<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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
ISOCOR
- --------------------------------------------------------------------------------
(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
LOGO
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1998
------------------------
TO THE SHAREHOLDERS OF ISOCOR:
Notice is hereby given that the 1998 Annual Meeting of Shareholders (the
"Annual Meeting") of ISOCOR (the "Company"), a California corporation, will be
held at the Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica,
California 90401 on Wednesday, May 13, 1998 at 9:00 a.m. local time, for the
following purposes:
1. To elect the following directors, each to serve for a one year
term: Janine M. Bushman, Dennis Cagan, Andrew De Mari, Paul Gigg, Alexandra
Giurgiu and G. Bradford Jones.
2. To authorize an amendment to the Company's 1992 Stock Option Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder by 350,000 shares to an aggregate of 2,950,000 shares.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the
independent auditors for the Company for the fiscal year ending December
31, 1998.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 27, 1998 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. If you decide to attend
the meeting you may vote in person even if you have returned a proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Elias J. Blawie
--------------------------
ELIAS J. BLAWIE, Secretary
Santa Monica, California
April 13, 1998
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return it
in the envelope provided.
<PAGE> 3
LOGO
------------------------
PROXY STATEMENT FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
ISOCOR (the "Company"), a California corporation, for use at its 1998 Annual
Meeting of Shareholders (the "Annual Meeting") to be held on May 13, 1998 at
9:00 a.m., local time, or at any adjournment or postponement thereof, for the
purposes set forth in this Proxy Statement and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at the Miramar
Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica, California 90401.
These proxy solicitation materials were mailed on or about April 13, 1998
to all shareholders entitled to vote at the meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Janine M. Bushman, Inspector of Elections) a written notice of revocation or a
duly executed proxy bearing a later date or by attending the meeting and voting
in person.
VOTING AND SOLICITATION
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
The Inspector of Elections will also determine whether or not a quorum is
present. Except in certain specific circumstances, the affirmative vote of a
majority of shares represented and voting on a particular proposal at a duly
held meeting at which a quorum is present is required under California law for
approval of proposals presented to shareholders. In general, California law also
provides that a quorum consists of a majority of the shares entitled to vote,
represented either in person or by proxy. The Inspector of Elections will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as not voting for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
Any proxy which is returned using the form of proxy enclosed and which is not
marked as to a particular item will be voted for the election of the persons
nominated by management as directors, for approval of the amendment to the
Company's 1992 Stock Option Plan, for ratification of the appointment of the
designated independent auditors and as the proxy holders deem advisable on other
matters that may come before the meeting, as the case may be with respect to the
item not marked. If a broker indicates on the enclosed proxy or its substitute
that it does not have discretionary authority as to certain shares to vote on a
particular matter ("broker non-votes"), those shares will not be considered as
voting with respect to that matter. While there is no definitive specific
statutory or case law authority in California concerning the proper treatment of
abstentions and broker non-votes, the Company believes that the tabulation
procedures to be followed by the Inspector of Elections are consistent with the
general statutory requirements in California concerning voting of shares and
determination of a quorum.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by electronic mail, facsimile, telephone or
telegram.
<PAGE> 4
RECORD DATE AND SHARE OWNERSHIP
Only shareholders of record at the close of business on March 27, 1998 are
entitled to notice of and to vote at the meeting. As of March 27, 1998,
9,645,122 shares of the Company's Common Stock were issued and outstanding.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
NOMINEES
A board of six directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for
management's six nominees named below, all of whom are currently directors of
the Company. Director Jean-Michel Barbier has indicated that he does not intend
to seek re-election to the Company's Board of Directors at the Annual Meeting
for reasons unrelated to the Company and will resign immediately prior to the
Annual Meeting. Therefore, the Board of Directors has amended the Company's
Bylaws, in accordance with the terms thereof, to reduce the number of directors
of the Company to six, effective as of the Annual Meeting. Accordingly, at the
Annual Meeting, six directors will be elected.
In the event that any nominee of the Company is unable or declines to serve
as a director at the time of the Annual Meeting, the proxies will be voted for
any nominee who shall be designated by the present Board of Directors to fill
the vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner in accordance with cumulative voting as will assure the election of as
many of the nominees listed below as possible and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. It is expected
that all nominees will be able and willing to serve as directors. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Shareholders, until such director's successor has been elected and
qualified or until such director resigns as a director of the Company. The names
of the nominees, and certain information about them as of December 31, 1997, are
set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
Janine M. Bushman 43 Vice President, Finance and 1995
Administration and Chief Financial
Officer of the Company
Dennis Cagan 53 Chairman and Chief Executive Officer 1997
of HumanRace, Inc.
Andrew De Mari 59 Chairman of the Board of Directors of 1991
the Company
Paul Gigg 44 President and Chief Executive Officer
of the Company
Alexandra Giurgiu 38 Partner, 4C Ventures, a venture 1993
capital investment firm
G. Bradford Jones 41 General partner, Brentwood Associates, 1991
a venture capital investment firm
</TABLE>
Except as set forth below, each of the nominees has been engaged in his or
her principal occupation described above during the past five years. There is no
family relationship between any of the directors or executive officers of the
Company.
Janine M. Bushman joined the Company in April 1993. She became the Vice
President of Operations of the Company in October 1994, was elected to the Board
of Directors in July 1995 and was elected Vice President of Finance and
Administration and Chief Financial Officer in November 1995. For almost six
years prior to joining the Company, Ms. Bushman was Controller and Corporate
Secretary for Interactive Systems Corporation, a developer and supplier of UNIX
operating systems software. Ms. Bushman holds an M.B.A.
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<PAGE> 5
from Loyola Marymount University and a B.S. in Accounting from the California
State University at Northridge.
Dennis Cagan has been President and Chief Executive Officer of CaganCo
Inc., a management consulting firm, since 1981 and also serves as Chairman and
Chief Executive Officer of HumanRace, Inc., an Internet showcased travel
adventure event. Mr. Cagan was elected to the Board of Directors of the Company
in August 1997 and currently also serves as a consultant to the Company. Mr.
Cagan also serves as a member of the Board of Directors of Intervista Software,
Inc.
Andrew De Mari is a founder of the Company, was elected Chairman of the
Board of Directors in November 1997 and has been a member of the Board of
Directors since the Company's inception in 1991. Prior to becoming Chairman, Dr.
De Mari served as the Company's President and Chief Executive Officer since its
founding in 1991. Dr. De Mari was previously a founder and the Chairman and
Chief Executive Officer of Retix from its inception in 1985 to November 1990.
Retix develops, manufactures, markets and supports telecommunications software
through Vertel Corporation, its principal operating subsidiary. Prior to 1985,
he was Senior Vice President of Research and Development and Engineering at
Compucorp, a manufacturer of office automation products. Dr. De Mari holds
M.S.E.E. and Ph.D. degrees in Electrical Engineering from the California
Institute of Technology and Dott. Ing. Electrical Engineering from the
Politecnico di Torino, Italy.
Paul R. Gigg joined ISOCOR in January 1993. He became General Manager,
Europe in October 1995, was elected Vice President, European Marketing and Sales
in October 1996, was appointed Chief Operating Officer in April 1997 and was
elected to the Board of Directors and as President and Chief Executive Officer
in November, 1997. For more than 5 years prior to joining ISOCOR, Mr. Gigg was
Director of Marketing and Engineering at Dowty Communications (formerly Case
Communications) a developer and supplier of networking products. Mr. Gigg holds
a B.S.E.E. degree from the University of Wales, United Kingdom.
Alexandra Giurgiu is President of Olivetti Management of America, Inc., an
investment subsidiary of Ing. C. Olivetti & C., S.p.A., a manufacturer of
information processing systems, which position she has held since 1991. Ms.
Giurgiu has also been a Managing Director and Executive Officer of 4C Ventures,
L.P., a venture capital partnership, since 1994. From 1984 to 1985, she was
Director of International Operations for Lifeboat Associates, a software
distribution and publishing company. She became a member of the Company's Board
of Directors in May 1993. Additionally, she currently serves on the Board of
Directors of Object Design, Wireless Access, Hands-On Technology and Alacrity
Systems.
G. Bradford Jones is a general partner in the venture capital firm of
Brentwood Venture Capital, which he joined in 1981. He became a member of the
Company's Board of Directors in July 1991. Mr. Jones also serves on the Board of
Directors of Interpore International and Onyx Acceptance Corporation.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings during
the fiscal year ended December 31, 1997. The Board of Directors had an Audit
Committee and a Compensation Committee. There is no committee performing the
functions of a nominating committee.
The Audit Committee of the Board of Directors reviews the results and scope
of the audit and other services provided by the Company's independent auditors,
approves fee arrangements with auditors and reports the results of its review to
the full Board of Directors and to management. This Committee, which consists of
directors Barbier and Giurgiu, held one formal meeting during fiscal 1997.
Following the Annual Meeting, Mr. Jones is expected to replace Mr. Barbier as a
member of the Audit Committee.
The Compensation Committee of the Board of Directors makes recommendations
regarding salaries and incentive compensation for employees of the Company,
makes recommendations with respect to purchase and option arrangements for
individuals subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and makes recommendations regarding other
compensation matters to the full Board of Directors. This Committee, which
consists of directors Barbier and Jones, held five formal meetings during
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<PAGE> 6
fiscal 1997. Following the Annual Meeting Ms. Giurgiu is expected to replace Mr.
Barbier on the Compensation Committee.
No incumbent director attended fewer than 75 percent of the aggregate
number of meetings of the Board of Directors and of the committees, if any, upon
which such director served during fiscal 1997.
COMPENSATION OF DIRECTORS
All directors are reimbursed for out-of-pocket travel expenses associated
with their attendance at Board meetings. Nonemployee directors of the Company
are automatically granted options to purchase shares of the Company's Common
Stock pursuant to the terms of the Company's 1996 Directors' Stock Option Plan
(the "Directors' Plan"). The Directors' Plan provides that each person who is or
becomes a nonemployee director of the Company and who has not previously been
granted an option under the 1992 Stock Option Plan shall be granted a
nonstatutory stock option to purchase 10,000 shares of the Common Stock of the
Company on the date on which the optionee first becomes a nonemployee director
of the Company. Thereafter, on the first calendar day of the Company's fiscal
year commencing in 1998, each nonemployee director shall be granted an
additional option to purchase 2,500 shares of Common Stock if, on such date, he
or she shall have served on the Company's Board of Directors for at least six
months.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES LISTED ABOVE.
PROPOSAL NO. 2
AMENDMENT OF THE 1992 STOCK OPTION PLAN
At the Annual Meeting, shareholders are being asked to approve an amendment
to the Company's 1992 Stock Option Plan (the "1992 Option Plan") that would
increase the shares reserved for issuance thereunder by 350,000 shares of Common
Stock to an aggregate of 2,950,000 shares.
GENERAL
The Company's 1992 Option Plan provides for the grant of options to
employees and consultants of the Company. The aggregate number of shares
reserved for issuance under the 1992 Option Plan includes options previously
granted and exercised under the 1992 Option Plan. The increase in shares
reserved for issuance under the 1992 Option Plan has been necessitated by the
hiring of new employees and the grant of additional stock options to current
employees as previously granted options vest and become exercisable. The Company
does not believe that the shares remaining available for future grant pursuant
to the 1992 Option Plan are sufficient to attract new employees or retain
existing employees. The increase will provide sufficient additional stock to
continue the Company's policy of equity ownership by employees and consultants
as an incentive to contribute to the Company's success. The 1992 Option Plan was
adopted by the Board of Directors in July 1992 and approved by the shareholders
in September 1992. A total of 2,600,000 shares of Common Stock has been reserved
for issuance under the 1992 Option Plan. Subject to shareholder approval, this
amount would be increased to an aggregate of 2,950,000 shares.
Options granted under the 1992 Option Plan may be either "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or nonstatutory stock options at the discretion of the
Board of Directors and as reflected in the terms of the written option
agreement. The 1992 Option Plan is not a qualified deferred compensation plan
under Section 401(a) of the Code, and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
As of December 31, 1997, 315,581 shares had been issued upon exercise of
options granted under the 1992 Option Plan, options for 2,002,765 shares were
outstanding under the 1992 Option Plan and 281,654 shares remained available for
future grants. Shares not purchased under an option prior to its
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<PAGE> 7
expiration will be available for future option grants under the 1992 Option
Plan. As of December 31, 1997, the fair market value of shares subject to
outstanding options was approximately $3.5 million, based upon the closing price
of the Common Stock as reported on the Nasdaq Stock Market System on such date.
PURPOSE
The purposes of the 1992 Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION
The 1992 Option Plan may be administered by the Board of Directors or by a
committee of the Board of Directors. The 1992 Option Plan is currently being
administered by the Board of Directors and its Compensation Committee. Members
of the Board of Directors receive no additional compensation for their services
in connection with the administration of the 1992 Option Plan. All questions of
interpretation of the 1992 Option Plan are determined by the Board of Directors
or its committee and its decisions are final and binding upon all participants.
ELIGIBILITY
The 1992 Option Plan provides that either incentive stock options or
nonstatutory options may be granted to employees (including officers and
directors who are also employees) of the Company or any of its subsidiaries. In
addition, the 1992 Option Plan provides that nonstatutory options may be granted
to consultants (not including directors who are not compensated for their
services or are paid only a director's fee by the Company) of the Company or any
of its subsidiaries. The Board of Directors or its committee selects the
optionees and determines the number of shares to be subject to each option. In
making such determination, there are taken into account the duties and
responsibilities of the optionee, the value of the optionee's services, the
optionee's present and potential contribution to the success of the Company, and
other relevant factors.
The 1992 Option Plan provides that the maximum number of shares of Common
Stock which may be granted under options to any one employee during any fiscal
year shall be 750,000, subject to adjustment as provided in the 1992 Option
Plan. There is also a limit on the aggregate market value of shares subject to
all incentive stock options that may be granted to an optionee during any
calendar year.
TERMS OF OPTIONS
Each option is evidenced by a stock option agreement between the Company
and the optionee. Each option is subject to the following additional terms and
conditions:
(a) Exercise of the Option. The Board of Directors or its committee
determines when options may be exercised. An option is exercised by giving
written notice of exercise to the Company specifying the number of full
shares of Common Stock to be purchased and/by tendering of payment of the
purchase price. The purchase price of the shares purchased upon exercise of
an option shall be paid in consideration of such form as is determined by
the Board of Directors or its committee and specified in the option
agreement, and such form of consideration may vary for each option.
(b) Exercise Price. The exercise price under the 1992 Option Plan is
determined by the Board of Directors or its committee and may not be less
than 100% and 85% of the fair market value of the Common Stock on the date
the option is granted for incentive stock options and nonstatutory stock
options, respectively. The fair market value per share is equal to the
closing price on the Nasdaq Stock Market on the last trading day preceding
the date of grant. In the case of an option granted to an optionee who owns
more than 10% of the voting power of all classes of stock of the Company,
its parent or subsidiaries, the exercise price must not be less than 110%
of the fair market value on the date of the grant.
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<PAGE> 8
(c) Termination of Employment. If the optionee's employment or
consulting relationship terminates for any reason other than disability or
death, options under the 1992 Option Plan may be exercised not later than
forty-five days (or such other period of time not exceeding three months in
the case of an incentive stock option or six months in the case of a
nonstatutory stock option as is determined by the Board of Directors or its
committee) after such termination and may be exercised only to the extent
the option was exercisable on the date of termination. In no event may an
option be exercised by any person after the expiration of its term.
(d) Disability. If an optionee is unable to continue his or her
employment or consulting relationship with the Company as a result of his
total and permanent disability, options may be exercised within twelve
months (or such other period of time not exceeding 12 months as is
determined by the Board of Directors or its committee) of termination and
may be exercised only to the extent the option was exercisable on the date
of termination, but in no event may the option be exercised after its
termination date.
(e) Death. Under the 1992 Option Plan, if an optionee should die while
employed or retained by the Company, and such optionee has been
continuously employed or retained by the Company since the date of grant of
the option, the option may be exercised within six months after the date of
death (or such other period of time, not exceeding six months, as is
determined by the Board of Directors or its committee) by the optionee's
estate or by a person who acquired the right to exercise the option by
bequest or inheritance to the extent the optionee would have been entitled
to exercise the option had the optionee continued living and remained
employed or retained by the Company for three (3) months after the date of
death, but in no event may the option be exercised after its termination
date.
If an optionee should die within 30 days (or such other period of time
not exceeding three months as is determined by the Board of Directors or
its committee) after the optionee has ceased to be continuously employed or
retained by the Company, the option may be exercised within six months
after the date of death by the optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance to the
extent that the optionee was entitled to exercise the option at the date of
termination, but in no event may the option be exercised after its
termination date.
(f) Termination of Options. The 1992 Option Plan provides that options
granted under the 1992 Option Plan have the term provided in the option
agreement. In general, these agreements currently provide for a term of ten
years. Incentive stock options granted to an optionee who, immediately
before the grant of such option, owned more than 10% of the total combined
voting power of all classes of stock of the Company, its parents or
subsidiaries, may not in any case have a term of more than five years. No
option may be exercised by any person after its expiration.
(g) Option Not Transferable. An option is nontransferable by the
optionee other than by will or the laws of descent and distribution, and is
exercisable only by the optionee during his or her lifetime and in the
event of the optionee's death by a person who acquires the right to
exercise the option by bequest or inheritance or by reason of the death.
(h) Other Provisions. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the 1992 Option Plan
as may be determined by the Board of Directors or its committee.
AMENDMENT AND TERMINATION
The Board of Directors may amend the 1992 Option Plan at any time or from
time to time or may terminate it without approval of the shareholders; provided,
however, that shareholder approval is required for any amendment to the 1992
Option Plan that increases the number of shares that may be issued under the
1992 Option Plan, modifies the standards of eligibility, modifies the limitation
on grants to employees described in the 1992 Option Plan or results in other
changes which would require shareholder approval to qualify options granted
under the 1992 Option Plan as performance-based compensation under Section
162(m) of the Code, or so long as the Company has a class of equity securities
registered under
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<PAGE> 9
Section 12 of the Exchange Act, materially increases the benefits to
participants that may accrue under the 1992 Option Plan. However, no action by
the Board of Directors or shareholders may alter or impair any option previously
granted under the 1992 Option Plan. The 1992 Option Plan shall terminate in
September 2002, provided that any options then outstanding under the 1992 Option
Plan shall remain outstanding until they expire by their terms.
FEDERAL INCOME TAX ASPECTS OF THE 1992 OPTION PLAN
Options granted under the 1992 Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory options.
If an option granted under the 1992 Option Plan is an incentive stock
option, under U.S. tax laws the optionee will recognize no income upon grant of
the incentive stock option and incur no tax liability due to the exercise unless
the optionee is subject to the alternative minimum tax. The Company will not be
allowed a deduction for federal income tax purposes as a result of the exercise
of an incentive stock option regardless of the applicability of the alternative
minimum tax. Upon the sale or exchange of the shares at least two years after
grant of the option and one year after receipt of the shares by the optionee,
any gain will be treated as long-term capital gain under U.S. tax laws. If these
holding periods are not satisfied, the optionee will recognize ordinary income
under U.S. tax laws equal to the difference between the exercise price and the
lower of the fair market value of the stock at the date of the option exercise
or the sale price of the stock. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain recognized on such a premature disposition of the shares in excess of
the amount treated as ordinary income will be characterized under U.S. tax laws
as long-term capital gain if the sale occurs more than one year after exercise
of the option or as short-term capital gain if the sale is made earlier. For
individual taxpayers, the current U.S. federal income tax rate on long-term
capital gains is alternatively 28% (in the case of shares held more than one
year but less than 18 months after exercise) and 20% (in the case of shares held
more than 18 months after exercise), whereas the maximum rate on other income is
39.6%. Capital losses for individual taxpayers are allowed in full against
capital gains plus $3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income under U.S. tax laws at the time he or she is granted a nonstatutory
option. However, upon its exercise, under U.S. tax laws the optionee will
recognize ordinary income for tax purposes measured by the excess of the then
fair market value of the shares over the exercise price. In certain
circumstances, where the shares are subject to a substantial risk of forfeiture
when acquired or where the optionee is an officer, director or 10% shareholder
of the Company, the date of taxation under U.S. tax laws may be deferred unless
the optionee files an election with the Internal Revenue Service under Section
83(b) of the Code. The income recognized by an optionee who is also an employee
of the Company will be subject to tax withholding by the Company by payment in
cash or out of the current earnings paid to 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, will
be treated under U.S. tax laws as capital gain or loss, and will qualify for
long-term capital gain or loss treatment if the shares have been held for more
than one year. For individual taxpayers, the current U.S. federal income tax
rate on long-term capital gains is alternatively 28% (in the case of shares held
more than one year but less than 18 months after exercise) and 20% (in the case
of shares held more than 18 months after exercise), whereas the maximum rate on
other income is 39.6%. Capital losses for individual taxpayers are allowed in
full against capital gains plus $3,000 of other income.
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<PAGE> 10
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Annual Meeting is required to approve the
amendments to the 1992 Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE
AMENDMENT TO THE 1992 STOCK OPTION PLAN.
PROPOSAL NO. 3:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Coopers & Lybrand L.L.P., independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1998, and recommends that shareholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Coopers & Lybrand L.L.P. has audited the Company's financial statements
annually since its inception. Representatives of Coopers & Lybrand L.L.P. are
expected to be present at the meeting, with the opportunity to make a statement
if they desire to do so, and to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P.
AS INDEPENDENT AUDITORS FOR THE COMPANY.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of February 17, 1998 as to (i) each person who is known by the
Company to beneficially own more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table beginning on page 12, (the
"Named Officers") and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
5% SHAREHOLDERS, DIRECTORS, NAMED OFFICERS AND NUMBER OF SHARES PERCENT
EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP BENEFICIALLY OWNED BENEFICIALLY OWNED
- ---------------------------------------------- ------------------ ------------------
<S> <C> <C>
Thomson-CSF Ventures....................... 897,084 8.6%
56/58, rue de Ponthieu (3rd Floor)
75008 PARIS -- France
Brentwood Associates....................... 607,618 6.0%
11150 Santa Monica Boulevard, Suite 1200
Los Angeles, CA 90025
CFJPE...................................... 568,964 5.6%
12, rue Chauchat
75009 Paris, France
ISO-Investors.............................. 548,571 5.4%
450 N. Roxbury Drive, Suite 600
Beverly Hills, CA 90210
Northern Trust Corporation................. 511,770 5.1%
50 South LaSalle Street
Chicago, IL 60675
Jean-Michel Barbier(2)..................... 902,084 8.6%
Janine M. Bushman(1)....................... 48,874 *
Dennis Cagan............................... 6,250 *
Andrew De Mari(1)(3)....................... 322,833 3.3%
Paul Gigg (1).............................. 92,656 1.0%
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
5% SHAREHOLDERS, DIRECTORS, NAMED OFFICERS AND NUMBER OF SHARES PERCENT
EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP BENEFICIALLY OWNED BENEFICIALLY OWNED
- ---------------------------------------------- ------------------ ------------------
<S> <C> <C>
Alexandra Giurgiu(4)....................... 427,618 4.2%
G. Bradford Jones(5)....................... 612,618 6.0%
Alex Lazar(1).............................. 37,340 *
Robert Lewin............................... 5,000 *
Raomal Perera(1)........................... 88,653 *
All executive officers and directors as a 2,673,660
group (13 persons)(2)(3)(4)(5)........... 21.8%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes shares subject to options issued pursuant to the Company's 1992
Stock Option Plan which are exercisable on or before April 19, 1998 (60 days
from the date of this table). Such shares include: Janine M. Bushman:
48,874; Andrew De Mari: 30,833; Paul Gigg 61,798; Alex Lazar: 16,895; Raomal
Perera 12,833 others (129,734).
(2) Includes 897,084 shares held by Thomson-CSF Ventures. Mr. Barbier, a
director of the Company, is Directeur General of Thomson-CSF Ventures.
Because of his position with Thomson-CSF Ventures, Mr. Barbier may be deemed
to be a beneficial owner of such shares, but disclaims beneficial ownership
of such shares. Mr. Barbier has indicated that he does not intend to seek
re-election to the Company's Board of Directors at the Annual Meeting for
reasons unrelated to the Company.
(3) Excludes 6,471 shares owned by Antonella De Mari, 471 shares owned by Luigi
De Mari, 6,471 shares owned by Alessandra De Mari and 6,471 shares owned by
Susanna De Mari, all of whom are members of Dr. De Mari's immediate family.
Dr. De Mari disclaims beneficial ownership of such shares.
(4) Includes 422,618 shares held by 4CV Management Company, Inc. Ms. Giurgiu, a
director of the Company, is a Partner of 4CV Management Company, Inc.
Because of her position with 4CV Management Company, Inc., Ms. Giurgiu may
be deemed to be a beneficial owner of such shares, but disclaims beneficial
ownership of such shares except to the extent of her individual interest
therein.
(5) Includes 607,618 shares held by Brentwood Associates. Mr. Jones, a director
of the Company is a general partner of Brentwood Associates, a limited
partnership. Because of his position with Brentwood Associates, Mr. Jones
may be deemed to be a beneficial owner of such shares, but disclaims
beneficial ownership of such shares except to the extent of his individual
interest in the partnership.
9
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS
Notwithstanding anything to the contrary set forth in any of the Company
previous filings under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement in whole or in part, the following report and the
Performance Graph on page 15 shall not be incorporated by reference into any
such filings.
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION POLICIES
The Board of Directors establishes and periodically reviews the
compensation of the Chief Executive Officer and the management employees who
report to the Chief Executive Officer. Compensation for executives is based
generally on the concept that compensation must be competitive with that of
other quality companies in order to help motivate and retain the talent,
leadership skills and experience needed to help successfully guide the Company;
and must provide a strong incentive for key personnel to achieve the Company's
financial, product development and market penetration goals.
It is the Company's policy that executive compensation include base salary,
stock options and, for certain employees, commissions. The Company's salary
levels are determined by comparisons with companies with similar characteristics
in the software industry. Salary increases are determined based on the
individual performance of the executive, the performance of the Company, any
change in the responsibilities of the executive and comparisons to industry
compensation data.
The Company relies upon incentive stock options as an important element of
the compensation packages of executive employees. By using incentive stock
options, the Company has been able to keep salaries and bonuses at relatively
modest levels. All employee stock options are granted pursuant to the Company's
1992 Stock Option Plan. The Company makes stock option grants periodically at no
less than 100% of the market price of the Company's Common Stock on the day
prior to the date of the grant.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of Andrew De Mari, the Company's President and Chief
Executive Officer until November 13, 1997, consisted of base salary and
incentive stock options. The Board of Directors periodically reviewed Mr. De
Mari's salary and revised his compensation based on the Board's overall
evaluation of his performance toward the achievement of the Company's financial,
strategic and other goals. In connection with Dr. De Mari's resignation from the
position of President and Chief Executive Officer of the Company, the Board of
Directors (including the Compensation Committee) felt that it was important to
the Company to ensure an orderly transition to a new President, as well as to
ensure that the Company retained access to Dr. De Mari's substantial industry
expertise. Therefore, the Company has entered into an Agreement with Dr. De
Mari, pursuant to which he continued to receive his regular salary and bonus
through the end of fiscal 1997 and, beginning with January 1, 1998 and
continuing through December 31, 1999 he will become a part-time employee of the
Company, reporting to the Company's Chief Executive Officer, with a salary of
$100,000 per year and a target bonus of $9,000 per quarter. Dr. De Mari's
currently outstanding options will continue to vest during such period.
In order to attract Paul Gigg to become the Company's new Chief Executive
Officer, the Company has entered into a one year employment agreement with Mr.
Gigg pursuant to which he is entitled to an annual salary of $216,000 per year
with a target bonus for the year of $54,000. In addition, the Company has
committed to loan Mr. Gigg up to $500,000 in order to purchase a home in the
Santa Monica, California area; the loan will be secured by the home purchased.
Should Mr. Gigg's employment be terminated other than for cause, he will be
entitled to receive six (6) months salary as a severance payment. In addition to
options to purchase 83,000 shares issued to Mr. Gigg prior to his becoming an
officer of the Company and the options to purchase 75,000 shares issued to him
upon his promotion to Chief Operating Officer, Mr. Gigg was also
10
<PAGE> 13
granted options to purchase 50,000 shares of the Company's Common Stock, which
vest over 26 months, upon his election to the position of President and CEO.
OPTION REPRICING
In April 1997, the Board of Directors (including the Compensation
Committee) determined that it was in the best interest of the Company to offer
to reprice the then-existing stock options of the Company with exercise prices
in excess of the then-current fair market value of the Company's Common Stock.
Given the substantial decline in fair market value of the Company's Common Stock
in the six months prior to April 1997, and the fact that many of the Company's
employees had commenced work at the Company during that period, a large number
of the Company's employees held stock option grants, before the repricing, with
exercise prices substantially in excess of the fair market value of the
Company's Common Stock in April 1997. Included in the repricing actions were
options then held by the Company's executive officers.
The objectives of the 1992 Stock Option Plan are to promote the interests
of the Company by providing employees and consultants an incentive to acquire a
proprietary interest in the Company and to continue to render services to the
Company. It was the view of the Board that stock options with exercise prices
substantially above the current market price of the Company's Common Stock were
viewed negatively by most optionees of the Company, and provided little, if any,
equity incentive to the optionees. The Board thus concluded that such option
grants seriously undermined the specific objectives of the 1992 Stock Option
Plan and should be repriced.
In this context, The Board of Directors decided that effective April 1,
1997 all optionees holding options under the 1992 Stock Option Plan with
exercise prices in excess of the fair market value of the Company's Common Stock
on April 1, 1997 would receive one-for-one repricing of their then-existing
unexercised stock options with a new exercise price set at $2.625 per share, the
closing sale price and fair market value of the Company's Common Stock on April
1, 1997. The total number of stock option shares repriced was 1,235,065. The
Company completed this repricing through a one-for-one stock option exchange of
"underwater" stock options for all optionees under the 1992 Stock Option Plan.
Other than the change in the exercise price, the affected options remain the
same.
It is the opinion of the Board of Directors and the Compensation Committee
that this program helped build optionee morale and provided new incentives for
the Company's employees and management.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of the corporation's executive officers. However,
compensation which qualifies as "performance-based" is excluded from the $1
million limit if, among other requirements, the compensation is payable upon
attainment of pre-established, objective performance goals under a plan approved
by the stockholders.
The compensation to be paid to the Company's executive officers for the
1997 fiscal year did not exceed the $1 million limit per officer, nor is it
expected that the compensation to be paid to the company's executive officers
for fiscal 1997 will exceed that limit. The Company's 1992 Stock Option Plan is
structured so that any compensation income realized by an executive officer as a
result of the exercise of an outstanding option or the sale of option shares
under the 1992 Stock Option Plan will qualify as "performance-based"
compensation which will not be subject to the $1 million limitation. Because it
is very unlikely that the cash compensation payable to any of the Company's
executive officers in the foreseeable future will approach the $1 million limit,
the Compensation Committee has decided at this time not to take any other action
to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Compensation Committee will continue to
monitor the compensation levels potentially payable under the Company's cash
compensation
11
<PAGE> 14
programs, but intends to retain the flexibility necessary to provide total cash
compensation in line with competitive practice, the Company's compensation
philosophy and the Company's best interests.
COMPENSATION COMMITTEE
Jean-Michel Barbier
G. Bradford Jones
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are currently Jean-Michel Barbier and G. Bradford Jones. Upon Mr.
Barbier's resignation from the Company's Board of Directors Alexandra Giurgiu is
expected to replace Mr. Barbier on the Compensation Committee. Neither Mr.
Barbier, Ms. Giurgiu nor Mr. Jones has at any time been an officer or employee
of the Company.
SUMMARY COMPENSATION TABLE
The following table shows the compensation received by the two persons who
served as Chief Executive Officer during 1997 and the four other most highly
compensated executive officers of the Company on an annualized basis whose total
annual salary and bonus exceeded $100,000 for 1997 (the "Named Officers"), and
the compensation received by each such individual for the fiscal years ended
December 31, 1995, 1996 and 1997.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
---------------------------------------- SECURITIES
BONUS AND OTHER ANNUAL UNDERLYING ALL OTHER
SALARY(1) COMMISSION(1) COMPENSATION OPTIONS COMPENSATION(2)
--------- ------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Andrew De Mari(3)......... 1997 $180,000 $19,439 $ -- --
Chairman of the Board 1996 165,000 -- -- 50,000 $ --
of Directors 1995 150,000 -- -- 10,000 --
Paul Gigg (4)............. 1997 153,640 46,057 24,000 125,000 31,862
President and Chief 1996 79,698 76,913 -- 25,000 7,949
Executive Officer 1995 80,467 57,752 -- 16,000 --
Alex Lazar................ 1997 98,254 62,113 --
Vice President, North 1996 79,250 65,535 -- 20,000
American Sales 1995 67,500 31,408 -- 13,000
Raomal Perera............. 1997 110,957 12,680 32,400 9,235
Senior Vice President, 1996 87,295 32,400 28,000 11,904
Engineering 1995 80,100 32,400 11,885
Janine Bushman............ 1997 130,000 32,109
Vice President, Finance 1996 110,000 25,000
and Administration, CFO 1995 92,500 20,000
Robert Lewin (5).......... 1997 9,170 6,100 50,000
Vice President,
Marketing
</TABLE>
- ---------------
(1) Includes amounts earned during such fiscal year, but payable during the
subsequent fiscal year.
(2) Reflects reimbursement for car-related expenses.
(3) Dr.De Mari resigned as the Company's President and Chief and Executive
Officer on November 13, 1997 and was elected as the Company's Chairman of
the Board of Directors at that time.
(4) Mr. Gigg resigned as the Company's Chief Operating Officer on November 13,
1997 and was elected to the Company's Board of Directors and as President
and Chief Executive Officer at that time.
(5) Mr. Lewin commenced employment with the Company December 8, 1997. His
annualized salary is $183,400 with a target bonus of $36,600.
12
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE OR FOR OPTION TERM($)(3)
GRANTED IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME (SHARES)(1) YEAR (PER SHARE) DATE 5% 10%
---- ----------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Andrew De Mari............ 50,000(2) 6.4% $2.625 5-16-2005 $ 82,542 $209,180
Paul Gigg................. 6,000(2) 0.8 2.625 11-30-2005 9,905 328,709
25,000(2) 3.2 2.625 8-14-2006 41,271 258,983
75,000 9.6 2.750 5-15-2007 129,710 328,709
50,000 6.4 3.250 11-5-2007 102,195 258,983
Alex Lazar................ 20,000(2) 2.5 2.625 8-14-2006 33,017 83,671
Robert Lewin.............. 50,000 6.4 2.313 11-5-2007 102,195 258,983
Raomal Perera............. 8,000(2) 1.0 2.625 1-18-2006 13,207 33,469
20,000(2) 2.5 2.625 8-14-2006 33,017 83,671
Janine Bushman............ 10,000(2) 1.3 2.625 1-18-2006 16,508 41,836
15,000(2) 1.9 2.625 8-14-2006 24,763 62,754
</TABLE>
- ---------------
(1) For a description of the general terms of the options, see "Proposal No. 3
Amendment of the 1992 Stock Option Plan."
(2) Reflects options granted in prior fiscal years for which the exercise price
was adjusted. See "Compensation of Executive Officers -- Report of
Compensation Committee" and "-- Ten-Year Option/SAR Repricings."
(3) Potential realizable values are reported net of the option exercise price
but before taxes associated with exercise. These amounts represent certain
assumed rates of appreciation only. Actual realized gains, if any, on stock
option exercises are dependent on future performance of the Company's Common
Stock, as well as the optionee's continued employment through the vesting
period.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE TABLE
The following table provides certain summary information concerning shares
of Common Stock acquired upon exercise of stock options and represented by
outstanding stock options, for each of the Named Executive Officers as of
December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)(2)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew De Mari....... -- -- 10,000 0 $11,250 --
Paul Gigg............ -- -- 7,850 0 10,794 --
4,583 2,709 5,156 --
Robert Lewin......... -- -- -- -- -- --
Raomal Perera........ -- -- -- -- -- --
Alex Lazar........... -- -- 729 271 82 $ 305
6,750 5,250 3,375 2,625
Janine Bushman....... -- -- 16,000 0 22,000 0.00
3,916 84 4,406 95
3,166 834 3,562 938
2,916 1,084 3,281 1,220
9,000 7,000 4,500 3,500
</TABLE>
- ---------------
(1) Determined based on the closing price of the Company's Common Stock as
reported on the Nasdaq National Market on December 31, 1997 ($1.75 per
share).
(2) Excludes options with exercise prices in excess of the the fair market value
of the underlying shares as of the date of this table.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES ORIGINAL
UNDERLYING MARKET PRICE OPTION TERM
OPTION/SARS OF STOCK AT EXERCISE PRICE REMAINING AT
REPRICED OR TIME OF AT TIME OF NEW DATE OF
AMENDED REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE (#) AMENDMENT AMENDMENT PRICE($) AMENDMENT
---- ------ ----------- ------------ -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Andrew De Mari(1)............... 4-1-97 50,000 $2.625 $6.75 $2.625 9 years
Janine Bushman.................. 4-1-97 10,000 2.625 8.00 2.625 9 years
15,000 2.625 6.75 2.625 9 years
Paul Gigg....................... 4-1-97 6,000 2.625 7.50 2.625 8 years
25,000 2.625 6.75 2.625 9 years
Alex Lazar...................... 4-1-97 20,000 2.625 6.75 2.625 9 years
Robert Lewin.................... -- -- -- -- -- --
Raomal Perera................... 4-1-97 8,000 2.625 8.00 2.625 9 years
20,000 2.625 6.75 2.625 9 years
</TABLE>
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares, for the period of time that the Company's
Common Stock has been registered under Section 12 of the Securities Exchange Act
of 1934, the cumulative total shareholder return for the Company with the
cumulative total return of the Nasdaq Stock Market US Index, and the Hambrecht &
Quist Computer Software Index. The stock price performance on the following
graph is not necessarily indicative of future stock price performance.
COMPARISON OF TOTAL RETURN*
<TABLE>
<CAPTION>
HAMBRECHT &
QUIST
MEASUREMENT PERIOD NASDAQ STOCK COMPUTER
(FISCAL YEAR COVERED) ISOCOR MARKET (U.S.) SOFTWARE
<S> <C> <C> <C>
3/14/96 100 100 100
DEC-96 63 119 111
DEC-97 19 146 135
</TABLE>
- ---------------------------
* Assumes $100 invested on March 14, 1996, the date of the Company's initial
public offering of Common Stock and further assumes reinvestment of dividends
for purposes of the Nasdaq Stock Market US Index and the Hambrecht & Quist
Computer Software Index.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company is a party to an international reseller agreement with Syseca,
an affiliate of Thomson-CSF Ventures. Pursuant to such agreement, the Company
provides products to Syseca for resale on terms not substantially different from
terms with other international resellers. Pursuant to orders under such
agreement, the Company has included $58,000 in revenues for the year ended
December 31, 1997. Included in accounts receivable as of December 31, 1997 was
$46,000 relating to Syseca. The Company believes that this transaction was made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties.
Consistent with other employees of the Company's Irish operation, the
Company has entered into an employment agreement with C. Raomal Perera, the
Company's Senior Vice President, Engineering and the General Manager of the
Company's Irish operations. Such agreement contains customary provisions
including the rate of compensation, benefits, vacation and a car allowance
consistent with the terms offered to other
15
<PAGE> 18
ISOCOR managers in Ireland. In addition, his contract provides for the payment
of certain management fees related to his position as General Manager of ISOCOR
B.V. Mr. Perera is an "at-will" employee of the Company.
The Company has entered into a Consultancy Agreement with Cagan Co, Inc., a
management consulting firm of which Dennis Cagan is the President and Chief
Executive Officer. Pursuant to the terms of such agreement the Company may
engage Cagan Co, Inc. for one or more projects, from time to time, as mutually
agreed by the parties. There is currently one outstanding work order under such
agreement which provides for payments to Cagen Co, Inc. of $3,000 per month plus
performance related bonuses of up to an additional $3,000 per month. The terms
and conditions of such Agreement and the related work order are substantially
the same as the terms of other agreements between Cagan Co, Inc. and its
clients.
See "Compensation of Executive Officers -- Report of the Compensation
Committee" for a discussion of agreements with Paul Gigg and Andrew De Mari.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission ("SEC"). Specific filing deadlines of these
reports have been established and the Company is required to disclose in this
Proxy Statement any failure to file by these dates during 1997. All of these
filing requirements have been satisfied. In making this statement, the Company
has relied solely on written representations of its directors and executive
officers and any ten percent holders and copies of the reports that they filed
with the SEC.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 1999 Annual Meeting must be received by
the Company no later than February 9, 1999 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Elias J. Blawie
--------------------------
ELIAS J. BLAWIE, Secretary
Dated: April 13, 1998
16
<PAGE> 19
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF ISOCOR
1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of ISOCOR, a California corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Shareholders and proxy
Statement, each dated April 13, 1998, and hereby appoints Paul Gigg and Janine
M. Bushman or either of them, proxies and attorneys-in-fact, with full power to
each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 1998 Annual Meeting of Shareholders of ISOCOR
to be held on May 13, 1998, at 9:00 a.m., local time, at the Miramar Sheraton
Hotel, 101 Wilshire Boulevard, Santa Monica, California 90401 and at any
adjournment or postponement thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side, and, in their
discretion, upon such other matter or matters that may properly come before the
meeting and any adjournment thereof.
See Reverse
(TO BE SIGNED ON REVERSE SIDE) Side
<PAGE> 20
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD
nominees listed to AUTHORITY
the right (except to vote for all nominees
as indicated) listed to the right.
1. Election of Directors [ ] [ ]
If you wish to withhold authority to vote NOMINEES: Janine M. Bushman
for any individual nominee, strike a line Dennis Cagan
through that nominee's name in the list Andrew De Mar
to the right. Paul Gigg
Alexandra Giurgiu
G. Bradford Jones
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to [ ] [ ] [ ]
the Company's 1992 Stock Option Plan
to increase the number of shares of
Common Stock reserved for issuance
thereunder by 350,000 shares to an
aggregate of 2,950,000 shares.
3. Proposal to ratify the appointment of [ ] [ ] [ ]
Coopers & Lybrand L.L.P. as the
independent auditors of the Company
for the year ending December 31, 1998.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF ALL DIRECTORS; (2) FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1992 STOCK OPTION PLAN; (3) FOR
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
AUDITORS; AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.
SIGNATURE(S) DATE
-------------------------------------------- ----------------
NOTE: This Proxy should be marked, dated, signed by the shareholder(s) exactly
as his or her name appears hereon, and returned in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are
held by joint tenants or as community property, both should sign.
