[TREEV LOGO]
TREEV, INC.
500 Huntmar Park Drive
Herndon, Virginia 20170
April 29, 1999
Dear Stockholders:
It is my pleasure to invite you to the Annual Meeting of Stockholders of
TREEV, Inc. to be held on Thursday, June 3, 1999 at 9:00 a.m., at the Company's
headquarters at 500 Huntmar Park Drive, Herndon, Virginia 20170 (the "Annual
Meeting").
Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the Annual Meeting.
You are accordingly urged to complete, sign, date and return your proxy promptly
in the enclosed envelope. Your return of a proxy in advance will not affect your
right to vote in person at the Annual Meeting.
The officers and directors of the Company look forward to seeing you at the
Annual Meeting.
Very truly yours,
JAMES J. LETO
Chairman and Chief Executive Officer
<PAGE>
[TREEV, INC. LOGO]
TREEV, INC.
500 Huntmar Park Drive
Herndon, Virginia 20170
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, June 3, 1999
---------------
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of TREEV, Inc. (the "Company") will be held on Thursday, June 3, 1999
at 9:00 a.m. at the Company's headquarters located at 500 Huntmar Park Drive,
Herndon, Virginia for the following purposes:
1. To elect six directors;
2. To consider and vote upon a proposal to amend the TREEV, Inc. Amended
and Restated 1997 Director Stock Option Plan that increases the total
number of shares for which options may be granted under the plan from
90,000 to 270,000;
3. To consider and vote upon a proposal to amend the Employee Stock
Purchase Plan that increases the total number of shares for which
options may be granted under the plan from 100,000 to 400,000;
4. To ratify the selection of Ernst & Young LLP as independent accountants
for the year ending December 31, 1999; and
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 25, 1999 are
entitled to receive notice of and to vote at the Meeting. You are invited to
attend the Meeting. Please carefully read the attached Proxy Statement for
information regarding the matters to be considered and acted upon at the
Meeting.
By Order of the Board of Directors
JULIA A. BOWEN
Vice President, General Counsel
and Assistant Secretary
Herndon, Virginia
April 29, 1999
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
RETURN POSTAGE-PAID ENVELOPE. No postage need be affixed to the return envelope
if mailed in the United States. If you attend the Meeting, you may withdraw your
proxy and vote in person by ballot.
<PAGE>
TREEV, INC.
500 Huntmar Park Drive
Herndon, Virginia 20170
---------------
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders and Proxy Card are being furnished in connection with the
solicitation by the Board of Directors of TREEV, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Stockholders to be held on Thursday, June
3, 1999 at 9:00 a.m. or at any adjournment or postponement thereof. This Proxy
Statement and the enclosed Proxy Card are being furnished on or about April 29,
1999, to all holders of record of the Company's Common Stock (the "Common
Stock") as of April 25, 1999. A copy of the Company's Form 10-K for the year
ended December 31, 1998, including consolidated financial statements for that
year, accompanies this Proxy Statement.
At the Meeting, stockholders will vote on proposals to elect six directors,
to increase the number of shares available for issuance under the Company's
Amended and Restated 1997 Director Stock Option Plan, to increase the number of
shares available for issuance under the Employee Stock Purchase Plan, and to
ratify the selection of Ernst & Young as the Company's independent auditors for
1999.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed the close of business on April 25, 1999 as
the record date (the "Record Date") for determination of stockholders entitled
to notice of and to vote at the Meeting. As of the Record Date, there were
13,803,292 shares of Common Stock issued and outstanding and there were no other
voting securities of the Company outstanding. Each outstanding share of Common
Stock entitles the record holder thereof to one vote. Under Delaware law, shares
represented at the Meeting (either by properly executed proxy or in person) that
reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Abstentions as to each Proposal will have
the same effect as votes against the respective proposals. Broker non-votes,
however, will be treated as unvoted for purposes of determining approval of such
proposals (and therefore will reduce the absolute number -- although not the
percentage -- of votes needed for approval) and will not be counted as votes for
or against the proposals. Under the New York Stock Exchange Rules, brokers will
have discretionary voting authority for Proposals 1, 2, 3, and 4.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Stockholders of record on the Record Date may vote at the Meeting in person
or by means of the enclosed Proxy Card. You may specify your voting choices by
marking the appropriate boxes on the Proxy Card. The proxy solicited hereby, if
properly signed and returned to the Company and not revoked prior to or at the
Meeting, will be voted in accordance with the instructions specified thereon. If
you properly sign and return your Proxy Card, but do not specify your choices,
your shares will be voted by the proxy holders as recommended by the Board of
Directors.
The Board of Directors encourages you to complete and return the Proxy Card
even if you expect to attend the Meeting. You may revoke your proxy at any time
before it is voted at the Meeting by giving written notice of revocation to the
Secretary of the Company, by submission of a proxy bearing a later date or by
attending the Meeting and casting a ballot.
The proxy holders, James J. Leto and Jorge R. Forgues, will vote all shares
of Common Stock represented by Proxy Cards that are properly signed and returned
by stockholders. The Proxy Card also authorizes the proxy holders to vote the
shares represented with respect to any matters not known at the time this Proxy
Statement was printed that may properly be presented for consideration at the
<PAGE>
Meeting. You must return a signed Proxy Card if you want the proxy holders to
vote your shares of Common Stock.
The cost of preparing, assembling and mailing this proxy soliciting material
and Notice of Annual Meeting of Stockholders will be paid by the Company.
Following the mailing of proxy solicitation materials, proxies may be solicited
by directors, officers and regular employees of the Company and its subsidiaries
personally, by mail, telephone, telecopier or by personal solicitation, for
which they will receive no additional compensation. In addition, the Company
will reimburse brokers, custodians, nominees and other persons holding shares of
Common Stock for others for their reasonable expenses in sending proxy materials
to the beneficial owners of such shares and in obtaining their proxies.
Additional solicitation by Brokerage houses and other nominees, fiduciaries, and
custodians nominally holding shares of the Company's stock as of the record date
will be requested to forward proxy soliciting material to the beneficial owners
of such shares, and will be reimbursed by the Company for their reasonable
expenses.
PROPOSAL 1 --
ELECTION OF DIRECTORS
A Board of six directors is to be elected at the annual meeting. The
Board of Directors proposes that the six nominees named below be elected as
directors of the Company to hold office until the next annual meeting of
stockholders and until their successors are elected and qualified. The nominees
for director are:
James J. Leto John F. Burton Michael J. Smith
C. Alan Peyser Robert P. Bernardi Edwin A. Adams
Director candidates are nominated by the Board of Directors.
At the Meeting, the six directors are to be elected. Each nominee has
consented to being named as a nominee for director of the Company and has agreed
to serve if elected. The directors will be elected to serve for their respective
terms and until their successors have been elected and have qualified. The Board
of Directors has no reason to believe that any of the nominees will be
unavailable or that any other vacancy on the Board will occur; however, should
any nominee become unavailable or unable to serve as a director, the persons
named as proxies on the proxy card will vote for the person(s) the Board of
Directors recommends.
Set forth below is certain information regarding each director, each of
whose term of office will continue after the Meeting.
James J. Leto, 55, became Chief Executive Officer and a Director of the
Company in May 1996 and became Chairman of the Board in June 1997. Mr. Leto
served as the Chairman and Chief Executive Officer of PRC Inc., an information
technology company ("PRC"), from January 1993 to February 1996, and prior
thereto in various capacities as an executive officer of that company. From
January 1989 until February 1992, Mr. Leto served as the Vice President and
General Manager of AT&T Federal Systems Computer Division, a division of AT&T
charged with developing a major system integration and computer presence in the
federal marketplace. Mr. Leto first joined AT&T in November 1977. Mr. Leto is a
director of Government Technology Systems, Inc. and Federal Sources.
John F. Burton, 47, was appointed to the Board of Directors in September
1995. Mr. Burton is Managing Director of Updata Capital, Inc., a mergers and
acquisitions investment bank, a position he has held since 1997. From October
1996 to February 1997, he was President of Burton Technology Partners. From
August 1995 to September 1996, he was President and Chief Executive Officer of
Nat Systems, Inc. From 1984 to 1995, Mr. Burton served in various executive
capacities at Legent Corporation including President, Chief Executive Officer
and Director. Mr. Burton is a member of the Board of Directors of Banyan Systems
Corporation, Axent Technologies, Netrix Corporation, and MapInfo Corporation.
<PAGE>
Michael J. Smith, 40, became a director of the Company in March 1999. Mr.
Smith has over fourteen years of experience in the securities industry
specializing in finance for middle market and emerging growth companies. Mr.
Smith currently serves as an investment banker and mergers and acquisitions
specialist for Brill Securities, a small New York investment firm. Previously,
Mr. Smith served as President of Stanhope Capital, Inc., a New York venture
capital firm, as well as Managing Director of Condor Ventures, Inc., a
Connecticut based venture capital firm. Mr. Smith has served as an outside
business consultant to numerous private emerging growth companies.
C. Alan Peyser, 65, became a Director of the Company in May 1996. Mr.
Peyser was appointed President and Chief Executive Officer of Cable & Wireless,
Inc., in October 1996. From September 1995 to October 1996, Mr. Peyser served as
a consultant to Cable & Wireless, Inc. He is also currently President of Country
Long Distance Corporation and a member of the Board of Directors of Transworld
Communications, TCI International, Inc., Spaceworks and 1010web. Mr. Peyser
previously served as the Chief Executive Officer and President of Cable &
Wireless, Inc. from 1980 through September 1995.
Robert P. Bernardi, 46, has been a Director of the Company (and its
predecessor) since its inception. He was a co-founder of the Company. Mr.
Bernardi is the founder and Chief Executive Officer of Musicmaker.com. Mr.
Bernardi served as President of the Company from inception to February 1995, as
Chief Executive Officer from inception to May 1996, and Chairman of the Board of
Directors from September 1995 to June 1997. From 1988 to 1990, Mr. Bernardi was
an independent consultant in the document imaging and telecommunications fields.
From March 1984 to December 1987, Mr. Bernardi was Chairman and Chief Executive
Officer of Spectrum Digital Corporation, a publicly held telecommunications
equipment manufacturing company ("Spectrum Digital"), with overall management
responsibilities including marketing, sales, engineering and finance.
Edwin A. Adams, 51, was appointed to the Board of Directors in March 1999.
Mr. Adams is a consultant specializing in public speaking engagements at
technology industry events and sales motivational seminars, a position he has
held since April 1998. From May 1993 to April 1998, he was Senior Vice President
and General Manager of the Americas for SCO Inc., a provider of UNIX operating
system software. From May 1992 to May 1993, Mr. Adams was Senior Vice President
of Sales and Marketing of Telebit, a provider of high end modems and dial up
routers. From 1987 to 1992, he served in various capacities at Oracle
Corporation including Vice President of Sales and Vice President of Marketing.
Mr. Adams is a member of the Board of Directors of Crystal Graphics, Net ERP and
Jones Business Systems, all privately held software or systems integration
companies. He also serves on the Board of ITAA Software Division, a national
trade association of software companies.
The nominees receiving the vote of a plurality of the outstanding
shares of Common Stock present, in person or represented by proxy at the Meeting
and entitled to vote on the election of directors will be elected as Directors.
The Board of Directors recommends that stockholders vote FOR the election of
each of the nominated Directors.
Compensation of Directors
At the Board's quarterly meeting on August 28, 1997, the Board voted
and approved the elimination of payment for service to the Board and adopted,
subject to shareholder approval, the Directors Stock Option Plan (the "Director
Stock Option Plan"). The Director Stock Option Plan was amended and restated on
March 5, 1998 and December 11, 1998. Under the Director Stock Option Plan, each
director who is not an executive officer of the Company will receive an option
to purchase 30,000 shares of Common Stock at each calendar year end, and such
option shall become vest at the rate of one quarter each quarter following the
date of grant. The option price is equal to 100% of fair market value on the
date of the option grant. Messrs. Burton, Peyser, and Bernardi were each granted
an options for shares of the Company's Common Stock under that plan with an
exercise price equal to 100% of fair market value of the Common Stock on
December 11, 1998.
<PAGE>
The Company has entered into a termination of consulting agreement
("Bernardi Termination Agreement") with Robert P. Bernardi, and BCG, Inc.
("BCG") (of which Mr. Bernardi is the sole stockholder) that provides for the
termination, as of October 1, 1997, of the consulting agreement entered into
between the parties as of May 28, 1996. Under the terms of this agreement, the
Company agreed to pay BCG severance pay at the rate of $18,750 per month for the
period beginning on October 1, 1997 and ending on September 1, 1998. The Company
also granted to Mr. Bernardi a warrant to purchase 50,000 shares of the Common
Stock at $1.50 per share. The warrant has a term of five years. Furthermore, Mr.
Bernardi held, prior to the execution of the Bernardi Termination Agreement,
options to purchase 1,348,325 shares of Common Stock with exercise prices
ranging from $2.60 to $6.82 per share. Under the terms of the Bernardi
Termination Agreement, these options were converted into options to purchase
755,747 shares of Common Stock at an exercise price of $1.50 per share, the
market price of the Common Stock on September 17, 1997. These options were not
exercisable October 1, 1998. After the one-for-four reverse stock split
effective December 10, 1998, Mr. Bernardi held options for 188,936 shares of
Common Stock. The Company also agreed to employ Mr. Bernardi as an Assistant
Secretary of the Company at an annual salary of $5,000. Mr. Bernardi will also
receive health and dental insurance through December 31, 2003. The agreement
prohibits Mr. Bernardi for one year from certain associations with any business
that competes with the Company.
Board of Directors' Meetings and Committees
The Board of Directors held five meetings during 1998. The Board of
Directors has established standing Audit and Compensation committees, each of
which is composed of non-employee members of the Board of Directors. The
membership of each of these standing committees is determined from time to time
by the Board. The Board of Directors has not established a nominating committee;
the entire Board of Directors votes on nominations of directors for the Company.
The Audit Committee, which presently consists of John F. Burton and Michael
J. Smith, held one meeting during 1998. The committee selects, subject to the
approval of the Board of Directors, a firm of independent certified public
accountants to audit the books and accounts of the Company and its subsidiaries
for the year for which they are appointed. In addition, the committee reviews
and approves the scope and cost of all services (including nonaudit services)
provided by the firm selected to conduct the audit. The committee also monitors
the effectiveness of the audit effort and the Company's financial and operating
controls.
The Compensation Committee, which presently consists of Robert P. Bernardi,
John F. Burton, and James J. Leto held two meetings during 1998. The committee
is responsible for the approval and administration of the compensation program
for James J. Leto, the Company's President and Chief Executive Officer. The
committee also reviews and approves compensation programs for the other officers
of the Company as recommended by Mr. Leto. The committee is also responsible for
the grant of options to the Company's employees under the Company's various
stock option plans and administers the plans. Mr. Leto does not participate in
discussions or decisions regarding his compensation package.
OWNERSHIP OF TREEV STOCK
The following table sets forth certain information, as of April 15, 1999,
with respect to the beneficial ownership of shares of Common Stock by (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding shares of Common Stock; (ii) each director of
the Company; (iii) the Chief Executive Officer and the four other most highly
compensated executive officers of the Company; and (iv) all executive officers
and directors as a group. Except as indicated in the footnotes to the table,
persons named in the table have sole voting and investment power with respect to
all shares of Common Stock which they respectively own beneficially.
The address of each person listed below, other than Mr. Kassner, Mr.
Ardinger and Mr. Adkins is 500 Huntmar Park Drive, Herndon, Virginia 20170.
<PAGE>
Number of Shares Percent
Name and Address of Beneficial Owner Beneficially Owned(1) of Class
- ------------------------------------ --------------------- --------
Fred E. Kassner(2)............................. 1,923,524 13.9%
Horace T. Ardinger, Jr.(3)..................... 1,623,740 11.8
Douglas Adkins(4).............................. 1,136,038 8.2
Robert P. Bernardi(5).......................... 306,561 2.2
James J. Leto(6)............................... 388,729 2.8
Jorge R. Forgues(7)............................ 104,444 0.8
John F. Burton(8).............................. 84,203 0.6
David E. MacWhorter(9)......................... 83,115 0.6
Brian H. Hajost(10)............................ 96,082 0.7
Richard McMahon(11)............................ 91,570 0.7
C. Alan Peyser(12)............................. 63,393 0.5
Directors and executive officers as a group (8) 1,218,097 8.8
persons........................................
- ----------
(1) Under applicable rules of the SEC, a person is deemed to be the
beneficial owner of shares of Common Stock if, among other things, he or
she directly or indirectly has or shares voting power or investment
power with respect to such shares. A person is also considered to
beneficially own shares of Common Stock that he or she does not actually
own but has the right to acquire presently or within the next sixty (60)
days, by exercise of stock options or otherwise.
(2) The address of Mr. Kassner is 69 Spring Street, Ramsey, New Jersey
07446. Of the total shares shown, Mr. Kassner has shared voting and
dispositive power with respect to 1,923,524 shares, including 20,000
shares underlying a warrant, held by Liberty Travel, Inc. of which Mr.
Kassner is an officer, director, and stockholder. Of the shares reported
as being held directly by Mr. Kassner, 88,500 are issuable upon the
exercise of warrants, 1,000,000 shares are issuable upon the conversion
of the Series M Convertible Preferred Stock and 250,000 shares are
issuable upon the conversion of the Series M1 Convertible Preferred
Stock.
(3) The address of Mr. Ardinger is 3000 Thanksgiving Tower, Dallas, Texas
75201. The shares of Common Stock listed in the table as beneficially
owned by Mr. Ardinger consist of 1,623,740 shares of Common Stock
currently owned by Mr. Ardinger and and/or the Investor Warrants
purchased by Mr. Ardinger and the Ardinger Family Partnership, which Mr.
Ardinger controls.
(4) The address of Mr. Adkins is 3000 Thanksgiving Tower, Dallas, Texas
75201. The shares of Common Stock listed in the table as beneficially
owned by Mr. Adkins consist of 1,092,288 shares of Common Stock
currently owned by Mr. Adkins and the Adkins Family Trust Ltd. and the
Baker Family Trust (both of whose shares Mr. Adkins may be deemed to
beneficially own) and 43,750 shares issuable upon exercise of warrants
(including 40,000 issuable upon exercise of the Investor Warrants).
(5) Includes 194,686 shares issuable upon exercise of options.
(6) Includes 366,043 shares issuable upon exercise of options.
(7) Includes 96,923 shares issuable upon exercise of options.
(8) All shares are issuable upon exercise of options.
(9) Includes 77,308 shares issuable upon exercise of options.
(10) Includes 91,495 shares issuable upon exercise of options.
(11) Includes 91,570 shares issuable upon exercise of options.
(12) Includes 57,393 shares issuable upon exercise of options.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table below lists the Chief Executive Officer and
the four other most highly compensated executive officers of the Company (the
"Named Executives") as of the end of 1998 and their compensation for services in
1998, 1997 and 1996.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation -------------
-------------------------------------------------- Securities All Other
Name and Principal Other Annual Underlying Compen-
Position Year Salary($) Bonus($) Compensation($) Options(#) sation($)
---------------------- ------ ---------- ------------ ------------------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
James J. Leto 1998 225,000 85,542 270,999(1)
Chairman & 1997 305,000 70,000 500,000
Chief Executive Officer 1996 118,974(2) 34,066 262,195
Jorge R. Forgues...... 1998 166,250 92,622 68,999(1)
Chief Financial Officer 1997 156,417 55,000 150,000
& Senior Vice President 1996 93,635(3) 31,500 74,695
Richard E. McMahon....
Senior Vice President, 1998 132,417 57,999 65,000(1)
Customer Service 1997 95,731(4) 31,750 60,000
David E. MacWhorter... 1998 116,250(5) 57,288 39,808(1)
President 1997 144,167 32,500 150,000
1996 140,000 16,000 0
Brian H. Hajost.......
Senior Vice President, 1998 140,000 79,278 65,000(1)
Marketing 1997 135,967 29,500 150,000
1996 102,000(6) 26,978 60,976 42,697(7)
___________
</TABLE>
(1) The Company effected a one-for-four reverse stock split on December 10,
1998. All options shown for 1998 are reflected on a post reverse stock
split basis.
(2) Mr. Leto joined the Company as its Chief Executive Officer in May 1996.
(3) Mr. Forgues joined the Company as its Chief Financial Officer in April 1996.
(4) Mr. McMahon joined the Company as its Senior Vice President, Customer
Service in April 1997.
(5) Mr. MacWhorter resigned as President of the Company in September 1998.
(6) Mr. Hajost joined the Company as an officer in March 1996.
(7) The amount shown constitutes temporary housing benefits and moving expenses
paid for Mr. Hajost in 1996.
<PAGE>
Stock Options
The following table sets forth certain information concerning the grant of
options to the Chief Executive Officer and the Named Executives in 1998. The
Company has not granted any stock appreciation rights ("SARs").
<TABLE>
<CAPTION>
Option Grants in Last Year
Individual Grants
------------------------------------- Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise for Option Term
Options Employees in or Base Expiration ----------------------
Name Granted(#) Year Price($/sh) Date 5% 10%
- ---------------- ----------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James J. Leto 270,999(1) 13% $ 1.63(2) 12/10/08 $ 260,435 $ 655,192
Jorge R. Forgues 68,999(1) 3% $ 1.63(2) 12/10/08 $ 66,420 $ 167,098
Richard E. McMahon 65,000(1) 3% $ 1.63(2) 12/10/08 $ 62,647 $ 157,617
David E. MacWhorter 39,808(1) 2% $ 1.63(2) 12/10/08 $ 40,482 $ 102,897
Brian H. Hajost 65,000(1) 3% $ 1.63(2) 12/10/08 $ 62,647 $ 167,098
- ----------
</TABLE>
(1) Each of the indicated options was granted pursuant to the Company's Employee
Incentive Stock Option Plan and vests in equal annual installments over two
years from the date of grant, or, for the options held by the Chief
Executive Officer and the Named Executives, upon the acquisition of the
Company.
(2) Upon the effectiveness of the Company's one-for-four reverse stock split,
all stock options held by officers, directors and employees were repriced
to $1.63.
The following table summarizes the value realized upon exercise of
outstanding stock options and the value of the outstanding options held by the
Chief Executive Officer and the other Named Executives.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Year and
Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End(#) at Fiscal-Year End($)(1)
Acquired on Value --------------------------- ----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James J. Leto.... 0 0 0(2) 270,999 $ 0 $32,520
Jorge R. Forgues. 0 0 0(2) 68,999 0 8,280
Richard E. McMahon. 0 0 0(2) 65,000 0 7,800
David E. MacWhorter 0 0 0(2) 0 4,777
Brian H. Hajost.. 0 0 0(2) 65,000 0 7,800
- ----------
</TABLE>
<PAGE>
(1) Computed by multiplying the number of options by the difference between
(i) the per share market value of the Common Stock on 12/31/98 and (ii) the
exercise price per share.
(2) By the terms of the repricing of stock options which became effective
December 10, 1998, all repriced options are subject to a lock-up period
which extends through June 11, 1999.
The information set forth in the following Report and Performance Graph
shall not be deemed incorporated by reference by anything incorporating by
reference this Proxy Statement, future filings or generally into any filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates such information by reference.
Report of the Board of Directors on Executive Compensation
The Compensation Committee of the Board of Directors is directly responsible
for the approval and administration of the compensation program for James J.
Leto, the Company's President and Chief Executive Officer. The Compensation
Committee is also responsible for the grant of options to the Company's
employees under the Company's various stock option plans and administers the
plans. In 1998, the Compensation Committee consisted of two outside directors of
the Company, Robert P. Bernardi, John Burton and James J. Leto, who did not
participate in the administration of the compensation program related to his
employment with the Company.
Mr. Leto is responsible for the approval and administration of compensation
programs for the other executive officers of the Company, including those named
in the Summary Compensation Table, subject to review and approval by the
Compensation Committee and the Board of Directors.
Executive Compensation Philosophy
The Company's executive compensation program is designed to meet the
following objectives:
o To attract and retain highly qualified executives to lead and manage the
Company by providing competitive total compensation packages;
o To reward executives based on the business performance of the Company;
o To provide executives with incentives designed to maximize the long-term
performance of the Company; and
o To assure that objectives for corporate and individual performance are
established and measured.
For 1998, the components of the Company's executive compensation program
included annual base salary and short-term incentive bonus plans. In 1998, stock
options to purchase shares of the Company's Common Stock were awarded as a
long-term incentive to executive officers of the Company as follows: James J.
Leto, 270,999 shares; Jorge R. Forgues, 68,999 shares; each of Richard McMahon
and Brian Hajost, 65,000 shares, and David E. MacWhorter, 39,808 shares.
Base Salaries and Short Term Incentive Plans
Base salaries for executive officers (including the Chief Executive Officer)
are determined by evaluating the responsibilities associated with their
respective positions and the experience of the officers and by reference to
salaries paid in the competitive marketplace to executive officers with
comparable ability and experience within the same industry following review of
compensation information available in certain widely-known surveys and
databases. Bonuses and annual salary adjustments, if any, are determined by
evaluating performance taking into account such factors as achievement of the
Company's strategic goals, assumption of additional responsibilities and
attainment of specific individual objectives. The Board believes that stock
ownership by management is especially beneficial in aligning management's and
stockholders' interests in the Company.
<PAGE>
Base salaries are set by Mr. Leto for the other executive officers. No
specific weight of relative importance is assigned to the various factors and
compensation information considered. Accordingly, the Company's executive
compensation policies and practices may be deemed informal and subjective,
although they are based on such factors and detailed investigation.
Long-Term Incentive Plans
The Company historically has provided long-term incentive compensation to
attract, motivate and retain executive officers and other employees through
grants of stock options under the Company's Employee Incentive Stock Option
Plan. The Compensation Committee believes that this form of compensation closely
aligns the interests of executive officers with those of the Company's
shareholders and provides a major incentive in building shareholder value. The
Compensation Committee designates the employees who shall be granted options and
the amount and terms of the options granted. The number of stock options granted
to each individual is based on his or her salary range, position, level of
responsibility, and performance during the relevant year. All grants are made
with an exercise price not less than the fair market value of the Common Stock
on the date of grant.
Section 162(m) of the Code imposes a limitation on the deductibility of
nonperformance-based compensation in excess of $1 million paid to the Named
Executives. The cash compensation of each of the Company's executive officers is
substantially below the $1 million threshold. The options granted under the
Company's stock option plans to date may not meet the requirement of being
performance-based as that term is used in the section and consequently their
exercise could reduce the compensation tax deduction that would otherwise be
available to the Company if the spread between the exercise price and the then
fair market value of the common stock should cause a specified executive's
compensation to exceed $1 million. The Board of Directors currently believes
that it should be able to continue to manage the executive compensation paid to
the Named Executives so as to preserve the related federal income tax
deductions.
Compensation Committee
Robert P. Bernardi
John F. Burton
Employment Contracts, Termination of Employment Arrangements and Change of
Control Agreements
The Company has agreements with its officers that provide for their
continued employment with the Company. The officers are eligible to receive
severance equal to six months' base salary and bonuses in the event any of the
officers is terminated without cause.
In connection with an acquisition of the Company by merger or asset
sale or through a change of control, any officer who is terminated shall receive
a lump sum payment equal to fifteen months' base salary and bonuses. Each
outstanding option held by the officers under the Option Plan will automatically
accelerate in full and all unvested shares of Common Stock issued to such
individuals pursuant to the exercise of options granted or direct stock
issuances made under such plan will immediately vest in full.
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1998, the Company's Compensation
Committee was composed of outside directors Robert Bernardi, John Burton, and
James Leto.
The Company entered into consulting agreements with Mr. Bernardi and
BCG, Inc. ("BCG") (of which Mr. Bernardi is the sole stockholder) that provided
for BCG to make the services of Mr. Bernardi available to the Company. The
consulting agreement was for an initial term ending January 31, 1999 and
continued from year to year thereafter unless terminated by either the Company
or Mr. Bernardi. The agreement with BCG provided for an annual consulting fee of
$225,000, subject to increase upon review by the Board of Directors. The Company
<PAGE>
also agreed to employ Mr. Bernardi as Assistant Secretary at an annual salary of
$5,000. The agreement provided demand registration rights to Mr. Bernardi with
respect to securities of the Company owned by him or that he may acquire upon
exercise of options. Each registration right terminated on the first anniversary
following termination of the consulting agreement. The agreement prohibits Mr.
Bernardi during the term of the agreement from certain associations with any
business that competes with the Company.
The Company has entered into the Bernardi Termination Agreement with Robert
P. Bernardi, and BCG that provides for the termination, as of October 1, 1997,
of the consulting agreement entered into between the parties as of May 28, 1996.
In the Bernardi Termination Agreement, the Company agreed to pay BCG gross
severance pay at the rate of $18,750 per month, beginning on October 1, 1997 and
ending on September 1, 1998. Under the terms of this agreement, the Company also
granted to Mr. Bernardi a warrant to purchase 12,500 shares of the Common Stock
at $4.00 per share. The warrant has a term of five years. Mr. Bernardi retained
a certain number of options he had received as an executive officer of the
Company. The Company also agreed to employ Mr. Bernardi as an Assistant
Secretary of the Company at an annual salary of $5,000. Mr. Bernardi will also
receive annual health and dental insurance through December 31, 2003. The
agreement prohibits Mr. Bernardi for one year from certain associations with any
business that competes with the Company.
Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock for the period beginning
with the Company's initial public offering on May 8, 1992 through December 31,
1998 with cumulative total return for the Nasdaq Stock Market (US) and for
Nasdaq Computer & Data Processing Stocks (SIC code 737). The comparison assumes
$100 was invested on May 8, 1992 in the Company's Common Stock at the $4.00
initial offering price and in each of the foregoing indices and assumes
reinvestment of dividends, if any.
<TABLE>
<CAPTION>
5-YEAR CUMULATIVE TOTAL RETURN AMONG TREEV, INC., NASDAQ
MARKET INDEX AND PEER GROUP INDEX
Base Period
Company/Index Name 1993 1994 1995 1996 1997 1998
- ------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TREEV, Inc.-Common Stock $ 100 $ 44.05 $ 35.71 $ 29.17 $ 8.93 $ 3.94
NASDAQ Market Index..... 100 104.99 136.18 169.23 207.00 291.96
NASDAQ Computer &
Data Processing Services 100 121.44 184.92 228.24 280.39 501.76
</TABLE>
Certain Business Relationships and Related Transactions
In December 1996, the Company entered into an agreement for a line of credit
for up to $5,000,000 with Fred E. Kassner at an interest rate of 2% above a
commercial lender's fluctuating prime rate. The line of credit is secured by a
lien against all of the accounts receivables of the Company. In connection with
the Kassner financing, the Company issued to Mr. Kassner warrants to acquire
25,000 shares of Common Stock, exercisable at $12.24 per share. Mr. Kassner is
the beneficial owner of more than five percent of the outstanding stock of the
Company. On December 27, 1997, Mr. Kassner converted $4.0 million of the $5.0
million line of credit into equity. The Company issued 1,000 shares of Series M
Convertible Preferred Stock. The Series M Convertible Preferred Stock is
convertible into 1,000,000 shares of Common Stock at a price of $4.00 per share.
On June 30, 1998, Mr. Kassner converted the remaining $1.0 million of the $5.0
million line of credit into equity. The Company issued 1,000 shares of Series M1
Convertible Preferred Stock. The Series M1 Convertible Preferred Stock is
convertible into 250,000 shares of Common Stock at a price of $3.32 per share.
As of April 15, 1999, none of the shares of the Series M Convertible Preferred
<PAGE>
Stock and the Series M1 Convertible Preferred Stock had been converted into
Common Stock.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's executive officers, directors and persons
who own more than ten percent of the Common Stock (collectively, "Reporting
Persons") to file initial reports of ownership and changes of ownership of the
Common Stock with the SEC and the Nasdaq Stock Market. Reporting Persons are
required to furnish the Company with copies of all forms that they file under
Section 16(a). Based solely upon a review of the copies of such forms received
by the Company or written representations from Reporting Persons, the Company
believes that, with respect to year 1996, all reports required of Reporting
Persons pursuant to Section 16(a) were timely filed except that: late filings on
Forms 4 were made for Messrs. Leto, Forgues and Hajost due to administrative
errors on the part of the Company.
PROPOSAL 2 --
TO CONSIDER AND VOTE UPON A PROPOSAL TO AMEND THE TREEV, INC. AMENDED AND
RESTATED 1997 DIRECTOR STOCK OPTION PLAN
At the Meeting, the shareholders are being asked to approve the amendment of
the TREEV, Inc. Amended and Restated 1997 Director Stock Option Plan (the
"DSOP"), as adopted by the Board of Directors, with an increase of 180,000
shares to the plan.
The description that follows is an overview of the material provisions of
the DSOP and is qualified in its entirety by references to the DSOP. A copy of
the complete DSOP is attached hereto as Appendix A.
Description of the DSOP
Purpose. The purpose of the DSOP is to encourage ownership in the Company by
outside directors of the Company, whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.
Administration. The DSOP shall be administered by the Board of Directors
("Board of Directors"). The interpretation and construction by the Board of
Directors, to the full extent permitted by law, final.
Eligibility. Directors of the Company who are not executive officers of the
Company or any subsidiary of the Company and are not serving on the Board of
Directors as a representative of any institutional investor ("outside
Directors") shall be eligible to participate in the DSOP.
Shares Subject to the DSOP. The maximum number of shares of the Company's
Common Stock that may be issued under the DSOP shall be 270,000, subject to
adjustment as provided in the DSOP.
Terms, Conditions and Form of Options. Each option granted under the Plan
shall be evidenced by a written agreement in such form as the Board of Directors
shall from time to time approve, which agreements shall comply with and be
subject to the following terms and conditions:
(a) Option Grant Dates. Subject to the terms of the DSOP, an option to
purchase Common Stock shall be granted automatically to each outside director
elected to the Board of Directors after the effective date of this DSOP, at the
end of each calendar quarter.
<PAGE>
(b) Share Subject to Option. The number of shares covered by the
option is 30,000 per each calendar year.
(c) Option Exercise Price. The option exercise price per share for
each option granted under the Plan shall equal to (i) the closing sales price
per share of the Company's Common Stock on the Nasdaq National Market (or, if
the company is traded on a nationally recognized securities exchange on the date
of grant, the reported closing sales price per share of the Company's Common
Stock by such exchange) on the lowest day during the last month of each calendar
year. The date of grant, for purposes of the option and its vesting schedule,
shall be the date that option is granted or (ii) if the Common Stock is not
traded on Nasdaq National Market or an exchange, the fair market value per share
on the lowest closing sale price for the last calendar month of a quarter.
(d) Vesting and Exercise Period. Each Option granted to a Full-Term
Director shall vest in quarterly installments each ninety (90) days following
the date of grant if such Full-Time Director is still serving as a director of
the Company at such time. Each Option may be exercised on a cumulative basis as
to be the vested number of shares at any time or from time to time, in whole or
in part; provided that, subject to the provisions of Section 5 (f), no Option
may be exercised more that one year after the optionee ceases to serve as a
director of the Company or for a number of shares greater than that which was
vested at the time the optionee ceased to serve as a director of the Company. No
Option shall be exercisable after the expiration of ten years from the date of
grant.
Amendment of the DSOP. The Company, insofar as permitted by law, may at any
time amend, suspend or discontinue the DSOP except that no revision or amendment
may increase the number of shares of Common Stock under the DSOP, materially
increase the benefits accruing to participants under the DSOP or otherwise
materially modify the requirements for eligibility without the approval of the
shareholders of the Company.
Tax Consequences. The DSOP is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code. Participants will
not recognize income for federal income tax purposes either upon enrollment in
the DSOP or upon purchase of shares thereunder. All tax consequences of
purchasing shares under the DSOP are deferred until the participant sells or
otherwise disposes of the shares or dies. The Company will be entitled to a
deduction for federal income tax purposes to the extent that a participant
recognizes ordinary income on a disqualifying disposition of the shares in the
year of the disqualification, but not if a participant meets the holding
requirements. The foregoing is intended to be a brief summary of the tax
consequences of transactions under the DSOP based on federal tax laws in effect
on April 1, 1997. As federal and state tax laws may change, the federal, state
and local tax consequences for any participant will depend upon his or her
individual circumstances.
The affirmative vote of a majority of the outstanding shares of Common Stock
present or represented and entitled to vote at the Meeting is required to
approve the amendment to the Director Stock Option Plan.
The Board of Directors unanimously recommends a vote for the amendment to
the Director Stock Option Plan.
PROPOSAL 3 --
APPROVAL OF AMENDMENT TO THE EMPLOYEE
STOCK PURCHASE PLAN
At the Meeting, the shareholders are being asked to approve the amendment to the
Company's Employee Stock Purchase Plan (the "ESPP"), as adopted by the Board of
Directors, with an increase of 300,000 shares of Common Stock for issuance
thereunder.
The description that follows is an overview of the material provisions
of the ESPP and is qualified in its entirety by references to the ESPP. A copy
of the complete ESPP (without exhibits) is attached hereto as Appendix B.
<PAGE>
Description of the ESPP
Purpose. The purpose of the ESPP is to provide employees of the Company
and its subsidiaries with an opportunity to purchase Common Stock at a discount
from the market price, through payroll deductions, and to thereby provide an
incentive for continued employment.
Administration. The ESPP shall be administered by a committee appointed
by the Board of Directors. Currently, the Compensation Committee administers the
ESPP for all employees. The interpretation and construction by the Compensation
Committee is, to the full extent permitted by law, final.
In the event that insufficient shares are available under the ESPP for
a full allocation of shares to all participants during a given Offering Period
(as defined below), the Compensation Committee shall make a pro rata allocation
of the shares remaining available for purchase in as uniform a matter among the
persons exercising options as shall be practicable and as it shall determine to
be equitable.
Eligibility. All employees of the Company or its subsidiaries are
eligible to participate in the ESPP except the following: (i) employees who are
customarily employed for less than 20 hours per week; (ii) employees who are
customarily employed for less than five months in a calendar year; and (iii)
employees who own or hold options to purchase or who, as a result of
participation in the ESPP, would own stock or hold options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company as determined pursuant to Section 424(d)
of the Code. Currently, there are approximately 326 employees eligible to
participate in the ESPP.
Offering Periods and Enrollment. Each Offering Period of Common Stock
under the ESPP is for a period of six (6) months. Offering Periods commence on
the first day of January and July of each year. The Compensation Committee may
change the duration of Offering Periods without stockholder approval, subject to
certain limitations set forth in the ESPP.
Eligible employees may participate in any Offering Period by submitting
a subscription agreement to the Company on or before the fifteenth day of the
last month before the Offering Period. Once enrolled, a participant
automatically will participate in each succeeding Offering Period unless the
participant withdraws from the Offering Period or the ESPP. Upon enrollment, a
participant authorizes payroll deductions of up to ten percent (10%) of the
participant's base salary or wages, bonuses, overtime, shift premiums, incentive
compensation, and sales commissions received during an Offering Period provided
that such deductions may not exceed twenty-five thousand dollars ($25,000) in
any calendar year. After a participant sets the rate of payroll deductions for
an Offering Period, the participant may increase or decrease the rate for any
subsequent Offering Period, but may only decrease the rate for the current
Offering Period. Only one change may be made during an Offering Period, unless
otherwise approved by the Compensation Committee. No interest accrues on payroll
deductions.
Purchase of Stock. The number of whole shares that a participant may
purchase in any Offering Period is determined by dividing the total amount of
payroll deductions withheld from the participant during the Offering Period by
the price per share determined as described below. The purchase takes place
automatically on the Exercise Date. Any cash balance remaining in a
participant's account following the purchase will be returned to the
participant.
No participant may purchase more than ten percent (10%) of the
participant's compensation, as described herein, on the Exercise Date divided by
the applicable percentage of the purchase price of the Common Stock on the
Offering Commencement Date elected by the participant at the commencement of
each Offering Period. In no event may the participant purchase more than $25,000
worth of Common Stock in any calendar year.
Purchase Price. The purchase price of shares purchased in any Offering
Period will be 85% of the lesser of (a) the average of the high and low market
prices as reported on NASDAQ National Market System on the Offering Commencement
Date or (b) the average of the high and low market prices as reported on the
NASDAQ National Market System on the Offering Termination Date. Shares are
purchased at 85% of the fair market value of the Common Stock, at a price
<PAGE>
determined as described above, and those shares shall be restricted for a
minimum period of six (6) months after receipt of those shares.
Withdrawal. A participant may withdraw from the ESPP or any Offering
Period by giving written notice to the Company. All of the participant's payroll
deductions credited to the participant's account will be paid to the participant
after receipt of notice of withdrawal. After such a withdrawal, payroll
deductions will not resume at the beginning of the succeeding Offering Period
unless the participant completes a new subscription agreement.
Termination of Employment. If a participant's employment terminates for
any reason (including death, disability or retirement) the participant will be
deemed to have elected to withdraw from the ESPP and the payroll deductions
credited to the participant's account during the Offering Period, but not yet
used to exercise the option, will be returned to such participant, or in the
case of the participant's death, to the persons entitled to receive such funds.
Recapitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding
option, and the price per share thereof in each such option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company.
In the event of a merger or consolidation and the Company is a
surviving corporation, each outstanding option shall pertain to and apply to the
securities to which a holder of the number of shares of Common Stock subject to
the option would have been entitled.
In the event of a change in the Common Stock as presently constituted,
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value the
shares resulting from any such change shall be deemed to be the Common Stock.
Such adjustments to stock or securities of the Company shall be made by the
Compensation Committee, whose determination shall be final.
Resale of Shares. The ESPP imposes a six month holding period on the
shares of Common Stock purchased by participants at 85% of the purchase price.
The Company intends to file a Form S-8 Registration Statement with the SEC which
will satisfy most federal securities laws requirements with respect to the
resale of such shares. In addition, participants who are affiliates of the
Company may not resell under the Form S-8 Registration Statement any shares
purchased under the ESPP. Such resales must be effected in accordance with Rule
144 or another available exemption under the Securities Act of 1933, as amended.
Amendment of the ESPP. The Company, insofar as permitted by law, may at
any time amend, suspend or discontinue the ESPP except that no revision or
amendment may increase the number of shares of Common Stock under the ESPP,
materially increase the benefits accruing to participants under the ESPP or
otherwise materially modify the requirements for eligibility without the
approval of the shareholders of the Company.
Tax Consequences. The ESPP is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code. Participants will
not recognize income for federal income tax purposes either upon enrollment in
the ESPP or upon purchase of shares thereunder. All tax consequences of
purchasing shares under the ESPP are deferred until the participant sells or
otherwise disposes of the shares or dies. The Company will be entitled to a
deduction for federal income tax purposes to the extent that a participant
recognizes ordinary income on a disqualifying disposition of the shares in the
year of the disqualification, but not if a participant meets the holding
requirements. The foregoing is intended to be a brief summary of the tax
consequences of transactions under the ESPP based on federal tax laws in effect
on May 30, 1995. As federal and state tax laws may change, the federal, state
and local tax consequences for any participant will depend upon his or her
individual circumstances.
The affirmative vote of a majority of the outstanding shares of Common
Stock present or represented and entitled to vote at the Meeting is required to
approve the amendment to the Employee Stock Purchase Plan.
<PAGE>
The Board of Directors unanimously recommends a vote for the amendment
to the Employee Stock Purchase Plan.
PROPOSAL 4 -- RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Ernst & Young LLP, independent accountants, as auditors of the Company
to examine and report to stockholders on the consolidated financial statements
of the Company and its subsidiaries for the year ending on December 31, 1999.
Ernst & Young LLP currently serves as the Company's independent accountants.
Representatives of Ernst & Young LLP will be present at the Meeting and will be
given an opportunity to make a statement. They also will be available to respond
to appropriate questions from stockholders.
Although ratification of the appointment of Ernst & Young LLP is not
required, the Board of Directors requests that the stockholders ratify the
appointment. If ratification is not obtained, the Board will reconsider the
matter of appointment of independent accountants for the Company.
The Company engaged Ernst & Young LLP effective June 25, 1996 as independent
accountants to examine the consolidated financial statements of the Company for
the year ending December 31, 1996. Ernst & Young LLP replaced Price Waterhouse
LLP. The Company's decision to retain Ernst & Young LLP and discontinue the
engagement of Price Waterhouse LLP as the Company's principal independent
accountants was approved by the Board of Directors of the Company. There have
been no disagreements with Price Waterhouse LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Price Waterhouse LLP,
would have caused it to make reference to the subject matter of the disagreement
in connection with its report for the years ended December 31, 1995 and December
31, 1994.
The affirmative vote of a majority of the outstanding shares of Common Stock
present or represented and entitled to vote at the Meeting is required to ratify
the appointment of Ernst & Young LLP.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the appointment of Ernst & Young as the Company's independent
accountants for year 1999.
SHAREHOLDER PROPOSALS
The Company anticipates that its 2000 Annual Meeting of stockholders will be
held in June, 2000. In order for a stockholder proposal to be included in the
Company's proxy statement or form of proxy for the 2000 Annual Meeting, such
proposal must be submitted in accordance with SEC Rule 14a-8 and must be
received by the Company no later than December 24, 1999. Stockholders should
send their proposals to the Company's corporate headquarters. Under SEC Rule
14a-4, the Company will be able to use proxies given to it for the 2000 Annual
Meeting to vote for or against any stockholder proposal submitted other than
pursuant to Rule 14a-8 at the Company's discretion unless the proposal is
submitted to the Company on or before March 6, 2000.
OTHER BUSINESS
The Board of Directors does not intend to bring any other matter before the
Meeting and does not know of any other business which others will present for
consideration at the Meeting. Except as the Board of Directors may otherwise
permit, only the business set forth and discussed in the Notice of Annual
Meeting of Stockholders and this Proxy Statement may be acted on at the Meeting.
If any other business does properly come before the Meeting the proxy holders
will vote on such matters according to their discretion.
<PAGE>
By Order of the Board of Directors
JULIA A. BOWEN
Vice President, General Counsel
and Assistant Secretary
All stockholders are urged to complete, sign, date, and return the
accompanying proxy card in the enclosed postage-paid envelope. Thank you for
your prompt attention to this matter.
<PAGE>
APPENDIX A
TREEV, INC.
AMENDED AND RESTATED
1997 DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1997 Director Stock Option Plan (the "Plan") of
TREEV, Inc. (the "Company") is to encourage ownership in the Company by outside
directors of the Company, whose continued services are considered essential to
the Company's future progress and to provide them with a further incentive to
remain as directors of the Company.
2. ADMINISTRATION
The Board of Directors of the Company (the "Board of Directors") shall
supervise and administer the Plan. Grants of stock options under the Plan and
the amount and nature of the awards to be granted shall be automatic in
accordance with Section 5. However, all questions of interpretations of the Plan
or of any options issued under it shall be determined by the Board of Directors
and such determination shall be final and binding upon all persons having an
interest in the Plan.
3. PARTICIPATION IN THE PLAN
Directors of the Company who are not executive officers of the Company
or any subsidiary of the Company and are not serving on the Board of Directors
as a representative of any institutional investor ("outside directors") shall be
eligible to participate in the Plan.
4. STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares of the Company's Common Stock, no par
value per share ("Common Stock"), that may be issued under the plan shall be
270,000, subject to adjustment as provided in Section 9 of the Plan.
(b) If any outstanding option under the Plan for any reason expires or
is terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.
( c) All options granted under the Plan shall be non-statutory options
not entitled to special tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended to date and as it may be amended from time to time (the
"Code").
5. TERMS, CONDITIONS AND FORM OF OPTIONS
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
<PAGE>
(a) Option Grant Dates. Subject to Section 7 of this Plan, an option to
purchase Common Stock shall be granted automatically to each outside director
elected to the Board of Directors after the effective date of this Plan, at the
end of each calendar quarter.
(b) Share Subject to Option. The number of shares covered by the option
(i) in the case of an outside director elected at the commencement of a term (a
"Full -Term Director"), shall be 7,500 per each calendar quarter and (ii) in the
case of an outside director elected during the course of a term (for example, to
fill a vacancy) an ("Interim Director"), shall be equal to 7,500 per each
calendar quarter in which he serves as a member of the Board.
( c) Option Exercise Price. The option exercise price per share for
each option granted under the Plan shall equal to (i) the closing sales price
per share of the Company's Common Stock on the Nasdaq National Market (or, if
the company is traded on a nationally recognized securities exchange on the date
of grant, the reported closing sales price per share of the Company's Common
Stock by such exchange) on the lowest day during the last month of each calendar
quarter (i.e., March, June, September, and December). The date of grant, for
purposes of the option and its vesting schedule, shall be the date that option
is granted or (ii) if the Common Stock is not traded on Nasdaq National Market
or an exchange, the fair market value per share on the lowest closing sale price
for the last calendar month of a quarter.
(d) Option Non-Transferable. Each option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will, or by
the laws of descent and distribution, and shall be exercised during the lifetime
of the optionee only by him. No option or interest therein may be transferred,
assigned, pledged or hypothecated by the optionee during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(e) Vesting and Exercise Period. Each Option granted to a Full-Term
Director shall vest ninety (90) days following the date of grant if such
Full-Time Director is still serving as a director of the Company at such time.
Each Option may be exercised on a cumulative basis as to be the vested number of
shares at any time or from time to time, in whole or in part; provided that,
subject to the provisions of Section 5 (f), no Option may be exercised more that
one year after the optionee ceases to serve as a director of the Company or for
a number of shares greater than that which was vested at the time the optionee
ceased to serve as a director of the Company. No Option shall be exercisable
after the expiration of ten years from the date of grant.
(f) Exercise Period Upon Disability or Death. Notwithstanding the
provisions of Section 5(e), any option granted under the Plan may be exercised,
to the extent then vested an exercisable, by an optionee who becomes disabled
(within the meaning of Section 22 (e) (3) of the Code or any successor provision
thereto) while acting as a director of the Company, or may be exercised, to the
extend then exercisable, upon the death of such optionee while a director of the
Company by the person to whom it is transferred by will, by the laws of descent
and distribution, or by written notice filed pursuant to Section 5 (h), in each
case within the period of one year after the date the optionee ceases to be such
a director or reason of such disability or death; provided that no option shall
be exercisable after the expiration of nine years from the date of grant.
(g) Exercise Procedure. Options may be exercised only by written notice
to the Company at its principal office accompanied by payment in cash of the
full consideration for the shares as to which they are exercised.
(h) Exercise by Representative Following Death of Director. A director,
by written notice to the Company, may designate one or more persons (and from
time to time change such designation) including his legal representative, who,
by reason of the director's death, shall acquire the right to exercise all or a
portion of the option. If the person or persons so designated wish to exercise
any portion of the option, they must do so within the term of the option as
provided herein. Any exercise by a representative shall be subject to the
provisions of the Plan
6. ASSIGNMENTS
The rights and benefits under the Plan may not be assigned except for
the designation of a beneficiary as provided in Section 5.
<PAGE>
7. EFFECTIVE DATE AND TIME FOR GRANTING OPTIONS
(a) The Plan shall become effective on July 1, 1997 as adopted by the
Board of Directors.
(b) All options for shares subject to the Plan shall be granted, if at
all, not later than ten years after the approval of the Plan by the Company's
shareholders.
8. LIMITATIONS OF RIGHTS
(a) No Right to Continue as a Director. Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a director for any period of time.
(b) No Shareholders' Rights for Options. An optionee shall have no
rights as a shareholder with respect to the shares covered by his options until
the date of the issuance to him of a stock certificate therefor, and no
adjustment will be made for dividends or other rights (except as provided in
Section 9) for which the record date is prior to the date such certificate is
issued.
9. CHANGES IN COMMON STOCK
(a) If the outstanding shares of Common Stock are increased, decreased
or exchanged for a different number of kind of shares or other securities (other
than the stock split approved by the Board on the same date as the initial
adoption of this Plan), or if additional shares or new or different shares or
other securities, through merger, consolidation, sale of all or substantially
all of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock, or other securities,
an appropriate and proportionate adjustment will be made in (i) the maximum
number and kind of shares reserved for issuance under the Plan, (ii) the number
and kind of shares or other securities subject to then outstanding options under
the Plan and (iii) the price for each share subject to any then outstanding
options under the Plan, without changing the aggregate purchase price as to
which such options remain exercisable.
No fractional shares will be issued under the Plan on account of any such
adjustments.
(b) In the event that the Company is merged or consolidated into or
with another corporation (in which consolidation or merger the shareholders of
the Company receive distributions of cash or securities of another issuer as a
result thereof), or in the event that all or substantially all of the assets of
the Company is acquired by any other person or entity, or in the event of a
reorganization or liquidation of they Company, all stock options granted under
this Plan to the Director shall become immediately vested and exercisable and
shall continue to be exercisable for a period of one (1) year
10. AMENDMENT OF THE PLAN
The Board of Directors may suspend or discontinue the Plan or review or
amend it in any respect whatsoever; provided, however, that without approval of
the shareholders of the Company no revision or amendment shall change the number
of shares subject to the Plan (except as provided in Section 9), change the
designation of the class of directors eligible to receive options, or materially
increase the benefits accruing to participants under the Plan.
11. NOTICE
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.
12. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the Commonwealth of Virginia.
<PAGE>
APPENDIX B
TREEV, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The Employee Stock Purchase Plan (the "Plan") is intended to
encourage stock ownership by employees of TREEV, Inc. (the "Corporation") or any
of its present or future subsidiaries (the "Subsidiaries") as defined in Section
424 of the Internal Revenue Code of 1986, as amended (the "Code") so that such
employees may increase their interest in the success of the Corporation and its
Subsidiaries and so that they may be encouraged to remain in the employ of the
Corporation or its Subsidiaries. It is the intention of the Corporation to have
the Plan qualify as an Employee Stock Purchase Plan under Section 423 of the
Code.
2. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Corporation (the "Committee"). The
Board of Directors may from time to time remove members from, or add members to,
the Committee. Vacancies on the Committee, howsoever caused, shall be filled by
the Board of Directors. The Committee shall hold meetings at such times and
places as it may determine and may hold telephonic Committee meetings. If the
Committee consists of three or more members, the Committee shall select one of
its members as Chairman. Acts by a majority of the Committee at a meeting at
which a quorum is present shall be the valid acts of the Committee. Any decision
or determination reduced to writing and signed by a majority of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The interpretation and construction by
the Committee of any provisions of the Plan shall be final. No member of the
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan.
3. Definitions.
(a) "Compensation" shall mean regular straight-time gross earnings plus
payments for overtime, shift premium, incentive compensation, bonuses and
other special payments, such as, in the case of employees who are
salespersons, sales commissions.
(b) "Committee" shall mean the Committee referenced in Article 2, or if
no such Committee has been designated, it shall mean the Board of Directors
of the Corporation.
(c) "Employee" shall mean any person (including officers, whether or not
they are Directors) who is customarily employed on a full-time or part-time
basis by the Corporation or its Subsidiaries and is regularly scheduled to
work more than twenty (20) hours per week but excluding any employee
customarily employed for not more than five months in any calendar year.
(d) "Enrollment Period" shall mean the applicable time periods during
which an employee will be allowed to become a participant under the Plan.
(e) "Exercise Date" or "Purchase Date" shall mean the applicable date at
the end of an Offering Period on which shares are purchased pursuant to an
option issued under the Plan, which date shall be each Offering Termination
Date.
(f) "Fair Market Value" or "FMV" shall mean the average of the high and
low market prices as reported on NASDAQ National Market System on a given
trading day.
(g) "Offering Commencement Date" shall mean the applicable date on which
an Offering under the Plan commences pursuant to Article 6.
<PAGE>
(h) "Offering Termination Date" shall mean the applicable date on which
an Offering under the Plan terminates pursuant to Article 6.
(i) "Offering Period" shall mean the applicable time period during which
an Offering under the Plan shall take place pursuant to Article 6.
(j) "Purchase Price" shall mean 85% of the lower of: (a) the average of
the high and low market prices as reported on NASDAQ National Market System
on the Offering Commencement Date ("Option Price") and (b) the average of
the high and low market prices as reported on NASDAQ on the Offering
Termination Date, pursuant to Article 22.
(k) "Trading Day" shall mean a day on which the National Association of
Securities Dealers Automated Quotation (NASDAQ) System is open for trading.
4. Eligibility. The persons who shall be eligible to participate in the Plan
shall be all Employees of the Corporation or its Subsidiaries on a given
Enrollment Date. No Participant shall be granted an option under the Plan if (i)
immediately after the grant such Participant (or any other person whose stock
would be attributed to such Participant pursuant to Section 424(d) of the Code)
would own capital stock of the Corporation or any Subsidiary and/or hold
outstanding options of any kind to purchase such stock possessing five percent
(5%) or more of the capital stock of the Corporation or any Subsidiary or (ii)
his or her rights to purchase stock under the Plan or any other employee stock
purchase plan of the Corporation or any Subsidiary accrues at a rate which
exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time.
5. Stock. The stock subject to the options of the Plan shall be shares of
the Corporation's authorized, but unissued or reacquired common stock (the
"Common Stock").
(a) The aggregate number of shares which may be issued under the Plan
shall not exceed 400,000 shares of Common Stock. The limitation established
by the preceding sentence shall be subject to adjustment as provided in
Article 18 of the Plan. If, on a given Exercise Date, the number of shares
with respect to which options are to be exercised exceeds the number of
shares then available under the Plan, the Committee shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a
manner among the persons exercising options as shall be practicable and as
it shall determine to be equitable.
(b) The Participant will have no voting right or other interests in
shares issuable upon exercise of any option held by such Participant until
such option has been exercised.
(c) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant
and the Participant's spouse.
6. Offering Periods. The Plan shall be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after January 1 and July 1 of each year, or on such other date as the Committee
shall determine, and continuing thereafter until terminated in accordance with
Article 21 hereof. The duration of each Offering Period shall be six (6) months.
The Committee shall have the power to change the duration of Offering Periods at
its discretion (including the commencement dates thereof) with respect to future
offerings without shareholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Offering Period
to be effective thereafter.
7. Participation.
(a) An eligible Employee may become a Participant in the Plan by
completing a Subscription Agreement authorizing payroll deductions on a form
established by the Company from time to time which will be similar to
Exhibit A to this Plan and filing it with the Corporation's Payroll
Administrator during the applicable Enrollment Period.
<PAGE>
(b) Payroll deductions for a Participant shall commence on the first
payday following the Offering Commencement Date and shall end on the last
payday in the Offering Period to which such authorization is applicable,
unless sooner terminated by the Participant as provided in Article 12
hereof.
8. Payroll Deductions.
(a) At the time a Participant files his or her Subscription Agreement,
he or she shall elect to have payroll deductions made on each payday during
the Offering Period in an amount not less than one percent (1%) of his or
her Compensation and not exceeding ten percent (10%) of his or her
Compensation for such payroll period on each payday during the Offering
Period.
(b) All payroll deductions made for a Participant shall be credited to
his or her account under the Plan. A Participant may not make any additional
payments into such account.
(c) A Participant may discontinue his or her participation in the Plan
as provided in Article 12 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Article 9 hereof, a Participant's
payroll deductions may be decreased to zero percent (0%) at such time during
any Offering Period, which is scheduled to end during the current calendar
year (the "Current Offering Period"), that the aggregate of all payroll
deductions which were previously used to purchase Common Stock under the
Plan in a prior Offering Period which ended during that calendar year plus
all payroll deductions accumulated with respect to the Current Offering
Period equal $25,000. Payroll deductions shall recommence as provided in
such Participant's Subscription Agreement at the beginning of the first
Offering Period which is scheduled to end in the following calendar year,
unless terminated by the Participant as provided in Article 12 hereof.
(e) At the time some or all of the Common Stock issued under the Plan is
disposed of, the Participant must make adequate provision for the
Corporation's federal, state, or other tax withholding obligations, if any,
which arise upon the exercise of the option or the disposition of the Common
Stock. At any time, the Company may, but will not be obligated to, withhold
from the Participant's compensation the amount necessary for the Company to
meet applicable withholding obligations, including any withholding required
to make available to the Company any tax deductions or benefits attributable
to sale or early disposition of Common Stock by the Employee.
9. Grant of Option. On the Enrollment Date of each Offering Period, each
Participant shall be granted an option to purchase on the Exercise Date of such
Offering Period (at the applicable Purchase Price) up to a maximum number of
shares of Common Stock determined as follows: an amount equal to (a) that
percentage of such Participant's Compensation as of the Enrollment Date which he
has elected to have withheld (but not in any case in excess of ten percent
(10%)) multiplied by (b) the Participant's annual Compensation as of the
Enrollment Date (c) divided by the applicable percentage of the Purchase Price
of the Common Stock on the Offering Commencement Date elected by the Participant
at the commencement of each Offering Period pursuant to Article 22 hereof. No
Participant shall be granted an option to purchase in excess of the maximum
amount allowable pursuant to Section 423 of the IRS Code. Exercise of the option
shall occur as provided in Article 10 hereof, unless the Participant has
withdrawn pursuant to Article 12 hereof, and shall expire on the last day of the
Offering Period.
10. Exercise of Option. Unless a Participant withdraws from the Plan as
provided in Article 12 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date of each Offering Period, and the
maximum number of full shares subject to option shall be purchased for such
Participant at the applicable Purchase Price, as defined in Article 3, with the
accumulated payroll deductions in his or her account (but not in excess of the
number of shares for which options have been granted to the Participant pursuant
to Article 9 hereof). No fractional shares will be purchased and any payroll
deductions accumulated in a Participant's account which are not sufficient to
purchase a full share shall be retained in the Participant's account for the
subsequent Offering Period, subject to earlier withdrawal by the Participant as
provided in Article 12 hereof. Any other monies left over in a Participant's
<PAGE>
account after the Exercise Date shall be returned to the Participant. During a
Participant's lifetime, a Participant's option to purchase shares hereunder is
exercisable only by him or her.
11. Delivery of Shares Purchased. All shares of Common Stock purchased
pursuant to this Plan shall be held in a separate shareholder account
("Shareholder Account") maintained by such brokerage house, investment banking
firm, commercial bank or other such similar institution as may be selected by
the Committee. Each Shareholder Account shall be in the name of a Participant.
Each Participant shall have all of the rights and privileges of a shareholder of
the Corporation with respect to those shares purchased under the Plan and held
in his or her Shareholder Account.
12. Withdrawal; Termination of Employment.
(a) A Participant may voluntarily withdraw all, but not less than all,
the payroll deductions credited to his or her account, and not yet used to
exercise his or her option under the Plan, at any time by giving written
notice to the Corporation on a form established by the Corporation from time
to time which will be similar to Exhibit B to this Plan. All of the
Participant's payroll deductions credited to his or her account will be paid
to such Participant promptly after receipt of notice of withdrawal and such
Participant's option for the Offering Period will be automatically
terminated and no further payroll deductions for the purchase of shares will
be made during the Offering Period. If a Participant voluntarily withdraws
from an Offering Period, payroll deductions will not resume at the beginning
of the succeeding Offering Period unless the Participant completes and
delivers to the Company a new Subscription Agreement.
(b) Upon a Participant's ceasing to be an Employee for any reason, he or
she will be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such Participant's account during the Offering
Period, but not yet used to exercise the option, will be returned to such
Participant or, in the case of his or her death, to the person or persons
entitled thereto under Article 14 hereof, and such Participant's option will
be automatically terminated.
(c) A Participant's withdrawal from an Offering Period (other than in
the case of death) will not have any effect upon his or her eligibility to
participate in any similar plan which may hereafter be adopted by the
Corporation or in succeeding Offering Periods which commence after the
termination of the Offering Period from which the Participant voluntarily
withdraws for so long as the Participant remains an Employee of the
Corporation or its Subsidiaries.
13. Interest. No interest shall be paid on the payroll deductions of a
Participant in the Plan.
14. Designation of Beneficiary.
(a) A Participant may file with the Corporation's Payroll Administrator
a written designation of a beneficiary who is to receive any shares and
cash, if any, from the Participant's accounts under the Plan in the event of
such Participant's death subsequent to an Exercise Date on which the option
is exercised but prior to delivery to such Participant of any shares and/or
cash in Participant's accounts.
(b) Such designation of beneficiary may be changed by the Participant at
any time by written notice to the Corporation's Payroll Administrator. In
the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant's death, the Corporation shall deliver such shares and/or cash
to the executor or administrator of the estate of the Participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Corporation), the Corporation, in its discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents or relatives of
the Participant, or if no spouse, dependent or relative is known to the
Corporation, then to such other person as the Corporation may designate.
15. Transferability. Neither payroll deductions credited to a Participant's
account nor any rights with regard to the exercise of an option or to receive
<PAGE>
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Article 14 hereof) by the Participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Article 12 hereof.
16. Application of Funds. The proceeds received by the Corporation from the
sale of Common Stock issued pursuant to options will be used for general
corporate purposes.
17. Reports. Individual accounts will be maintained by the Corporation for
each Participant in the Plan. Statements of account will be given to
Participants after the termination of each Offering Period. Such statements will
set forth the amounts of payroll deductions, the Purchase Price, the number of
shares of Common Stock purchased and any remaining cash balance.
18. Recapitalization. Subject to any required action by the shareholders of
the Corporation, the number of shares of Common Stock covered by each
outstanding option, and the price per share thereof in each such option, shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Corporation, so that the
optionee's percentage of ownership of the total number of shares of Common Stock
outstanding is neither increased nor decreased.
Subject to any required action by the shareholders of the Corporation, if
the Corporation shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain to and apply to the
securities to which a holder of the number of shares of Common Stock subject to
the option would have been entitled.
In the event of a change in the Common Stock of the Corporation as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Corporation, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Article 18, the
Participant shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, consolidation or spin-off of
assets or stock of another corporation, and any issue by the Corporation of
shares of stock of any class, or securities convertible into or exchangeable or
exercisable for shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to the option.
The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
19. Amendment of the Plan. The Committee of the Corporation may, insofar as
permitted by law, from time to time, with respect to any shares at the time not
subject to outstanding options, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever except that, without approval of the
Shareholders of the Corporation, no such revision or amendment shall increase
the number of shares of Common Stock which may be issued pursuant to the Plan,
materially increase the benefits accruing to Participants under the Plan, or
otherwise materially modify the requirements for eligibility or the class of
subsidiaries whose employees are eligible to participate.
<PAGE>
20. Notices. All notices or other communications by a Participant to the
Corporation under or in connection with the Plan shall be deemed to have been
duly given when received in writing by the person designated by the Corporation
for the receipt thereof.
21. Term of Plan. Options may be granted pursuant to the Plan from time to
time until such time as all shares of Common Stock available under the Plan as
set forth in Article 5 have been made subject to an option grant. If any
outstanding option under the Plan for any reason expires or is terminated, the
shares of Common Stock allocable to the option may again be subject to an option
under the Plan.
22. Investment Purpose. Each option under the Plan shall be granted on the
condition that the purchase of stock thereunder shall be for investment purposes
and not with a view for resale or distribution. Participant agrees to receive
shares carrying a six month holding period restriction. Participants may sell
shares purchased under the Plan subject to compliance with any applicable
governmental securities laws, provided, however, that because of certain
governmental tax requirements, each Participant agrees by entering the Plan, to
promptly give the Corporation notice of any such Common Stock disposed of within
two years after the date of grant of the applicable option or one year from the
date of exercise showing the number of such shares disposed of. The Participant
assumes the risk of any market fluctuations in the price of the stock.
23. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee and
the Board of Directors, the members of the Committee and the Board of Directors
shall be indemnified by the Corporation against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, in which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Corporation) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence or intentional misconduct in the performance of his or her duties,
provided that within sixty (60) days after institution of any such action, suit
or proceeding such person shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
24. No Employment Rights. The Plan does not, directly or indirectly, create
any right for the benefit of any employee or class of employees to purchase any
shares under the Plan, or create in any employee or class of employees any right
with respect to continuation of employment by the Corporation or its
Subsidiaries, and it shall not be deemed to interfere in any way with the
Corporation's or its Subsidiaries' right to terminate, or otherwise modify, an
employee's employment at any time.
25. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
26. Approval of Stockholders; Effectiveness of Plan. The Plan is subject to
the approval of the shareholders of the Corporation at their next annual meeting
or at any special meeting of the shareholders for which one of the purposes of
such a special meeting shall be to act upon the Plan.
