, attorneys, accountants or any other
persons and delegate to them such powers, rights and duties as the Committee may
consider necessary to properly carry out the administration of the Plan. The
interpretation and construction by the Committee of any provisions of the Plan
and the terms and conditions of an offering including employee participation
thereunder and any determination by the Committee pursuant to any provision of
the Plan shall be final and conclusive. The Committee may adopt such rules and
regulations as it deems appropriate to assist in administering and enforcing the
Plan.
4. OFFERINGS UNDER THE PLAN
The Committee shall determine whether the Corporation shall make an
offering to all of the then eligible employees, provided, however, that it shall
be under no obligation to do so. In the event of an offering under the Plan, an
offering prospectus, or such other document as may then be required under
applicable law, shall be prepared which outlines the specific terms and
conditions of such offering.
5. ELIGIBILITY
All employees of the Corporation or of any Participating Corporation shall
be eligible to participate in an offering under the Plan except (i) any employee
who normally works less than 20 hours a week, (ii) any employee who normally
works less than five months a year, (iii) any employee who, on the first date of
the applicable Offering Period (or, such later date as may otherwise be required
in order to comply with Section 423 of the Code), has not been employed by the
Corporation or a Participating Corporation for at least one year immediately
prior thereto and (iv) any employee who is a highly compensated employee (as
defined in Section 414(q) of the Code) who the Committee determines should not
participate; provided, however, the Committee may permit employees who are
otherwise ineligible to participate in an offering in a manner consistent with
the requirements of the Code. Notwithstanding the previous sentence, under any
offering the Committee may permit employees not otherwise eligible to
participate on the first date of the applicable Offering Period but who later
satisfy the eligibility requirements of this paragraph to participate as of a
subsequent date determined by the Committee. In the case of an employee of a
Participating Corporation who became employed as a result of the acquisition by
the Corporation or a Participating Corporation of all or part of the assets or
stock of such employee's previous employer, the employee's employment date will
be considered to be the date he was employed by his previous employer, unless
otherwise determined by the Committee.
6. STOCK
The stock offered hereunder shall be shares of Common Stock either (i)
authorized but unissued, (ii) purchased in the open market by the Company or at
its direction or (iii) issued and held in treasury. Subject to adjustment in
accordance with the provisions of Paragraph 8(g), the total number of shares of
Common Stock which may be offered shall not exceed the Maximum Share Limit. If
at any time participating employees elect to purchase more than the Maximum
Share Limit, then the number of shares of Common Stock which may be purchased by
each participating employee shall be reduced pro rata.
In the event that an employee's participation under the Plan for any reason
ends or is terminated and the shares which are subject to purchase are not
purchased, such unpurchased shares of Common Stock shall again be available for
offering under the Plan.
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7. NUMBER OF SHARES WHICH AN EMPLOYEE MAY PURCHASE
The Corporation may grant to each participating employee, on a
nondiscriminatory basis, an option to purchase such number of shares of Common
Stock with respect to a given offering as shall have an aggregate purchase price
not in excess of the least of (i) 20 percent of such employee's Compensation,
plus the amount of interest paid on such employee's Purchase Savings Account as
provided in Paragraph 8(c), or (ii) $50,000 or (iii) such lesser amount as the
Committee may determine.
Alternatively, the Corporation may grant to each participating employee, on
a nondiscriminatory basis, an option to purchase a fixed or maximum number of
shares of Common Stock provided that the aggregate purchase price must comply
with the limitations set forth in the preceding sentence.
Notwithstanding the foregoing provisions of this Plan, no employee may
participate in an offering under the Plan (i) if such participation would permit
the employee to purchase shares of Common Stock under all the employee stock
purchase plans of the Corporation and any Participating Corporation qualified
under Section 423 of the Code at a rate which exceeds $25,000 in fair market
value of such shares (determined on the first date of the Offering Period or, if
later, the date the option is granted) for each calendar year in which such
employee participates in the Plan, or (ii) if such employee, immediately after
his participation commences, owns stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Corporation or any
Participating Corporation. For such purpose, the rules of Section 424(d) of the
Code, as amended, shall apply in determining the stock ownership of an employee,
and stock which the employee may purchase pursuant to his participation in the
Plan and under all other plans or options of the Corporation or any
Participating Corporation shall be treated as stock owned by the employee.
8. TERMS AND CONDITIONS OF PARTICIPATION IN AN OFFERING UNDER THE PLAN
An eligible employee's participation in an offering under this Plan shall
comply with and be subject to the following:
(a) Purchase Price. The purchase price per share of Common Stock
shall be determined by the Committee; provided, however, the purchase price
may not be lower than the lesser of 85 percent of the Fair Market Value of
the shares of Common Stock on the first date of the Offering Period or 85
percent of the Fair Market Value of the shares of Common Stock on the
Purchase Date.
(b) Purchase Savings Account. A participating employee shall
authorize the withholding from his Compensation, throughout the Offering
Period, of a dollar amount or percent of Compensation per pay period, the
maximum of which is subject to the limits of Paragraph 7 or other lesser
limitations set by the Committee. Withheld amounts will be deposited in the
employee's Purchase Savings Account. The employee shall not be entitled to
make any other deposits to his Purchase Savings Account, unless the
Committee so determines, and then, only to the extent permitted by the
Committee and subject to the applicable limitations contained in Paragraph
7 hereof.
The employee may, at times and in the manner permitted by the
Committee, elect to change the amounts to be withheld from his Compensation
for deposit in his Purchase Savings Account for periods after such election
has been received and approved by the Corporation provided such election
complies with the limitations set forth in Paragraph 7.
The employee may withdraw funds accumulated in his Purchase Savings
Account at any time, except as the Committee may otherwise provide.
(c) Interest Payable on the Purchase Savings Account. All interest
paid by the financial institution providing a Purchase Savings Accounts
shall be paid and applied in the same manner as other amounts deposited to
such Purchase Savings Account.
(d) Purchase of Shares
(i) Purchase Directions. Subject to earlier purchase pursuant to
Paragraph 8(d)(ii), 8(f) and 8(h) hereof, each employee shall specify on
or before the Purchase Date whether he desires to
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purchase all, a portion or none of the shares of Common Stock which he
is entitled to purchase as a result of his participation in the
offering. Except as set forth in the next paragraph, if the employee
fails to deliver the notification referred to in this paragraph, such
failure shall be deemed an election by the employee to exercise his
right to purchase on the Purchase Date all of the shares of Common Stock
which he is entitled to purchase.
On the Purchase Date, the Corporation shall cause the funds,
including interest, if any, then on deposit in the employee's Purchase
Savings Account to be withdrawn and applied to the purchase price of the
shares of Common Stock the employee elected to purchase. Any funds
remaining in the Purchase Savings Account after such purchase will be
paid to the employee and, at the direction of the Committee, the
Purchase Savings Account may be closed. However, except as may otherwise
be provided by the Committee under Paragraph 8(d)(ii), if the Fair
Market Value of one share of Common Stock on the Purchase Date is less
than the purchase price for one share of Common Stock, the Corporation
shall cause the funds, including interest, if any, then on deposit in
his Purchase Savings Account to be paid to the employee and, at the
direction of the Committee, the Purchase Savings Account may be closed.
(ii) The Committee may determine that the Corporation shall make an
offering which shall have more than one Purchase Date and, in such case,
the Committee shall establish the dates (each a "Purchase Date") on
which purchases of shares of Common Stock can or will be made by
participating employees during an Offering Period. The Committee shall
set the terms, conditions and other procedures necessary for the proper
administration of such Offering.
(e) Termination of Participation by Employee. An employee who
participates in an offering may at any time on or before the expiration of
the Offering Period terminate participation by written notice of such
termination on a form prescribed by the Committee and delivered to the
Corporation. As soon as practicable thereafter, all funds, including
interest, if any, then on deposit in his Purchase Savings Account will be
paid to the employee and, at the direction of the Committee, the Purchase
Savings Account may be closed.
(f) Termination of Employment. In the event that a participating
employee's employment with the Corporation and/or a Participating
Corporation terminates during the term of an Offering Period, his
participation under the Plan shall terminate immediately and within a
reasonable time thereafter all funds, including interest, if any, then on
deposit in his Purchase Savings Account will be paid to the employee.
However, if any termination of employment is for reasons of total and
permanent disability or normal or early retirement, all as defined by the
Committee with respect to each offering, the employee shall have the right
within three months from the date of his retirement or disability (unless
the Offering Period shall first expire in which event such right may be
exercised only on or prior to such expiration) to elect to purchase all or
fewer than all of the shares of Common Stock which he is entitled to
purchase or to receive the proceeds of his Purchase Savings Account in
cash.
If the employee dies while in the employment of the Corporation or a
Participating Corporation during the term of an offering in which he is
participating, his estate, personal representative, or beneficiary shall
have the right, at any time within 12 months from the date of his death
(unless the expiration of the Offering Period shall first occur in which
event such right may be exercised only on or prior to such expiration), to
elect to purchase all or fewer than all of the shares of Common Stock which
the deceased employee would have otherwise been entitled to purchase or to
receive the cash on deposit in the deceased employee's Purchase Savings
Account.
(g) Recapitalization. The aggregate number of shares of Common Stock
which may be offered under the Plan, the number of shares of Common Stock
which each employee is entitled to purchase as a result of his
participation in an offering and the purchase price per share for each such
offering shall all be proportionately adjusted for any increase or decrease
in the number of issued and outstanding shares of Common Stock resulting
from a subdivision or consolidation of shares or other capital adjustment,
or the declaration and subsequent payment of a dividend in shares of Common
Stock, or any other increase or decrease in such shares of Common Stock
effected without receipt of consideration by the Corporation;
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<PAGE> 25
provided, however, that any fractional shares of Common Stock resulting
from any such adjustment shall be eliminated.
Subject to any required action by stockholders, if the Corporation
shall be the surviving or resulting corporation in any merger or
consolidation, excluding for this purpose a merger or consolidation which
constitutes a Change of Control (and, thus, the consequences of which are
otherwise provided for in Paragraph 8(h) hereof), any employee's rights to
purchase stock pursuant to participation in an offering hereunder shall
pertain to and apply to the shares of stock to which a holder of the number
of shares of Common Stock subject to such rights would have been entitled;
but a dissolution or liquidation of the Corporation or a merger or
consolidation in which the Corporation is not the surviving or resulting
corporation, excluding for this purpose a merger or consolidation which
constitutes a Change of Control (and, thus, the consequences of which are
otherwise provided for in Paragraph 8(h) hereof), shall cause all
participation in any offering made under the Plan which is then in effect
to terminate, except that the surviving or resulting corporation may, in
its absolute and uncontrolled discretion, tender an offer to purchase its
shares on terms and conditions both as to the number of shares and
otherwise, which will substantially preserve the rights and benefits of
employees participating in an offering then in effect under the Plan.
In the event of a change in Common Stock which is limited to a change
in the designation thereof to "Capital Stock" or other similar designation,
or to a change in par value thereof, or from par value to no par value,
without increase in the number of issued shares, the shares resulting from
any such change shall be deemed to be Common Stock within the meaning of
the Plan.
(h) Change of Control. Anything in the Plan to the contrary
notwithstanding, the date on which a Change of Control occurs shall be
considered to be a Purchase Date with respect to all Offering Periods under
the Plan and each employee who is a participant in the Plan shall thereupon
have the right to purchase all or fewer than all of the shares of Common
Stock which he is entitled to purchase as a result of his participation in
the offering with the funds, including interest, if any, then on deposit in
his Purchase Savings Account or to be promptly paid in cash all funds, plus
accrued interest through the date of payment, on deposit in his Purchase
Savings Account.
(i) Assignability. No Purchase Savings Account, or option to purchase
shares of Common Stock hereunder shall be assignable, by pledge or
otherwise, or transferable except by will or by the laws of descent and
distribution; and no right of any employee to purchase stock pursuant to an
offering made hereunder shall be subject to any obligation or liability of
such employee or have a lien imposed upon it. During the lifetime of an
employee, the shares of Common Stock which he is entitled to purchase under
the Plan may be purchased only by the employee.
(j) Rights as Stockholder. An employee who is a participant hereunder
shall have no rights as a stockholder with respect to shares of Common
Stock which he is entitled to purchase under the Plan until the date of the
issuance of the shares of Common Stock to the employee.
(k) Miscellaneous
(i) The Board may modify the terms and conditions of participation
hereunder to comply with local laws and regulations in order to permit
eligible employees employed outside the United States to receive the
benefits intended under the Plan.
(ii) The terms and conditions of participation under the Plan may
include such other provisions as the Board shall deem advisable,
including without limitation, provisions which may require participants
to notify the Corporation promptly in writing if such participant
disposes of stock acquired hereunder prior to the expiration of
applicable holding periods under Section 423 of the Code.
(iii) This document covers the terms and conditions of
participation under the Plan for offerings commencing on or after
October 1, 1998.
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9. CONFORMANCE WITH TAX AND SECURITIES LAWS
The Plan and all offerings under the Plan are intended to comply in all
aspects with Section 423 of the Code (or its successor section) and Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended from time to
time. Should any of the terms of the Plan or offerings be found not to be in
conformity with the terms of Section 423 or Rule 16b-3, such terms shall be
invalid and shall be omitted from the Plan or the offering but the remaining
terms of the Plan shall not be affected. However, to the extent permitted by
law, any, provisions which could be deemed invalid and omitted shall first be
construed, interpreted or revised retroactively to permit this Plan to be
construed in compliance with all applicable laws (including Rule 16b-3) so as to
foster the intent of this Plan.
10. AMENDMENTS
The Board may alter, amend, suspend or discontinue the Plan or, at any time
prior to a Change of Control (as defined in Paragraph 8(h)), alter or amend any
and all terms of participation in an offering made thereunder. However, if
applicable securities, tax or other laws or rules or regulations promulgated
thereunder require stockholder approval, then such Board action shall be subject
to the requisite stockholder approval.
11. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of Common Stock
under the Plan, except as otherwise provided herein, will be used for general
corporate purposes.
12. NO OBLIGATION TO PURCHASE SHARES
Participation under the Plan shall impose no obligation upon the employee
to purchase any shares of Common Stock which are the subject of his
participation.
13. WITHHOLDING
Any amounts to be paid or shares of Common Stock to be delivered by the
Corporation under the Plan shall be reduced to the extent permitted or required
under applicable law by any sums required to be withheld by the Corporation or
any Participating Corporation.
14. GOVERNING LAW
This Plan and the terms and conditions of participation in the Plan, shall
be construed in accordance with and governed by the laws of the State of
Michigan except where such laws may be superseded by federal law.
15. REGULATORY AUTHORITIES
Each and every obligation and undertaking of the Corporation hereunder is
subject to the proviso that if at any time the Board determines that the
listing, registration or qualification of the shares covered hereby or by an
option issued hereunder upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental agency or regulatory
body, is necessary or desirable as a condition to or in connection with the
grant or exercise of any option hereunder, such grant or exercise shall be
deemed to be without effect hereunder until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.
16. DESIGNATION OF BENEFICIARY
Each employee may designate any person or entity as such employee's
beneficiary who shall, in the event of employee's death, receive shares of
Common Stock under the Plan or the funds in the employee's Purchase Savings
Account. Each designation of a beneficiary by an employee will revoke all
previous designations under the Plan made by that employee and will be effective
only when filed in writing with the Board or the Committee during the employee's
lifetime. If any employee fails to designate a beneficiary in the manner
provided above, or if the beneficiary designated by an employee dies before the
employee or before issuance of
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<PAGE> 27
all shares of Common Stock due to the employee under the Plan is completed, the
Board or the Committee shall distribute the employee's shares to the legal
representative or representatives of the estate of the later to die of the
employee or the employee's designated beneficiary.
17. LITIGATION BY EMPLOYEES OR OTHER PERSONS
To the extent permitted by law, if a legal action begun against the
Corporation, a Participating Corporation or any employee or director thereof, or
the Committee or any member thereof, by or on behalf of any person results
adversely to that person, or if a legal action arises because of conflicting
claims to shares of Common Stock due an employee or beneficiary, the cost to the
Corporation, a Participating Corporation or employee or director thereof, or the
Committee or any member thereof, of defending the action will be charged to the
extent possible to the shares of Common Stock or sums, if any, that were
involved in the action or were payable to, or on account of, the employee or
beneficiary concerned.
18. INDEMNIFICATION
Any person who is or was a director, officer, or employee of the
Corporation or a Participating Corporation and each member of the Committee
shall be indemnified and saved harmless by the Corporation to the extent legally
permissible from and against any and all liability or claim of liability to
which such person may be subjected by reason of any act done or omitted to be
done in good faith with respect to the administration of the Plan, including all
expenses reasonably incurred in his defense in the event that the Corporation
fails to provide such defense.
19. RIGHTS TO EMPLOYMENT
Participation under the Plan shall not confer upon any employee any right
with respect to continued employment by the Corporation or a Participating
Corporation.
20. EXPENSES
All expenses of administering the Plan shall be borne by the Corporation,
with the exception of sales fees related to the disposition or holding of the
employee's stock.
21. FACILITY OF PAYMENT
Whenever the Committee considers that an employee or a beneficiary entitled
to shares of Common Stock or proceeds under the Plan is under a legal disability
or is incapacitated in any way so as to be unable to manage his or her financial
affairs, the Committee may direct that such shares of Common Stock or proceeds
be issued directly to such employee or beneficiary, to the legal guardian or
conservator of such employee or beneficiary, to a relative of such employee or
beneficiary to be expended by such relative for the benefit of such employee or
beneficiary, to a custodian for such beneficiary under a Uniform Transfers or
Gifts to Minors Act or comparable statute of any state, or expended for the
benefit of such employee or beneficiary, as the Committee considers advisable.
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ENTERPRISE SOFTWARE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JANUARY 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF ENTERPRISE SOFTWARE, INC.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and the accompanying Proxy Statement,
each dated December 7, 1998, concerning the Annual Meeting of
Stockholders of Enterprise Software, Inc. to be held on January 6,
1999 and any adjournment thereof, and does hereby appoint Andre A.
Blay and H. Bradley Eden, or either of them, each with full power of
substitution, as the proxy of the undersigned to represent the
undersigned and to vote all shares of Common Stock, $.001 par value,
of Enterprise Software, Inc. which the undersigned would be entitled
to vote if personally present at said Annual Meeting and any
adjournments thereof.
1. Election of Directors
[ ] FOR all nominees as listed below (except as marked to the
contrary):
Andre A. Blay, Thomas H. Baur, H. Bradley Eden, Richard L.
Schleufer, Robert Beauregard, Joseph J. Porfeli and James S.
Ware
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE BELOW.
--------------------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all seven nominees identified
above.
2. Approval of the Enterprise Software, Inc. Employee Stock Purchase
and Savings Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of Appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending March 31,
1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In the discretion of the proxies, upon such other business as may
properly come before the meeting.
The shares represented hereby will be voted as directed. Where no
direction is made, the shares will be voted FOR the election of all
director nominees named above and FOR proposals 2 and 3.
Dated:
199
-----------------------------,
-----------------------------
(Signature)
-----------------------------
(Signature, if held jointly)
Please sign exactly as your
name or names appear hereon,
and when signing as attorney,
executor, administrator,
trustee or guardian, give
your full title as such. If
the signatory is a
corporation, sign the full
corporate name by a duly
authorized officer.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
