<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Broadway & Seymour, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
BROADWAY & SEYMOUR, INC.
128 SOUTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28202
(704) 372-4281
August 2, 1996
Dear Stockholder:
Broadway & Seymour's Board of Directors has called a Special Meeting of the
Stockholders for the purpose of approving a 1996 Stock Option Plan to replace
the proposed 1995 Stock Option Plan which was considered and not approved at
the Annual Stockholders Meeting held on May 30, 1996 and adjourned to June 6,
1996. The attached Proxy Statement describes the 1996 Plan and the procedures
to be followed for the Special Meeting.
When the Board learned that the 1995 Plan lacked sufficient stockholder support
due to several structural issues, it withdrew the Plan from consideration.
Since the predecessor 1985 Restated Incentive Stock Option Plan, with 573,000
shares still available for grant, had been canceled at the time of the Board's
approval of the 1995 Plan, the Company has no option plan of any type in place
to honor commitments made and to provide an incentive to current executives and
other employees of the Company. In light of the major organizational
transformation underway at Broadway & Seymour and the compensation standards
in the industry in which the Company competes for executives and other
employees, the Board of Directors believes that approval of the 1996 Plan is in
the best interests of the Company and the stockholders and recommends that the
stockholders vote for adoption of the 1996 Plan.
The 1996 Plan eliminates several issues raised by stockholders in objecting to
the 1995 Plan, namely: (1) the total number of shares available for grant under
the plan has been reduced to under the 10 percent potential dilution factor used
by several institutional investors; (2) the Board's ability to issue restricted
stock and "reset" previously granted options has been eliminated; (3) options
granted under the 1996 Plan to senior management and other employees now vest
over three years commencing on the first anniversary of the date of grant rather
than immediately; and (4) the total shares available for grants to outside
directors was reduced from 200,000 to 50,000, and initial grants were reduced
from 15,000 shares to 5,000 shares with identical 5,000 per year continuing
grants when a minimum of 10 percent appreciation in the stock price is attained
on a year-to-year basis.
As you know, equity incentives are a necessary component of compensation in the
Company's software and services industry which makes competitive and extensive
use of stock options in compensation plans. The Board of Directors believes
that the Company's greatest asset is its people and that the Company's ability
to attract and retain the talent it requires will be severely hampered if it
cannot offer stock options. In addition, the Board believes that the use of
equity incentives increases employee motivation to improve stockholder value
and, compared to phantom stock or stock appreciation rights programs, is a more
cost-effective form of incentive compensation for the Company.
On behalf of the Board, I invite you to attend the Special Meeting in
Charlotte, North Carolina, on Monday, September 16, 1996 at 10:00 a.m. The
meeting will be held in the Willow Room of the Radisson Plaza Hotel located at
One Radisson Plaza, 101 South Tryon Street in Charlotte, North Carolina.
Whether or not you plan to attend the meeting, it is important that your shares
be represented. Please take a moment now to sign, date and return your proxy
in the envelope provided even if you plan to be present.
The Board of Directors appreciates and encourages your participation on this
very important issue. If you have any questions or would like to discuss this
issue with me directly, please call me at 1-800-274-9287 or E-Mail me at
[email protected] or write to me at 128 South Tryon Street, Charlotte,
North Carolina 28202.
Sincerely,
/s/ Alan C. Stanford
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Alan C. Stanford
President and Chief Executive Officer
<PAGE> 3
BROADWAY & SEYMOUR, INC.
128 South Tryon Street
Charlotte, North Carolina 28202
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
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<S> <C>
TIME 10:00 a.m. on Thursday, September 16, 1996
PLACE Radisson Plaza Hotel
Willow Room
1 Radisson Plaza
101 South Tryon Street
Charlotte, North Carolina 28280
ITEM OF BUSINESS To approve the Company's 1996 Stock Option Plan.
RECORD DATE Holders of Common Stock of record at the close of business on July 29, 1996 are entitled
to vote at the meeting.
IMPORTANT In order to avoid additional soliciting expense to the Company, please SIGN, DATE and
MAIL your proxy PROMPTLY in the return envelope provided even if you plan to attend the
meeting. If you attend the meeting and wish to vote your shares in person, arrangements
will be made for you to do so.
</TABLE>
By order of the Board of Directors:
Alan C. Stanford
President and Chief Executive Officer
Charlotte, North Carolina
August 2, 1996
<PAGE> 4
BROADWAY & SEYMOUR, INC.
128 South Tryon Street
Charlotte, North Carolina 28202
PROXY STATEMENT
Special Meeting of Stockholders
September 16, 1996
VOTING SECURITIES, PRINCIPAL HOLDERS AND PROXIES
The accompanying proxy is solicited by the Board of Directors of
Broadway & Seymour, Inc. (the "Company") in connection with the Special Meeting
of Stockholders of the Company to be held in the Willow Room of the Radisson
Plaza Hotel located at 1 Radisson Plaza, 101 South Tryon Street, Charlotte,
North Carolina at 10:00 a.m. on Monday, September 16, 1996. The accompanying
form of proxy is for use at the Special Meeting if a stockholder does not
attend the meeting in person or wishes to vote shares by proxy even if the
stockholder plans to attend the meeting. All valid proxies received prior to
the meeting will be voted. Unless marked to the contrary, such proxies will be
voted in favor of the proposal to approve the Company's 1996 Stock Option Plan,
described below. If any other business is brought before the meeting, the
proxies will be voted in accordance with the judgment of the persons voting the
proxies.
A stockholder who has given a proxy may revoke it at any time prior to
such proxy being voted at the meeting by filing with the Secretary of the
Company an instrument revoking it or by providing a duly executed proxy bearing
a later date or by attending the meeting and giving notice of such revocation.
Attendance at the meeting does not by itself constitute revocation of a proxy.
This proxy statement and the accompanying form of proxy are being mailed to the
Company's stockholders on or about August 2, 1996.
The only class of voting securities of the Company is its common stock,
$.01 par value per share (the "Common Stock"). Only stockholders of record as
of the close of business on July 29, 1996 will be entitled to notice of and to
vote at the Special Meeting of Stockholders or any adjournment thereof. On
July 29, 1996 there were outstanding 8,974,266 shares of Common Stock. Each
share of Common Stock is entitled to one vote.
A majority of the shares entitled to vote at the Special Meeting,
represented in person or by proxy, will constitute a quorum. The proposal to
approve the Company's 1996 Stock Option Plan will be decided by the affirmative
vote of a majority of the shares present or represented at the meeting and
entitled to vote. On such matter, an abstention will have the same effect as a
negative vote but, because shares held by brokers will not be considered
entitled to vote on matters as to which the brokers withhold authority, a
broker non-vote will have no effect on the vote.
The Company will bear the cost of preparing the proxy statement and of
soliciting proxies in the accompanying form. The Company expects to solicit
proxies primarily by mail and through the use of Georgeson & Company, Inc., a
professional proxy solicitation firm. Proxies may be solicited personally and
by telephone by directors, officers and employees of the Company without
additional compensation and by employees of the professional proxy solicitation
firm. The Company anticipates that fees and expenses to be paid to the
professional proxy solicitation firm will be approximately $10,000.
Arrangements also may be made with brokerage firms or other custodians,
nominees and fiduciaries who hold the voting securities of record for the
forwarding of solicitation material to the beneficial owners thereof. The
Company will reimburse such brokers, custodians, nominees and fiduciaries for
the reasonable out-of-pocket expenses incurred by them in connection therewith.
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<PAGE> 5
ADOPTION OF THE COMPANY'S 1996 STOCK OPTION PLAN
The Board of Directors is submitting the Company's 1996 Stock Option
Plan (the "1996 Plan") to the stockholders for their approval. The 1996 Plan
was adopted by the Board of Directors and became effective on June 25, 1996,
subject to stockholder approval. The 1996 Plan permits the grant of options to
key employees and officers of the Company and its subsidiaries and formula
grants of options to directors who are not officers or employees of the Company
or any of its subsidiaries ("Outside Directors").
At the 1996 Annual Meeting of Stockholders, the stockholders did not
approve the 1995 Stock Option Plan which had been adopted by the Board of
Directors subject to stockholder approval. The 1995 Stock Option Plan provided
for grants of stock options to key employees and officers, formula grants of
stock options to Outside Directors, and authorized restricted stock awards to
key employees and officers. The 1996 Plan differs from the 1995 Stock Option
Plan in several regards, including that the 1996 Plan does not authorize
restricted stock awards, prohibits the repricing of outstanding options,
reduces the number of options to be granted to outside directors and authorizes
875,000 shares compared to 1,000,000 shares under the 1995 Stock Option Plan.
As a result of the failure of the 1995 Stock Option Plan to be approved by
stockholders at the 1996 Annual Meeting, the Company had no authorized plan to
grant options to its key employees and officers.
The Board of Directors has adopted the 1996 Plan because it believes
that equity incentives are a necessary component of compensation for a broad
range of the Company's employees. In addition, the Board of Directors believes
that the use of equity incentives increases employee motivation to improve
stockholder value.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
ADOPTION OF THE 1996 PLAN. PROXIES, UNLESS INDICATED TO THE CONTRARY, WILL BE
VOTED "FOR" ADOPTION OF THE 1996 PLAN.
SUMMARY OF 1996 STOCK OPTION PLAN
The 1996 Plan is summarized below. However, this summary is qualified
in its entirety by reference to the text of the 1996 Plan, a copy of which may
be obtained without charge, by written request to Broadway & Seymour, Inc., 128
South Tryon Street, Charlotte, North Carolina 28202, Attention: General
Counsel.
General. The 1996 Plan provides that the Company may grant options to
purchase Common Stock to officers, key employees and directors. The purpose of
the 1996 Plan is to promote the growth and profitability of the Company by
increasing personal participation of officers, key employees and directors in
the financial performance of the Company, by enabling the Company to attract
and retain officers, key employees and directors of outstanding competence and
by providing such officers, key employees and directors with an equity
opportunity in the Company.
A total of 875,000 shares of Common Stock may be issued under the 1996
Plan, of which 825,000 shares may be issued under options to key employees and
officers and 50,000 shares may be issued under options granted to Outside
Directors. In order to comply with the requirements for deductibility under
Section 162(m) of the Internal Revenue Code (the "Code") the maximum number of
shares under options that may be granted to a key employee or officer under the
1996 Plan during the term of the 1996 Plan is 500,000 shares. The number of
options that may be granted under the 1996 Plan and the number of shares
subject to and exercise prices of outstanding options shall be adjusted to
reflect any change in the capitalization of the Company as contemplated in the
1996 Plan.
Options that may be awarded to key employees and officers ("Employee
Options") may be: (i) options that are intended to qualify as incentive stock
options ("ISOs") under Section 422 of the Code; (ii) options that are not
intended to qualify under Section 422 of the Code ("NSOs"); or (iii) both of
the foregoing, if granted separately and not in tandem. The 1996 Plan provides
that in the case of ISOs, the aggregate fair market value of the shares with
respect to which ISOs are exercisable for the first time by a participant under
the 1996 Plan during any
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calendar year (under all plans taken into account pursuant to Section 422(d) of
the Code) shall not exceed $100,000. NSOs may be granted to any 1996 Plan
participant without regard to the Section 422(d) limitations.
As of the date of this proxy statement, outstanding options to acquire
an aggregate of 740,000 shares of Common Stock have been granted to key
employees. All of such options were granted on July 18, 1996 at an exercise
price equal to the fair market value (as defined in the 1996 Plan) of the Common
Stock on the date of grant ($11.00) and become exercisable over a period of
three years beginning on the first anniversary of the date of grant, with 33.33
percent of the award being exercisable on July 18, 1997 and an additional 33.33
percent becoming exercisable on each of the next two anniversaries. In
addition, in connection with the adoption of the 1996 Plan, outstanding options
to acquire 25,000 shares of Common Stock have been awarded to Outside Directors.
All grants are subject to stockholder approval of the 1996 Plan at the Special
Meeting.
Administration. The 1996 Plan will be administered by the
Compensation Committee or any other committee (the "Committee") of the Board of
Directors that is composed solely of Board members who are "disinterested
persons" as defined in the 1996 Plan. The Committee has complete authority to:
(i) interpret all terms and provisions of the 1996 Plan consistent with law;
(ii) select from the group of officers and key employees eligible to
participate in the 1996 Plan the officers and key employees to whom Employee
Options shall be granted; (iii) within the limits established therein,
determine the number of shares of Common Stock to be subject to, the exercise
price of, and the term of each Employee Option; (iv) prescribe the form of
instruments evidencing options; (v) determine the time or times at which
Employee Options shall be granted; (vi) make special grants of Employee Options
to officers or key employees when determined to be appropriate; (viii) provide,
if appropriate, for the exercisability of Employee Options granted to officers
or key employees in installments or subject to specified conditions; (viii)
determine the method of exercise of Employee Options; (ix) adopt, amend and
rescind general and special rules and regulations for the 1996 Plan's
administration; and (x) make all other determinations necessary or advisable
for the administration of the 1996 Plan.
The Committee may designate selected Board or Committee members or
certain employees of the Company to assist the Committee in the administration
of the 1996 Plan and may grant authority to such persons to execute documents,
including options, on behalf of the Committee, subject to certain limitations.
The 1996 Plan provides that no member of the Board or Committee or employee of
the Company assisting the Board or Committee in connection with the 1996 Plan
shall be liable for any action taken or determination made in good faith.
Further, the 1996 Plan provides that such persons shall be indemnified by the
Company against all liability (including reasonable expenses and amounts paid
as settlement or in satisfaction of a judgment) that results from any action
taken or failure to act in connection with the 1996 Plan or any option.
However, such indemnification does not extend to matters involving gross
negligence or misconduct.
Eligibility and Criteria for Employee Grants. The grant of Employee
Options under the 1996 Plan is limited to those officers and key employees of
the Company who have the greatest impact on the Company's long-term performance
and are selected by the Committee. Members of the Company's Board who are also
officers or employees of the Company are also eligible to receive Employee
Options. In making any determination as to the officers and key employees to
whom Employee Options shall be granted under the 1996 Plan, the Committee must
take into account the level and responsibility of the person's position, the
level of the person's performance, the person's level of compensation, the
assessed potential of the person and such additional factors as the Committee
deems relevant to the accomplishment of the purposes of the 1996 Plan. The
Company estimates that approximately 55 employees may be eligible to receive
Employee Options.
No Replacement of Options Permitted. The 1996 Plan provides that the
Committee may not grant options to any holder of outstanding options either
conditioned upon or under any arrangement contemplating the voluntary surrender
by such holder of any outstanding options granted under the 1996 Plan.
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Option Awards to Outside Directors. The 1996 Plan provides that,
subject to the approval of the stockholders of the 1996 Plan at the Special
Meeting, on June 25, 1996 each director who was an Outside Director on that date
(i.e., Messrs. Anderson, Levenson, McTavish, Seymour and Tate) be granted
options to purchase 5,000 shares of Common Stock at the fair market value of the
shares under the 1996 Plan ($11.125) on that date, subject to approval of the
1996 Plan by the stockholders at the Special Meeting. In addition, under the
1996 Plan, any individual who is not an employee or officer of the Company and
who is first elected to the Board after June 25, 1996 shall receive upon the
date of election an option to purchase 5,000 shares of Common Stock at an
exercise price per share equal to the fair market value of a share of Common
Stock on such date. The 1996 Plan further provides for awards of options to
purchase 5,000 shares of Common Stock on each January 5 after the adoption of
the 1996 Plan if the average daily value of a share of Common Stock for the
immediately preceding month of December is ten percent greater than the average
daily value of a share for the month of December of the immediately prior year.
In the event that the total exercise price of such options for 5,000 shares
exceeds $100,000, the number of shares purchasable under such option are to be
reduced so that the total exercise price of the options granted equals $100,000,
and in the event that the number of shares authorized under the 1996 Plan are
not sufficient to make an award to an Outside Director on any date, options for
the remaining authorized shares shall be awarded pro rata to the Outside
Directors then entitled to receive such options. All of the foregoing options
awarded or to be awarded to Outside Directors under the 1996 Plan become
exercisable over a period of four years, with 20 percent of the amount award
being exercisable on the date of grant and an additional 20 percent becoming
exercisable on each of the next four anniversaries.
Terms of Options. The 1996 Plan generally provides that Employee
Options are exercisable at such time and upon such conditions as may be
determined by the Committee at the time of grant, except that the term of such
Options may not exceed 10 years (or 5 years for ISOs awarded to certain 10%
stockholders) from the date of grant. Options granted to Outside Directors
under the 1996 Plan are exercisable in the 10-year period subsequent to the
date of grant. To the extent that any options are subject to vesting
requirements, the 1996 Plan also provides that such vesting requirements shall
be eliminated immediately in the event of any change of control of the Company
(as defined in the 1996 Plan) so that all options will thereafter become
immediately available at their stated exercise prices.
Transferability of Options. In general, Options granted under the
1996 Plan may not be transferred except by will, by the laws of descent and
distribution, or pursuant to certain qualified domestic relations orders. In
the case of ISOs, such options may not be transferred other than by will or the
laws of descent and distribution and during the optionee's lifetime may be
exercised only by the optionee. Participants who are subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934 may not sell
any shares of Common Stock acquired upon exercise of an option until after the
six-month period immediately following the date of grant of the option. In no
event may an option be exercised after the expiration of its fixed term.
Exercise Price of Options. The price per share at which Employee
Options may be exercised is determined by the Committee at the time of grant
taking into account, in each case, the market price of the Common Stock, the
level and responsibility of the person's position, the level of the person's
performance, the person's level of compensation, the assessed potential of the
person, and such additional factors as the Committee deems relevant to the
accomplishment of the purposes of the 1996 Plan. However, the exercise price
per share of Employee Options may not be less than 100% of the fair market
value of the Common Stock on the date of grant. In the case of ISOs, the price
per share shall not be less than 100% (or 110% for certain 10% stockholders) of
the fair market value of the Common Stock at the time such option is granted.
The exercise price of options granted to Outside Directors under the 1996 Plan
is fair market value on the date of grant. "Fair market value" is generally
defined as the average of the high and the low sales prices per share on the
date the Committee grants the option.
Method of Exercise of Options. To exercise an option granted under
the 1996 Plan, the optionee must deliver written notice to the Company, tender
payment in full of the exercise price for the shares for which the option is
exercised and comply with such other reasonable requirements as the Committee
may establish. Payment may be made in (i) cash, (ii) shares of the Common
Stock, the total market value of which equals the total option price of the
shares with respect to which the option is being exercised, or (iii) any
combination of cash and shares of the Common Stock, the total market value of
which equals the total option price of the shares with respect to which the
option is being exercised. The Committee may determine, in the exercise of its
discretion, to (i) grant such optionee permission to pay the exercise price in
installments or (ii) grant such optionee permission to pay the exercise price
by delivering for cancellation Options having an aggregate value (calculated by
subtracting the exercise price per share from the fair market value of a share
of Common Stock) equal to the total amount of the exercise price. An option
may be exercised for any lesser number of shares than the full amount for which
it could be exercised.
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Termination of Employment. In general, options terminate on the date
the optionee ceases to be an employee of the Company (or for options granted to
Outside Directors, on the date the optionee ceases to be a director). However,
if an optionee dies, becomes permanently or totally disabled while in the
employment of the Company, resigns or retires with the consent of the Company,
or employment is terminated by the Company without "cause" (as defined in the
1996 Plan), the 1996 Plan provides certain additional time for exercise of the
options. The Committee may establish the same or other restrictions with
respect to NSOs, and may grant NSOs without any such restrictions. In general,
unvested stock awards terminate upon the holder's ceasing to be an officer,
employee or director of the Company, as the case may be. However, in the event
that Mr. Finley's employment is terminated by the Company without "cause" or he
resigns or retires from employment with the consent of the Company, any portion
of the 70,000 options awarded to Mr. Finley on July 18, 1996 that is not then
exercisable shall become immediately exercisable and shall terminate on the
earlier of the tenth anniversary of the date of grant and 90 days after Mr.
Finley ceases to be a director of the Company.
Amendment of Plan and Options. Except for certain amendments relating
to options to be awarded to the Outside Directors, in general, the Committee
may, at any time, suspend, amend or terminate the 1996 Plan. However,
amendments that would: (i) materially increase the benefits accruing to
participants, (ii) increase the number of securities issuable under the 1996
Plan, (iii) change the class or classes of individuals eligible to receive
options or stock awards, or (iv) otherwise materially modify the requirements
for eligibility, may not be effected without the approval of the stockholders.
The Committee may also amend the terms and conditions of any outstanding
Employee Option. However, no action may be taken that would alter or impair
any rights or obligations under any outstanding Employee Option without the
consent of the holder thereof.
Effective Date; Duration. The 1996 Plan became effective on June 25,
1996. Its continued existence is subject to the approval by holders of a
majority of the outstanding shares of Common Stock present or represented by
proxy at the Special Meeting. If approved and unless previously terminated by
the Board or Committee, the 1996 Plan will terminate at the close of business
on June 25, 2006.
1996 PLAN BENEFITS TABLE
The following table sets forth the name and position of each person
named in the Summary Compensation Table and each current executive officer not
named in the Summary Compensation Table and the number of outstanding options
that have been granted under the 1996 Plan to such person as well as, for each
of the following groups, the total number of outstanding options granted as of
the date of this proxy statement: Company's current executive officers, all
current Outside Directors, and all non-executive employees. All such grants
are subject to the approval of the 1996 Plan by the stockholders at the Special
Meeting. On July 18, 1996, the closing price per share of the Common Stock on
the Nasdaq Stock Market was $10.75.
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<TABLE>
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Name Position Number of Options
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<S> <C> <C>
Alan C. Stanford President and Chief Executive Officer 400,000(1)
David A. Finley Executive Vice President and
Chief Financial Officer 70,000(1)
Robert J. Christiansen Former Senior Vice President 0
Angelina Corbet Former Senior Vice President - 0
Human Resources and Administration
David L. Durham Former Senior Vice President and 0
Chief Financial Officer
R. Duncan McPherson Former Senior Vice President 0
William W. Neal, III Former Chairman of the Board 0
Executive Group 470,000(1)
Non-Executive Director Group 25,000
Non-Executive Officer Employee Group 270,000(1)
</TABLE>
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(1) Such options were granted on July 18, 1996. Of such amount, 33.3% become
exercisable on each of the first, second and third anniversaries of the
date of grant at an exercise price of $11.00 per share.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Nonstatutory Options. No taxable income is recognized by an optionee
upon the grant of an NSO. The optionee generally will recognize ordinary
income in the year in which the option is exercised equal to the excess of the
fair market value of the purchased shares at the date of exercise over the
exercise price, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income which the optionee may elect
to satisfy by having the Company withhold shares from the shares otherwise due
or by delivering a sufficient number of previously owned shares of the
Company's Common Stock to the Company. On ultimate sale of the shares, the
optionee will generally recognize as capital gain or loss the difference
between the fair market value on the date of exercise and the ultimate sales
price.
Incentive Stock Options. No taxable income is recognized by the
optionee at the time of the grant of an ISO and, except in determining
alternative minimum tax, no taxable income is recognized at the time the ISO is
exercised. The optionee will, however, recognize taxable income or loss in the
year in which the purchased shares are sold or otherwise made the subject of
disposition.
For federal tax purposes, dispositions of ISOs are divided into two
categories: qualifying and disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other taxable disposition of
such shares is made more than two years after the grant date of the option and
more than one year after the exercise date. If the optionee fails to satisfy
either of these two holding periods prior to the sale or other disposition of
the purchased shares, then a disqualifying disposition will result.
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Upon a qualifying disposition of the shares, the optionee generally
will recognize long-term gain in an amount equal to the excess of (i) the
amount realized upon the sale or other disposition over (ii) the option price
paid for the shares. If there is a disqualifying disposition of the shares,
then the excess of (i) the fair market value of the shares at the date of
exercise (or, if lower, the fair market value of the shares on the date of
disposition) over (ii) the option price paid therefor will be taxable as
ordinary income. Any additional gain recognized upon the disposition will be a
capital gain, and such gain will be long-term if the shares have been held for
more than one year following exercise of the option.
Alternative Minimum Tax. The difference between fair market value of
shares subject to an ISO on the date of exercise and the exercise price of such
shares is an adjustment to income for purposes of the alternative minimum tax
(the "AMT"). The AMT (imposed to the extent it exceeds the taxpayer's regular
tax) is 26% of an individual taxpayer's alternative minimum taxable income (28%
in the case of alternative minimum taxable income in excess of $175,000).
Alternative minimum taxable income is determined by adjusting regular taxable
income for certain items, increasing that income by certain tax preference
items (including the difference between the fair market value of the shares
subject to the ISO on the date of exercise and the exercise price) and reducing
this amount by the applicable exemption amount ($45,000 in case of a joint
return, subject to reduction under certain circumstances). If a disqualifying
disposition of the shares subject to an ISO occurs in the same calendar year as
exercise of the ISO, there is no AMT adjustment with respect to those shares.
Also, upon a sale of such shares that is a qualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the shares subject to the ISO at exercise over the amount paid
for such shares.
Deduction to the Company. The Company will be entitled to an income
tax deduction equal to the amount of ordinary income recognized by the optionee
in connection with the exercise of an NSO. The deduction generally will be
allowed for the taxable year of the Company in which occurs the last day of the
calendar year in which the optionee recognizes ordinary income in connection
with such exercise.
If the optionee makes a disqualifying disposition of the shares
purchased on exercise of an ISO, then the Company will be entitled to an income
tax deduction for the taxable year in which such disposition occurs, equal to
the amount which is taxable to the employee as ordinary income. In no other
instance will the Company be allowed a deduction with respect to the optionee's
disposition of the shares purchased upon exercise of an ISO.
PRINCIPAL STOCKHOLDERS
The following table sets forth the names of, and the number and
percentage of shares beneficially owned by, (i) the persons known to the
Company to beneficially own five percent or more of the Company's outstanding
Common Stock as of June 30, 1996, (ii) the members of the Board of Directors,
(iii) the executive officers named in the Summary Compensation Table and (iv)
the directors and executive officers as a group:
7
<PAGE> 11
<TABLE>
<CAPTION>
Name and address Number of shares Percent
of beneficial owner beneficially owned of class
------------------- ------------------ --------
<S> <C> <C>
The Equitable Companies Incorporated(1) 995,200 11.2%
FMR Corp.(2) 993,400 11.1%
American Express Company(3) 896,500 10.0%
Robert C. Czepiel(4) 635,900 7.1%
Bruce K. Anderson 167,664(5) 1.9%
David A. Finley 9,001(6) *
George L. McTavish 12,669(7) *
Robert J. Levenson 1,000(8) *
William W. Neal, III 292,769(9) 3.2%
William G. Seymour 438,622(8) 4.9%
Alan C. Stanford 2,000 *
John A. Tate, Jr. 24,669(10) *
Directors and Executive Officers 961,416(11) 10.6%
as a Group
</TABLE>
- ---------------------------------
(1) The address of The Equitable Companies Incorporated is 787 Seventh
Avenue, New York, New York 10019.
(2) The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109-3614.
(3) The address of American Express Company is American Express Tower, World
Financial Center, New York, New York 10285.
(4) The address of Robert P. Czepiel is One Embarcadero Center, Suite 3100,
San Francisco, California 94111.
(5) Includes 1,000 shares purchasable under options granted under the 1996
Stock Option Plan, which grant is subject to stockholder approval of the
1996 Stock Option Plan at the Special Meeting, and 11,669 shares
purchasable under options granted in prior years.
(6) Includes 5,334 shares purchasable under options granted in prior
years.
(7) Includes 1,000 shares purchasable under options granted under the 1996
Plan, which grant is subject to stockholder approval of the 1996 Plan at
the Special Meeting, and 11,669 shares purchasable under options granted
in prior years.
(8) Includes 1,000 shares purchasable under options granted under the 1996
Plan, which grant is subject to stockholder approval of the 1996 Plan at
the Special Meeting.
(9) Includes 36,740 shares owned by Mr. Neal's spouse and 69,168 shares
purchasable under options granted in prior years.
(10) Includes 1,000 shares purchasable under options granted under the 1996
Plan, which grant is subject to stockholder approval of the 1996 Plan at
the Special Meeting, and 6,668 shares purchasable under options granted
in prior years.
(11) Includes 109,508 shares purchasable under options, of which 5,000
shares are purchasable under options granted under the 1996 Plan subject
to stockholder approval of the 1996 Plan at the Special Meeting.
8
<PAGE> 12
EXECUTIVE OFFICER COMPENSATION
The following table sets forth a summary, for fiscal years ended
December 31, 1995 and December 31, 1994 and the eleven months ended December
31, 1993, of the compensation of the five most highly compensated employees
serving as executive officers on December 31, 1995 and two additional employees
who served as executive officers for a portion of 1995 but who were not
executive officers on December 31, 1995. Of the individuals included in such
table, only Mr. Stanford remains an executive officer of the Company, while
Mr. Neal continues to be employed as a non-executive employee. All other
individuals listed in the table have ceased to be employed by the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
------------
Annual Compensation Securities
Name and Principal ------------------- Underlying
Position Year(1) Salary($) Bonus($) Options (#)
------------------ ---- ------ ----- -----------
<S> <C> <C> <C> <C>
Alan C. Stanford(2) 1995 100,075 450,000 400,000(VOID)(3)
President and Chief Executive 1994 - - -
Officer 1993 - - -
William W. Neal, III 1995 221,853 - 50,000(4)
Former Chairman of the Board 30,000(VOID)(3)
1994 202,100 80,000 25,000
1993 151,150 35,000 30,000
R. Duncan McPherson(5) 1995 254,954(6) - 10,000(7)
Former Senior Vice President 1994 172,500 69,000 50,000
1993 111,200 30,000 50,000
Robert J. Christiansen(5) 1995 191,223 - 20,000(7)
Former Senior Vice President 1994 161,700 67,500 30,000
and Chief Technology Officer 1993 90,700 40,000 45,000
David L. Durham(8) 1995 202,397(9) - 10,000(7)
Former Senior Vice President 1994 37,500 15,000 40,000
and Chief Financial Officer 1993 - - -
Angelina S. Corbet(10) 1995 103,333 - 10,000(7)
Former Senior Vice President 1994 100,867 36,000 15,000
1993 16,385 4,200 -
</TABLE>
- ----------------
(1) For 1993, the fiscal period consisted of the eleven months ended
December 31, 1993.
(2) Mr. Stanford's employment commenced in September 1995. Mr. Stanford
earned an initial bonus of $450,000 upon his acceptance of employment
with the Company, in part to defray the costs incurred by Mr. Stanford
in winding down his existing business, of which $350,000 was paid in
October 1995 and $100,000 was paid in March 1996.
(3) Option awards of 30,000 shares and 400,000 shares were made to Messrs.
Neal and Stanford, respectively, pursuant to the 1995 Stock Option Plan
subject to stockholder approval of that plan. Because the stockholders
did not approve the 1995 Stock Option Plan, such options have been
rendered void.
(4) Such options were awarded on May 16, 1995 at an exercise price of $18.00
per share.
(5) Messrs. McPherson and Christiansen's employment commenced in May 1993.
(6) Of such amount, $74,987 was paid to Mr. McPherson for relocation
expenses.
(7) Such options were awarded on May 16, 1995 at an exercise price of $18.00
per share.
(8) Mr. Durham's employment commenced in October 1994.
9
<PAGE> 13
(9) Of such amount, $18,024 was paid to Mr. Durham for relocation expenses.
(10) Ms. Corbet's employment commenced in October 1993.
The following table sets forth certain information with regard to options
granted during the year ended December 31, 1995 to the individuals named in the
Summary Compensation Table, of which only Mr. Stanford continues to serve as an
executive officer of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Individual Grants Annual Rates
Number of Percent of of Stock
Securities Total Options Price Appreciation
Underlying Granted To Exercise or for Option Term (1)
Options Granted Employees in Base Price Expiration ---------------------
Name (#) (2) Fiscal Year ($/SH) Date 5%($) 10%($)
----------------------- ----------------- ------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Alan C. Stanford 400,000(VOID)(3) 51.6% 28.375 9/1/2005 7,137,908 18,088,943
William W. Neal, III (4) 50,000 6.4% 18.00 5/15/2005 566,002 1,434,366
30,000(VOID)(3) 3.9% 28.375 9/1/2005 535,348 1,356,671
R. Duncan McPherson (4) 10,000 1.3% 18.00 5/15/2005 113,200 286,873
Robert J. Christiansen (4) 20,000 2.6% 18.00 5/15/2005 226,400 573,746
David L. Durham (4) 10,000 1.3% 18.00 5/15/2005 113,200 286,873
Angelina Corbet (4) 10,000 1.3% 18.00 5/15/2005 113,200 286,873
</TABLE>
- ----------------------------
(1) These amounts, based on the assumed 5% and 10% appreciation rates
prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the price
of the Common Stock and may not reflect the actual value ultimately
realized by recipients of the options.
(2) Except as otherwise noted, options are exercisable with respect to
one-sixth of the total number of shares upon the date of grant and
become exercisable with respect to additional one-sixths of the total
number of shares in each of the next five years. The options expire ten
years after the date of grant. In addition, the options expire
immediately upon the termination of employment, other than termination
by the Company without cause or as a result of death or disability.
Options expire 30 days after termination of employment without cause,
one year after permanent disability and from three months to one year
after death depending on the length of time the option had been held.
(3) Such options are void. The options were granted pursuant to the 1995
Stock Option Plan subject to stockholder approval of that plan. The
stockholders did not approve the 1995 Stock Option Plan.
(4) Messrs. Neal, McPherson, Christiansen and Durham and Ms. Corbet ceased
to serve as officers of the Company on July 15, 1996, December 4, 1995,
June 1, 1996, March 1, 1996 and May 17, 1996, respectively.
The following table sets forth certain information with regard to stock
options exercised in the year ended December 31, 1995 by each of the
individuals named in the Summary Compensation Table, of which only Mr. Stanford
continues to serve as an executive officer of the Company.
10
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Value of securities
Number of securities underlying
underlying unexercised in-the-
unexercised options money options at FY-
at FY-end(#) end($)
Shares acquired Value Exercisable/ Exercisable/
Name on exercise (#) realized ($) unexercisable unexercisable
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Alan C. Stanford - - 400,000/0(1) 0/0
William W. Neal, III (2) - - 113,408/74,332(3) 771,736/211,125
Robert J. Christiansen (2) 25,000 196,250 10,832/59,168 63,742/291,259
David L. Durham (2) 8,834 103,135 6,668/34,998 5,001/19,998
R. Duncan McPherson (2) 41,670 421,881 1,666/66,665 0/379,159
Angelina Corbet (2) 6,666 46,035 0/18,334 0/50,000
</TABLE>
- ----------------------------
(1) Includes exercisable options to purchase 400,000 shares under options
granted to Mr. Stanford under the 1995 Stock Option Plan subject to
stockholder approval of that plan. Because the stockholders did not
approve the 1995 Stock Option Plan, such options have been rendered void.
(2) Messrs. Neal, McPherson, Christiansen and Durham and Ms. Corbet ceased to
serve as officers of the Company on July 15, 1996, December 4, 1995, June
1, 1996, March 1, 1996 and May 17, 1996, respectively.
(3) Includes exercisable options to purchase 30,000 shares under options
granted to Mr. Neal under the 1995 Stock Option Plan subject to
stockholder approval of that plan. Because the stockholders did not
approve the 1995 Stock Option Plan, such options have been rendered void.
EMPLOYMENT AGREEMENTS
On September 1, 1995, the Company entered into an employment agreement
with Alan C. Stanford upon Mr. Stanford's accepting employment as the Company's
President and Chief Operating Officer. Pursuant to his employment agreement
Mr. Stanford is to be paid a base salary for his first year of employment of
$300,000, subject to adjustment thereafter upon approval of the Compensation
Committee of the Board of Directors. Commencing with the year beginning
January 1, 1997, Mr. Stanford will be eligible to receive an annual bonus for
the prior fiscal year to be determined by the Compensation Committee after
reviewing the Company's financial performance (including earnings per share)
and operational performance during the year, Mr. Stanford's satisfaction or
progress toward goals established by the Compensation Committee and other
factors, though it need not give any particular weight to any such factor or
articulate its rational by reference to such factors. In addition, under the
employment agreement, Mr. Stanford was paid initial bonuses of $350,000 on
October 15, 1995 and $100,000 on March 1, 1996 as an inducement for his
acceptance of employment with the Company.
The employment agreement further required the Company to award to Mr.
Stanford under the 1995 Stock Option Plan immediately exercisable options to
purchase 400,000 shares of Common Stock at an exercise price per share equal to
the fair market value of a share of Common Stock on September 1, 1995 ($28.375),
subject to the approval of the 1995 Stock Option Plan by the stockholders.
Because the stockholders did not approve the 1995 Stock Option Plan, all options
granted under such plan have become void. On July 18, 1996, the Company granted
to Mr. Stanford, subject to stockholder approval of the 1996 Plan, options to
purchase a total of 400,000 shares. Of such options, 33.33 percent become
exercisable on each of the first, second and third anniversaries of the date of
grant at an exercise price of $11.00 per share, the fair market value of a share
of Common Stock under the 1996 Plan on the date of grant.
11
<PAGE> 15
Mr. Stanford's employment agreement also provides for other employee
benefits and perquisites customary for executive employment agreements. Mr.
Stanford is to be reimbursed for reasonable travel expenses from his offices in
Indiana and New York to the Company's principal offices in Charlotte and for
relocation expenses if Mr. Stanford moves his residence to facilitate the
performance of his duties under the employment agreement.
The initial term of Mr. Stanford's employment agreement will expire on
September 1, 1997, but will renew for successive two-year terms unless either
party provides the other with written notice of its intention to cancel the
agreement at least 180 days prior to the scheduled expiration of the agreement.
The Company may terminate Mr. Stanford's employment at any time for any
reason. In the event that the Company terminates Mr. Stanford's employment
other than for "cause" (as defined in the employment agreement), the employment
agreement provides that the Company shall pay Mr. Stanford in a lump sum the
amount of base salary that would have been paid to Mr. Stanford over the
remaining term of the agreement and the amount of annual bonuses Mr. Stanford
would have received for the remaining term of the agreement on the assumption
that such bonuses would have been of an amount equal to the amount of Mr.
Stanford's most recent annual bonus (for termination prior to payment of a
bonus for the fiscal year ending December 31, 1996, such bonus amount is
assumed to be $200,000). During such period, the employment agreement would
require Mr. Stanford to refrain from certain activities in competition with the
Company. Mr. Stanford may resign at any time.
Mr. Stanford's employment agreement requires that upon the expiration of
Mr. Stanford's current term as a director of the Company, the Company's Board
of Directors or a nominating committee thereof shall, subject to fiduciary
duties, nominate him for re-election as a director. In addition, the agreement
provides that by December 31, 1996, Mr. Stanford will be appointed the chief
executive officer of the Company. Mr. Stanford was appointed the Company's
Chief Executive Officer on May 30, 1996.
On January 19, 1996, the Company and David A. Finley entered into an
employment agreement in connection with Mr. Finley's acceptance of employment
as the Company's Executive Vice President and Chief Financial Officer.
Pursuant to his employment agreement, Mr. Finley is to be paid a base salary
for his first year of employment of $250,000, subject to adjustment thereafter
upon approval of the Compensation Committee. Mr. Finley will be eligible to
receive annual bonuses to be determined by the Compensation Committee in the
same manner as set forth in Mr. Stanford's employment agreement described
above.
Pursuant to the employment agreement, the Company awarded to Mr. Finley
under the 1995 Stock Option Plan immediately exercisable options to purchase
75,000 shares of Common Stock at an exercise price per share equal to the fair
market value on January 22, 1996 ($13.8125), subject to the approval of the 1995
Stock Option Plan by the stockholders. Because the stockholders did not approve
the 1995 Stock Option Plan, such options have become void. On July 18, 1996,
the Company granted to Mr. Finley, subject to stockholder approval of the 1996
Plan, options to purchase a total of 70,000 shares. Of such options, 33.33
percent become exercisable on each of the first, second and third anniversaries
of the date of grant at an exercise price of $11.00 per share, the fair market
value of a share of Common Stock under the 1996 Plan on the date of grant. In
the event that Mr. Finley's employment is terminated by the Company without
"cause" or he resigns or retires from employment with the consent of the
Company, any portion of the 70,000 options awarded to Mr. Finley on July 18,
1996 that is not then exercisable shall become immediately exercisable and
shall terminate on the earlier of the tenth anniversary of the date of grant
and 90 days after Mr. Finley ceases to be a director of the Company.
Mr. Finley's employment agreement provides for other employee benefits
and perquisites customary for executive employment agreements. In addition,
Mr. Finley is to be reimbursed for reasonable travel expenses from his
residence and offices in New York to the Company's principal offices in
Charlotte, for reasonable lodging expenses while in Charlotte and for
relocation expenses if Mr. Finley moves his residence to facilitate the
performance of his duties under the employment agreement.
The initial term of Mr. Finley's employment agreement will expire on
July 21, 1996, but will renew for successive six-month terms unless either
party provides the other with written notice of its intention to cancel the
12
<PAGE> 16
agreement at least 60 days prior to the scheduled expiration of the agreement.
No such notice has been provided by either party, and accordingly the term of
such agreement has renewed through January 21, 1997. The Company may terminate
Mr. Finley's employment at any time for any reason. In the event that the
Company terminates Mr. Finley's employment other than for "cause" (as defined
in the employment agreement), the employment agreement provides that the
Company shall pay to Mr. Finley in a lump sum the amount of base salary that
would have been paid to Mr. Finley over the remaining term of the agreement and
the amount of annual bonuses Mr. Finley would have received for the remaining
term of the agreement on the assumption that such bonuses would have been an
amount equal to the amount of Mr. Finley's most recent bonus (for termination
prior to payment of a bonus for the fiscal year ending December 31, 1995, such
bonus amount is assumed to be $200,000). During such period, the employment
agreement would require Mr. Finley to refrain from certain activities in
competition with the Company. Mr. Finley may resign at any time upon 60 days'
prior notice to the Company.
Effective July 15, 1996, the Company entered into a Retirement and
Post-employment Agreement with William W. Neal, III, pursuant to which the
Company has agreed to continue Mr. Neal's salary at its current rate through
December 31, 1996, to pay salary at one half of the current rate from January
1, 1997 through April 30, 1997, and to provide certain other limited benefits
for continuing services as required by the Company. On the effective date of
the agreement, Mr. Neal resigned as an officer of the Company and as an officer
and director of each of its subsidiaries and agreed to resign as a director of
the Company effective December 31, 1996.
DIRECTOR COMPENSATION
The Company pays its non-employee directors a fee of $2,500 for each
directors' meeting attended and pays an additional $500 fee to each member of
the Audit Committee for each committee meeting attended. During fiscal 1992,
the Company granted each of Messrs. Finley and Tate options to purchase 10,000
shares of Common Stock at the exercise price of $4.75 per share. Each such
option is exercisable as to 20% of the total number of shares covered by the
option during any 12-month period beginning on the date of grant. During the
year ended December 31, 1993, the Company granted each of Messrs. Anderson,
Finley, McTavish and Tate options to purchase 10,000 shares of Common Stock at
an exercise price of $7.75 per share. During the year ended December 31, 1994,
the Company granted each of Messrs. Anderson and McTavish options to purchase
10,000 shares of common stock at exercise prices of $11.25 and $11.75 per
share, respectively. Such 1993 and 1994 options are exercisable with respect
to one-sixth of the total number of shares covered by the option during any
12-month period beginning on the date of grant. To the extent any option is
not exercised during any 12-month period, installments accumulate and may be
exercised, in whole or in part, at any time thereafter until expiration of the
option (ten years from the date of grant). Subject to the approval of the
stockholders of the 1996 Plan at the Special Meeting, on June 25, 1996 each
director who was not also an officer or employee of the Company on that date
(i.e., Messrs. Anderson, Levenson, McTavish, Seymour and Tate) was granted
options to purchase 5,000 shares of Common Stock at the fair market value of
the shares ($11.125 per share) on that date. In addition, under the 1996 Plan,
any individual who is not an employee or officer of the Company and who is
first elected to the Board after June 25, 1996 shall receive upon the date of
such election an option to purchase 5,000 shares of Common Stock at an exercise
price per share equal to the fair market value of a share of Common Stock on
such date. The 1996 Plan further provides for awards of options to purchase
5,000 shares of Common Stock on each January 5 after the adoption of the 1996
Plan if the average daily value of a share of Common Stock for the immediately
preceding month of December is ten percent greater than the average daily value
of a share for the month of December of the immediately prior year. In the
event that the total exercise price of such options for 5,000 shares exceeds
$100,000, the number of shares purchasable under such option are to be reduced
so that the total exercise price of the options granted equals $100,000, and in
the event that the number of shares authorized under the 1996 Plan are not
sufficient to make an award to Outside Directors, options for the remaining
authorized shares shall be awarded pro rata to the Outside Directors then
entitled to receive such options. All such options awarded to such directors
under the 1996 Plan become exercisable over a period of four years, with 20% of
the total award being exercisable on the date of grant and an additional 20%
becoming exercisable on each of the next four anniversaries.
13
<PAGE> 17
STOCKHOLDERS' PROPOSALS
Stockholders' proposals intended for inclusion in Company's proxy
statement and the form of the proxy for the Annual Meeting in 1997 should be
sent by certified mail, return receipt requested, and must be received by the
Company at its principal executive offices (Attention: General Counsel) by
December 24, 1996. Such proposals may be made only by persons who are
stockholders, beneficially or of record, on the date the proposal is submitted
and who continue in such capacity through the meeting date, of at least 1% or
$1,000 in market value of securities entitled to be voted at the meeting, and
have held such securities for at least one year. In addition, the Company's
Bylaws prescribe the procedure a stockholder must follow to make nominations
for director candidates or to propose any business to be considered at an
annual meeting. Stockholder nominations for director or other proposals will
be considered at an annual meeting if the stockholder delivers to the Secretary
of the Company at its principal executive offices, no less than 60 nor more
than 90 days prior to the meeting (or in the event that public disclosure of
the date of the annual meeting is first made less than 70 days in advance of
the meeting date, no later than the close of business on the tenth day after
public disclosure of the date of the annual meeting is made), a written notice
setting forth the information specified in the Company's Bylaws. Any
stockholder desiring a copy of the Company's Bylaws will be furnished one
without charge upon written request to the Secretary of the Company at 128
South Tryon Street, Charlotte, North Carolina 28202.
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be
presented for action at the Special Meeting. If any other matter requiring a
vote of the stockholders properly comes before the meeting, the persons
authorized under management proxies will vote and act according to their best
judgment.
14
<PAGE> 18
APPENDIX A
FRONT
BROADWAY & SEYMOUR, INC.
Revocable Proxy SPECIAL MEETING OF STOCKHOLDERS
to be held on September 16, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints David A. Finley, Lillian N. Gudzy Wilson and
Alan C. Stanford as Proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of common stock of Broadway & Seymour, Inc. (the "Company") held
of record by the undersigned on July 29, 1996 at the special meeting of
stockholders to be held on September 16, 1996 (the "1996 Special Meeting") or
any adjournment thereof.
1. PROPOSAL TO APPROVE THE COMPANY'S 1996 STOCK OPTION PLAN described in
the Company's Proxy Statement for the 1996 Special Meeting of
Stockholders.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
Please sign and date on the reverse side and return in the enclosed
postage-prepaid envelope.
BACK
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL, AND THIS PROXY
WILL BE VOTED FOR THE PROPOSAL UNLESS THE SHAREHOLDER DIRECTS OTHERWISE, IN
WHICH CASE IT WILL BE VOTED AS DIRECTED.
The undersigned acknowledges receipt of the Notice of Special Meeting and
Proxy Statement dated August 2, 1996, and revokes all proxies heretofore
given by the undersigned.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: , 1996
-----------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED POSTAGE-
PREPAID ENVELOPE.
<PAGE> 19
APPENDIX B
BROADWAY & SEYMOUR, INC.
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Broadway & Seymour, Inc. 1996 Stock Option Plan
(the "Plan") is to promote the growth and profitability of Broadway & Seymour,
Inc. (the "Company") and its subsidiaries ("Subsidiaries") from time to time by
increasing the personal participation of officers, key employees and directors
in the financial performance of the Company, by enabling the Company to attract
and retain officers, key employees and directors of outstanding competence and
by providing such officers, key employees and directors with an equity
opportunity in the Company. This purpose will be achieved through the grant of
stock options ("Options") to purchase shares of common stock of the Company, no
par value per share (the "Common Stock") subject to such restrictions as the
administrators of the Plan may determine.
2. ADMINISTRATION
The Plan will be administered by the Company's Board of Directors (the
"Board"); provided, however, that if the Board includes members who are not
"non-employee directors" (as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, or any applicable successor rule
or regulation ("Rule 16b-3")) or "outside directors" (as defined in Section
162(m) of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder ("Section 162(m)")), then all authority of the Board under the Plan
shall be exercised by a committee of the Board (the "Committee") composed
solely of members thereof who are both "non-employee directors" and "outside
directors" (as so defined).
The Board or Committee shall have complete authority to: (i)
interpret all terms and provisions of the Plan consistent with law; (ii) select
from the group of officers and key employees eligible to participate in the
Plan the officers and key employees to whom Options shall be granted; (iii)
within the limits established herein, determine the number of shares to be
subject to, the exercise price of, and the term of each Option, granted to each
of such officers and key employees; (iv) prescribe the form of instrument(s)
evidencing Options granted under this Plan; (v) determine the time or times at
which Options shall be granted to officers or key employees; (vi) make special
grants of Options to officers or key employees when determined to be
appropriate; (vii) provide, if appropriate, for the exercisability of Options
granted to officers or key employees in installments or subject to specified
conditions; (viii) determine the method of exercise of Options granted to
officers or key employees under the Plan; (ix) adopt, amend and rescind general
and special rules and regulations for the Plan's administration; and (x) make
all other determinations necessary or advisable for the administration of this
Plan.
Any action which the Board or Committee is authorized to take may be
taken without a meeting if all the members of the Board or Committee sign a
written document authorizing such
<PAGE> 20
action to be taken, unless different provision is made by the By-Laws of the
Company or by resolution of the Board or Committee.
The Board or Committee may designate selected Board or Committee
members or certain employees of the Company to assist the Board or Committee in
the administration of the Plan and may grant authority to such persons to
execute documents, including Options, on behalf of the Board or Committee,
subject in each such case to the requirements of Rule 16b-3.
No member of the Board or Committee or employee of the Company
assisting the Board or Committee pursuant to the preceding paragraph shall be
liable for any action taken or determination made in good faith.
3. STOCK SUBJECT TO PLAN
The stock to be offered under this Plan shall be authorized but
unissued shares of Common Stock, shares of Common Stock previously issued and
thereafter acquired by the Company, or any combination thereof. An aggregate
of 875,000 shares of Common Stock are reserved for Option grants under this
Plan, of which an aggregate of 825,000 shares may be the subject of Options
granted under Section 4 hereof and an aggregate of 50,000 shares may be the
subject of Options granted under Section 5 hereof. Any or all of the Options
granted under Section 4 hereof may, at the Board's or Committee's discretion,
be intended to qualify as incentive stock options ("Incentive Stock Options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). The number of shares reserved under this Plan may be adjusted to
reflect any change in the capitalization of the Company as contemplated by
Section 10 hereof and occurring after the adoption of this Plan. The Board or
Committee will maintain records showing the cumulative total of all shares
subject to Options outstanding under this Plan.
4. OPTIONS FOR OFFICERS AND KEY EMPLOYEES
a. Eligibility and Factors to be Considered in Granting Options
The grant of Options under this Section 4 shall be limited to those
officers and key employees of the Company or any of its Subsidiaries who have
the greatest impact on the Company's long-term performance and are selected by
the Board or Committee. Members of the Company's Board of Directors who are
also officers or employees of the Company are eligible to receive Options under
this Section 4. In making any determination as to the officer(s) and key
employee(s) to whom Options shall be granted under this Section 4 and as to the
number of shares to be subject thereto, the Board or Committee shall take into
account, in each case, the level and responsibility of the person's position,
the level of the person's performance, the person's level of compensation, the
assessed potential of the person and such additional factors as the Board or
Committee shall deem relevant to the accomplishment of the purposes of the
Plan.
Options may be granted under this Section 4 only for a reason
connected with an officer's or key employee's employment by the Company or any
Subsidiary.
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<PAGE> 21
b. Allotment of Shares
The Board or Committee may, in its sole discretion and subject to the
provisions of this Plan, grant to participants eligible under this Section 4,
on or after the date hereof, Options to purchase shares of Common Stock.
Options granted under this Section 4 may, at the discretion of the Board or
Committee, be: (i) Options that are intended to qualify as Incentive Stock
Options; or (ii) Options that are not intended to be Incentive Stock Options or
(iii) both of the foregoing, if granted separately, and not in tandem. Each
Option granted under this Plan must be clearly identified as to its status as
an Incentive Stock Option or not.
Options granted under this Section 4 may be allotted to participants
in such amounts, subject to the limitations specified in this Plan, as the
Board or Committee, in its sole discretion, may from time to time determine,
provided that in any fiscal year no participant may be granted Options with
respect to more than 500,000 shares of Common Stock.
In the case of Options intended to be Incentive Stock Options, the
aggregate fair market value (determined at the time of such Incentive Stock
Options' respective grants) of the shares with respect to which Incentive Stock
Options are exercisable for the first time by a participant hereunder during
any calendar year (under all plans taken into account pursuant to Section
422(d) of the Code) shall not exceed $100,000. Options under this Section 4
not intended to qualify as Incentive Stock Options may be granted to any Plan
participant without regard to the Section 422(d) limitations.
c. Time of Granting Options
The date of grant of an Option under this Section 4 shall, for all
purposes, be the date on which the Board or Committee makes the determination
of granting such Option (each such date, a "Grant Date"). Notice of the
determination shall be given to each officer or key employee to whom an Option
is so granted under this Section 4 within a reasonable time after the Grant
Date for such Option.
d. Exercise Price for Options
The price per share at which each Option granted under this Section 4
may be exercised shall be such price as shall be determined by the Board or
Committee at the time of grant based on such criteria as may be adopted by the
Board or Committee at the time of grant in good faith, taking into account, in
each case, the market price of the Common Stock, the level and responsibility
of the person's position, the level of the person's performance, the person's
level of compensation, the assessed potential of the person, and such
additional factors as the Board or Committee shall deem relevant to the
accomplishment of the purposes of the Plan; provided, however, that in no event
shall the exercise price per share of an Option be less than 100% of the fair
market value of the Company's shares of Common Stock on the Grant Date for such
Option. In the case of an Option intended to qualify as an Incentive Stock
Option, the price per share shall not be less than 100% (or 110% for owners of
more than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary) of the fair market value of the Common Stock on the
Grant Date for such Option.
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<PAGE> 22
If the Company's shares of Common Stock are:
(1) actively traded on any national securities exchange or NASDAQ
system that reports their sales prices, fair market value shall be the average
of the high and low sales prices per share on any Grant Date;
(2) otherwise traded over the counter, fair market value shall be
the average of the final bid and asked prices for the shares of Common Stock as
reported for any Grant Date;
(3) not traded, the Board or Committee shall consider any factor
or factors that it believes affects fair market value, and shall determine fair
market value without regard to any restriction other than a restriction that by
its terms will never lapse.
e. Term of Options
The term of each Option granted under this Section 4 shall be
established by the Board or Committee, but shall not exceed 10 years (or 5
years for owners of more than 10% of the total combined voting power of all
classes of stock of the Company or of a Subsidiary) from the Grant Date for
such Option.
f. Repricing and Replacement of Options Prohibited
Notwithstanding any other provision of the Plan, the Board or
Committee may not grant Options to the holder of outstanding Options either
conditioned upon or under an arrangement contemplating the voluntary surrender
by such holder of any such outstanding Options granted under this Section 4.
5. OPTIONS FOR DIRECTORS WHO ARE NEITHER OFFICERS NOR EMPLOYEES
a. Initial Director Options
On June 25, 1996, each member of the Board of Directors who is not an
officer or employee of the Company or any Subsidiary (an "Eligible Director")
shall receive, as of such date, subject to subsequent approval of this Plan by
the Company's stockholders to the extent required by Section 162(m) and the
rules of the NASDAQ Stock Market, an option to purchase 5,000 shares of Common
Stock, and thereafter upon the initial election of a member of the Board of
Directors who is an Eligible Director such Eligible Director shall receive, on
the date of such election, subject to subsequent approval of this Plan by the
Company's stockholders to the extent required by Section 162(m) and the rules
of the NASDAQ Stock Market, an option to purchase 5,000 shares of Common Stock.
b. Annual Director Options
Subject to subsequent approval of this Plan by the Company's
stockholders to the extent required by Section 162(m) and the rules of the
NASDAQ Stock Market, on January 5 of each year following the adoption of this
Plan the Company shall grant to each Eligible Director an Option to
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<PAGE> 23
purchase 5,000 shares of Common Stock (subject to reduction as described below)
if the average of the daily fair market value (as determined in accordance with
Section 4(d)) of a share of Common Stock over the immediately preceding month
of December is ten percent (10%) greater than the average of the daily fair
market value (as determined in accordance with Section 4(d)) of a share of
Common Stock over the month of December of the next preceding year.
Notwithstanding the foregoing, if the product of the exercise price per share
under such Option multiplied by 5,000 exceeds $100,000, then such Option shall
be granted to purchase the number of shares of Common Stock equal to the
quotient of $100,000 divided by the exercise price per share under such Option
(rounded down to the nearest whole share).
c. Exercise Price
Each Option granted pursuant to this Section 5 shall have an exercise
price per share equal to the fair market value (as defined in Section 4(d)) of
a share of Common Stock on the date of grant (the "Director Grant Date") or, if
such date is not a business day, then on the next preceding business day.
d. Exercisability and Term
Each Option granted pursuant to this Section 5 shall become
exercisable as set forth below:
<TABLE>
<CAPTION>
Aggregate Percentage of
Shares under such Option
Date Exercisable on such Date
---- ----------------------------
<S> <C>
Director Grant Date 20%
First Anniversary of 40%
Director Grant Date
Second Anniversary of 60%
Director Grant Date
Third Anniversary of 80%
Director Grant Date
Fourth Anniversary of 100%
Director Grant Date
</TABLE>
The term of each Option granted pursuant to this Section 5 shall be ten years
from the Director Grant Date for such Option.
-5-
<PAGE> 24
e. Insufficient Shares
In the event that any award of options to Outside Directors as set
forth in this Section 5 would exceed the remaining number of shares of Common
Stock authorized for awards under this Section 5, then the amount of options to
be awarded at such time shall be reduced to an amount equal to the quotient of
the remaining shares authorized under this Section 5 divided by the number of
Outside Directors then entitled to receive such award.
f. Amendments to Section 5
This Section 5 may not be amended more frequently than once every six
months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act or the rules thereunder.
6. NON-TRANSFERABILITY
An Option granted to a participant under this Plan shall not be
transferable by him or her except: (i) by will; (ii) by the laws of descent
and distribution; or (iii) pursuant to a qualified domestic relations order as
defined by the Code or in Title I of the Employee Retirement Income Security
Act, or the rules thereunder. In the case of an Option intended to be an
Incentive Stock Option, such Option shall not be transferable by a participant
other than by will or the laws of descent and distribution and during the
optionee's lifetime shall be exercisable only by him or her.
Notwithstanding anything to the contrary contained herein, for a
period of six months commencing on the Grant Date for any Option granted
hereunder to a participant subject to reporting requirements under Section 16
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), such
participant may not sell any share(s) of Common Stock acquired upon exercise of
such Option.
7. EXERCISABILITY OF OPTIONS
Subject to the provisions of this Plan, Options granted under Section
4 hereof shall be exercisable at such time or times after the Grant Date for
such Options according to such schedule and upon such conditions as may be
determined by the Board or Committee at the time of grant, and an Option
granted under Section 5 hereof shall be exercisable in accordance with the
provisions of Section 5 hereof.
Any Option granted under Section 5 of this Plan and, unless otherwise
determined by the Board or the Committee at the time of grant or thereafter,
any Option granted under Section 4 of this Plan, shall terminate in full
(whether or not previously exercisable) prior to the expiration of its term on
the date the optionee ceases to be a director of the Company or an employee of
the Company or any Subsidiary of the Company, unless the optionee shall (a) die
while a director of the Company or an employee of the Company or such
Subsidiary, in which case the participant's legatee(s) under his or her last
will or the participant's personal representative or representatives may
exercise all or part of the previously unexercised portion of such Option at
any time within one year, but not beyond the expiration of its term, after the
participant's death to the extent the optionee could have exercised the Option
immediately prior to his or her death or in the amount purchasable under the
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<PAGE> 25
Option immediately after the death of the optionee, whichever is greater, (b)
become permanently or totally disabled within the meaning of section 22(e)(3)
of the Code (or any successor provision) while a director of the Company or an
employee of the Company or such Subsidiary, in which case the participant or
his or her personal representative may exercise the previously unexercised
portion of such Option at any time within one year, but not beyond the
expiration of its term, after termination of his or her employment or
directorship to the extent the optionee could have exercised the Option
immediately prior to such termination, or (c) resign or retire with the consent
of the Company or have his or her employment with the Company or any Subsidiary
terminated by the Company or any Subsidiary other than for cause (as defined
below), in which case the participant may exercise the previously unexercised
portion of such Option at any time within six months, but not beyond the
expiration of its term, after the participant's resignation, retirement or
employment termination to the extent the optionee could have exercised the
Option immediately prior to such resignation, retirement or employment
termination.
For purposes of this Section 7, employment termination for "cause"
means termination of employment by reason of gross misconduct as determined by
the Board or Committee, which will include but not be limited to the following:
(i) the commission of dishonest acts involving the Company, (ii) disclosure of
confidential information of the Company, (iii) obvious intoxication (whether
due to alcohol, drugs or other substance abuse) on the job or possession of any
alcoholic substance or illegal drugs on the premises of the Company or any
Subsidiary, (iv) misuse of Company or Subsidiary assets (which shall include
but be limited to cash, equipment, and/or other assets), (v) repeated disregard
for the lawful policies of the Company as may be established from time to time
and communicated to the employee, or (vi) any misconduct specified in any
employment agreement to which the participant is a party that would justify the
termination of such participant's employment with the Company or any Subsidiary
"for cause."
In no event may an Option be exercised after the expiration of its
fixed term.
8. METHOD OF EXERCISE
Each Option granted under the Plan shall be deemed exercised when the
holder (a) shall indicate the decision to do so in writing delivered to the
Company, (b) shall at the same time tender to the Company payment in full of
the exercise price for the shares for which the Option is exercised, which
payment may be made in (i) cash, (ii), shares of the Common Stock, the total
market value of which equals the total option price of the shares with respect
to which the option is being exercised, or (iii) any combination of cash and
shares of the Common Stock, the total market value of which equals the total
option price of the shares with respect to which the option is being exercised,
and (c) shall comply with such other reasonable requirements as the Board or
Committee may establish; provided that in order to enable an optionee
(including but not limited to members of the Board and officers) to exercise
options granted under this Plan, the Board or the Committee may determine, in
the exercise of its discretion, to (i) grant such optionee permission to pay
the exercise price in installments or (ii) grant such optionee permission to
pay the exercise price by delivering for cancellation Options having an
aggregate value (calculated by subtracting the exercise price per share from
the fair market value of a share of Common Stock) equal to the total amount of
the exercise price. The exercise of any option granted under this Plan may be
made subject to the condition that, if at any time the Board or the Committee
shall determine, in its discretion, that
-7-
<PAGE> 26
the satisfaction of withholding tax or other withholding liabilities under any
state or federal law is necessary or desirable as a condition of, or in
connection with, such exercise or the delivery or purchase of shares pursuant
thereto, then in such event, the exercise of the option shall not be effective
unless such withholding tax or other withholding liabilities shall have been
satisfied in a manner acceptable to the Company, which may include the
withholding by the Company of shares of Common Stock to be issued upon exercise
of an Option having a fair market value equal to the required withholding
amount. With respect to the foregoing sentences, the value of the shares of
Common Stock shall be the fair market value determined in accordance with
Section 4(d) of this Plan as of the day of such payment or withholding.
No person, estate or other entity shall have any of the rights of a
shareholder with reference to shares subject to an Option until a certificate
for the shares has been delivered.
An Option granted under this Plan may be exercised for any lesser
number of shares than the full amount for which it could be exercised. Such a
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan for the remaining shares subject
to the Option.
9. TERMINATION OF OPTIONS
An Option granted under this Plan shall be considered terminated in
whole or in part, to the extent that, in accordance with the provisions of this
Plan and such Option, it can no longer be exercised for any shares originally
subject to the Option. The shares subject to any terminated Option or portion
thereof shall no longer be charged against the applicable limitation or
limitations provided in Section 3 of this Plan and may again become shares
available for the purposes, and subject to the same applicable limitations, of
this Plan.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the
Company by reason of a stock dividend, stock split, stock consolidation,
recapitalization, reorganization, merger, split up or the like, the shares
available for purposes of this Plan, the shares to be covered by subsequent
grants under Section 5 hereof and the number and kind of shares under option in
outstanding option agreements pursuant to this Plan (and the option price under
such agreements) shall be appropriately adjusted so as to preserve, but not
increase, the benefits of this Plan to the Company and the benefits to the
holders of such Options; provided, however, that for any Incentive Stock
Options, in the case of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the excess of the
aggregate fair market value of the shares subject to any Options immediately
after such event over the aggregate option price of such shares is not more
than the excess of the aggregate fair market value of all shares subject to
such Options immediately before such event over the aggregate option price of
such shares.
Adjustments under this Section shall be made by the Board or
Committee, whose determination as to what adjustments shall be made and the
extent thereof, shall be final, binding and conclusive.
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<PAGE> 27
11. COMPLIANCE WITH SECURITIES LAWS AND OTHER REQUIREMENTS
No certificate(s) for shares shall be executed and delivered upon
exercise of an Option until the Company shall have taken such action, if any,
as is then required to comply with the provisions of the Securities Act of
1933, as amended, the 1934 Act, the North Carolina Uniform Securities Act, as
amended, any other applicable state securities law(s) and the requirements of
any exchange on which the Common Stock may, at the time, be listed.
In the case of the exercise of an Option by a person or estate
acquiring the right to exercise the Option by bequest or inheritance, the Board
or Committee may require reasonable evidence as to the ownership of the Option
and may require such consents and releases of taxing authorities as it may deem
advisable.
12. NO RIGHT TO EMPLOYMENT
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, shall confer upon any
employee participant under the Plan any right to continue in the employ of the
Company, or upon any director participant under the Plan any right to continue
as a director of the Company, or shall in any way affect the right and power of
the Company to terminate the employment or position with the Company of any
participant under this Plan at any time with or without assigning a reason
therefor, to the same extent as the Company might have done if this Plan had
not been adopted.
13. AMENDMENT AND TERMINATION
Subject to Section 5 hereof, the Board or Committee may at any time
suspend, amend, or terminate this Plan. Except as provided in Section 4(f) of
this Plan, the Board or Committee may make such modifications of the terms and
conditions of a holder's Option as it shall deem advisable; provided, however,
that an Option granted under Section 5 of this Plan may not be modified by the
Board or Committee with respect to any term or condition thereof required by
Section 5 hereof. No Option may be granted during any suspension of the Plan
or after such termination. Notwithstanding the foregoing provisions of this
Section, no amendment, suspension or termination shall, without the consent of
the holder of an Option, alter or impair any rights or obligations under any
Option theretofore granted under the Plan.
In addition to Board or Committee approval of an amendment, if the
amendment would: (i) materially increase the benefits accruing to participants;
(ii) increase the number of securities issuable under this Plan (other than an
increase pursuant to Section 10 hereof); (iii) change the class or classes of
individuals eligible to receive Options; or (iv) otherwise materially modify
the requirements for eligibility, then such amendment must be approved by the
holders of a majority of the Company's outstanding capital stock present or
represented by proxy and entitled to vote at a meeting duly held of the
shareholders of the Company.
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<PAGE> 28
14. USE OF PROCEEDS
The proceeds received by the Company from the sale of shares pursuant
to the exercise of Options granted under the Plan shall be used for general
corporate purposes as determined by the Board.
15. INDEMNIFICATION OF BOARD OR COMMITTEE
In addition to such other rights of indemnification as they may have
as members of the Board, the members of the Board or Committee shall to the
fullest extent permitted by law be indemnified by the Company against the
reasonable expenses, including attorney's fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to 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 the settlement is approved by independent
legal counsel selected by the Company) 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
Board member or Committee member is liable for gross negligence or misconduct
in the performance of his duties; provided, however, that within 60 days after
institution of any such action, suit or proceeding the Board member or
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
16. EFFECTIVE DATE OF THE PLAN
This Plan was adopted by the Board of the Company on June 25, 1996,
and shall be effective until June 25, 2006, subject to its approval by the
appropriate stockholder vote at a special meeting called for such purpose or at
the next ensuing annual meeting of stockholders of the Company.
17. DURATION OF THE PLAN
Unless previously terminated by the Board or Committee, this Plan
shall terminate at the close of business on June 25, 2006, and no Option shall
be granted under it thereafter, but such termination shall not affect any
Option previously granted under this Plan.
18. COMPLIANCE WITH RULE 16b-3
With respect to any Plan participant who is subject to Section 16 of
the 1934 Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To
the extent that any provision of the Plan or action by the Board or Committee
fails to so comply, such provision or action shall be deemed null and void to
the extent permitted by law and deemed advisable by the Board or Committee.
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<PAGE> 29
19. CHANGE OF CONTROL
In the event of a change of control of the Company, all vesting
requirements in respect of Options granted under this Plan shall be terminated
and all outstanding Options shall become immediately exercisable at their
stated exercise prices. From and after the date of such change of control, all
such Options shall be deemed fully vested. For the purposes of this Section, a
change of control shall include the following:
a. A tender offer or exchange offer is made whereby the
effect of such offer is to take over and control the affairs of the
Company and such offer is consummated for the ownership of securities
of the Company representing 25% or more of the combined voting powers
of the Company's then outstanding voting securities.
b. The adoption by the Company's stockholders of a plan
of merger or consolidation providing for the merger or consolidation
of the Company with another corporation and, as a result of such
merger or consolidation, less than 75% of the outstanding voting
securities of the surviving or resulting corporation would then be
owned in the aggregate by the former stockholders of the Company,
other than affiliates within the meaning of the 1934 Act or any party
to such merger or consolidation.
c. The Company transfers substantially all of its assets
to another corporation or entity which is not a wholly owned
subsidiary of the Company.
d. Any "person" (as such term is used in Sections
3(a)(9) and 13(d)(3) of the 1934 Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding securities, and the effect of such ownership is to
take over and control the affairs of the Company.
e. As the result of a tender offer, merger,
consolidation, sale of assets, or contested election, or any
combination of such transactions, the persons who were members of the
Board of Directors of the Company immediately before the transaction,
cease to constitute at least a majority thereof.
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<PAGE> 30
Dear
In accordance with the 1996 Stock Option Plan (the "Plan") of Broadway &
Seymour, Inc. (the "Company"), you, as an officer, key employee or director of
the Company or its subsidiaries, and in order to give you an added proprietary
interest in the Company and an additional incentive to advance the interest of
the Company, were granted on _____________, ____, an option to purchase _____
shares of the common stock of the Company upon the following terms and
conditions:
(1) The exercise price shall be $___________ (____% of the fair
market value of a share on the date of grant - ___________,
____);
(2) This Option will become exercisable according to the following
schedule:
(3) Once exercisable, this Option may be exercised until
____________, ____, subject to the terms and conditions of the
Plan, a copy of which is attached hereto and incorporated
herein by reference. This Option is granted subject to the
Plan and shall be construed in accordance with the Plan.
(4) This Option is (is not) intended to be treated as an
"incentive stock option" for purposes of Section 422 of the
Internal Revenue Code.
(5) To exercise this Option, the holder must deliver written
notice of the decision to do so and at the same time tender to
the Company payment in full of the exercise price for the
shares for which the Option is exercised, which payment may be
made in (i) cash, (ii) shares of the Common Stock, the total
market value of which equals the total option price of the
shares with respect to which the option is being exercised, or
(iii) any combination of cash and shares of the Common Stock,
the total market value of which equals the total option price
of the shares with respect to which the option is being
exercised. With respect to the foregoing sentence, the value
of the shares of Common Stock shall be the fair market value
determined in accordance with Section 4(d) of this Plan as of
the day of such payment.
(6) The exercise of this Option shall be subject to the condition
that, if at any time the Board or the Committee (as defined in
the Plan) shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding
liabilities under any state or federal law is necessary or
desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares pursuant
thereto, then in such event, the exercise of the option shall
not be effective unless such withholding tax or other
withholding liabilities shall have been satisfied in a manner
acceptable to the Company, which may include the withholding
by the Company of shares of Common Stock to be issued upon
exercise of an Option having a fair market value equal to the
required withholding amount.
This Option is not transferable except pursuant to the terms and conditions of
the Plan.
<PAGE> 31
Very truly yours,
BROADWAY & SEYMOUR, INC.
By:
----------------------------
Title:
-------------------------
I hereby accept the within Option and
acknowledge receipt of a copy of the Plan.
- ------------------------------------------
Optionee
Date:
-------------------------------------
