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 Sec. 240.14a-11(c) or sec. 240.14a-12
CAERE CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions apply:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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<PAGE>
CAERE CORPORATION
100 COOPER COURT
LOS GATOS, CALIFORNIA 95030
April 6, 1995
Dear Stockholder:
On behalf of Caere Corporation (the "Company"), I cordially invite you to
attend the Annual Meeting of Stockholders to be held at 9:00 a.m. on Friday, May
5, 1995, at Los Gatos Lodge, 50 Saratoga Avenue, Los Gatos, California. At the
meeting, stockholders will be asked to elect two persons to the Company's Board
of Directors to serve for a three-year term expiring on the date of the
Company's 1998 Annual Meeting of Stockholders, to approve amendments to the 1992
Non-Employee Directors' Stock Option Plan to increase the number of shares which
may be issued and to extend the term of options, and to ratify the selection of
KPMG Peat Marwick LLP as the Company's independent auditors for 1995. The
accompanying Notice and Proxy Statement describes these proposals. We urge you
to read this information carefully. The Company's Board of Directors believes
that a favorable vote on each of the matters to be considered at the meeting is
in the best interests of the Company and its stockholders and unanimously
recommends a vote "FOR" each such matter. Accordingly, we urge you to review the
accompanying material carefully and to return the enclosed proxy card promptly.
The directors and officers of the Company hope that as many stockholders as
possible will be present at the meeting. Because the vote of each stockholder is
important, we ask that you sign, date and return the enclosed proxy card in the
envelope provided, whether or not you now plan to attend the meeting. This will
not limit your right to change your vote at the meeting or to attend the
meeting. We appreciate your cooperation and interest in the Company. To assist
us in preparation for the meeting, please return your proxy card at your
earliest convenience.
Sincerely yours,
Robert G. Teresi
Chairman of the Board and
Chief Executive Officer
<PAGE>
CAERE CORPORATION
100 COOPER COURT
LOS GATOS, CALIFORNIA 95030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1995
To the Stockholders of Caere Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Caere Corporation, a Delaware corporation (the "Company"), will be
held on Friday, May 5, 1995, at 9:00 a.m., local time, at Los Gatos Lodge, 50
Saratoga Avenue, Los Gatos, California, for the following purposes: 1. To elect
two directors of the Company to serve for the ensuing three years until the
Company's 1998 Annual Meeting of Stockholders and until their successors are
elected; 2. To approve amendments to the 1992 Non-Employee Directors' Stock
Option Plan to increase the number of shares which may be issued from 80,000 to
130,000, an increase of 50,000 shares, and to extend the term of options,
including outstanding options, from five years to ten years; 3. To ratify the
selection of KPMG Peat Marwick LLP as the Company's independent auditors for the
fiscal year ending December 31, 1995; and 4. To transact such other business as
may properly come before the Annual Meeting or any adjournment thereof. The
foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. The Board of Directors of the Company has fixed the
close of business on March 14, 1995, as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof.
By order of the Board of Directors
Blanche M. Sutter, Secretary
Los Gatos, California
April 6, 1995
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE-PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
CAERE CORPORATION
100 COOPER COURT
LOS GATOS, CALIFORNIA 95030
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of Caere Corporation, a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders to be
held on May 5, 1995, at 9:00 a.m., local time (the "Annual Meeting"), or at any
adjournment or postponement thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting. The Annual Meeting will be held at
Los Gatos Lodge, 50 Saratoga Avenue, Los Gatos, California.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. The Company has
engaged the firm of D. F. King & Co., Inc. to assist the Company in the
distribution and solicitation of proxies and has agreed to pay D. F. King & Co.,
Inc. a fee of $5,500 plus expenses for its services. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of the Company's common stock (the
"Common Stock") beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
employees of the Company and by D. F. King & Co., Inc. No additional
compensation will be paid to directors, officers or other employees for such
services. Except as described above, the Company does not intend to solicit
proxies other than by mail.
The Company intends to mail this proxy statement and accompanying proxy on
or about April 6, 1995, to all stockholders entitled to vote at the Annual
Meeting.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March
14, 1995, will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on March 14, 1995, the Company had outstanding and
entitled to vote 13,126,237 shares of Common Stock. Each holder of record of
Common Stock on such date will be entitled to one vote for each share held on
all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
<PAGE>
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 100 Cooper
Court, Los Gatos, California 95030, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
Annual Meeting and voting in person. Attendance at the meeting will not, by
itself, revoke a proxy. attending the Annual Meeting and voting in person.
Attendance at the meeting will not, by itself, revoke a proxy.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide that the
Board of Directors shall be divided into three classes having staggered terms of
three years each, with each class consisting, as nearly as possible, of
one-third of the total number of directors. Vacancies on the Board may be filled
by persons elected by a majority of the remaining directors or by the
affirmative vote of the holders of a majority of the Company's outstanding
capital stock. A director elected to fill a vacancy (including a vacancy created
by an increase in the size of the Board of Directors) shall serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and qualified.
The Company's Bylaws presently authorize a Board of Directors composed of
five directors. Thus, the Board is presently divided into three classes, two of
which have two directors and one of which has one director. The class whose term
of office expires at the Annual Meeting consists of two directors. One of the
purposes of the Annual Meeting is the election of two directors to this class,
such directors to serve until the 1998 Annual Meeting of Stockholders and until
their successors are elected and have qualified, or until such directors'
earlier death, resignation or removal. The nominees for election to this class
are currently directors of the Company whose terms expire at the Annual Meeting.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the nominees named below. In the event that a nominee should be unavailable
for election as a result of an unexpected occurrence, such shares will be voted
for the election of such substitute nominee as management may propose. The
individuals nominated for election have agreed to serve if elected, and
management has no reason to believe that the nominees will be unable to serve.
Set forth below is biographical information for the individuals nominated
and for each person whose term of office as a director will continue after the
Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 1998
ANNUAL MEETING
ROBERT G. TERESI
Mr. Teresi, age 53, has been with the Company since 1976 and has served as
President, Chief Executive Officer and a director of the Company since May 1985.
He was elected Chairman of the Board on October 15, 1991. In May 1994, Mr.
Teresi relinquished the office of President.
WAYNE E. ROSING
Mr. Rosing, age 48, has been a director of the Company since June 1991.
Since September 1994, he has been President of The Remote Telescope Company,
Inc., a recently incorporated company that is developing. From 1988 to 1994, he
was an officer of Sun Microsystems, Inc., a manufacturer of UNIX-based
professional work stations and compatible software, or President or Vice
President of one of its subsidiaries, divisions, or groups.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF THESE NOMINEES.
<PAGE>
DIRECTOR CONTINUING IN OFFICE UNTIL THE 1996 ANNUAL MEETING
SIDNEY S. KAHN
Mr. Kahn, age 57, has served as a director of the Company since 1978. He
has been a private investor since December 1987. He is director of a number of
privately held corporations, including Orion Network Systems, Inc., Telogy
Systems, Inc. and The Ambis Corporation. He is also a director of Phoenix
Network Systems.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1997 ANNUAL MEETING
JAMES K. DUTTON
Mr. Dutton, age 62, has been a director of the Company since 1979. He is
currently a consultant and private investor. From December 1979 to May 1985, he
served as the Company's President and Chief Executive Officer. From 1991 to May
1993, Mr. Dutton was President of Andor Corporation, a distributor of high end
mainframe computer equipment and related software. From July 1988 to February
1990, Mr. Dutton was President of ELXSI, a manufacturer of computers. He was a
director of System Industries Inc. from 1985 to July 1993 and served as Chairman
of the Board from March 1992 to July 1993. He is a director of ECCS, Inc.
FREDERICK W. ZUCKERMAN
Mr. Zuckerman, age 60, has been a director of the Company since March 1995.
Mr. Zuckerman is a private investor. Previously, he was Vice President and
Treasurer of International Business Machines Corp., a multinational corporation
principally engaged in the computer business, from September 1993 to January
1995, Vice President and Treasurer of RJR Nabisco, Inc., a multinational
corporation principally engaged in the tobacco and food businesses, from
February 1991 to September 1993, and Corporate Vice President and Treasurer of
Chrysler Corp., a multinational corporation principally engaged in the
automotive business, from December 1981 to September 1990. He is a director of
Meditrust, Northeast Federal Corporation, Turner Corporation, NVR Corporation,
Anacomp, Inc., Japan Equity Fund, The Singapore Fund, Northeast Federal
Corporation, Northeast Savings Bank and Pantone, Inc.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1994, the Board held eight
meetings. The Board has a standing Compensation and Option Committee, a standing
Audit Committee, and a standing Nominating Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the auditors' comments as to controls, adequacy of staff,
and management performance and procedures in connection with audit and financial
controls. The Audit Committee, which consists of Messrs. Dutton, Kahn and
Rosing, met once during the fiscal year ended December 31, 1994.
The Compensation and Option Committee makes recommendations concerning
salaries, incentive compensation, and stock option grants to employees and
consultants under the Company's stock option plans and otherwise determines
compensation levels and performs such other functions regarding compensation as
the Board may delegate. The Compensation and Option Committee, which consists of
Messrs. Dutton, Kahn and Rosing, met four times during the fiscal year ended
December 31, 1994.
<PAGE>
In June 1994, the Board appointed a Nominating Committee, which consists of
three non-employee directors: Messrs. Kahn, Dutton and Rosing. The Nominating
Committee interviews, evaluates, nominates and recommends individuals for
membership on the Company's Board of Directors and committees thereof. No
procedure has been established for the consideration of nominees recommended by
stockholders. The Nominating Committee did not meet during the fiscal year ended
December 31, 1994.
During the fiscal year ended December 31, 1994, each Board member attended
seventy-five percent or more of the aggregate of the meetings of the Board and
of the committees on which he served, held during the period for which he was a
director or committee member, respectively.
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE 1992 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
DESCRIPTION OF THE PROPOSED AMENDMENT
The Company's 1992 Non-Employee Directors' Stock Option Plan (the
"Directors' Plan") was originally adopted by the Board in February 1992 and
approved by the stockholders in May 1992. In August 1994, the Board adopted,
subject to stockholder approval, an amendment to extend the term of options,
including outstanding options, granted under the Directors' Plan from five years
to ten years. In March 1995, the Board adopted, subject to stockholder approval,
a proposal to amend the Directors' Plan to increase the number of shares
authorized for issuance under the Directors' Plan from 80,000 shares to 130,000
shares. The Board adopted these amendments to facilitate the Company's goal of
attracting additional non-employee directors and to ensure that the Company can
continue to grant stock options to non-employee directors at levels determined
appropriate by the Board and the Compensation and Option Committee.
As of December 31, 1994, and without taking into account the proposed
amendment to the Directors' Plan, the Company had granted options for an
aggregate of 60,000 shares of Common Stock pursuant to the Directors' Plan, all
of which were outstanding, with exercise prices ranging from $6.9375 to $7.00.
No options have been exercised under the Directors' Plan. As of December 31,
1994, and without taking into account the proposed amendment to the Directors'
Plan, 20,000 shares remained available for future grant.
The affirmative vote of a majority of the shares of the Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting will be required for the approval of Proposal 2.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
DESCRIPTION OF THE DIRECTORS' PLAN
The essential features of the Directors' Plan are outlined below.
GENERAL
The Directors' Plan, and the right of directors to receive options and
purchase stock thereunder, is intended to qualify as a formula award plan having
"disinterested administration" promulgated under Rule 16b-3 of the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). The Directors' Plan provides
for the nondiscretionary grant of nonstatutory stock options. Nonstatutory stock
options granted under the Directors' Plan are intended not to qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). See "Federal Income Tax
Information" below for a discussion of the tax treatment of nonstatutory stock
options. Without taking into account the proposed amendment to the Directors'
Plan, the maximum number of shares of Common Stock that may be issued pursuant
to options granted under the Directors' Plan currently is 80,000. Under Proposal
2, the Directors' Plan would be amended to increase this number to 130,000
shares.
<PAGE>
PURPOSE
The Company, by means of the Directors' Plan, seeks to attract and retain
the best available personnel for service as directors of the Company, to provide
additional incentive for such persons to exert maximum efforts to promote the
success of the Company, and to encourage their continued service on the Board.
ADMINISTRATION
The Directors' Plan is administered by the Board, unless the Board
delegates administration to a committee composed of not fewer than two members
of the Board. As used herein with respect to the Directors' Plan, the term
"Board" refers to any committee to which the Board delegates administrative
authority with respect to the Directors' Plan, as well as to the Board of
Directors itself. Subject to the provisions of the Directors' Plan, the Board
has the power to construe and interpret the Directors' Plan and options granted
under it, to establish, amend and revoke rules and regulations for its
administration, to amend the Directors' Plan, and to generally exercise such
powers and to perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company.
ELIGIBILITY
Options may be granted under the Directors' Plan only to non-employee
directors of the Company. A "non-employee director" is defined in the Directors'
Plan as a director of the Company who is not otherwise an employee of the
Company or of any affiliate of the Company. The term "affiliate" as used in the
Directors' Plan means any parent or subsidiary corporation of the Company as
those terms are defined in the Code. Four of the Company's five current
directors (all except Mr. Teresi) are eligible to participate in the Directors'
Plan.
The option grants under the Directors' Plan are nondiscretionary. Pursuant
to the terms of the Directors' Plan, after the date of approval of the
Directors' Plan by the Board (the "Adoption Date") each person who is
subsequently elected for the first time to be a non-employee director of the
Company shall automatically be granted an option to purchase 20,000 shares of
Common Stock (subject to adjustment as provided in the Directors' Plan) upon the
date of his or her initial election to be a non-employee director of the Company
by the Board or stockholders of the Company. Thereafter, so long as any such
person remains a non-employee director of the Company and the Directors' Plan
remains in effect, he or she shall, on each three-year anniversary of such
initial grant, automatically be granted an option to purchase 20,000 shares of
the Company's Common Stock (subject to adjustment as provided in the Directors'
Plan). Each non-employee director who was a non-employee director as of the
Adoption Date shall, on each three-year anniversary of such non-employee
director's receipt of an option grant (as of a date immediately preceding the
Adoption Date) covering shares of Common Stock of the Company, automatically be
granted an option to purchase 20,000 shares of Common Stock (subject to
adjustment as provided in the Directors' Plan).
TERMS OF OPTIONS
Each option under the Directors' Plan is subject to the following terms and
conditions:
Exercise Price; Payment. The exercise price of each option granted under
the Directors' Plan shall be equal to 100% of the fair market value of the
Common Stock subject to such option on the date such option is granted. The
exercise price of options granted under the Directors' Plan must be paid either:
(i) in cash at the time the option is exercised, (ii) by delivery to the Company
of shares of Common Stock of the Company that have been held for the requisite
period necessary to avoid a charge to the Company's reported earnings and valued
at the fair market value on the date of exercise, or (iii) by a combination of
such methods of payment.
Option Vesting. Options granted under the Directors' Plan vest with respect
to each optionee in three equal annual installments commencing on the date one
year after the date of grant of the option, provided that the optionee has,
during the entire one-year period prior to such vesting date, continuously
served as a non-employee director of the Company.
<PAGE>
Termination of Options. Currently no option granted under the Directors'
Plan is exercisable after the expiration of five years from the date the option
was granted. Under Proposal 2, the Directors' Plan would be amended to extend
the term during which the option is exercisable from a period of five years to a
period of ten years from the date the option was granted.
Nontransferability of Options. Options granted under the Directors' Plan
are not transferable except by will or by the laws of descent and distribution,
and are exercisable during the lifetime of the person to whom the option is
granted only by such person or by his or her guardian or legal representative.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the Directors' Plan or
subject to any option granted under the Directors' Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Directors' Plan and options outstanding will be appropriately adjusted as to the
class and maximum number of shares subject to the Directors' Plan and the class,
number of shares and price per share of stock subject to such outstanding
options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Directors' Plan provides that in the event of a dissolution or
liquidation of the Company, specified type of merger or other corporate
reorganization, then, at the sole discretion of the Board and to the extent
permitted by applicable law: (i) the time during which such options may be
exercised shall be automatically accelerated and such options shall be
exercisable in their entirety immediately prior to such event; (ii) any
surviving corporation may elect to assume such options outstanding under the
Directors' Plan or may substitute similar options for those outstanding under
the Directors' Plan; and (iii) any options outstanding thereunder will terminate
if not exercised or assumed prior to such event.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Directors' Plan at any time. Unless
sooner terminated, the Directors' Plan shall terminate on February 27, 2002.
The Board may also amend the Directors' Plan at any time and from time to
time, provided, however, that the Board shall not amend the Directors' Plan more
than once every six months, with respect to the provisions of the plan which
relate to the amount, price and timing of grants, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
thereunder. In addition, no amendment will be effective unless approved by the
stockholders of the Company within twelve months before or after the adoption of
the amendment, where the amendment would: (i) increase the number of shares
reserved for options under the Directors' Plan; (ii) modify the requirements as
to eligibility for participation in the Directors' Plan (to the extent such
modification requires stockholder approval in order for the Directors' Plan to
comply with the requirements of Rule 16b-3); or (iii) modify the Directors' Plan
in any other way if such modification requires stockholder approval in order for
the Directors' Plan to comply with the requirements of Rule 16b-3.
FEDERAL INCOME TAX INFORMATION
Stock options granted under the Directors' Plan are subject to federal
income tax treatment pursuant to rules governing options that are not incentive
stock options.
<PAGE>
The following is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Directors' Plan, does not purport to be complete, and does not
discuss the income tax laws of any state or foreign country in which an optionee
may reside.
Options granted under the Directors' Plan are nonstatutory options. There
are no tax consequences to the optionee or the Company by reason of the grant of
a nonstatutory stock option. Upon exercise of a nonstatutory stock option, the
optionee generally will recognize ordinary income for tax purposes measured by
the excess of the then fair market value of the shares over the option price.
Because the optionee is a director of the Company, under existing laws the date
of taxation (and the date of measurement of taxable ordinary income) may in some
instances be deferred unless the optionee files an election under Section 83(b)
of the Code. The filing of a Section 83(b) election with respect to the exercise
of an option may affect the time of taxation and the amount of income recognized
at each such time. At the time the optionee recognizes ordinary income due to
the exercise of the option, the Company will generally be entitled to a business
expense deduction equal to the taxable ordinary income realized by the optionee.
Upon resale of such shares by the optionee, any difference between the sales
price and the exercise price, to the extent not recognized as ordinary income as
provided above, generally will be treated as capital gain or loss, and will
qualify for long-term capital gain or loss treatment if the shares have been
held for at least one year.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP ("KPMG") as the
Company's independent auditors for the fiscal year ending December 31, 1995, and
has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting. KPMG has
audited the Company's financial statements since 1976. Representatives of KPMG
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they so desire, and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of KPMG as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to
ratify the selection, 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 auditing firm at any time during the year if the
Board determines that such a change would be in the best interests of the
Company and its stockholders.
The affirmative vote of the holders of a majority of the shares of the
Common Stock present in person or represented by proxy and entitled to vote at
the Annual Meeting will be required to ratify the selection of KPMG.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 25, 1995, by: (i) each director and
nominee for director, (ii) each of the executive officers named in the Summary
Compensation Table, (iii) all officers and directors of the Company as a group,
and (iv) all those known by the Company to be beneficial owners of more than
five percent of its Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
Number of Percent of
Beneficial Owner Shares(2) Total
<S> <C> <C>
Wisconsin Investment Board 820,000 6.2%
P.O. Box 7842
Madison, WI 53707
Gardner Lewis Asset Management, L.P. 789,800 6.0%
285 Wilmington-West Chester Pike
Chadds Ford, PA 19317
Robert G. Teresi 204,242 1.5%
Sidney S. Kahn 40,726 *
James K. Dutton 70,000 *
Wayne E. Rosing 0 *
Frederick W. Zuckerman 0 *
Blanche M. Sutter 59,332 *
Serge L. Blanc 43,099 *
Roger L. Bailey 10,000 *
Dan D. Borozan 4,000 *
All executive officers and directors as a group (15 persons) 497,022 3.7%
- - -----------
* Less than 1%
<FN>
(1)This table is based upon information supplied by executive officers,
directors, and principal stockholders and Schedules 13D and 13G filed with the
SEC. Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, each of the stockholders named in this
table has sole voting and investment power with respect to the shares indicated
as beneficially owned. Applicable percentages are based on 13,121,179 shares
outstanding on February 25, 1995, adjusted as required by rules promulgated by
the SEC.
(2)Includes shares which certain executive officers and directors of the
Company have the right to acquire within 60 days after the date of this table
pursuant to outstanding options as follows: Robert G. Teresi, 130,900 shares;
Sidney S. Kahn, 40,000 shares; James K. Dutton, 40,000 shares; Blanche M.
Sutter, 39,332 shares; Serge L. Blanc, 8,549 shares; Roger L. Bailey, 10,000
shares and Dan D. Borozan, 4,000 shares; and all executive officers and
directors as a group, 300,771 shares.
</FN>
</TABLE>
<PAGE>
ADDITIONAL INFORMATION
MANAGEMENT
Executive officers are elected annually by the Board and serve at the
discretion of the Board. Set forth below is information regarding executive
officers of the Company who are not directors of the Company.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Roger L. Bailey......................54 Vice President, Corporate Services
Serge L. Blanc.......................57 Vice President, Business Products
Dan D. Borozan.......................58 Vice President, Operations
Steven C. Humphreys..................33 President
Dean A. Hovey........................40 Vice President, Business Development
Chad B. Kinzelberg...................27 Vice President, Marketing
Lawrence F. Lunetta..................43 Vice President, Strategic Relations
Blanche M. Sutter ...................48 Vice President, Finance, Chief Financial Officer and Secretary
Warren Teitelman Ph.D................54 Vice President, Engineering
<FN>
Mr. Bailey joined the Company in August 1989 as Vice President, Marketing
and Sales for Business Products. In October 1990, he became Vice President,
Sales and Service. In December 1994, he became Vice President, Corporate
Services.
Mr. Blanc joined the Company in May 1977 as Vice President, Engineering. In
August 1994, he became Vice President, Business Products.
Mr. Borozan joined the Company in January 1991 as Vice President,
Operations. Prior to joining the Company, he was Director of Materials at Hughes
LAN Systems, a manufacturer of local area network products.
Mr. Hovey joined the Company in August 1994 as Vice President, Business
Development. Prior to joining the Company, from 1989 to 1994, he was a General
Partner of Avalon Ventures, a venture capital fund.
Mr. Humphreys joined the Company in June 1994 as President. Prior to
joining the Company, from 1991 to 1994, he was Vice President, Business
Development and Vice President of the Information Delivery Services Division for
GE Information Services, a provider of applications and systems software
development. From 1990 to 1991, he was President and Chief Executive Officer of
Space Industry Telecommunication and Electronics Company (SITEC), a provider of
PC-based software and hardware for faxing, scanning and voice response.
Mr. Kinzelberg joined the Company in September 1994 as Vice President,
Marketing. Prior to that, he was Senior Director, Fax and Messaging Software,
from 1992 to 1994, and Senior Director, Marketing in 1994 for Delrina
Corporation, a designer and manufacturer of fax, forms, and content-based
software. From May 1990 to June 1992, he was Director of Marketing for Polaris
Software, a developer of personal information manager relational database
software.
Mr. Lunetta became the Company's Vice President, Strategic Relations, in
August 1994. Previously, he was Vice President, Worldwide Marketing from 1993 to
1994. From 1992 to 1993 he was Director of International Markets. From 1989 to
1991, he was Vice President, Marketing and Sales for Advanced Vision Research, a
manufacturer of desktop scanners.
Ms. Sutter has been the Company's Vice President, Finance, and Chief
Financial Officer since April 1986. In June 1989 she was also appointed as the
Company's Secretary.
<PAGE>
Dr. Teitelman joined the Company in August 1994 as Vice President,
Engineering. Prior to joining the Company, from 1992 to August 1994, he was Vice
President, Engineering of Lucid, Inc., a developer of LISP programming language
compilers and a manufacturer of computer input/output ports. From 1984 to 1992,
he held various positions at Sun Microsystems, Inc., most recently as Director
of the Multimedia Platforms Products Group. In 1992, he was the recipient
of the ACM Software Systems Award.
</FN>
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1994, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives an annual retainer of
$6,000 and a per meeting fee of $1,000 (plus $500 for each committee meeting
attended by committee members, if held on days other than Board meeting dates).
No compensation is paid for participation in telephone meetings. In the fiscal
year ended December 31, 1994, the total compensation paid to non-employee
directors as a group was $38,000.
Each non-employee director of the Company also receives stock option grants
under the Directors' Plan. Only non-employee directors of the Company are
eligible to receive options under the Directors' Plan. See Proposal 2.
During the last fiscal year, each person who was then a non-employee
director received an automatic stock option grant for 20,000 shares of Common
Stock, with exercise prices ranging from $6.9375 to $7.00 per share.
<PAGE>
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ending December 31, 1994,
1993 and 1992, compensation awarded or paid to, or earned by the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at December 31, 1994 (the "Named Executive Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Awards
Name and Securities
Principal Underlying All Other
Position Year Salary(1) Bonus Options Compensation(2)
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
Mr. Robert G. Teresi 1994 250,000 250,000 0(3) 3,115
----
Chief Executive Officer 1993 250,000 0 69,000 2,007
----
1992 203,000 156,370 122,000 1,451
----
Ms. Blanche M. Sutter 1994 136,000 136,000 54,000(3) 1,824
----
Vice President, Finance 1993 136,000 0 36,000 1,536
----
Chief Financial Officer 1992 123,000 94,687 64,000 1,451
----
and Secretary
Mr. Serge L. Blanc 1994 136,000 136,000 0(3) 3,741
----
Vice President, 1993 136,000 0 23,800 1,309
----
Business Products 1992 123,000 94,687 42,300 1,451
----
Mr. Roger L. Bailey 1994 136,000 136,000 0(3) 1,848
----
Vice President, 1993 136,000 0 25,800 1,372
----
Corporate Services 1992 123,000 94,687 45,800 1,451
----
Mr. Dan D. Borozan 1994 132,000 132,000 0 3,012
----
Vice President, 1993 132,000 0 21,400 1,708
----
Operations 1992 120,000 92,374 77,400 1,451
----
- - -----------
<FN>
(1) Includes amounts earned but deferred at the election of the executive
officer.
(2) Includes the Company's matching payment of $400 for each officer under
its 401(k) plan and term life insurance premiums paid by the Company.
(3) Does not include the following options whose terms were extended to ten
years from five years in accordance with an offer extended to all employees in
August 1994: Mr. Teresi, 173,750 shares; Ms. Sutter, 100,000 shares; Mr. Blanc,
25,826 shares; and Mr. Bailey, 51,600 shares.
</FN>
</TABLE>
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The following tables show for the fiscal year ended December 31, 1994,
certain information regarding options granted to, exercised by, and held at year
end by the Named Executive Officers:
<TABLE>
Option Grants in Last Fiscal Year(1)
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term(4)
Number of % of
Securities Total Options Exercise
Underlying Options Granted to or Base Expira-
Granted Employees in Price tion
Name (#)(2) Fiscal Year(%)(3) ($/Sh) Date 5% ($) 10% ($)
- - ---- -------- --------------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Mr. Teresi 0 _ _ _ _ _
Ms. Sutter 54,000 13.2 14.125 10/13/04 479,690 1,215,627
Mr. Blanc 0 _ _ _ _ _
Mr. Bailey 0 _ _ _ _ _
Mr. Borozan 0 _ _ _ _ _
- - -----------
<FN>
(1) Does not include the following options whose terms were extended to ten
years from five years in accordance with an offer extended to all employees in
August 1994: Mr. Teresi, 173,750 shares; Ms. Sutter, 100,000 shares; Mr. Blanc,
25,826 shares; and Mr. Bailey, 51,600 shares.
(2) Options generally vest over a four-year period, 25% per year with a
ten-year term. The options will fully vest upon a change of control, as defined
in the Company's Option Plans, unless the acquiring company assumes the options
or substitutes similar options.
(3) Based on 409,000 options granted in fiscal year ended December 31,
1994.
(4) The potential realizable value is based on the ten-year term of the
option at its time of grant. It is calculated by assuming that the stock price
on the date of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option and that the option is exercised and
sold on the last day of its term for the appreciated stock price. No gain to the
optionee is possible unless the stock price increases over the option term,
which will benefit all stockholders.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994 AND DECEMBER 31, 1994 OPTION VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Aggregate 12/31/94(#)
12/31/94($(2)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($(1) Unexercisable Unexercisable
---- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Teresi 9,600 82,800 125,650/112,750 1,312,800/1,106,250
Ms. Sutter 28,668 319,556 32,332/113,000 310,236/795,000
Mr. Blanc 38,176 291,672 3,924/39,000 32,373/383,881
Mr. Bailey 37,850 311,662 5,000/42,250 55,447/415,850
Mr. Borozan 44,050 367,868 0/44,750 0/448,050
- - -----------
<FN>
(1)Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price and does not
necessarily indicate that the optionee sold such stock.
(2)Fair market value of the Company's Common Stock at December 31, 1994
($18.125) minus the exercise price of the options.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In February 1991, the Board adopted a severance plan for its executive
officers designated by the Compensation and Option Committee (the "Severance
Plan"). The Severance Plan provides that, in the event, within 36 months of a
change of control, the participant is involuntarily terminated, other than for
death, disability or cause, or the participant voluntarily terminates his or her
employment for good reason, the terminated participant will be entitled to (i) a
lump sum severance payment equal to two times annual compensation if termination
occurs within one year of a change of control, or two times annual compensation,
less 1/24 of such amount for each full month which has passed since such
anniversary if termination occurs beyond the one-year anniversary of a change of
control, (ii) continuation of health insurance benefits for up to 18 months at
Company expense, and (iii) acceleration of vesting of stock options ranging from
25% to 100% of unvested stock options, depending upon length of service with the
Company. The Severance Plan provides for a reduction in the benefits otherwise
payable to the extent the payment would result in an "excess parachute payment"
under the Code's golden parachute provisions.
A "change of control" includes (i) acquisition by a person or group of 50%
or more of the voting power of the Company, (ii) individuals who constitute the
incumbent board cease to constitute a majority of the Board of Directors, (iii)
consummation of certain business combinations following which the Company's
stockholders immediately prior to the transaction do not own more than 50% of
the voting power of the surviving company, and (iv) any other event the
incumbent board determines constitutes a change of control. For purposes of the
Severance Plan, the incumbent board is defined to include not only the present
directors but subsequently elected directors, so long as their election or
nomination for election by the Company's stockholders was approved by a majority
of the then incumbent board (other than an approval in connection with an actual
or threatened election contest).
<PAGE>
"Good reason" includes (i) reduction of compensation, (ii) failure to
provide a substantially similar welfare benefit package, (iii) change in the
participant's responsibilities, authority, titles or offices resulting in
diminution of position, (iv) a material reduction in duties, (v) request that
the participant relocate to a worksite that is more than 35 miles from his or
her prior worksite, (vi) failure or refusal of the successor company to assume
the Severance Plan, or (vii) material breach of material provisions of the
Severance Plan.
The Severance Plan has been automatically extended for a one-year term on
each December 31 since December 31, 1991, and will automatically be extended for
additional one-year periods unless the Board takes action not to extend it. The
Severance Plan may not be amended or terminated with respect to any participant
without the consent of such participant.
In February 1991, the Company also adopted a severance policy for its
executive officers designated by the Compensation and Option Committee in the
event of involuntary termination (the "Standard Policy"). The Standard Policy
provides that, in the event that the participant is involuntarily terminated
other than for death, disability or cause, the terminated participant will be
entitled to (i) a lump sum severance payment equal to one half of annual
compensation and (ii) continuation of health insurance benefits for up to six
months at Company expense.
The Standard Policy has been automatically extended for a one-year term on
each December 31 since December 31, 1991, and will automatically be extended for
additional one-year periods unless the Board takes action not to extend it. The
Standard Policy may not be amended or terminated with respect to any participant
without the consent of such participant.
In December 1994, the Company entered into an Executive Compensation and
Benefits Continuation Agreement with Robert Teresi, the Company's Chief
Executive Officer, which remains in effect during the duration of Mr. Teresi's
employment by the Company. In the event of (i) the involuntary termination of
Mr. Teresi without cause, as defined in the agreement, or due to the death or
disability of Mr. Teresi; (ii) the voluntary termination of Mr. Teresi for good
cause, as defined in the agreement, or (iii) the part-time employment of Mr.
Teresi at the Company as a non-officer in certain circumstances after voluntary
termination of employment, then the agreement provides that Mr. Teresi will be
paid salary continuation benefits equal to three years of his base salary, to be
paid in equal monthly installments over a period of five years. The Company will
also continue Mr. Teresi's health insurance benefits, including any medical,
vision care or dental insurance coverage then in effect, for a period of up to
five years, and will continue medical benefits for Mr. Teresi's spouse and
daughter for up to five years. In addition, any outstanding unvested stock
options held by Mr. Teresi at the termination date of his employment will be
subject to continued or accelerated vesting, subject to certain criteria as set
forth in the agreement. All the benefits payable by the Company under the
agreement cease immediately upon the happening of certain events specified in
the agreement, including in the event that Mr. Teresi becomes employed by or
provides consulting services to an entity which is engaged in a business in
which the Company is also engaged.
COMPENSATION AND OPTION COMMITTEE REPORT
The Compensation and Option Committee of the Board of Directors (the
"Committee") consists of Mr. James Dutton, Mr. Sidney Kahn, and Mr. Wayne
Rosing, none of whom are currently officers or employees of the Company. The
Committee is responsible for setting and administering the Company's policies
governing employee compensation and administering the Company's employee benefit
plans, including its Stock Option Plans, the Caere Savings and Retirement 401(k)
Plan and the 1990 Employee Stock Purchase Plan.
General
The Company's executive compensation programs are designed to attract and
retain executives capable of leading the Company to meet its business objectives
and thereby enhance long-term stockholder value. Annual compensation for the
Company's executive officers consists of three elements: a cash salary, a cash
incentive bonus, and stock option grants.
<PAGE>
The Committee evaluates the performance of management and determines
compensation policies, plans, and programs which seek to enhance the performance
of the company, and thus stockholder value, by aligning closely the financial
interests of the Company's senior management with those of its stockholders.
In its review of management performance and compensation, the Committee
also takes into account management's commitment to the long-term success of the
Company through development of new products and enhanced versions of current
products as evidenced by the Company's significant investments in research and
development. Over the last three years, Caere's expenditures on research and
development have been $9.7 million, $9.4 million, and $7.5 million,
respectively. The Committee recognizes that while these expenditures reduce
current reported earnings, they provide the basis for helping to achieve
management's objective of sustained significant long-term earnings growth.
In establishing executive compensation levels for 1994, the Committee
recognized management's significant accomplishments during the year, including,
in order of importance (i) record financial performance; (ii) the successful
acquisition of Calera Recognition Systems, Inc. ("Calera"); (iii) new additions
to Caere's family of PageKeeper document management software products; and (iv)
PageKeeper's receipt of PC Computing magazine's "Most Valuable Product" award
and Byte magazine's "Best of COMDEX" award, for software application categories.
In addition to achieving corporate performance goals in 1994, these were
significant accomplishments toward the advancement of management's overall
objective of sustained significant long-term earnings growth.
Executive Officer Compensation
At its December 1993 meeting, the Committee reviewed the results of two
salary surveys which provided information on the compensation of management at
similarly-sized software and technology companies, detailed by position. Based
in part on this survey information, the Committee set base salaries in 1993 at
levels comparable to the mid-range of competitive companies of comparable size
in similar industries. Those companies include some, but not all, of the
companies included in the Hambrecht & Quist Technology Stock Index used in the
performance measurement comparison graph. Based on the Company's policy of
providing incentives for meeting performance goals and the structure of its
salary and bonus plan, as discussed below, there were no increases in the base
salaries of the Company's executive officers in 1994.
The Company's cash bonus plan is tied to financial performance versus plan
and the profitability of the Company. The total size of the bonus pool is
calculated using a formula based upon the Company's operating earnings as a
percentage of revenues. Performance is measured and bonus is determined each
quarter independently in order to encourage meeting plan objectives on a
quarterly basis. The salary and bonus plans are structured in a highly leveraged
manner, e.g., potential bonus as a percentage of total compensation, to provide
a strong incentive for achieving short-term annual performance objectives. Bonus
amounts are allocated among the executive officers based upon the individual's
base salary as a percentage of the entire group's base salaries. The maximum
bonus allowable for an executive in any period is 100% of that person's base
salary for the period. Since the Company exceeded its 1994 goals and due to its
other exceptional accomplishments in 1994, including Caere's record financial
performance, resulting in a 577% increase in net earnings, cash bonuses of 100%
of base compensation were awarded to executive officers in 1994.
The Company uses its stock option program as a long-term incentive to
further align the interests of stockholders and management by creating common
incentives related to the possession by management of a substantial economic
interest in the long-term appreciation of the Company's Common Stock. Options
have been granted to existing members of management based on a plan of achieving
certain levels of predetermined ownership participation. Because these
objectives have been long-term in nature, they have not been significantly
increased when annual performance goals have been exceeded, as they were in 1992
and 1994, nor decreased when annual performance goals have not been met, as in
1993. Options are granted at the then fair market value of the Company's Common
Stock, are subject to four-year vesting, and have a term of either five or ten
years. In August 1994, the Committee authorized the extension of the term of all
outstanding stock options from five to ten years.
The Company believes this combination of short- and long-term incentives in
the form of salary and bonus plus stock option grants will focus the Company's
officers on the optimum balance of achieving short-term annual objectives while
building long-term stockholder value.
<PAGE>
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1.0 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1.0 million may
be deducted if it is "performance-based compensation" within the meaning of the
Code. The Compensation Committee has not yet established a policy for
determining which forms of incentive compensation awarded to its Named Executive
Officers shall be designed to qualify as "performance-based compensation." The
Compensation Committee intends to continue to evaluate the effects of the
statute and any final Treasury regulations and to comply in the future with Code
Section 162(m) to the extent consistent with the best interests of the Company.
Chief Executive Compensation
In accordance with the general procedures described above, the Chief
Executive Officer received a base salary of $250,000 in 1994, which did not
reflect any increase from his 1993 base salary. Consistent with the Company's
philosophy of providing incentives for and rewarding exceptional performance,
the Chief Executive Officer received a cash bonus of $250,000. No additional
stock option grants were awarded to the Chief Executive Officer in 1994. As
discussed above, however, the term of certain stock options previously held by
the Chief Executive Officer, as well as those held by other employees of the
Company, was extended from five years to ten years.
By the Compensation Committee
James K. Dutton
Sidney S. Kahn
Wayne E. Rosing
*The material in this report and in the performance graph is not soliciting
material, is not deemed filed with the SEC, and is not incorporated by reference
in any filing of the Company under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, whether made before or after
the date of this proxy statement and irrespective of any general incorporation
language in such filing.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Company's Compensation and Option Committee consists of
Messrs. Dutton, Kahn, and Rosing. Mr. Dutton was an executive officer of the
Company from 1979 to 1985.
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The following chart shows the value of an investment of $100 on December
31, 1989, in cash of (i) the Company's Common Stock, (ii) the H&Q Technology
Stock Index, and (iii) the Nasdaq Market Index.
<TABLE>
<CAPTION>
Caere Corporation H&Q Technology Index NASDAQ Market Index
<S> <C> <C> <C>
December 1989 100.0 100.0 100.0
December 1990 79.45 91.42 84.92
December 1991 82.19 135.14 136.28
December 1992 197.26 155.45 158.58
December 1993 105.48 169.64 180.93
December 1994 198.63 196.9 176.91
*The material in this report and in the performance graph is not soliciting
material, is not deemed filed with the SEC, and is not incorporated by reference
in any filing of the Company under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, whether made before or after
the date of this proxy statement and irrespective of any general incorporation
language in such filing.
</TABLE>
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he or she may
be required to pay in actions or proceedings which he or she is or may be made a
party by reason of his or her position as a director, officer or other agent of
the Company, and otherwise to the full extent permitted under Delaware law and
the Company's Bylaws.
OTHER MATTERS
The Board does not know of any other matters which may come before the
Annual Meeting. If any other matters are properly presented at the meeting, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise to act, in accordance with their best judgment on such matters.
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1996 Annual Meeting of Stockholders must be received by the Company
not later than December 8, 1995, in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
The Board hopes that stockholders will attend the Annual Meeting. Whether
or not you plan to attend, you are urged to complete, sign and return the
enclosed proxy in the accompanying envelope. A prompt response will greatly
facilitate arrangements for the Annual Meeting, and your cooperation will be
appreciated. Stockholders who attend the Annual Meeting may vote their shares
personally even though they have sent in their proxies.
By Order of the Board of Directors
/s/ Blanche M. Sutter
BLANCHE M. SUTTER, Secretary
Los Gatos, California
April 6, 1995
<PAGE>
APPENDIX
Form of Stockholder Proxy
CAERE CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1995
The undersigned hereby appoints Robert G. Teresi and Blanche M. Sutter, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Caere Cororation (the
"Company") which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of the Company to be held at Los Gatos Lodge, 50 Saratoga
Avenue, Los Gatos, California, on Friday, May 5, 1995, at 9:00 a.m., and at any
and all continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3 AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Continued and to be signed on other side)
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTORS NAMED BELOW.
1. To elect two directors of the Company to serve for the ensuing three years
until the Company's 1998 Annual Meeting of Stockholders and until their
successors are elected.
Nominees: Wayne E. Rosing and Robert G. Teresi
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY
ABOVE (EXCEPT AS MARKED TO VOTE FOR ALL
TO THE CONTRARY BELOW) NOMINEES LISTED ABOVE
[ ] [ ]
_____________________________________________________
To withhold authority to vote for any individual nominee write such
individual nominee's name above.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.
2. To approve amendments to the 1992 Non-Employee Directors' Stock Option Plan
to increase the number of shares which may be issued from 80,000 to
130,000, an increase of 50,000 shares, and to extend the term of options,
including outstanding options, from five (5) years to ten (10) years.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1995.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Signature __________________________________ Date ____________________________
Signature __________________________________ Date ____________________________
Please vote, date and promptly return this proxy in the enclosed return
envelope which is postage prepaid if mailed in the United States.
