SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Soliciting Material Pursuant to
sec.240.14a-11(c) or sec.240.14a-12
[X] Definitive Proxy Statement [ ] Confidential, for Use of the
Commission Only
[ ] Definitive Additional Materials (as permitted by Rule 14a-6(e)(2))
Centura Software Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $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:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
<PAGE>
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 17, 1999
___________
TO THE SHAREHOLDERS OF CENTURA SOFTWARE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Centura Software Corporation (the "Company") will be held on Thursday,
June 17, 1999, at 10:00 a.m., local time, at the Hotel Sofitel, located at
223 Twin Dolphin Drive, Redwood Shores, California 94065 for the following
purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected and qualified;
2. To approve an amendment to the Company's 1995 Stock Option
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder by 1,400,000 shares to an aggregate of 4,400,000 shares;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending December
31, 1999; and
4. To transact such other business as may properly come before
the meeting or any postponement or adjournment(s) thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
Only shareholders of record at the close of business on April 21,
1999 are entitled to notice of and to vote at the meeting and any
adjournment(s) thereof.
All shareholders are cordially invited to attend the meeting in
person. However, to assure your representation at the meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly
as possible in the postage-prepaid envelope enclosed for that purpose. Any
shareholder attending the meeting may vote in person even if such
shareholder returned a proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ RICHARD S. GREY
RICHARD S. GREY
Secretary
San Francisco, California
May __, 1999
<PAGE>
___________
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1999
___________
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors
("Board of Directors") of Centura Software Corporation (the "Company"),
a Delaware corporation, for use at the Annual Meeting of Shareholders to
be held on Thursday, June 17, 1999 at 10:00 a.m., local time, or at any
postponement or adjournment(s) thereof ("Annual Meeting"), for the
purposes set forth herein and in the accompanying Notice of Annual Meeting
of Shareholders. The Annual Meeting will be held at the Hotel Sofitel,
located at 223 Twin Dolphin Drive, Redwood Shores, California 94065. The
telephone number at that location is (650) 598-9000.
The Company's principal executive offices are located at 975 Island
Drive, Redwood Shores, California 94065. The Company's telephone number at
that location is (650) 596-3400.
This Proxy contains information that was also included in the
Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission ("SEC") on March 31, 1999.
Solicitation
These proxy solicitation materials were mailed on or about April 30,
1999 to all shareholders entitled to vote at the meeting. The costs of
soliciting these proxies will be borne by the Company. These costs will
include the expenses of preparing and mailing proxy materials for the
Annual Meeting and reimbursement paid to brokerage firms and others for
their expenses incurred in forwarding solicitation material regarding the
Annual Meeting to beneficial owners of the Company's Common Stock
("Common Stock"). The Company may conduct further solicitation
personally, telephonically, or by facsimile through its officers,
directors, and regular employees, none of whom will receive additional
compensation for assisting with the solicitation.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Asa Drew, Inspector of Elections) a written notice of
revocation or a duly executed proxy bearing a later date or by attending
the meeting of shareholders and voting in person.
Voting
Every shareholder voting for the election of directors may cumulate
such shareholder's votes and give one candidate a number of votes equal to
the number of directors to be elected multiplied by the number of shares
held by such shareholder, or distribute the shareholder's votes on the
same principle among as many candidates as the shareholder thinks fit,
provided that votes cannot be cast for more than seven candidates.
However, no shareholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting
prior to the voting of the intention to cumulate the shareholder's votes.
On all other matters, each share has one vote.
Votes cast in person or by proxy at the Annual Meeting will be
tabulated by the Inspector of Elections ("Inspector of Elections") with
the assistance of ChaseMellon Shareholder Services, the Company's transfer
agent ("Transfer Agent"). The Inspector of Elections will also determine
whether or not a quorum is present. Except with respect to the election of
directors where cumulative voting is invoked and except in certain other
specific circumstances, the affirmative vote of a majority of shares
represented and voting at a duly held meeting at which a quorum is present
is required for approval of proposals presented to shareholders. In
general, applicable law also provides that a quorum consists of a majority
of the shares entitled to vote, represented either in person or by proxy.
The Inspector of Elections will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum but as not voting for purposes of determining the approval of any
matter submitted to the shareholders for a vote. Any proxy which is
returned using the form of proxy enclosed and which is not marked as to a
particular item will be voted for the election of directors, for approval
of the amendment to the Company's 1995 Stock Option Plan to increase the
number of shares of Common Stock reserved for issuance thereunder by
1,400,000 shares to an aggregate of 4,400,000 shares, for ratification of
the appointment of the designated independent auditors, and as the proxy
holders deem advisable on other matters that may come before the meeting,
as the case may be, with respect to the item not marked. If a broker
indicates on the enclosed proxy or its substitute that it does not have
discretionary authority as to certain shares to vote on a particular
matter ("broker non-votes"), those shares will not be considered as voting
with respect to that matter.
Application of the General Corporation Law of California to the
Company, a Delaware Corporation. The Company was reincorporated in the
state of Delaware on February 16, 1999. However, under Section 2115 of
the California General Corporation Law, certain corporations not
incorporated in California are still considered to be "quasi-
California" corporations if they have significant shareholder, sales or
employment contacts with the state of California. Because the Company
does have such significant shareholder, sales and employment contacts
with the state of California, the Company remains subject to a number of
key provisions of the California General Corporation Law which pertain
generally to shareholder voting rights and the election of directors for
the purposes of this Annual Meeting.
Record Date and Share Ownership
Only shareholders of record at the close of business on April 21,
1999 ("Record Date") are entitled to notice of and to vote at the
meeting. As of the Record Date, 29,598,182 shares of the Company's Common
Stock, par value $0.01 per share, were issued and outstanding.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The Company's bylaws currently provide for seven directors. At the
Annual Meeting, the Board of Directors has nominated five directors to be
elected to serve until the next annual meeting and until their successors
are elected and qualified at that next annual meeting. Pursuant to the
Company's merger agreement with Raima Corporation ("Raima"), described in
the Company's form S-4 filed on April 30, 1999, the Company will be
obligated, upon closing of the merger, to appoint Mr. Thomas Clarke of
Raima's board of directors to sit on the Company's Board of Directors.
The Company intends to leave the sixth seat vacant until the merger closes
and then appoint Mr. Clarke. The Company had intended to nominate Samuel
M. Inman, III, the Company's former Chief Executive Officer, to fill the
seventh seat. However, shortly before the filing of this proxy statement,
Mr. Inman notified the Company that he does not wish to continue to serve
on the Board of Directors. The Company has not yet selected a successor.
Unless otherwise instructed, the proxy holders representing the Board of
Directors will vote the proxies received by them for the Company's five
nominees named below, all of whom are presently directors of the Company.
To fill the sixth and seventh seats, and in the event that any nominee of
the Company is unable or declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors. In the event that
additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of as many
of the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. Assuming
a quorum is present, the nominees for director receiving the greatest
number of votes cast (not to exceed seven) at the Annual Meeting will be
elected. The term of office of each person elected as a director will
continue until the next annual meeting of shareholders or until his or her
successor has been elected and qualified.
The names of the nominees and certain other information about them
as of April 21, 1999 are set forth below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
- ---------------------- ---- ------------------------------------- --------
<S> <C> <C> <C>
Scott R. Broomfield.. 42 President and Chief Executive Officer 1997
(Principal Executive Officer),
Chairman of the Board of Directors
Jack King............ 65 President and Chief Executive Officer 1997
of Zitel Corporation
Philip Koen.......... 47 President and Chief Executive Officer 1997
of PointCast Corporation
Peter Micciche....... 45 Senior Vice President, Sales and 1998
Services of ChannelPoint, Inc.
Earl M. Stahl........ 44 Vice President, Products and Strategy 1997
of Rightpoint Corporation
</TABLE>
Mr. Broomfield has served as Chief Executive Officer and a director
of the Company since December 1997 and Chairman of the Board of Directors
and Chief Executive Officer since February 1998. He also currently serves
as a member of the board of directors of CAM Data Systems, Inc., a
software company that provides applications for retailers. Prior to
joining the Company, Mr. Broomfield was a principal with the firm of
Hickey & Hill Incorporated ("Hickey & Hill") from February 1993 to
December 1997, advising companies needing operational and financial
restructuring. In this capacity, Mr. Broomfield assisted companies with
executive management, strategy, operational and financial restructuring,
business planning and business development. Prior to joining Hickey &
Hill, Mr. Broomfield held senior management positions at Trilogy
Systems, Inc., and Digital Equipment Corporation. Mr. Broomfield has a BS
in psychology from Azusa Pacific University and an MBA with an emphasis in
finance, from Santa Clara University.
Mr. King has served on the Company's Board of Directors since
December 1997. Mr. King has been President and CEO of Zitel Corporation, a
company specializing in Year 2000 software conversion consulting, systems
integration and "intelligence-based" technology solutions, since
November 1986. Prior to joining Zitel, Mr. King has held key executive and
senior management positions at Dynamic Disk, Data Electronics, Memorex and
Xerox Corporation. Mr. King holds a B.S. in Industrial Management from San
Diego State University.
Mr. Koen has served on the Company's Board of Directors since
December 1997. Mr. Koen has served as Chief Executive Officer of PointCast
Inc. since March of 1999. Prior to this, Mr. Koen served as Chief
Operating Officer and Chief Financial Officer of PointCast since July of
1997. From December 1993 until June 1997, Mr. Koen was Chief Financial
Officer at Etec Systems. Prior to that, he was the Chief Financial
Officer and then Vice President of Manufacturing at Levelor Corporation
from April 1989 to December 1993. Mr. Koen holds a B.A. in Economics from
Claremont Mens College and an M.B.A in General Management from the
University of Virginia.
Mr. Micciche has served as a member of the Board of Directors since
February 1998. Mr. Micciche is currently Senior Vice President, Sales and
Services at ChannelPoint, Inc. Prior to this, Mr. Micciche served as
President and CEO of SceneWare Corporation from 1994 to 1998. Prior to
that he was Vice-President and General Manager, North America at The ASK
Group from December 1992 until May, 1993, and was President of Cognos
Corporation from December 1989 through December 1992. Mr. Micciche
graduated from Boston College with a Bachelor of Science in Accounting and
from Suffolk University with an MBA in Finance.
Mr. Stahl serves as Vice President, Products and Strategy for
Rightpoint Corporation. He served as Chief Technology Officer and Senior
Vice President for the products organization at the Company from April,
1995 until December 1997. Mr. Stahl joined the Company as an employee in
1988 and held various key positions within the company's development
organization, including spearheading the company's client/server tools
development effort. Mr. Stahl has more than 20 years of industry
experience, which includes product development and support on mainframe,
minicomputers, and PC systems. He holds a B.S. in computer science from
San Diego State University and has previously managed development projects
at Bell Northern Research, Dest Corporation, and VisiCorp.
The Board of Directors appoints the Company's officers and such
officers serve at the discretion of the Board of Directors. There are no
family relationships among the officers or directors of the Company.
Board of Directors Meetings and Committees
The Board of Directors held a total of thirteen meetings during the
fiscal year ended December 31, 1998. The Board of Directors has an Audit
Committee and a Compensation Committee. It does not have a nominating
committee or a committee performing the functions of a nominating
committee.
The Audit Committee of the Board of Directors currently consists of
directors Inman and Koen and held one meeting during 1998. The Audit
Committee recommends engagement of independent auditors for the Company,
and is primarily responsible for approving the services performed by such
auditors and for reviewing and evaluating the Company's accounting
principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors currently
consists of directors King, Koen and Micciche, and had one meeting in
1998. The Compensation Committee establishes the compensation for the
Company's executive officers, including the Company's Chief Executive
Officer.
No incumbent director attended fewer than 75% of the aggregate
number of meetings of the Board of Directors and/or meetings of the
committees of the Board of Directors that he was eligible to attend.
Compensation of Directors
Directors are reimbursed for out-of-pocket travel expenses
associated with their attendance at Board of Directors meetings. Directors
received no cash compensation for their services on the Board of
Directors. Nonemployee directors of the Company are automatically granted
options to purchase shares of the Company's Common Stock pursuant to the
terms of the Company's 1996 Directors' Stock Option Plan (the "Directors'
Option Plan"). Under the Directors' Option Plan as currently structured,
each nonemployee director receives an option to purchase 100,000 shares of
Common Stock on the date on which such person first becomes a nonemployee
director of the Company. Each option granted under the Directors' Option
Plan becomes exercisable in installments of 1/36th of the shares subject to
such option on each of the first thirty-six (36) monthly anniversaries of
the date of grant of the option. Directors' Options issued Prior to 1998
become exercisable in installments of 1/48th of the shares subject to such
option on each of the first forty-eight (48) monthly anniversaries of the
date of the grant option. Options granted under the Directors' Option
Plan have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant, and a term of ten years.
Required Vote
The nominees (not to exceed seven) receiving the highest number of
affirmative votes of shares of the Company's Common Stock present at the
Annual Meeting in person or by proxy and entitled to vote shall be elected
as directors.
The Board of Directors recommends a vote "FOR" the election of each
of the nominees listed above.
PROPOSAL NO. 2
APPROVAL OF THE AMENDMENT TO THE 1995 STOCK OPTION PLAN
At the Annual Meeting, shareholders are being asked to approve an
amendment to the 1995 Stock Option Plan (the "1995 Option Plan") to
increase the number of shares of Common Stock reserved for issuance
thereunder by 1,400,000 shares to an aggregate of 4,400,000 shares.
General
The Company's 1995 Option Plan was adopted by the Board of Directors
in March 1995 to replace the 1986 Incentive Stock Option Plan which had
160,970 shares available for grant thereunder as of April 19, 1995 and
which expired in accordance with its terms in July 1996. The Board of
Directors initially reserved 1,000,000 shares of Common Stock for issuance
under the 1995 Option Plan and obtained shareholder approval on
September 24, 1996 to a proposed amendment to increase the number of
shares reserved for issuance under the 1995 Option Plan by 1,000,000. On
June 17, 1998, the Board of Directors obtained shareholder approval for an
additional 1,000,000 shares increase, elevating the number of shares
reserved for issuance under the 1995 Option Plan to 3,000,000. On
April 21, 1999, the Board of Directors approved a further amendment to
increase the number of shares reserved for issuance under the 1995 Option
Plan by 1,400,000 shares to a total of 4,400,000 shares, for which
shareholder approval is being requested.
The 1995 Option Plan provides for the granting to employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and for the granting of
nonstatutory options to employees and consultants. See "United States
Federal Income Tax Information" below for information concerning the tax
treatment of both incentive stock options and nonstatutory stock options.
As of March 31, 1999, 58,303 shares had been issued upon exercise of
options granted under the 1995 Option Plan, options to purchase 2,504,815
shares were outstanding and 436,882 shares remained available for future
grant (not including the additional 1,400,000 shares reserved by the Board
of Directors, for which shareholder approval is being requested). As of
March 31, 1999, the fair market value of all shares of Common Stock
subject to outstanding options was $2,582,464 based on the closing sale
price of $1.031 for the Company's Common Stock as reported on The Nasdaq
SmallCap Market (a tier the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") National Market System) on such date.
As of March 31, 1999, (i) options to purchase 651,000 shares of
Common Stock were outstanding under the 1995 Option Plan and held by all
current executive officers earning $100,000 per year or more as a group (7
persons), (ii) options to purchase 367,042 shares were outstanding under
the 1995 Option Plan and held by current directors who are not executive
officers (2 persons) and (iii) options to purchase 1,486,773 shares of
Common Stock were outstanding and held by all employees, including current
officers who are not executive officers, as a group (274 persons as of
March 31, 1999). The actual benefits, if any, to the holders of stock
options issued under the 1995 Option Plan are not determinable prior to
exercise as the value, if any, of such stock options to their holders is
represented by the difference between the market price of a share of the
Company's Common Stock on the date of exercise and the exercise price of a
holder's stock option, as set forth below. For information with respect to
options to purchase Common Stock of the Company granted in 1998 under the
1995 Option Plan and under the Company's 1986 Incentive Stock Option Plan
to the Company's Chief Executive Officer and the four most highly
compensated executive officers of the Company whose annual salary and
bonus exceeded $100,000 for 1998, see "Compensation of Executive Officers
Stock Option Grants in 1999" and "Report of the Compensation Committee."
The 1995 Option Plan is not a qualified deferred compensation plan
under Section 401(a) of the Code, and is not subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
Amendment to Increase Number of Reserved Shares
The Board of Directors believes that in order for the Company to
attract and retain highly qualified employees and consultants and to
provide such employees and consultants with adequate incentive through
their proprietary interest in the Company, it is necessary to amend the
1995 Option Plan to reserve an additional 1,400,000 shares of Common Stock
for issuance thereunder. At the Annual Meeting of Shareholders, the
shareholders are being asked to approve the above amendment to the 1995
Option Plan.
Purpose
The purposes of the 1995 Option Plan are to attract and retain the
best available personnel for the Company, to give employees, officers,
directors, and consultants of the Company or its subsidiary a greater
personal stake in the value of the business, and to provide such persons
with added incentive to continue and advance in their employment or
services to the Company.
Administration
The 1995 Option Plan may be administered by the Board of Directors
or a committee designated by the Board of Directors. The 1995 Option Plan
is currently being administered by the Compensation Committee of the Board
of Directors (the "Administrator"). The Compensation Committee has the
exclusive authority to grant stock options and otherwise administer the
1995 Option Plan with respect to the Company's directors and officers
eligible to participate in the 1995 Option Plan. Members of the Board of
Directors receive no additional compensation for their services in
connection with the administration of the 1995 Option Plan. All questions
of interpretation of the 1995 Option Plan are determined by the
Administrator and decisions of the Administrator are final and binding
upon all participants.
Eligibility
The 1995 Option Plan provides that options may be granted to
employees (including officers and directors who are also employees) and
consultants of the Company. Incentive stock options may be granted only to
employees. The Administrator selects the optionees and determines the
number of shares and the exercise price to be associated with each option
(except in the case of an optionee-employee who is also a director, in
which case the Compensation Committee alone determines the number of
shares and the exercise price to be associated with each option). In
making such determination, there are taken into account the duties and
responsibilities of the optionee, the value of the optionee's services,
the optionee's present and potential contribution to the success of the
Company, and other relevant factors. As of March 31, 1999 there are
approximately 238 employees eligible to participate in the 1995 Option
Plan.
The 1995 Option Plan provides that the maximum number of shares of
Common Stock which may be granted under options to any one employee during
any fiscal year shall be 250,000, subject to adjustment as provided in the
1995 Option Plan. There is also a limit on the aggregate market value of
shares subject to all incentive stock options that may be granted to an
optionee during any calendar year.
Terms of Options
The terms of options granted under the 1995 Option Plan are
determined by the Administrator. Each option is evidenced by a stock
option agreement between the Company and the optionee and is subject to
the following additional terms and conditions:
(a) Exercise of the Option. The optionee must earn the right to
exercise the option by continuing to work for the Company. The
Administrator determines when options are exercisable. An option is
exercised by giving written notice of exercise to the Company specifying
the number of full shares of Common Stock to be purchased, and by
tendering payment of the purchase price to the Company. The method of
payment of the exercise price of the shares purchased upon exercise of an
option is determined by the Administrator.
(b) Exercise Price. The exercise price of options granted under the
1995 Option Plan is determined by the Administrator, and must be at least
equal to the fair market value of the shares on the date of the first
grant, in the case of incentive stock options, and 85% of the fair market
value of the shares on the date of the grant, in the case of nonstatutory
stock options, as determined by the Administrator, based upon the closing
price on the NASDAQ National Market (including any tier thereof) on the
date of grant. Options granted to shareholders owning more than 10% of the
Company's outstanding stock are subject to the additional restriction that
the exercise price on such options must be at least 110% of the fair
market value on the date of the grant. Nonstatutory stock options granted
to a covered employee under Section 162(m) of the Code are subject to the
additional restriction that the exercise price on such options must be at
least 100% of the fair market value on the date of grant.
(c) Consideration. The consideration to be paid for shares issued on
exercise of options granted under the 1995 Option Plan, including the
method of payment, is determined by the Administrator (in the case of
incentive stock options, such determination shall be made at the time of
grant) and may consist entirely of cash; check; promissory note; shares of
Common Stock which have been beneficially owned by the optionee for at
least six months or which were not acquired directly or indirectly from
the Company, with a fair market value on the exercise date equal to the
aggregate exercise price of the shares purchased; authorization from the
Company to retain from the total number of shares as to which the option
is exercised a number of shares having a fair market value on the exercise
date equal to the aggregate exercise price of the shares issued; or
delivery of a properly executed notice and irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan
proceeds required to pay the exercise price. The Administrator may also
authorize payments by any combination of the above methods or any other
consideration and method of payment permitted by law.
(d) Termination of Employment. If the optionee's employment or
consulting relationship with the Company is terminated for any reason
other than death or total and permanent disability, options under the 1995
Option Plan may be exercised not later than ninety days after the date of
such termination to the extent the option was exercisable on the date of
such termination. In no event may an option be exercised by any person
after the expiration of its term.
(e) Disability. If an optionee is unable to continue his or her
employment or consulting relationship with the Company as a result of his
total and permanent disability, options may be exercised within six months
(or such other period of time not exceeding twelve months as is determined
by the Administrator) after the date of termination and may be exercised
only to the extent the option was exercisable on the date of termination,
but in no event may the option be exercised after its termination date.
(f) Death. If an optionee should die while employed or retained by the
Company, and such optionee has been continuously employed or retained by
the Company since the date of grant of the option, the option may be
exercised within six months after the date of death (or such other period
of time, not exceeding six months, as is determined by the Administrator)
by the optionee's estate or by a person who acquired the right to exercise
the option by bequest or inheritance to the extent the optionee would have
been entitled to exercise the option had the optionee continued living and
remained employed or retained by the Company for three months after the
date of death, but in no event may the option be exercised after its
termination date. If an optionee should die within thirty days (or such
other period of time not exceeding three months as is determined by the
Administrator) after the optionee has ceased to be continuously employed
or retained by the Company, the option may be exercised within three
months after the date of death by the optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance to the
extent that the optionee was entitled to exercise the option at the date
of termination, but in no event may the option be exercised after its
termination date.
(g) Termination of Options. Incentive stock options granted under the
1995 Option Plan expire ten years from the date of grant unless a shorter
period is provided in the option agreement. Incentive stock options and
nonstatutory stock options granted to shareholders owning more than 10% of
the Company's outstanding stock may not have a term of more than five
years and five years and one day, respectively.
(h) Nontransferability of Options. Options are not transferable by the
optionee, other than by will or the laws of descent and distribution, and
are exercisable only by the optionee during his or her lifetime or, in the
event of death, by a person who acquires the right to exercise the option
by bequest or inheritance or by reason of the death of the optionee.
(i) Acceleration of Option. In the event of a merger of the Company
with or into another corporation or sale of substantially all of the
Company's assets, the Administrator shall either accomplish a substitution
or assumption of options or give written notice of the acceleration of the
optionee's right to exercise his or her outstanding options in full at any
time within thirty days of such notice. The Administrator may, in its
discretion, make provisions for the acceleration of the optionee's right
to exercise his or her outstanding options in full. Effective July 14,
1995, the Board of Directors adopted a resolution amending the 1995 Option
Plan such that each employee stock option issued under the 1995 Option
Plan is to accelerate by 50% of the unvested portion of such option upon
an acquisition of the Company in which the employee-optionee is not
offered a comparable position with the successor company.
(j) Other Provisions. The option agreement may contain such other
terms, provisions, and conditions not inconsistent with the 1995 Option
Plan as may be determined by the Administrator.
Adjustment Upon Changes in Capitalization
In the event any change is made in the Company's capitalization,
such as a stock split or dividend, that results in an increase or decrease
in the number of outstanding shares of Common Stock without receipt of
consideration by the Company, appropriate adjustment shall be made in the
option price, the number of shares subject to each option, the annual
limitation of grants to employees, as well as the number of shares
available for issuance under the 1995 Option Plan. In the event of the
proposed dissolution or liquidation of the Company, all outstanding
options automatically terminate unless otherwise provided by the
Administrator.
Amendment and Termination
The Board of Directors may amend the 1995 Option Plan at any time or
from time to time or may terminate it without approval of the
shareholders; provided, however, that shareholder approval is required for
any amendment to the 1995 Option Plan that: (i) increases the number of
shares that may be issued under the 1995 Option Plan, (ii) modifies the
standards of eligibility, (iii) modifies the limitation on grants to
employees described in the 1995 Option Plan or results in other changes
which would require shareholder approval to qualify options granted under
the 1995 Option Plan as performance-based compensation under
Section 162(m) of the Code, or (iv) so long as the Company has a class of
equity securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), materially increases the
benefits to participants that may accrue under the 1995 Option Plan.
However, no action by the Board of Directors or shareholders may alter or
impair any option previously granted under the 1995 Option Plan. The 1995
Option Plan shall terminate in March 2005, provided that any options then
outstanding under the 1995 Option Plan shall remain outstanding until they
expire by their terms.
United States Federal Income Tax Information
The following is a brief summary of the U.S. federal income tax
consequences of transactions under the 1995 Option Plan based on federal
income tax laws in effect on the date of this Proxy Statement. This
summary is not intended to be exhaustive and does not address all matters
which may be relevant to a particular optionee based on his or her
specific circumstances. The summary addresses only current U.S. federal
income tax law and expressly does not discuss the income tax laws of any
state, municipality, non-U.S. taxing jurisdiction, or gift, estate, or
other tax laws other than federal income tax law. The Company advises all
optionees to consult their own tax advisor concerning tax implication of
option grants, and exercises and the disposition of stock acquired upon
such exercises, under the 1995 Stock Option Plan.
Options granted under the 1995 Option Plan may be either incentive
stock options, which are intended to qualify for the special tax treatment
provided by Section 422 of the Code, or nonstatutory options ("NSOs"),
which will not so qualify. If an option granted under the 1995 Option Plan
is an incentive stock option, the optionee will recognize no income upon
grant of the incentive stock option and will incur no tax liability due to
the exercise except to the extent that such exercise causes the optionee
to incur alternative minimum tax. (See discussion below). The Company will
not be allowed a deduction for federal income tax purposes as a result of
the exercise of an incentive stock option regardless of the applicability
of the alternative minimum tax. Upon the sale or exchange of the shares
received as a result of the exercise of incentive stock options more than
two years after grant of the option and one year after exercise of the
option by the optionee, any gain will be treated as a long-term capital
gain. If both of these holding periods are not satisfied, the optionee
will recognize ordinary income equal to the difference between the
exercise price and the lower of the fair market value of the Common Stock
at the date of the option exercise or the sale price of the Common Stock.
The Company will be entitled to a deduction in the same amount as the
ordinary income recognized by the optionee. Any gain or loss recognized on
a disposition of the shares prior to completion of both of the above
holding periods in excess of the amount treated as ordinary income will be
characterized as long-term capital gain if the sale occurs more than one
year after exercise of the option or as short-term capital gain if the
sale is made earlier. For individual taxpayers, the current U.S. federal
income tax rate on long-term capital gains is 20%, whereas the maximum
rate on other income is 39.6%. Capital losses for individual taxpayers are
allowed in full against capital gains plus, generally, $3,000 of other
income.
All other options which do not qualify as incentive stock options
are referred to as nonstatutory options. An optionee will not recognize
any taxable income at the time he or she is granted a nonstatutory option.
However, upon its exercise, the optionee will recognize ordinary income
for tax purposes measured by the excess of the fair market value of the
shares, as of the date of exercise of the option, over the exercise price.
The income recognized by an optionee who is also an employee of the
Company will be subject to income and employment tax withholding by the
Company by payment in cash by the optionee or out of the optionee's
current earnings. Upon the sale or exchange of such shares by the
optionee, any difference between the sale price and the fair market value
of the shares as of the date of exercise of the option will be treated as
capital gain or loss, and will qualify for long-term capital gain or loss
treatment if the shares have been held for more than one year after
exercise.
Alternative Minimum Tax
The exercise of an incentive stock option may subject the optionee
to the alternative minimum tax under Section 55 of the Code. The
alternative minimum tax is calculated by applying a tax rate of 26% to
alternative minimum taxable income of joint filers up to $175,000 ($87,500
for married taxpayers filing separately) and 28% to alternative minimum
taxable income above that amount. Alternative minimum taxable income is
equal to (i) taxable income adjusted for certain items, plus (ii) items of
tax preference less (iii) an exemption amount of $45,000 for joint
returns, $33,750 for unmarried individual returns and $22,500 in the case
of married taxpayers filing separately (which exemption amounts are phased
out for upper income taxpayers). Alternative minimum tax will be due if
the tax determined under the foregoing formula exceeds the regular tax of
the taxpayer for the year.
In computing alternative minimum taxable income, shares purchased
upon exercise of an incentive stock option are treated as if they had been
acquired by the optionee pursuant to exercise of a nonstatutory stock
option. As a result, the excess of the fair market value of the Common
Stock on the date of exercise over the incentive stock option exercise
price will be included in the calculation of the alternative minimum
taxable income. Because the alternative minimum tax calculation may be
complex, optionees should consult their own tax advisors prior to
exercising incentive stock options.
If an optionee pays alternative minimum tax, the amount of such tax
may be carried forward as a credit against any subsequent year's regular
tax in excess of the alternative minimum tax for such year.
Required Vote
The affirmative vote of the holders of a majority of the shares of
the Company's Common Stock present at the Annual Meeting in person or by
proxy and entitled to vote is required to approve the amendment to the
1995 Option Plan and the reservation of an additional 1,400,000 shares of
Common Stock for issuance thereunder.
The Board of Directors recommends a vote "FOR" the approval of the
amendment to the 1995 Option Plan and the reservation of an additional
1,400,000 shares of Common Stock for issuance thereunder.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of
PricewaterhouseCoopers LLP, independent public accountants
("PricewaterhouseCoopers"), to audit the financial statements of the
Company for the fiscal year ending December 31, 1999, and recommends that
the shareholders vote for ratification of this appointment. In the event
the shareholders do not ratify such appointment, the Board of Directors
will reconsider its selection. PricewaterhouseCoopers was created in 1998
as a result of the merger between Price Waterhouse LLP and Coopers &
Lybrand LLP. Before the merger, Price Waterhouse LLP audited the
Company's financial statements for the fiscal years ending December 31,
1997 and December 31, 1998. Representatives of PricewaterhouseCoopers are
expected to be present at the meeting with the opportunity to make a
statement if they desire to do so, and are expected to be available to
respond to appropriate questions.
Required Vote
The affirmative vote of the holders of a majority of the shares of
the Company's Common Stock present at the Annual Meeting in person or by
proxy and entitled to vote is required to approve the appointment of
PricewaterhouseCoopers as the Company's independent auditors.
The Board of Directors recommends a vote "FOR" the approval of the
appointment of PricewaterhouseCoopers as the Company's independent
auditors.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 1999 as to (i) each person who is known by
the Company to beneficially own more than five percent of the Company's
Common Stock, (ii) each of the Company's directors, (iii) each of the
executive officers named in the Summary Compensation Table and (iv) all
directors and executive officers as a group. The number of shares of the
Company Common Stock outstanding as of March 31, 1999 was 29,598,182.
<TABLE>
<CAPTION>
Shares
Beneficially Owned(1)
-----------------------
5% Shareholders, Directors, Percent
Named Executive Officers, of
And Directors and Executive Officers as a Group Number(2) Total
- ------------------------------------------------ ------------ ---------
<S> <C> <C>
Newport Acquisition Company No. 2, LLC (3)....... 7,990,566 27.00
1600 Dove Street, Suite 300
Newport Beach, CA 92660
Scott R. Broomfield.............................. 813,349 2.75
John Bowman...................................... 457,786 1.55
John Griffin..................................... 190,799 *
Antonio Espinosa................................. 8,240 *
Kathy Lane....................................... 572,710 1.93
Michael Moore.................................... 52,500 *
Ann Bontatibus................................... 1,660 *
Samuel M. Inman III (3).......................... 421,945 1.43
Jack King........................................ 32,986 *
Philip Koen...................................... 32,986 *
Peter Micciche................................... 30,903 *
Earl Stahl....................................... 153,924 *
All directors and executive officers as group
(14 persons) (4)................................. 2,797,971 9.45
</TABLE>
___________
* Less than one percent.
1. Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of common stock
subject to options or warrants held by that person that are exercisable
on or before May 31, 1999, are deemed outstanding. Such shares,
however, are not deemed outstanding for purposes of computing the
ownership of each other person. Except as indicated in the footnotes to
this table and pursuant to applicable community property laws, the
shareholder named in the table has sole voting and investment power
with respect to the shares set forth opposite such shareholder's name.
2. Includes with respect to each named person the following shares subject
to stock options and/or warrants exercisable within 60 days of
March 31, 1999: Mr. Broomfield-562,500; Mr. Bowman-329,861; Mr.
Griffin-47,874; Ms. Lane-329,861; Mr. Moore-52,500; Mr. Inman-421,945;
Mr. King-32,986; Mr. Koen-32,986; Mr. Micciche-30,903; and
Mr. Stahl-153,924.
3. Mr. Inman served as Chairman of the Board of Directors from September
1996 to February 1998, President and Chief Executive Officer from
December 1995 to December 1997, and he served as President and Chief
Operating Officer from April 1995 to December 1995.
4. Includes shares subject to options held by directors and officers that
are exercisable within 60 days of March 31, 1999.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended,
or the Exchange Act that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following report and the
Performance Graph shall not be incorporated by reference into any such
filings.
REPORT OF THE COMPENSATION COMMITTEE
General
The Company's executive compensation policies are determined by the
Compensation Committee of the Board of Directors. The Compensation
Committee (the "Committee") is composed of three nonemployee directors.
The objective of the Company's executive compensation program is to
align executive compensation with the Company's business objectives and
performance and to enable the Company to attract, retain, and reward
executives who contribute to the long-term business success of the
Company. The Company's executive compensation program is based on the same
four basic principles that guide compensation decisions for all employees
of the Company:
o The Company compensates for demonstrated and sustained performance.
o The Company compensates competitively.
o The Company strives for equity and fairness in the administration of
compensation.
o The Company believes that each employee should understand how his or
her compensation is determined.
The Company believes in compensating its executives for demonstrated
and sustained levels of performance in their individual jobs. The
achievement of higher levels of performance and contribution are rewarded
by higher levels of compensation. In order to ensure that it compensates
its executives competitively, the Company regularly compares its
compensation practices to those of other companies of comparable size
within similar industries. Through the use of independent compensation
surveys and analysis, employee compensation training, and periodic pay
reviews, the Company strives to ensure that compensation is administered
equitably and fairly and that a balance is maintained between how
executives are paid relative to other employees and relative to executives
with similar responsibilities in comparable companies.
The Committee typically meets at least twice annually: once late in
the year to establish the compensation program for the next fiscal year
and once mid-year to evaluate how effectively the program is meeting its
objectives. Additionally, the Committee may hold special meetings to
approve the compensation program of a newly hired executive or an
executive whose scope of responsibility has significantly changed. Each
year, the Committee meets with the CEO and the Director, Human Resources
regarding executive compensation projections for the next three years and
proposals for executive compensation for the next operating year.
Compensation plans are based on compensation surveys and assessments as to
the demonstrated and sustained performance of the individual executives.
The Committee then independently reviews the performance of the CEO and
the Company, and develops the annual compensation plan for the CEO based
on competitive compensation data and the Committee's evaluation of the
CEO's demonstrated and sustained performance and its expectation as to his
future contributions in leading the Company. The Committee presents for
adoption its findings on the compensation of each individual executive at
a subsequent meeting of the full Board of Directors.
Compensation of Executive Officers
During 1998, the Company's executive compensation program was
comprised of the following key components:
Base Salary. The Company sets the base salaries of its executives at the
levels of comparably sized companies engaged in similar industries.
Equity-Based Incentives. Equity-based incentives are an important
component of the total compensation of executives, and are designed to
align the interests of each executive with those of the shareholders. Each
year the Committee considers the grant to executives of stock option
awards under the Company's 1995 Stock Option Plan. The Committee believes
that equity-based incentives provide added incentive for the executives to
influence the strategic direction of the Company and to create and
increase value for customers, shareholders, and employees. The Company
grants stock options to all employees, including executive officers. The
option grants typically utilize three or four year vesting periods to
encourage executives to continue employment with and contribution to the
Company. The number of stock option shares that are granted to individual
executives is, in part, based on independent survey data collected by the
Board of Directors reflecting competitive stock option practices within
software companies of similar size.
Cash-Based Incentives. Certain executive officers of the Company involved
directly in the sales process receive commissions based on the success of
the Company's sales efforts.
Compensation of Chief Executive Officer. CEO compensation is comprised of
the same components as the other executive officers' compensation: base
salary and equity-based incentives. (CEO compensation does not include
cash-based incentives.) The compensation plan for Mr. Broomfield, the
Company's CEO, is designed to achieve two primary objectives: (1) to
provide a base compensation level that is reasonably competitive with
similar positions in comparable companies and (2) to tie a significant
portion of CEO earnings to increases in shareholder value, as measured by
the market price of the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Jack King,
Philip Koen, and Peter Micciche.
Former Directors William Grabe and Anthony Sun comprised the
Compensation Committee of the Board of Directors from January 1, 1997
until April 17, 1997, at which time former director Max Hopper replaced
Mr. Sun as a member of the Compensation Committee. Messrs. Grabe and
Hopper resigned their positions on the Board of Directors effective
December 8, 1997, at which time they were replaced by newly elected
directors Jack King and Phillip Koen, Jr. as members of the Compensation
Committee. On March 17, 1998, newly appointed director Peter Micciche was
named as an additional member of the Compensation Committee of the Board
of Directors. None of these persons currently is or has ever been an
officer or employee of the Company or any of its subsidiaries, nor were
there any compensation committee interlocks or other relationships during
1998 requiring disclosure under item 402(j) of Regulation S-K of SEC.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation received by (a) the
individuals who served as the Company's Chief Executive Officer ("CEO")
during 1998; (b) the four most highly compensated executive officers other
than the CEO who were serving as executive officers of the Company at
December 31, 1998 and whose total compensation for the year exceeded
$100,000, (c) the two most highly compensated individuals who would have
been included under item (b) above but for the fact that they were no
longer serving as executive officers of the Company at December 31, 1998,
and (d) the compensation received by each such individual for the
Company's two preceding fiscal years.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensa-
Other tion
Annual Awards All
Salary Compensa- Securities Other
($) Bonus tion Underlying Compensa-
Name and Principal Position Year (1)(2)(3) ($) ($) Options tion
- ----------------------------------------- ------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Scott R. Broomfield (3).................. 1998 200,000 -- -- -- --
President and Chief Executive 1997 51,667 -- -- 750,000 --
Officer (Principal Executive Officer) 1996 -- -- -- -- --
John Bowman.............................. 1998 200,000 -- -- -- --
Executive Vice President, Finance and 1997 51,667 -- -- 500,000 --
Operations, Chief Financial Officer 1996 -- -- -- -- --
John Griffin............................. 1998 294,522 -- -- 25,000 --
Vice President, European 1997 260,000 -- -- 75,000 --
Operations 1996 -- -- -- -- --
Michael Moore............................ 1998 205,585 -- -- -- --
Senior Vice President, World 1997 192,897 10,000 -- 150,000 --
Wide Sales 1996 -- -- -- -- --
Kathy Lane............................... 1998 200,000 -- -- -- --
Senior Vice President, Alliances 1997 51,667 -- -- 500,000 --
1996 -- -- -- -- --
Tony Espinosa............................ 1998 278,874 -- -- 22,000 --
Vice President, North American Sales 1997 158,525 -- -- 50,500 --
1996 188,640 -- -- -- --
Ann Bontatibus........................... 1998 148,583 -- -- 15,000 --
Vice President, Technical Services 1997 133,000 16,000 -- 85,000 --
and Support 1996 132,891 20,000 -- -- --
</TABLE>
___________
(1) Includes amounts deferred under the Company's 401(k) plan.
(2) Includes bonus earned in the indicated year. Excludes bonuses earned
in the indicated year but paid in the subsequent year.
(3) Includes commissions paid in the indicated year.
STOCK OPTION GRANTS IN 1998
<PAGE>
The following table sets forth information for the executive
officers named in the Summary Compensation Table with respect to grants of
options to purchase common stock of the Company made in 1998 and the value
of all options held by such executive officers on December 31, 1998.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------
Percent Potential Realizable
of Total Value at Assumed
Options Annual Rates of
Number of Granted Stock Price
Securities to Appreciation for
Underlying Employees Exercise Expir- Option Term (2)
Options in Fiscal Price ation ---------------------
Name Granted(#) Year(1) ($/Share) Date(1) 5%($) 10%($)
- ----------------- ----------- --------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John Bowman...... 125,000 3.58 $1.813 03/17/08 $142,523 $361,182
John Griffin..... 25,000 0.72 $1.813 03/17/08 $28,505 $72,236
Kathy Lane....... 125,000 3.58 $1.813 03/17/08 $142,523 $361,182
Antonio Espinosa. 12,000 0.34 $1.813 03/17/08 $13,682 $34,673
10,000 0.29 $1.031 10/27/08 $6,484 $16,431
Ann Bontatibus... 15,000 0.43 $1.813 03/17/08 $17,103 $43,342
</TABLE>
___________
(1) Options to purchase a total of 1,818,125 shares of common stock were
granted under the Company's 1995 Stock Option Plan during the fiscal
year ended December 31, 1998. These options generally vest over a
period of three years, provided however, that the stock options of
the officers listed vest automatically in the event of any sale of
all or substantially all of the Company's assets or upon the
effective date of any merger, consolidation or stock sale which
results in the holders of the Company's common stock immediately
prior to such transaction owning less than 50% of the voting power
of the Company's common stock immediately after such transaction and
such officer is not offered a comparable position with the surviving
entity. The figures reported above do not include repriced options
under the 1986 Incentive Stock Option Plan (which expired in
accordance with its terms in July 1996) because such repricings were
deemed to be amendments to the outstanding options rather than new
issuances.
(2) Potential realizable values are reported net of the option exercise
price but before taxes associated with exercise. These amounts
represent certain assumed rates of appreciation only. Actual
realized gains, if any, on stock option exercises are dependent on
future performance of the Company's common stock, as well as the
optionee's continued employment through the vesting period.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
The following table sets forth information for the executive
officers named in the Summary Compensation Table with respect to options
to purchase common stock of the Company held as of December 31, 1998.
<TABLE>
<CAPTION>
Shares
Acquired Number of Securities Value of Unexercised
on Value Underlying Unexercised In-the-Money Options
Exercise Realized Options at 12/31/98(#)(2) at 12/31/98($)(3)
Name (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------- --------- ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Scott R. Broomfield. -- -- 375,000/375,000 --/--
John Bowman......... -- -- 187,500/312,500 --/--
John Griffin........ -- -- 30,989/69,011 --/--
Antonio Espinosa.... -- -- 26,970/45,530 --/--
Kathy Lane.......... -- -- 187,500/312,500 --/--
Michael Moore....... -- -- 52,085/97,915 --/--
Ann Bontatibus...... -- -- 53,021/46,979 --/--
</TABLE>
___________
(1) Value realized is calculated based on the closing price of the
Company's common stock as reported in the NASDAQ National Market (or
a tier thereof) on the date of exercise minus the exercise price of
the option, and does not necessarily indicate that the optionee sold
such stock.
(2) No stock appreciation rights (SARs) were outstanding during 1998.
(3) The fair market value of the Company's common stock at the close of
business on December 31, 1998 was $1.063 per share.
REPRICING OF OPTIONS
The following table provides information regarding the repricing of
certain options held by the executive officers of the Company during the
last ten years. More detailed terms of the repricings are set forth in the
REPORT OF THE COMPENSATION COMMITTEE of this proxy statement.
Ten Year Option Repricings
<TABLE>
<CAPTION>
Number of
Securities Market Price Expiration
Underlying of Stock at Exercise Price New Date of
Date of Options Time of at Time of Exercise Original
Name Repricing Repriced(#) Repricing ($) Repricing ($) Price ($) Option
- --------------------------- --------- ------------ ------------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Samuel M. Inman III (1)... 05/13/97 120,000 1.5000 4.2500 1.5000 02/03/07
05/13/97 240,000 1.5000 5.9375 1.5000 12/14/05
05/13/97 239,999 1.5000 5.9375 1.5000 04/10/05
01/05/96 240,000 5.9375 10.7500 5.9375 12/14/05
01/05/96 239,999 5.9375 6.6250 5.9375 04/03/05
John Griffin.............. 05/13/97 50,000 1.5000 5.0000 1.5000 01/30/07
Vice President, European
Operations
Earl M. Stahl (2)......... 05/13/97 30,000 1.5000 4.5000 1.5000 02/04/07
05/13/97 45,000 1.5000 5.9375 1.5000 12/14/05
05/13/97 40,000 1.5000 5.9375 1.5000 03/14/05
05/13/97 25,000 1.5000 5.9375 1.5000 06/14/04
05/13/97 22,500 1.5000 3.0000 1.5000 09/25/02
01/05/96 45,000 5.9375 6.6250 5.9375 12/14/05
01/05/96 40,000 5.9375 10.7500 5.9375 03/14/05
01/05/96 25,000 5.9375 10.7500 5.9375 06/14/04
Michael K. Keddington (3). 05/13/97 20,000 1.5000 4.5000 1.5000 02/04/07
05/13/97 20,000 1.5000 5.0000 1.5000 01/30/07
05/13/97 10,000 1.5000 4.3750 1.5000 07/23/06
05/13/97 10,000 1.5000 5.9375 1.5000 12/14/05
05/13/97 80,000 1.5000 5.9375 1.5000 07/14/05
01/05/96 10,000 5.9375 6.6250 5.9375 12/14/05
01/05/96 80,000 5.9375 9.0000 5.9375 07/14/05
07/27/95 80,000 9.0000 9.7500 9.0000 07/14/05
Michael Moore (4)......... 05/13/97 80,000 1.5000 5.0000 1.5000 01/30/07
Senior Vice President,
World Wide Sales
Ann Bontatibus (5) 05/13/97 30,000 1.5000 5.9375 1.5000 12/14/05
Vice President, Technical 05/13/97 5,000 1.5000 5.9375 1.5000 03/14/05
Services and Support 05/13/97 10,000 1.5000 5.9375 1.5000 06/14/04
01/05/96 30,000 5.9375 10.7500 5.9375 12/14/05
01/05/96 5,000 5.9375 9.0000 5.9375 03/14/05
01/05/96 10,000 5.9375 9.0000 5.9375 06/14/04
07/27/95 10,000 9.0000 10.7500 9.0000 06/14/04
06/14/94 10,000 10.7500 23.7500 10.7500 01/28/04
Richard J. Heaps (6)...... 05/13/97 65,000 1.5000 5.9375 1.5000 12/14/05
05/13/97 20,000 1.5000 5.9375 1.5000 07/14/05
05/13/97 40,000 1.5000 5.9375 1.5000 06/14/04
01/05/96 65,000 5.9375 6.6250 5.9375 12/14/05
01/05/96 20,000 5.9375 9.7500 5.9375 07/14/05
01/05/96 40,000 5.9375 9.0000 5.9375 06/14/04
07/27/95 40,000 9.0000 10.7500 9.0000 06/14/04
Helmut G. Wilke (7)....... 05/13/97 40,000 1.5000 5.9375 1.5000 07/14/05
05/13/97 20,000 1.5000 5.9375 1.5000 12/14/05
05/13/97 2,292 1.5000 5.9375 1.5000 12/01/02
05/13/97 25,000 1.5000 5.9375 1.5000 06/14/04
05/13/97 10,000 1.5000 5.9375 1.5000 12/17/03
01/05/96 20,000 5.9375 6.6250 5.9375 12/14/05
01/05/96 40,000 5.9375 9.7500 5.9375 07/14/05
01/05/96 25,000 5.9375 9.0000 5.9375 06/14/04
01/05/96 10,000 5.9375 9.0000 5.9375 12/17/03
01/05/96 2,292 5.9375 8.8000 5.9375 12/01/02
07/27/95 40,000 9.0000 10.7500 9.0000 06/14/04
07/27/95 10,000 9.0000 10.7500 9.0000 12/17/03
06/14/94 10,000 10.7500 16.8750 10.7500 12/17/03
Richard Gelhaus (8)....... 05/13/97 30,000 1.5000 4.5000 1.5000 02/04/07
05/13/97 120,000 1.5000 5.9375 1.5000 01/05/06
Robert Bramley (9)........ 01/05/96 40,000 5.9375 6.6250 5.9375 12/14/05
01/05/96 5,000 5.9375 10.7500 5.9375 03/14/05
01/05/96 5,000 5.9375 9.0000 5.9375 12/17/03
07/27/95 10,000 9.0000 10.7500 9.0000 12/17/03
06/14/96 10,000 10.7500 16.8750 10.7500 12/17/03
John G. McAughtry (10).... 01/05/96 5,000 5.9375 6.6250 5.9375 12/14/05
01/05/96 11,875 5.9375 9.0000 5.9375 12/17/03
01/05/96 10,000 5.9375 9.0000 5.9375 07/21/03
07/27/95 30,000 9.0000 10.7500 9.0000 12/17/03
07/27/95 10,000 9.0000 10.7500 9.0000 07/21/03
06/14/94 30,000 10.7500 16.8750 10.7500 12/17/03
06/14/94 10,000 10.7500 20.0000 10.7500 07/21/03
Antonio Espinosa (11)..... 01/29/93 5,000 1.5000 11.0000 1.5000 05/14/03
01/16/95 7,500 1.5000 13.1250 1.5000 05/14/07
01/30/97 5,000 1.5000 5.0000 1.5000 05/14/07
01/05/96 15,000 1.5000 5.9375 1.5000 05/14/07
</TABLE>
___________
(1) Mr. Inman resigned as the Company's President and Chief Executive
Officer effective December 8, 1997.
(2) Mr. Stahl resigned as the Company's Senior Vice President,
Engineering and Chief Technical Officer effective December 8, 1997.
(3) Mr. Keddington resigned as the Company's Vice President of Sales and
Marketing, North American effective August 8, 1997.
(4) Mr. Moore resigned as the Company's Senior Vice President, World
Wide Sales effective October 31, 1998.
(5) Ms. Bontatibus resigned as the Company's Vice President, Technical
Sales and Support effective January 15, 1999.
(6) Mr. Heaps resigned as the Company's Senior Vice President, Business
Development and General Counsel effective November 5, 1997.
(7) Mr. Wilke resigned as the Company's Vice President, European
Division effective May 15, 1997.
(8) Mr. Gelhaus resigned as the Company's Senior Vice President, Finance
and Operations and Chief Financial Officer effective December 8,
1997.
(9) Mr. Bramley resigned as the Company's Vice President Technical
Services effective April 1, 1997.
(10) Mr. McAughtry resigned as the Company's Vice President, Asia Pacific
and Latin America effective September 3, 1996.
(11) Mr. Espinosa resigned as the Company's Vice President, North
American Sales effective January 1, 1999.
PERFORMANCE GRAPH
The following graph and table summarize cumulative total shareholder
return data (assuming reinvestment of dividends) for the period since the
Company's common stock was first registered under Section 12 of the
Exchange Act (February 4, 1993). The graph assumes that $100 was invested
(i) on February 4, 1993 in the Company's common stock at a price of $18.00
per share, the price at which such stock was first offered to the public
on that date, (ii) on January 31, 1993 in the Standard & Poor's 500 Stock
Index and (iii) on January 31, 1993 in the Nasdaq Computer and Data
Processing Services Composite Index. The stock price performance on the
following graph and table is not necessarily indicative of future stock
price performance.
COMPARISON OF 58 MONTH CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, THE S & P 500 INDEX
AND S & P HIGH TECH COMPOSITE INDEX
[GRAPH]
___________
* $100 invested on 2/4/93 in stock or on 1/31/93 in indices including
reinvestment of dividends. Fiscal year ending December 31.
<TABLE>
<CAPTION>
02/04/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
The Company......................... 100 109 63 28 15 6 6
Standard & Poor's 500 Stock Index... 100 109 111 152 187 249 287
Nasdaq Computer and Data Processing
Services Composite Index.......... 100 101 122 186 230 282 281
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1997, the Company entered into a Settlement Agreement
and Mutual Release with Earl M. Stahl, who was then Senior Vice
President, Engineering and Chief Technical Officer and a director of the
Company, pursuant to which Mr. Stahl resigned from his position as an
officer of the Company as of December 8, 1997, and agreed to perform
consulting services for the Company thereafter and to remain on the Board
of Directors. In August 1995 the Company and Mr. Stahl and his wife, Ann
Stahl, entered into a loan agreement pursuant to which Mr. and Mrs. Stahl
borrowed $300,000 in connection with their purchase of a new home. Prior
to Mr. Stahl's termination, this loan was being forgiven at a rate of
$40,000 of principal on each yearly anniversary of the loan. Pursuant to
Mr. Stahl's severance arrangements, the Company continues to forgive
outstanding principal and interest under the loan each month in an amount
equal to Mr. Stahl's monthly salary immediately prior to his termination
(less applicable withholding) and will continue to do so for as long as
Mr. Stahl continues to perform consulting services required by the
Company. As of April 30, 1999, principal and interest totaling $90,293
outstanding under this loan, and the largest aggregate amount outstanding
under this loan in 1998 was $254,918. The loan is due in August 1999.
In December 1997, the Board of Directors approved the installation
of a new management team provided by Hickey & Hill, corporate
restructuring specialists, pursuant to a letter agreement between the
Company and Hickey & Hill dated November 5, 1997 and approved by the Board
of Directors on November 6, 1997 (the "H&H Agreement"). The H&H
Agreement, as amended on February 26, 1998 and again on March 17, 1998,
provided that the three executive officers provided by Hickey & Hill would
fill the positions of President and Chief Executive Officer, Chief
Financial Officer, and the Company's principal marketing officer. Those
three officers, Scott R. Broomfield, John Bowman, and Kathy Lane,
respectively, (collectively, the "New Officers") became full-time
employees of the Company effective February 26, 1998, each at a
compensation level of $16,667.67 per month. Also pursuant to the H&H
Agreement, the New Officers were granted nonstatutory stock options (the
"First Options") to purchase a total of 1,500,000 shares of the Company's
Common Stock at an exercise price of $1.906 per share. Additional options
to purchase 125,000 shares of the Company's Common Stock at an exercise
price of $1.81 per share ("Additional Options") were granted to
Mr. Bowman and Ms. Lane on March 17, 1998. The First Options vest with
respect to the underlying shares of Common Stock at the rate of 25% every
six months from the date of grant. The Additional Options vest with
respect to one-third of the underlying shares of Common Stock at the end
of one year from the date of grant, and monthly thereafter with respect to
1/36 of the total shares comprising the grant.
The First Options and Additional Options are subject to full
acceleration of vesting in the event of a "Change of Control," defined as
the occurrence of any of the following: (i) all or substantially all of
the assets of the Company are sold, exchanged or otherwise transferred in
one or more transactions; (ii) the Company is merged or consolidated with
or into another corporation with the effect that the common shareholders
immediately prior to such merger or consolidation hold less than 75% of
the ordinary voting power of the outstanding securities of the surviving
corporation of such merger or the corporation resulting from such
consolidation; (iii) a person or group (such as that term is used in
Rule 13d-5 of the Exchange Act shall, as a result of a tender or exchange
offer, open market purchases, merger, private placement, or otherwise,
have become, directly or indirectly, the beneficial owner (within the
meaning of Rule 13d-5 under the Exchange Act) of securities having 15% or
more of the voting power of then outstanding securities of the Company,
excluding the issuance of securities in connection with the conversion of
that certain Floating Rate Convertible Subordinated Note Due 1998 dated as
of April 3, 1995 issued by the Company to Computer Associates
International, Inc. and any transactions related thereto; (iv) the Board
of Directors elects to expand its membership from 7 to 9, or if 3 of its
existing members resign or are in any way removed from the Board of
Directors; (v) the 2 Board of Directors designees of Newport Acquisition
Company No 2, LLC ("NAC") vote the NAC shares; or (vi) termination of the
optionee by the Company for any reason without cause.
The Company's CEO, Scott Broomfield, is a member of the board of
directors of CAM Data Systems, Inc., one of the Company's customers.
Each option is exercisable by the officer to which it was granted
for five years following such officer's termination of employment with the
Company other than for cause.
The Company has entered into indemnification agreements with each of
its directors and executive officers which may require the Company, among
other things, to indemnify them against certain liabilities that may arise
by reason of their status or service as directors or officers, to advance
their expenses incurred as a result of any proceeding against them as to
which they could be indemnified, and to obtain directors' and officers'
liability insurance if available on reasonable terms.
COMPLIANCE WITH SECTION 16 OF
THE EXCHANGE ACT (SECURITIES EXCHANGE ACT OF 1934)
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors, and
holders of more than ten percent of the Company's Common Stock are
required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the best of the Company's knowledge, based solely upon review of
the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal
year ended December 31, 1998 all Section 16(a) filing requirements
applicable to the Company's officers, directors and holders of more than
ten percent of the Company's Common Stock were complied with.
OTHER MATTERS
The Board of Directors knows of no other matters to be addressed at
the Annual Meeting. If any other matters properly come before the Annual
Meeting, then the proxy-holders will vote the shares they represent in
such manner as the Board of Directors may recommend.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's Year 2000 Annual Meeting
of Shareholders must be received by the Company in writing no later than
March 15, 2000 in order that they may be considered for inclusion in the
proxy statement and form of proxy relating to that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ RICHARD S. GREY
RICHARD S. GREY
Secretary
Dated: May __, 1999
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CENTURA SOFTWARE CORPORATION FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 17, 1999
The undersigned shareholder of Centura Software Corporation, a
Delaware Corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated May __, 1999,
and hereby appoints Scott R. Broomfield and John Bowman or either of
them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the Annual Meeting of Shareholders of Centura Software
Corporation to be held on Thursday, June 17, 1999 at 10:00 a.m., local
time, at Hotel Sofitel, located at 223 Twin Dolphin Drive, Redwood
Shores, California 94065 and at any adjournment or postponement thereof,
and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set
forth below:
PLEASE SIGN ON REVERSE SIDE AND RETURN IMMEDIATELY
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<PAGE>
[X] Please mark your votes as indicated in this example
1. ELECTION OF DIRECTORS:
___ FOR all nominees listed below (except as indicated).
___ WITHHOLD authority to vote for all nominees listed below.
If you wish to withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list below:
Scott R. Broomfield, Jack King, Phillip Koen, Jr., Peter Micciche,
Earl M. Stahl
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S 1995 STOCK
OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK FOR ISSUANCE
THEREUNDER BY 1,400,000 SHARES TO AN AGGREGATE OF 4,400,000 SHARES:
____FOR ____AGAINST ____ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999:
____FOR ____AGAINST ____ABSTAIN
4. PROPOSAL TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT(S) THEREOF:
____FOR ____AGAINST ____ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS;
(2) FOR APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
THEREUNDER BY 4,000,000 SHARES TO AN AGGREGATE OF 4,400,000 SHARES; (3)
FOR RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS; (4) TO TRANSACT SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNEMENT(S) THEREOF.
_______________________________________ Date:__________________________
Signature(s)
(This Proxy should be marked, dated, signed by the shareholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate.
If shares are held by joint tenants or as community property, both should
sign.)
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