<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cambridge Technology Partners (Massachusetts), 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):
[X] No fee required.
[_] 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:
not applicable
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
not applicable
-------------------------------------------------------------------------
(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):
not applicable
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
not applicable
-------------------------------------------------------------------------
(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:
not applicable
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
not applicable
-------------------------------------------------------------------------
(3) Filing Party:
Cambridge Technology Partners (Massachusetts), Inc.
-------------------------------------------------------------------------
(4) Date Filed:
April 10, 1997
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<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
304 VASSAR STREET
CAMBRIDGE, MASSACHUSETTS 02139
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
To The Stockholders:
The Annual Meeting of Stockholders of Cambridge Technology Partners
(Massachusetts), Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, May 14, 1997 at 10:00 A.M. at the Downtown Club, State Street Bank
Building, 225 Franklin Street, 33rd Floor, Boston, Massachusetts, for the
following purposes:
1. To fix the size of the Board of Directors at eight (8) directors and to
elect a Board of Directors for the ensuing year.
2. To consider and act upon a proposal to approve amendments to the
Company's 1991 Stock Option Plan (the "1991 Plan") to (i) increase the
number of shares of Common Stock available for issuance under the 1991
Plan from 15,000,000 to 19,000,000 shares and (ii) provide for the
transferability of stock options as authorized by the Management
Resource Committee of the Board of Directors.
3. To ratify the selection of the firm of Coopers & Lybrand L.L.P. as
independent accountants for the fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on March 17, 1997, the record date
fixed by the Board of Directors for such purpose. A list of such stockholders
will be available during regular business hours at the offices of Testa,
Hurwitz & Thibeault, LLP, 125 High Street, Boston, Massachusetts for the ten
days before the meeting for inspection by any stockholder for any purpose
germane to the meeting.
By Order of the Board of Directors,
JAMES P. O'HARE
Secretary
March 26, 1997
STOCKHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
304 VASSAR STREET
CAMBRIDGE, MASSACHUSETTS 02139
----------------
PROXY STATEMENT
MARCH 26, 1997
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Cambridge Technology Partners (Massachusetts), Inc. (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held on Wednesday, May 14, 1997, at 10:00 A.M., at the Downtown Club, State
Street Bank Building, 225 Franklin Street, 33rd Floor, Boston, Massachusetts,
or at any adjournments thereof.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 1996, is being mailed together with this proxy
statement to all stockholders entitled to vote. It is anticipated that this
proxy statement and the accompanying proxy will be first mailed to
stockholders on or about April 14, 1997.
Only stockholders of record as of the close of business on March 17, 1997
(the "Record Date") will be entitled to vote at the meeting and any
adjournments thereof. As of the Record Date, 48,944,579 shares of Common Stock
of the Company were issued and outstanding. Each share outstanding as of the
record date will be entitled to one vote, and stockholders may vote in person
or by proxy. Execution of a proxy will not in any way affect a stockholder's
right to attend the meeting and vote in person. Any stockholder delivering a
proxy has the right to revoke it by written notice to the Secretary at any
time before it is exercised.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, as well as abstentions and
broker "non-votes" with respect to all other matters being submitted to
stockholders, are counted as present or represented for purposes of
determining the presence or absence of a quorum for the meeting. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because, in respect of such
other proposal, the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. Votes may be
cast in favor of or withheld from each nominee. On all other matters being
submitted to stockholders, an affirmative vote of a majority of the shares
present in person or by proxy and entitled to vote on each such matter is
required for approval. Abstentions will have the practical effect of voting
against each such matter since they are included in the number of shares
present and voting on each such matter. Shares subject to broker "non-votes"
are not considered to have been voted for the particular matter and have the
practical effect of reducing the number of affirmative votes required to
achieve a majority for such matter by reducing the total number of shares from
which the majority is calculated.
Each of the persons named as proxies in the proxy is a director and/or
officer of the Company. All properly executed proxies returned in time to be
cast at the meeting will be voted. With respect to the election of a Board of
Directors, any stockholder submitting a proxy has a right to withhold
authority to vote for any individual
<PAGE>
nominee or group of nominees to the Board of Directors by writing the name of
such individual or group in the space provided on the proxy. The proxies will
be voted as stated below and under "Election of Directors." In addition to the
election of directors, the stockholders will act upon proposals to ratify the
selection of auditors and to approve amendments to the Company's 1991 Stock
Option Plan (the "1991 Plan") to (i) increase the number of shares of Common
Stock available for issuance under the 1991 Plan from 15,000,000 to 19,000,000
and (ii) provide for the transferability of stock options as authorized by the
Management Resource Committee of the Board of Directors. Where a choice has
been specified on the proxy with respect to these matters, the shares
represented by the proxy will be voted in accordance with the specification
and will be voted FOR if no specification is indicated.
The Board of Directors knows of no other matter to be presented at the
meeting. If any other matter should be presented at the meeting upon which a
vote may be properly taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as proxies in the proxies.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of the Record Date, the name of each
person who, to the knowledge of management, beneficially owned more than 5% of
the shares of Common Stock of the Company outstanding at such date, the number
of shares owned by each of such persons, and the percentage of the outstanding
shares represented thereby.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) CLASS
------------------- --------------------------- ----------
<S> <C> <C>
Safeguard Scientifics, Inc.(2)........... 9,487,389 19.0%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Pilgrim Baxter & Associates(3)........... 4,609,800 9.4%
1255 Drummers Lane, Suite 300
Wayne, PA 19087
Putnam Investments, Inc.(4).............. 2,601,660 5.3%
One Post Office Square
Boston, MA 02109
</TABLE>
- --------
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares.
(2) Shares are held of record by Safeguard Scientifics (Delaware), Inc., a
wholly-owned subsidiary of Safeguard Scientifics, Inc. ("Safeguard").
Includes 900,000 shares issuable pursuant to presently exercisable
warrants.
(3) Pilgrim Baxter & Associates has sole dispositive power with respect to all
shares shown and shared voting power with respect to all shares shown.
(4) Information obtained from Schedule 13G filed by Putnam Investments, Inc.
with the Securities and Exchange Commission on or about January 28, 1997.
Includes 2,461,660 shares beneficially owned by Putnam Investment
Management, Inc. and 140,000 shares beneficially owned by The Putnam
Advisory Company, Inc. Putnam Investments, Inc., a wholly-owned subsidiary
of Marsh & McLennan Companies, Inc., wholly owns two registered investment
advisers: Putnam Investment Management, Inc. and The Putnam Advisory
Company, Inc. The Putnam Advisory Company, Inc. is an institutional
investment advisor.
2
<PAGE>
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office until the
next annual meeting of stockholders and until their successors shall have been
elected and qualified. Shares represented by all proxies received by the Board
of Directors and not so marked as to withhold authority to vote for any
individual director or for any group of directors will be voted (unless one or
more nominees are unable or unwilling to serve) for fixing the size of the
Board of Directors for the ensuing year at eight directors and for the
election of the nominees named below. The Board of Directors knows of no
reason why any such nominee should be unable or unwilling to serve, but if
such should be the case, proxies will be voted for the election of some other
person or for fixing the number of directors at a lesser number.
The nominees for director are James K. Sims, Warren V. Musser, Jean C.
Tempel, Robert E. Keith, Jr., Jack L. Messman, John W. Poduska, Sr., Ph.D.,
James I. Cash, Jr., Ph.D. and James D. Robinson III. All eight nominees are
currently directors of the Company.
COMPENSATION OF DIRECTORS
Directors receive no cash compensation for their services as directors,
except for reimbursement of expenses incurred in connection with attending
meetings of the Board of Directors and its committees. The Company's non-
employee directors are entitled to participate in the Company's 1991 Non-
Employee Director Stock Option Plan. See "Non-Employee Directors Stock
Options".
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James K. Sims(1)........ 50 Chief Executive Officer, President and
Director
Arthur M. Toscanini..... 54 Executive Vice President, Finance, Chief
Financial Officer and Treasurer
Christopher H. 44 Executive Vice President, Marketing
Greendale..............
William A. Seibel....... 45 Executive Vice President, Operations--
Americas
Gordon R. Brooks........ 39 Senior Vice President, Sales
Michael A. Korchinsky... 35 Senior Vice President, Cambridge Technology
Partners Cambridge Management Consulting
Ben S. Levitan.......... 35 Senior Vice President, Northeast and
Southeast Operations
Susan J. Loker.......... 52 Senior Vice President, Human Resources
James P. O'Hare......... 38 Senior Vice President, General Counsel and
Secretary
Timothy A. Ramos........ 33 Senior Vice President, Cambridge Technology
Partners--Enterprise Resource Solutions
I. Allen Shaheen........ 34 Senior Vice President, European Operations
Laura Zak............... 32 Senior Vice President, Domains
Warren V. Musser(1)..... 70 Chairman of the Board and Director
Jean C. Tempel(1)(2).... 53 Vice Chairman of the Board and Director
Robert E. Keith, 55 Director
Jr.(1)(3)..............
Jack L. Messman(3)...... 56 Director
John W. Poduska, Sr., 59 Director
Ph.D.(2)...............
James I. Cash, Jr., 49 Director
Ph.D.(3)...............
James D. Robinson III... 61 Director
</TABLE>
- --------
(1) Member of Executive Committee.
(2) Member of Management Resource Committee. Mr. Musser served on the
Management Resource Committee through March 19, 1996.
(3)Member of Audit Committee.
JAMES K. SIMS joined the Company in February 1991 and since that time has
served as its Chief Executive Officer, President and as a director. From
September 1990 until February 1991, Mr. Sims was an independent management
consultant. From October 1985 until September 1990, Mr. Sims served as Chief
Executive Officer and President of Concurrent Computer Corporation, a computer
hardware manufacturer. From September 1988 until March 1991, Mr. Sims also
served as Chairman of the Board of Concurrent Computer Corporation.
ARTHUR M. TOSCANINI joined the Company in November 1991 and serves as its
Executive Vice President, Finance, Chief Financial Officer and Treasurer. From
November 1991 to October 1996, Mr. Toscanini served as the Company's Senior
Vice President, Finance. From July 1985 until November 1991, Mr. Toscanini
served as Vice President, Controller of Concurrent Computer Corporation.
CHRISTOPHER H. GREENDALE joined the Company in April 1991 and serves as its
Executive Vice President, Marketing. From April 1991 to October 1996, Mr.
Greendale served as the Company's Senior Vice President,
4
<PAGE>
Marketing. From November 1990 until April 1991, Mr. Greendale was an
independent management consultant. From June 1990 until November 1990, Mr.
Greendale served as Vice President, Marketing for Oracle Corporation, a
provider of computer programming and software services. From April 1989 until
June 1990, Mr. Greendale served as Vice President, Worldwide Marketing for
Ingres Corporation, a software development company. From February 1986 until
April 1989, Mr. Greendale served as President and Chief Operating Officer of
Network Technologies, a software development company.
WILLIAM A. SEIBEL joined the Company in January 1992 and serves as its
Executive Vice President, Operations-Americas. From July 1995 to October 1996,
Mr. Seibel served as the Company's Senior Vice President of International
Operations. From January 1992 until July 1995, Mr. Seibel served as the
Company's Vice President of Operations. From June 1991 until January 1992, Mr.
Seibel served as Senior Vice President of Operations for AGS Management
Systems, a project management and methodology tools company. From October 1989
until June 1991, Mr. Seibel served as Senior Vice President of Technology and
Product Development for Intersolv, Inc. (formerly Index Technology). From
January 1988 until October 1989, Mr. Seibel served as Vice President of
Development for Dunn & Bradstreet Software (formerly McCormack & Dodge).
GORDON R. BROOKS joined the Company in June 1991 and serves as its Senior
Vice President, Sales. From November 1992 to October 1996, Mr. Brooks served
as Vice President, Sales North America. From June 1991 to November 1992, Mr.
Brooks served as Regional Sales Manager.
MICHAEL A. KORCHINSKY joined the Company in October 1995 in connection with
the Company's acquisition of Axiom Management Consulting, Inc. and serves as
its Senior Vice President, Cambridge Technology Partners Cambridge Management
Consulting. From October 1996 to March 1997, Mr. Korchinsky served as the
Company's Senior Vice President, Axiom Management Consulting. From April, 1988
to October 1996, Mr. Korchinsky served as President of Axiom Management
Consulting, Inc.
BEN S. LEVITAN joined the Company in March 1993 and serves as its Senior
Vice President, Northeast and Southeast Operations. From January 1994 to
October 1996, Mr. Levitan served as the Company's Vice President of Northeast
Operations. From February 1993 to January 1994, Mr. Levitan served as the
Company's Director of IT Strategy & Architecture. Prior to joining the
Company, Mr. Levitan served as a Senior Manager for Andersen Consulting, a
consulting and systems integration company from February 1992 to February
1993.
SUSAN J. LOKER joined the Company in August 1993 and serves as its Senior
Vice President, Human Resources. From June 1991 until August 1993, Ms. Loker
served as a Senior Consultant of Aubrey Daniels & Associates, Inc., a
management consulting firm. From September 1988 until May 1991, Ms. Loker
served as Vice President, Human Resources of The Atwell Group, a strategy
consulting firm. From September 1983 to August 1988, Ms. Loker served as Vice
President of Human Resources of ImagiTex, Inc.
JAMES P. O'HARE joined the Company in November 1996 and serves as its Senior
Vice President, General Counsel and Secretary. From January 1990 to November
1996, Mr. O'Hare was a partner in the law firm of Testa, Hurwitz & Thibeault,
LLP, Boston, Massachusetts and an associate attorney from August 1985 to
December 1989. From September 1983 to June 1985, Mr. O'Hare was an associate
attorney in the law firm of Mayer, Brown & Platt, Chicago, Illinois.
TIMOTHY A. RAMOS joined the Company in November 1996 in connection with the
Company's acquisition of Ramos & Associates, Inc. and serves as its Senior
Vice President, Cambridge Technology Partners--
5
<PAGE>
Enterprise Resource Solutions. From December 1991 to November 1996, Mr. Ramos
served as President and Chief Executive Officer of Ramos & Associates, Inc.
I. ALLEN SHAHEEN joined the Company in September 1991 and serves as its
Senior Vice President, European Operations. From October 1992 to October 1996,
Mr. Shaheen served as the Company's Vice President, Western Operations. From
September 1991 to October 1992, he served as Director of Operations and
Director of Operations Planning. From April 1989 to July 1991, Mr. Shaheen
served as manager, BBN Software Products Corporation, a software development
and technology consulting firm.
LAURA ZAK joined the Company in February 1991 and serves as its Senior Vice
President, Domains. From November 1996 to January 1997, Ms. Zak served as the
Company's Vice President, Domains. From October 1993 to November 1996, Ms. Zak
served as the Company's Vice President of Operations Planning. From May 1995
to October 1995, she also served as Group Manager for the Company's Lansing,
Michigan office. From February 1991 to October 1993, Ms. Zak served many
positions with the Company, including Client Partner and Director of
Operations Planning.
WARREN V. MUSSER became a director in March 1991 and has been Chairman of
the Board and Chief Executive Officer of Safeguard Scientifics, Inc., an
entrepreneurial technology company, since 1968 and President from November
1993 until February 1996. Mr. Musser is also a director of CompuCom Systems,
Inc., Coherent Communication Systems Corporation and National Media
Corporation. Mr. Musser is also a member of the executive committee of
Technology Leaders Management L.P. and Radnor Venture Management Company.
JEAN C. TEMPEL became a director in March 1991 and Vice Chairman in December
1992 and is a Managing Partner of Technology Equity Partners, an early-stage
private equity investment group. Ms. Tempel has been a special limited partner
of Technology Leaders II Management L.P. since June 1996. From November 1993
until June 1996, Ms. Tempel was a General Partner of Technology Leaders II
Management L.P. From February 1992 until November 1993, Ms. Tempel was the
President and Chief Operating Officer of Safeguard Scientifics, Inc. From
October 1990 until December 1991, Ms. Tempel was an independent management
consultant. From 1983 until October 1990, Ms. Tempel was Executive Vice
President and Chief Operations Officer of The Boston Company and The Boston
Safe Deposit and Trust Company, a holding company and a bank, respectively.
Ms. Tempel is also a director of Centocor, Inc. and Sonesta International
Hotels and a trustee of the Scudder Family of Funds.
ROBERT E. KEITH, JR. became a director in March 1991 and has been a Managing
Director since December 1991 and a general partner since 1995 of Technology
Leaders Management L.P., a venture capital fund, and a Managing Director and
general partner of Technology Leaders Management II L.P., a venture capital
fund, since December 1994. Mr. Keith has also been a member of the executive
committee of Radnor Venture Management Company, the general partner of Radnor
Venture Partners, L.P., since July 1989. From July 1991 until February 1996,
Mr. Keith was President and Chief Operating Officer of Technology Leaders
Management, Inc. and since February 1996 he has been President and Chief
Executive Officer. Since July 1989, Mr. Keith has been a member of the
executive committee of Technology Leaders Management, L.P., a general partner
of Technology Leaders, L.P., since December 1991. Mr. Keith served as Vice
Chairman of Fidelity Bank, N.A., a national bank and a subsidiary of First
Fidelity BanCorp, from February 1987 to July 1989. Mr. Keith is also a
director of Wave Technologies International, Inc., Gandalf Technologies, Inc.,
Safeguard Scientifics, Inc. and National Media Corporation.
6
<PAGE>
JACK L. MESSMAN is the Chairman, Chief Executive Officer and a director of
Union Pacific Resources Group, Inc. ("UPRG"). Mr. Messman has been the
Chairman and Chief Executive Officer of UPRG since October 1996. From May 1991
to October 1996, Mr. Messman was the President and Chief Executive Officer of
Union Pacific Resources Company. From 1988 to May 1991, Mr. Messman was
Chairman of the Board of Directors, and Chief Executive Officer of USPCI,
Inc., a former subsidiary of Union Pacific Corporation. Prior to joining
USPCI, he was a managing director of Mason Best Company of Houston, an
investment banking firm, from 1986 to 1988, and also served as Chairman of the
Board of Directors and Chief Executive Officer of Somerset House Corporation,
a publishing company owned by Mason Best. From 1983 to 1986, Mr. Messman was
Executive Vice President and a member of the Board of Directors of Warner Amex
Cable Communications, Inc. He was Executive Vice President and a member of the
Board of Directors of Safeguard Scientifics, Inc., from 1981 to 1983, and also
served as President and Chief Executive Officer of Novell, Inc. from 1982 to
1983. Mr. Messman currently is also a director of Novell, Inc., Safeguard
Scientifics, Inc., Tandy Corp. and USDATA Corporation. Mr. Messman has been a
Director of the Company since October 1992.
JOHN W. PODUSKA, SR., PH.D. became a director in September 1992 and has been
the Chairman of Advanced Visual Systems, Inc., a provider of visualization
software, since January 1992. From December 1989 until December 1991, Dr.
Poduska was President and Chief Executive Officer of Stardent Computer, Inc.,
a computer manufacturer. From December 1985 until December 1989, Dr. Poduska
was founder, Chairman and Chief Executive Officer of Stellar Computer, Inc., a
computer manufacturer and the predecessor of Stardent Computer, Inc. Prior to
founding Stellar Computer, Inc., Dr. Poduska founded Apollo Computer Inc. and
Prime Computer Inc. Dr. Poduska is also a director of Union Pacific Resources
Group, Inc. and Safeguard Scientifics, Inc.
JAMES I. CASH, JR., PH.D. became a director in September 1995 and has been
the James E. Robison Professor of Business Administration at the Graduate
School of Business Administration at Harvard University since 1988. From 1992
until 1995, Dr. Cash served as the Chairman of the Harvard University MBA
Program. Dr. Cash is also a director of Knight-Ridder, Inc., State Street
Boston Corporation, the Tandy Corporation, The Chubb Corporation and WinStar
Communications, Inc.
JAMES D. ROBINSON III became a director in December 1995 and is Chairman and
Chief Executive Officer of RRE Investors, LLC, a private venture investment
firm, and President of J.D. Robinson, Inc., a strategic advisory company. He
is also Chairman of Violy Byorum & Partners and Senior Advisor to Trust
Company of the West. Mr. Robinson previously served as Chairman and Chief
Executive Officer and a director of American Express Company from 1977 to
1993. Mr. Robinson is a director of Bristol-Myers Squibb Company, The Coca-
Cola Company, First Data Corporation and Union Pacific Corporation. He also
serves on the boards of two private companies: Iterated Systems Inc. and Giga
Information Group Inc.
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Company held four meetings during 1996. The
Management Resource Committee, of which Dr. Poduska and Ms. Tempel are members
and Mr. Musser was a member through March 1996, reviews and recommends the
compensation arrangements for senior management of the Company, including
salaries, bonuses and grants of options to purchase shares under the Company's
1991 Stock Option Plan and held six meetings during 1996. The Executive
Committee, of which Messrs. Sims, Musser, Keith and Ms. Tempel are members,
has the authority to perform functions on behalf of the full Board of
Directors between
7
<PAGE>
meetings, except such functions that are required by law to be performed by
the full Board of Directors, and held no meetings during 1996. The Audit
Committee, of which Messrs. Keith, Cash and Messman are members, recommends
the firm to be appointed as independent accountants to audit the Company's
financial statements, discusses the scope and results of the audit with the
independent accountants and reviews with management and the independent
accountants the Company's interim and year-end operating results. The Audit
Committee also considers the adequacy of the internal accounting controls and
audit procedures of the Company and reviews the non-audit services to be
performed by the independent accountants. The Audit Committee held three
meetings during 1996. The current membership of the Committees was determined
by the Board of Directors on March 13, 1997. During 1996, no incumbent
director attended fewer than 75% of the aggregate of (i) the total number of
meetings of the Board of Directors (held during the period for which he or she
has been a director) and (ii) the total number of meetings held by all
committees of the Board on which he or she served (during the period that he
or she served).
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of the Record Date with respect to
beneficial ownership of shares of the Company's Common Stock by all directors
and all executive officers named in the Summary Compensation Table set forth
below under "Compensation and Other Information Concerning Executive
Officers--Executive Compensation" individually, and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
---------------- ----------------- ----------
<S> <C> <C>
James K. Sims(3).................................. 2,021,958 4.1%
Arthur M. Toscanini(4)............................ 284,064 *
William A. Seibel(5).............................. 178,658 *
Christopher H. Greendale(6)....................... 339,955 *
Gordon R. Brooks(7)............................... 99,693 *
Warren V. Musser(8)............................... 588,017 1.2
Jean C. Tempel(9)................................. 492,972 1.0
Robert E. Keith, Jr.(10).......................... 148,267 *
Jack L. Messman(11)............................... 78,749 *
John W. Poduska, Sr., Ph.D.(12)................... 227,124 *
James I. Cash, Jr., Ph.D.(13)..................... 86,874 *
James D. Robinson III(14)......................... 29,561 *
All directors and executive officers as a group
(19 persons)(15)................................. 6,335,791 12.9
</TABLE>
- --------
* Less than one percent.
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares. The shares shown include
shares issuable pursuant to options held by the respective person that may
be exercised within 60 days after the Record Date ("Presently Exercisable
Options").
(2) Percentages of ownership are based upon 48,944,579 shares of Common Stock
issued and outstanding as of the Record Date. Shares of Common Stock
issuable pursuant to Presently Exercisable Options are deemed outstanding
for computing the percentage ownership of the person holding such
Presently Exercisable Options, but are not deemed outstanding for the
percentage ownership of any other person.
(3) Includes 734,060 shares issuable pursuant to Presently Exercisable
Options.
8
<PAGE>
(4) Includes 222,490 shares issuable pursuant to Presently Exercisable
Options.
(5) Includes 107,140 shares issuable pursuant to Presently Exercisable
Options.
(6)Includes 273,932 shares issuable pursuant to Presently Exercisable Options.
(7) Includes 56,161 shares issuable pursuant to Presently Exercisable Options.
(8) Does not include 9,487,389 shares beneficially owned by Safeguard. Mr.
Musser disclaims beneficial ownership of the shares beneficially owned by
Safeguard.
(9) Includes 30,000 shares issuable pursuant to Presently Exercisable Options.
Includes 1,500 shares owned beneficially by Ms. Tempel's spouse. Ms.
Tempel disclaims beneficial ownership of the shares beneficially owned by
her spouse.
(10) Does not include 9,487,389 shares beneficially owned by Safeguard. Mr.
Keith disclaims beneficial ownership of the shares beneficially owned by
Safeguard.
(11) Includes 73,749 shares issuable pursuant to Presently Exercisable
Options.
(12) Includes 120,624 shares issuable pursuant to Presently Exercisable
Options.
(13) Includes 86,874 shares issuable pursuant to Presently Exercisable
Options.
(14) Includes 26,561 shares issuable pursuant to Presently Exercisable
Options.
(15) Includes 2,061,074 shares issuable pursuant to Presently Exercisable
Options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1992, the Company entered into a lease for its Cambridge,
Massachusetts headquarters. The approximate minimum payments due from the
Company under this lease for 1997 are $702,117. These payments include base
rent charges, a management fee equal to one percent of base rent and,
beginning in January 1993, a monthly parking charge. Annual increases in base
rent under the lease are based on increases in the Consumer Price Index--Urban
Wage Earners and Clerical Workers, U.S. City Average, All Items. The Company
is also responsible for all operating expenses, real estate taxes and utility
charges, and most insurance and maintenance obligations for the leased
premises. The leased premises includes approximately 62,000 square feet of
rentable floor space. The lease term is for an initial term of fifteen years
with two options to extend for periods of five years each. This facility is
owned by a trust of which Mr. Musser, a director, is the sole beneficiary. The
Company's Board of Directors believes the lease terms are no less favorable to
the Company than could be obtained by the Company from an unrelated third
party.
During 1996, the Company received consulting services from RRE Investors,
LLC. The Company paid $200,000 for these services. Mr. Robinson, a director of
the Company, is Chairman and Chief Executive Officer of RRE Investors, LLC.
9
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table shows compensation information with respect to services
rendered to the Company in all capacities during the years ended December 31,
1996, 1995 and 1994 for the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (with the Chief Executive
Officer, collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION(2)
FISCAL --------------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(3) OPTIONS(#) COMPENSATION
- --------------------------- ------ ----------- --------------------------- ------------
<S> <C> <C> <C> <C> <C>
James K. Sims............ 1996 $ 450,000 $ 420,750 250,000 $ 4,750(5)
Chief Executive Officer
and President 1995 365,000 365,000 375,000 155,460(4)
1994 330,000 416,000 450,000 2,475(5)
Arthur M. Toscanini...... 1996 $ 231,250 $ 117,938 50,000 $ 4,063(5)
Executive Vice
President, Finance,
Chief Financial 1995 185,000 110,000 150,000 1,850(5)
Officer and Treasurer 1994 165,000 130,000 120,000 1,650(5)
William A. Seibel........ 1996 $ 226,500 $ 120,913 100,000 $ 3,988(5)
Executive Vice
President, Operations--
Americas 1995 170,000 85,000 180,000 1,700(5)
1994 156,000 65,273 60,000 1,763(5)
Christopher H. Greendale. 1996 $ 210,000 $ 107,100 30,000 $ 3,688(5)
Executive Vice
President, Marketing 1995 175,000 110,000 120,000 --
1994 160,000 130,000 90,000 --
Gordon R. Brooks......... 1996 200,000 95,306 70,001 $ 3,075(5)
Senior Vice President,
Sales 1995 150,000 100,000 -- 1,500(5)
1994 117,500 92,250 60,000 1,220(5)
</TABLE>
- --------
(1) In accordance with the rules of the Securities and Exchange Commission
(the "Commission"), other compensation in the form of perquisites and
other personal benefits has been omitted in those instances where the
aggregate amount of such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total of annual
salary and bonus for the Named Officer for such year.
(2) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during
1996, 1995 or 1994.
(3) Represents payments under the Company's Executive Bonus Plan.
(4) Includes Company contribution of $2,310 to 401(k) plan. In December 1991,
the Company loaned Mr. Sims $104,150, under a promissory note of Mr. Sims
accruing interest at an annual rate of 7.1%. In April 1992, the Company
loaned Mr. Sims an additional $49,000 under a promissory note accruing
interest at an annual rate of 5.2%. These notes were paid in full in
February 1995 pursuant to an agreement providing for the payment to Mr.
Sims (or to the Company with respect to these loans) of $153,150 in
satisfaction of a contractual condition to continue to be employed by the
Company on February 28, 1995.
(5) Represents Company contribution to 401(k) plan.
10
<PAGE>
OPTION GRANTS IN 1996
The following table shows information regarding grants of stock options to
the Named Officers during the year ended December 31, 1996. The Company did
not grant any stock appreciation rights in 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
--------------------------------------------- ----------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED FISCAL YEAR SHARE(1) DATE 5% 10%
---- ---------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
James K. Sims........... 250,000 8.6% $28.125 12/10/06 $4,421,918 $11,205,998
Arthur M. Toscanini..... 50,000 1.7 34.000 10/03/06 1,069,122 2,709,361
William A. Seibel....... 100,000 3.4 34.000 10/03/06 2,138,243 5,418,723
Christopher H.
Greendale.............. 30,000 1.0 34.000 10/03/06 641,473 1,625,617
Gordon R. Brooks........ 20,001 0.7 15.670 03/19/06 197,106 499,504
50,000 1.7 34.000 10/03/06 1,069,122 2,709,361
</TABLE>
- --------
(1) The exercise price per share of each option was determined by the
Management Resource Committee to be equal to the fair market value per
share of Common Stock on the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options exercised at the end of the option term. These gains
are based on assumed rates of appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise price, but
do not include deductions for taxes or other expenses associated with the
exercise of the options or sale of the underlying shares. The actual
gains, if any, on the stock option exercises will depend on the future
performance of the Common Stock, the optionholder's continued employment
through the option period, and the date on which the options are
exercised.
OPTION EXERCISES AND YEAR-END VALUES
The following table provides information on stock option exercises by the
Named Officers and the number and value of the Named Officers' unexercised
options at December 31, 1996.
AGGREGATED OPTION EXERCISES DURING 1996 AND
OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(2) AT FISCAL YEAR-END(3)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James K. Sims........... 0 0 766,676 818,324 $21,403,886 $13,847,576
Arthur M. Toscanini..... 187,064 $3,227,931 219,988 361,448 5,953,218 7,901,704
William A. Seibel....... 66,870 1,292,315 79,640 328,490 1,749,086 5,053,392
Christopher H.
Greendale.............. 110,850 2,439,872 269,240 315,910 7,930,860 7,521,626
Gordon R. Brooks........ 54,500 1,322,180 42,617 152,884 1,225,671 2,907,646
</TABLE>
- --------
(1) Calculated as the difference between the fair market value of the
underlying securities at the exercise date of the underlying options and
the aggregate exercise price.
(2) Options granted to the Named Officers become fully vested immediately
prior to the merger, consolidation, liquidation or sale of substantially
all of the assets of the Company and terminate immediately after the
effective date of such merger, consolidation, liquidation or sale.
(3) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on December 31, 1996
($33.5625 per share, the last reported sales price of the Company's Common
Stock on the NASDAQ National Market System on December 31, 1996)
multiplied by the number of shares underlying the option. The actual
gains, if any, on the stock option exercises will depend on the future
performance of the Common Stock, the optionholder's continued employment
through the option period, and the date on which the options are
exercised.
11
<PAGE>
The Company has agreed to maintain compensation levels for its executive
officers and to provide severance benefits to certain of its executive
officers but has not entered into employment agreements with any of these
officers providing for specified employment periods. The Company has entered
into noncompetition agreements with each of its executive officers for a term
of twelve months commencing upon termination of employment.
Pursuant to an agreement with the Company, Mr. Sims is entitled to an annual
salary of $365,000 and an annual bonus based on individual performance and
operating results of the Company. Mr. Sims is also entitled to payments equal
to twelve months' salary at his then current base salary upon the termination
of his employment with the Company, payable over a twelve month period. Mr.
Toscanini is entitled to payments equal to six months' salary at his then
current base salary upon the termination of his employment with the Company,
payable over a six month period.
On December 13, 1995, the Management Resource Committee approved the
following base salaries for 1996 for the Named Officers: Mr. Sims $450,000;
Mr. Greendale $205,000; Mr. Toscanini $225,000; and Mr. Seibel $215,000. On
October 3, 1996, the Management Resource Committee approved the following
increases in base salaries effective September 30, 1996: Mr. Greendale,
$225,000; Mr. Toscanini, $250,000, Mr. Seibel, $260,000; and Mr. Brooks,
$200,000.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
Each non-employee director of the company is eligible to participate in the
Company's 1991 Non-Employee Director Stock Option Plan (the "Director Plan").
The Director Plan authorizes the grant of options for a maximum of 150,000
shares of Common Stock. The number of shares of Common Stock issuable under
the Director Plan or subject to outstanding options is subject to adjustment
for changes in the Company's Common Stock. Each non-employee director
automatically receives an option for 30,000 shares of Common Stock upon the
date such person is first elected to the Board of Directors. Twenty-five
percent (25%) of this option vests one year after the date of grant and an
additional 2.083% vests monthly thereafter.
The exercise price per share of options granted under the Director Plan is
100% of the fair market value of the Company's Common Stock on the date the
option is granted. Options expire on the tenth anniversary of the date of the
option grant. Options may not be assigned or transferred except by will or by
the laws of descent or distribution and are exercisable only while the
optionee is serving as a director of the Company or within 90 days after the
optionee ceases to serve as a director of the Company (except that if a
director dies or becomes disabled while serving as a director of the Company,
the option is exercisable until the scheduled expiration date of the option).
12
<PAGE>
On December 10, 1996, each non-employee director received an option for
10,000 shares of Common Stock pursuant to the Company's 1991 Plan. These
options are exercisable as to 25% of such shares one year after the date of
grant and an additional 2.083% vests monthly thereafter. These options expire
on the tenth anniversary of the date of the option grants (December 10, 2006).
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock for the period beginning
with the Company's initial public offering on April 12, 1993 through December
31, 1996, with the cumulative total return for the Nasdaq Market Index and a
SIC Index that includes organizations in the Company's Standard Industrial
Classification (SIC) code number 7373-Computer Integrated System Design. The
comparison assumes $100 was invested on April 12, 1993 in the Company's Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CAMBRIDGE
Measurement period TECH INDUSTRY BROAD
(Fiscal Year Ending) PARTNERS INDEX MARKET
- -------------------- -------- -------- --------
<S> <C> <C> <C>
1993 $ 100.00 $ 100.00 $ 100.00
1993 $ 104.80 $ 116.26 $ 113.70
1994 $ 148.20 $ 111.22 $ 119.37
1995 $ 383.00 $ 179.35 $ 154.84
1996 $ 671.20 $ 190.36 $ 192.41
</TABLE>
13
<PAGE>
REPORT OF MANAGEMENT RESOURCE COMMITTEE ON EXECUTIVE COMPENSATION
General
The Company was organized in 1991 to provide information technology
consulting and software development services to organizations with large scale
information processing and distribution needs that are utilizing or migrating
to open systems computing environments. In May 1993, the Company completed its
initial public offering of Common Stock and, in April 1994, the Company
completed its second public offering of Common Stock.
The Management Resource Committee is responsible for setting and
administering the policies which govern executive compensation and the stock
ownership programs of the Company within guidelines and plans approved by the
Board of Directors. The Committee members consist of Mr. Musser (through March
19, 1996) and Dr. Poduska and Ms. Tempel, none of whom is an employee of the
Company.
Compensation Philosophy and Review
The Company's executive compensation philosophy is to design a compensation
program that enables the Company to attract, retain and motivate high quality
executive officers capable of maximizing stockholder value. The current
compensation program includes three components: base salary; performance-based
cash bonus; and equity incentives. This program rewards executive officers for
long-term strategic management and enhancement of stockholder value by:
providing an opportunity to acquire equity ownership in the Company;
emphasizing both annual and long-term performance; and supporting a
performance-based environment to promote a team-oriented focus for executive
officers. The Management Resource Committee based its recommendations for 1996
in part on its review of compensation survey information compiled by a
management consulting firm concerning base salary, annual incentive
compensation and long term incentive compensation for the six highest paid
officers at selected companies, including service companies with revenues
between $75 and $150 million.
Annual Base Salary
Base salaries for executive officers are targeted at competitive market
levels for their respective positions, levels of responsibility and
experience. In December 1995, the Management Resource Committee approved the
following base salaries for 1996: Mr. Sims, $450,000; Mr. Toscanini, $225,000;
Mr. Greendale, $205,000; Mr. Seibel $215,000.
Executive Bonus Plan
An executive cash bonus plan was established in 1991 and is reviewed and
updated annually. In December 1995, the Management Resource Committee set the
terms for the 1996 Executive Bonus Plan. This Plan established a target for
pre-tax income for 1996 and a cash bonus pool for executive officers based on
achieving target levels. The percentage of the bonus pool available to
executive officers for 1996 depended on the extent to which the pre-tax income
target for 1996 was met. If 1996 pre-tax income equaled the target, 100% of
the bonus pool would be available for bonuses; if 1996 pre-tax income was less
than the target but greater than 1995 pre-tax income, a pro-rated portion of
the bonus pool would be available; and if 1996 pre-tax income exceeded the
target, an additional bonus pool would be made available. No bonuses would be
payable if 1996 pre-tax income was less than the 1995 level. The 1995 pre-tax
income target was exceeded by the Company and a substantial portion, but not
100%, of the bonus pool was available for 1996. See "Compensation and Other
Information Concerning Executive Officers--Executive Compensation" for a
description of bonuses paid to executive officers in 1996.
14
<PAGE>
The annual bonus potential for any individual executive officer was
established as a fixed percentage of that officer's base salary. Seventy-five
percent of the aggregate bonus payable to any executive officer was determined
according to the achievement of the pre-tax income goal and twenty-five
percent was based on individual performance. All bonus awards were approved by
the Company's Management Resource Committee, based upon a recommendation made
by the Chief Executive Officer.
Equity Incentives
The Management Resource Committee believes that equity compensation aligns
employees' long-term objectives with those of stockholders in striving to
maximize the Company's value. The Company's 1991 Stock Option Plan provides
all employees with the opportunity to receive stock options. These options
typically vest ratably over a four-year period. Each executive officer was
granted stock options at the time of hiring and periodically thereafter.
Other Compensation Plans
The Company also has various broad-based employee benefit plans, including
pension, insurance and other benefit plans for its employees. The Company also
offers the 1994 Employee Stock Purchase Plan pursuant to the provisions of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"),
under which employees may purchase up to 3,000 shares of Common Stock annually
at a discount to market price. Executive officers participate in these plans
on the same terms as eligible, non-executive employees. The 1994 Employee
Stock Purchase Plan was approved by the Company's stockholders at the 1995
Annual Meeting of Stockholders.
Compensation of the Chief Executive Officer
The 1996 base salary for Mr. Sims, the Company's Chief Executive Officer and
President, was set by the Management Resource Committee in December 1995 in
connection with setting the base salaries for the other executive officers as
described above. Like the other executive officers, Mr. Sims was granted stock
options at the time of hiring and periodically thereafter. See "Compensation
and Other Information Concerning Executive Officers--Option Grants in 1996"
for a description of option grants to Mr. Sims in 1996. Mr. Sims' portion of
the 1996 Executive Bonus Plan was $420,750 and was the largest share in the
Plan allocated to any executive officer. Accordingly, approximately half of
his 1996 cash compensation was based on 1996 corporate performance compared to
1995. Mr. Sims' performance continues to be exceptional on a quantitative and
qualitative basis.
Net income for 1996 was $21,100,000 compared to $13,348,000 in 1995 and
$7,922,000 in 1994. In addition net revenues increased to $236,554,000 from
$156,266,000 in 1995 and $94,287,000 in 1994. These comparative income and
revenue amounts have been adjusted to give retroactive effect to (i) the
acquisitions of NatSoft S.A. and Ramos & Associates, Inc. in the fourth
quarter of 1996, respectively, and (ii) the acquisitions of The Systems
Consulting Group, Inc. and Axiom Management Consulting, Inc. in the third and
fourth quarters of 1995, respectively. Return on average stockholders' equity
was 29.2% in 1996. The Board of Directors believes that, under Mr. Sims'
direction, the Company continues to effectively meet the challenges of the
rapidly changing global demand for information technology consulting and
software development and systems integration services. The Company has
continued to make significant progress toward the achievement of its business
goals, including growth of revenues, new business development through
acquisitions and European expansion, the addition of qualified personnel, and
strengthening of its capital base.
15
<PAGE>
Deductibility of Executive Compensation Expenses
In general, under Section 162(m) of the Code, the Company cannot deduct, for
federal income tax purposes, compensation in excess of $1,000,000 paid to any
Named Officer, except to the extent such excess constitutes performance-based
compensation. The policy of the Company is to qualify future compensation
arrangements to ensure deductibility, except in those limited cases where
stockholder value is maximized by an alternate approach.
THE 1996 MANAGEMENT RESOURCE COMMITTEE
Warren V. Musser (through March 19, 1996)
Jean C. Tempel
John W. Poduska, Sr.
16
<PAGE>
PROPOSAL TO AMEND THE 1991 STOCK OPTION PLAN
The 1991 Stock Option Plan (the "1991 Plan") was adopted by the Company's
Board of Directors and approved by the Company's stockholders in June 1991 and
December 1991, respectively. A maximum of 15,000,000 shares of Common Stock
have been reserved for issuance under the 1991 Plan upon the exercise of
options. The Board of Directors has approved and recommended to the
stockholders that they approve amendments to the 1991 Plan to (i) increase the
number of shares authorized for issuance pursuant to the 1991 Plan to
19,000,000 shares and (ii) provide for the transferability of stock options as
authorized by the Management Resource Committee of the Board of Directors (the
"Committee").
Since December 1991, when the 1991 Plan was originally approved, the number
of employees at the Company has increased from approximately 150 to
approximately 1,824 through December 31, 1996. The Company's management relies
on stock options as an essential part of the compensation packages necessary
for the Company to attract and retain experienced officers and employees and
motivate employees to maximize stockholder value. The Board of Directors of
the Company believes that the proposed increase in the number of shares
available under the 1991 Plan is essential to permit the Company's management
to continue to provide long-term, equity-based incentives to present and
future key employees. Additionally, the Board of Directors has determined that
any future option grants resulting from the proposed increase will be at
minimum exercise prices equal to at least fair market value at the time of
grant, except in those limited cases where stockholder value would be
maximized by an alternate approach. Accordingly, the value of the future
options is tied to the future performance of the Company's stock and will
provide value to the recipient only to the extent that stockholders as a whole
have benefited from an increase in the market value of the Company's Common
Stock.
In 1996, the Company granted options under the 1991 Plan with fair market
value exercise prices as follows: to the Named Officers, Mr. Sims, 250,000
shares; Mr. Toscanini, 50,000 shares; Mr. Greendale, 30,000 shares; Mr. Seibel
100,000 shares, Mr. Brooks 70,001 shares; all executive officers as a group,
824,006 shares; non-employee directors, 70,000 shares; and all other
employees, 2,098,669 shares. Of these grants, options granted to Mr. Sims to
purchase 105,000 shares were made contingent upon stockholder approval of the
increase in the number of shares authorized. The Company has not at the
present time determined who will receive options to purchase the additional
shares of Common Stock that will be authorized for issuance under the 1991
Plan, if the proposed amendment is approved.
Effective August 15, 1996, the Securities and Exchange Commission (the
"Commission") revised Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") to eliminate a requirement that stock
options granted pursuant to plans intended to qualify for favorable treatment
under Section 16(b) of the Exchange Act be non-transferable. In response to
the Commission's action, the Board of Directors of the Company has decided to
amend the 1991 Plan to grant the Committee the discretion to permit the option
recipient to transfer the option to family members or other persons for estate
planning purposes. Family members determined by the Committee to be eligible
to be transferees of options would be likely to include (i) the spouse,
children or grandchildren of the optionee ("Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Family Members and (iii) a
partnership of which such Family Members are the only partners; provided that
there can be no consideration given or payment made for any such transfer.
Because Federal tax rules do not permit incentive stock options to be
transferable, it is unlikely that the Committee will permit transferability of
incentive stock options. The Board of Directors of the Company believes that
the proposed amendment to the 1991 Plan to provide for the transferability of
stock options granted under the 1991 Plan will enable the Company to attract
employees, consultants and directors of the Company to join the
17
<PAGE>
Company by allowing such individuals flexibility in transferring options
granted to them by the Company for estate planning purposes. In addition, the
proposed amendments will assist the Company's existing employees, consultants
and directors to conduct estate planning with respect to future grants of
stock options.
Approval of the proposal to amend the Company's 1991 Plan will require an
affirmative vote of a majority of the outstanding shares of Common Stock of
the Company represented in person or by proxy at the Annual Meeting and
entitled to vote. The Board of Directors recommends a vote FOR the approval of
the proposal to approve amendments to the Company's 1991 Plan to (i) increase
the number of shares of Common Stock available for issuance under the 1991
Plan from 15,000,000 to 19,000,000 shares and (ii) provide for the
transferability of stock options as authorized by the Management Resource
Committee of the Board of Directors.
DESCRIPTION OF THE 1991 PLAN
The purpose of the 1991 Plan is to provide incentives to officers and other
employees of the Company by providing them with opportunities to purchase
stock of the Company. The text of the 1991 Plan, amended as proposed above, is
attached to this proxy statement as Appendix A. The following is a summary of
the 1991 Plan and should be read together with the full 1991 Plan text.
Under the 1991 Plan, employees of the Company may be awarded incentive stock
options ("ISO" or "ISOs"), as defined in Section 422(b) of the Code, and
directors, officers, employees and consultants of the Company may be granted
options which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options"). ISOs and Non-Qualified Options are sometimes collectively referred
to as "Options." As of March 17, 1997, the closing price of the Company's
Common Stock on the NASDAQ National Market System was $24.50.
The 1991 Plan is administered by the Management Resource Committee (the
"Committee") of the Board of Directors of the Company. Subject to the terms of
the 1991 Plan, the Committee has the authority to determine the persons to
whom Options are granted, the number of shares covered by each Option grant,
and other terms and provisions governing Options, including restrictions, if
any, applicable to the shares of Common Stock issuable upon exercise of
Options. The interpretation and construction by the Committee of any provision
of the 1991 Plan or of any Option granted under the 1991 Plan is final unless
otherwise determined by the Board of Directors.
Options may be granted under the 1991 Plan at any time prior to December 19,
2001. The exercise price per share of ISOs and, unless otherwise specified by
the Committee, Non-Qualified Options granted under the 1991 Plan cannot be
less than the fair market value of the Common Stock on the date of grant (or,
in the case of ISOs granted to employees holding more than 10% of the voting
stock of the Company, 110% of the fair market value of the Common Stock on the
date of grant). The 1991 Plan provides that each option shall expire on the
date specified in the option agreement, but not more than ten years from its
date of grant and five years in the case of ISOs granted to an employee or
officer holding more than ten percent of the voting stock of the Company.
Unless otherwise specified by the Committee, each Option granted under the
1991 Plan shall become exercisable with respect to 25% of the shares of Common
Stock subject to such Option as of the first anniversary of the date of grant
and, thereafter, with respect to an additional 2.083% of the shares subject to
such Option on each calendar month thereafter. Each Option may be exercised
from time to time, in whole or in part, up to the total number of shares with
respect to which it is then exercisable. The Committee shall have the right to
18
<PAGE>
accelerate the date of exercise of any installment of any option (subject to
the $100,000 per year limitation on the fair market value of stock subject to
ISOs granted to any employee which become exercisable in any calendar year).
Payment of the exercise price of an option granted under the 1991 Plan may
be made in cash or by tendering Common Stock of the Company, if authorized by
the Committee.
Generally, only the optionee may exercise an option; no assignment or
transfers are permitted except by will or by the laws of descent and
distribution. However, if the 1991 Plan is amended as described herein, the
Committee may, in its discretion, permit an option recipient to transfer the
option to family members or other persons for estate planning purposes. Family
members determined by the Committee to be eligible transferees of options
would likely include (i) the spouse, children or grandchildren of the optionee
("Family Members"), (ii) a trust or trusts for the exclusive benefit of such
Family Members, or (iii) a partnership of which such Family Members are the
only partners. In connection with permitting transfers, the Committee may
require that (i) no consideration given or payment made for any such transfer,
(ii) the stock option agreement pursuant to which such options are granted
must be approved by the Committee, and must expressly provide for
transferability at the date of grant in a manner consistent with the 1991
Plan, and (iii) subsequent transfers of the transferred option shall be
prohibited except by will or the laws of descent and distribution. Following
any such transfer, any such options shall continue to be subject to the same
terms and conditions as were applicable immediately prior to the transfer.
If an ISO optionee ceases to be employed by the Company other than by reason
of death or disability, no further installments of his or her ISOs will become
exercisable, and the ISOs shall terminate after the passage of three months
from the date of termination of employment (but no later than their specified
expiration dates). If an optionee is disabled, any ISO held by the optionee
may be exercised by the optionee within twelve months thereafter, whether or
not exercisable at the time of such termination of employment. If an optionee
dies, any ISO held by the optionee may be exercised by the optionee's executor
or administrator within twenty-four months thereafter, whether or not
exercisable at the time of such termination of employment. Non-Qualified
Options are subject to such termination and cancellation provisions as may be
determined by the Committee. If an optionee transfers options pursuant to the
1991 Plan, the events of termination of employment as specified in the 1991
Plan shall continue to be applied with respect to the original optionee,
following which the options shall be exercisable by the transferee only to the
extent, and for the periods specified in the 1991 Plan.
Option holders are protected against dilution in the event of a stock
dividend, recapitalization, stock split, merger or similar transaction. The
Board of Directors may from time to time adopt amendments to the 1991 Plan,
certain of which are subject to stockholder approval, and may terminate the
1991 Plan at any time (although such action shall not affect options
previously granted). Any shares subject to an option granted under the 1991
Plan, which for any reason expires or terminates unexercised, may again be
available for future option grants. Unless terminated sooner, the 1991 Plan
will terminate on December 19, 2001.
The following general rules are applicable under current federal income tax
law to ISOs under the 1991 Plan.
1. In general, no taxable income results to the optionee upon the grant
of an ISO or upon the issuance of shares to him or her upon the exercise of
the ISO, and no tax deduction is allowed to the Company upon either grant
or exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of within
(i) two years following the date the option was granted or (ii) one year
following the date the shares are issued to the optionee pursuant
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to the ISO exercise, the difference between the amount realized on any
subsequent disposition of the shares and the exercise price will generally
be treated as capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of before the
expiration of one or both of the requisite holding periods (a
"Disqualifying Disposition"), then in most cases the lesser of (i) any
excess of the fair market value of the shares at the time of exercise of
the ISO over the exercise price or (ii) the actual gain on disposition will
be treated as compensation to the optionee and will be taxed as ordinary
income in the year of such disposition.
4. In any year that an optionee recognizes compensation income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Company generally should be entitled to a corresponding deduction for
income tax purposes.
5. Any excess of the amount realized by the optionee as the result of a
Disqualifying Disposition over the sum of (i) the exercise price and (ii)
the amount of ordinary income recognized under the above rules will be
treated as capital gain.
6. Capital gain or loss recognized on a disposition of shares will be
long-term capital gain or loss if the optionee's holding period for the
shares exceeds one year.
7. An optionee may be entitled to exercise an ISO by delivering shares of
the Company's Common Stock to the Company in payment of the exercise price,
if the optionee's ISO agreement so provides. If an optionee exercises an
ISO in such a manner, special rules will apply.
8. In addition to the tax consequences described above, the exercise of
ISOs may result in a further "minimum tax" under the Code. The Code
provides that an "alternative minimum tax" (at a rate of 26% or 28%) will
be applied against a taxable base which is equal to "alternative minimum
taxable income," reduced by a statutory exemption. In general, the amount
by which the value of the Common Stock received upon exercise of the ISO
exceeds the exercise price is included in the optionee's alternative
minimum taxable income. A taxpayer is required to pay the higher of his
regular tax liability or the alternative minimum tax. A taxpayer who pays
alternative minimum tax attributable to the exercise of an ISO may be
entitled to a tax credit against his or her regular tax liability in later
years.
The following general rules are applicable under current federal income tax
law to Non-Qualified Options under the 1991 Plan:
1. The optionee generally does not realize any taxable income upon the
grant of a Non-Qualified Option, and the Company is not allowed a business
expense deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation income at
the time of exercise of a Non-Qualified Option in an amount equal to the
excess, if any, of the fair market value of the shares on the date of
exercise over the exercise price.
3. When the optionee sells the shares, he or she generally will recognize
a capital gain or loss in an amount equal to the difference between the
amount realized upon the sale of the shares and his or her basis in the
stock (generally, the exercise price plus the amount taxed to the optionee
as compensation income). If the optionee's holding period for the shares
exceeds one year, such gain or loss will be a long-term capital gain or
loss.
4. The Company generally should be entitled to a tax deduction when
compensation income is recognized by the optionee.
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5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Company's Common Stock to the Company in payment
of the exercise price. If an optionee exercises a Non-Qualified Option in
such fashion, special rules will apply.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand L.L.P.,
independent accountants, to serve as auditors for the fiscal year ending
December 31, 1997. Coopers & Lybrand L.L.P. has served as the Company's
auditors and outside accountants since 1991. It is expected that a member of
the firm will be present at the Annual Meeting of Stockholders with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions. Ratification of the selection of auditors is not
required under the laws of the State of Delaware but will be considered by the
Board of Directors in selecting auditors for future years. The directors
recommend a vote FOR ratification of this selection.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock of
the Company. Such persons are required by regulations of the Commission to
furnish the Company with copies of all such filings. Based on its review of
the copies of such filings received by it with respect to the fiscal year
ended December 31, 1996 and written representations from certain Reporting
Persons, the Company believes that all Reporting Persons complied with all
Section 16(a) filing requirements in the fiscal year ended December 31, 1996,
except as set forth below. The following Reporting Persons did not report
transactions on a timely basis and filed late reports as indicated: (i) Mr.
Toscanini did not report five transactions on a timely basis and filed two
late reports; (ii) Mr. Greendale did not report six transactions on a timely
basis and filed three late reports; (iii) Mr. Gett, a former executive officer
of the Company, did not report ten transactions on a timely basis and filed
one late report; (iv) Mr. Seibel did not report four transactions on a timely
basis and filed one late report; (v) Ms. Loker did not report one transaction
on a timely basis; (vi) Mr. Robinson did not report one transaction on a
timely basis and filed one late report; (vii) The Christopher & Ellen
Greendale Charitable Remainder Trust dated May 12, 1996 did not report six
transactions on a timely basis and filed two late reports; and (viii) Mr.
Shaheen did not report one transaction on a timely basis. The following
Reporting Persons did not file their Form 3, Initial Statement of Beneficial
Ownership of Securities, within the requisite period after first becoming an
executive officer of the Company: (i) Mr. Brooks; (ii) Mr. Korchinsky; (iii)
Mr. Levitan; (iv) Mr. Ramos; and (v) Mr. Shaheen.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting
of the Company must be received at the Company's principal executive offices
no later than December 1, 1997. In order to curtail controversy as to the date
on which a proposal was received by the Company, it is suggested that
proponents submit their proposals by Certified Mail--Return Receipt Requested.
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EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Company may
also be made of some stockholders in person or by mail, telephone or telegraph
following the original solicitation. The Company may retain a Proxy
Solicitation firm to assist in the solicitation of proxies in connection with
the Annual Meeting. If the Company retains a Proxy Solicitation firm, it will
pay such firm customary fees, expected to be approximately $10,000, plus
expenses.
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APPENDIX A
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
1991 STOCK OPTION PLAN
1. PURPOSE
The name of this plan is the Cambridge Technology Partners (Massachusetts),
Inc. 1991 Stock Option Plan (the "Plan"). The purpose of the Plan is to
promote the long-term success of Cambridge Technology Partners
(Massachusetts), Inc., a Delaware corporation (the "Company"), by providing
financial incentives to the officers, employees, directors and consultants of
the Company who are in positions to make significant contributions toward such
success. The Plan is designed to attract individuals of outstanding ability to
become or to continue as officers, employees, directors or consultants of the
Company, to enable such individuals to acquire or increase proprietary
interests in the Company through the ownership of shares of Common Stock of
the Company, and to render superior performance during their associations with
the Company. The Company intends that this purpose will be effected by the
granting pursuant to the Plan of options for shares of the Company's Common
Stock (hereinafter referred to as "Options") that either do meet the
definition of "incentive stock options" ("Incentive Options") in Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"), or do
not meet such definition ("Nonqualified Options").
References herein to "the Company" shall include any successor corporation
to the Company and also any subsidiary of the Company (such that, if the
Company has one or more subsidiaries, individuals who are officers or key
employees thereof are eligible to be granted Options under the Plan).
2. OPTIONS TO BE GRANTED AND ADMINISTRATION
(a) Options granted under the Plan may be either Incentive Options or
Nonqualified Options. An Option shall not be considered to be an Incentive
Option unless designated as such at the time of grant or in the option
agreement relating to such option, and any option that is not so designated
(or even if so designated fails to meet the definition of "incentive stock
option" under Section 422(b) of the Code) shall be a Nonqualified Option.
Unless otherwise specified in a particular grant, Options granted under the
Plan are intended to qualify as performance-based compensation to the extent
required under Section 162(m) of the Code and the regulations thereunder.
(b) The Plan shall be administered by a committee (the "Option Committee")
of not less than two members of the Board of Directors of the Company selected
by and from the members of the Company's Board of Directors in accordance with
the provisions of the Company's By-Laws relating to the appointment of
Committees; provided, however, that the Plan shall be administered so that
Options granted under the Plan will qualify for the benefits provided by Rule
16b-3 (or any successor rule to the same effect) under the Securities Exchange
Act of 1934 and by Section 162(m) of the Code (or any successor provision to
the same effect) and the applicable regulations thereunder. Subject to the
provisions of this Plan, the Option Committee shall exercise all powers under
the Plan, unless and until other action is taken by the Company's Board of
Directors. Action by the Option Committee shall require the affirmative vote
of a majority of all its members, and a further vote of the Company's Board of
Directors shall be required for the approval of any and all grants of Options
recommended by the Option Committee.
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(c) Subject to the terms and conditions of the Plan, the Option Committee
shall have the power:
(i) To determine from time to time the Options to be granted to eligible
persons under the Plan, and to prescribe the terms and provisions (which
need not be identical) of each Option granted under the Plan to such
persons, and to recommend the grant of Options to the Board of Directors of
the Company for its approval;
(ii) To construe and interpret the Plan and Options granted thereunder
and to establish, amend, and revoke rules and regulations for
administration of the Plan. In this connection, the Option Committee may
correct any defect or supply any omission, or reconcile any inconsistency
in the Plan, or in any option agreement, in the manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective. All
decisions and determinations by the Option Committee and, with respect to
the grant of Options, by the Board of Directors of the Company in the
exercise of this power shall be final and binding upon the Company and all
optionees; and
(iii) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company
with respect to the Plan.
3. STOCK SUBJECT TO THE PLAN
(a) The stock subject to the Options granted under the Plan shall be shares
of the Company's authorized but unissued common stock, par value $.01 per
share (the "Common Stock"), or previously issued shares of Common Stock that
have been reacquired and reserved by the Company's Board of Directors for
resale upon exercise of Options granted under the Plan. The total number of
shares of Common Stock that may be issued pursuant to Options granted under
the Plan shall not exceed an aggregate of 19,000,000 shares of Common Stock.
Such number shall be subject to adjustment as provided in Section 9 hereof.
(b) Whenever any outstanding Option under the Plan expires, is cancelled or
is otherwise terminated (other than by exercise), the shares of Common Stock
allocable to the unexercised portion of such Option may again be the subject
of Options under the Plan.
(c) No employee of the Company may be granted Options to acquire, in the
aggregate, more than 3,000,000 shares of Common Stock under the Plan. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable
in whole or in part, the unpurchased shares subject to such Option shall be
included in the determination of the aggregate number of shares of Common
Stock deemed to have been granted to such employee under the Plan.
4. STOCK OPTION GRANTS
(a) Incentive Options may be granted only to persons who are employees of
the Company, including members of the Board of Directors who are also
employees of the Company. Nonqualified Options may be granted to officers and
employees of the Company, to directors of the Company, whether or not they are
also employees of the Company, to consultants to the Company who are not
employees, and to such other persons as the Option Committee shall select from
time to time. The determination of the persons eligible to receive grants, the
number of shares of Common Stock for which Options are granted and the
determination of whether an Option shall be an Incentive Option or a
Nonqualified Option shall be made by the Option Committee, subject to the
approval of the Board of Directors of the Company.
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(b) No person shall be eligible to receive any Incentive Option under the
Plan if at the date of grant such person beneficially owns (or would own upon
the exercise of any Options held, or which upon such grant would be held, by
such person) in excess of ten percent (10%) of the outstanding shares of
Common Stock, unless (i) the exercise price is at least 110% of the fair
market value (determined as provided in Section 5(c) hereof at the time the
Incentive Option is granted) of the shares of Common Stock subject to the
Option and (ii) such Option by its terms is not exercisable after the
expiration of five (5) years from the date such Option is granted.
(c) The aggregate fair market value (determined as provided in Section 5(c)
hereof at the time the Incentive Option is granted) of shares of Common Stock
with respect to which any Incentive Option is exercisable for the first time
by the optionee during any calendar year (plus the value of any other such
shares of Common Stock first purchasable in such year under any other Option
under the Plan or any other plan of the Company or any parent or subsidiary
thereof intended to be an "incentive stock option" under Section 422 of the
Code) shall not exceed $100,000, and no person shall be eligible to receive an
Incentive Option for shares of Common Stock in excess of such limitation.
5. TERMS OF THE OPTION AGREEMENTS
Each option agreement for Options granted under the Plan shall contain such
provisions as the Option Committee shall from time to time deem appropriate.
Option agreements need not be identical, but each option agreement by
appropriate language, or by reference to this Section 5 of the Plan, shall
include the substance of all of the following provisions:
(a) Expiration. Each Option shall expire on the date specified in the option
agreement, which date shall not be later than the tenth anniversary of the
date on which the Option was granted. Each Incentive Option shall in any event
expire not later than three months after the optionee is for any reason no
longer employed by the Company, except (i) if such termination of employment
results from optionee's disability (within the meaning of Section 22(e)(3) of
the Code), an Option may be exercised within twelve months thereafter, whether
or not exercisable at the time of such termination, and (ii) if such
termination of employment results from the optionee's death, an Option may be
exercised by his executors or administrators within twenty-four months
thereafter, whether or not exercisable at the time of such termination.
(b) Exercise. Unless the Option Committee shall otherwise determine at the
time an Option is granted, each Option shall become vested and exercisable
with respect to 25% of the shares of Common Stock subject to such Option as of
the first anniversary of the date of grant and, thereafter, with respect to an
additional 2.083% of the shares subject to such Option as of the same day (or
the immediately preceding day if a month does not have such day) of each
calendar month thereafter, so that such Option shall be exercisable in full as
of the fourth anniversary of the date of grant. Unless otherwise provided in
the vote of either the Option Committee or the Board of Directors of the
Company, for this purpose the date of the grant of an Option shall be the date
on which the Board of Directors approves the grant. To the extent not
exercised, vested installments shall accumulate and be exercisable in whole or
in part at any time after becoming exercisable, but not later than the date
the Option expires or terminates.
(c) Purchase Price. Unless the Option Committee shall otherwise determine at
the time the Option is granted, the purchase price per share of Common Stock
under each Option shall be not less than the fair market value of a share of
Common Stock on the date the Option is granted. For the purposes of the Plan,
the fair market value of the shares of Common Stock shall be determined by the
Option Committee with the approval of the Board of Directors of the Company.
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6. LIMITATION ON RIGHTS OF OPTIONEES
(a) Transferability of Options. Except as set forth below, (i) no Option
shall be transferable by any optionee other than by will or by the laws of
descent and distribution and (ii) Options may be exercised during the
optionee's lifetime only by the optionee (or, if the optionee is disabled and
so long as the Option remains exercisable, by the optionee's duly appointed
guardian or other legal representative). However, the Committee may, in its
discretion, permit an option recipient to transfer the option to family
members or other persons for estate planning purposes. In connection with
permitting transfers, the Committee may require that (i) no consideration
given or payment made for any such transfer, (ii) the stock option agreement
pursuant to which such options are granted must be approved by the Committee,
and must expressly provide for transferability at the date of grant in a
manner consistent with the 1991 Plan, and (iii) subsequent transfers of the
transferred option shall be prohibited except those in accordance with this
Section. Following any such transfer, any such options shall continue to be
subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that for purposes of Sections 4, 5, 6(b) - (d), 7, 8, 9
and 12 hereof the term "optionee" shall be deemed to refer to the transferee.
The events of termination of employment set forth in an optionee's option
agreement shall continue to be applied with respect to the original optionee,
following which the options shall be exercisable by the transferee only to the
extent, and for the periods specified herein.
(b) No Shareholder Rights. No optionee shall be deemed for any purpose to be
the owner of any shares of Common Stock subject to any Option unless and until
(i) the Option shall have been exercised pursuant to the terms thereof, (ii)
the Company shall have issued and delivered the shares to the optionee, and
(iii) the optionee's name shall have been entered as a shareholder of record
on the books of the Company. Thereupon, the optionee shall have full voting,
dividend and other ownership rights with respect to such shares of Common
Stock.
(c) No Employment Rights. Neither the Plan nor the grant of any Option
thereunder shall be deemed to confer upon any optionee any rights of
employment with the Company, including without limitation any right to
continue in the employ of the Company, or affect the right of the Company to
terminate the employment of an optionee at any time, with or without cause.
(d) Authority of Company. The existence of the Options shall not affect: the
right or power of the Company or its shareholders to make adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; any issue of bonds, debentures, preferred or prior
preference stock affecting the Common Stock or the rights thereof; the
dissolution or liquidation of the Company, or sale or transfer of any part of
its assets or business; or any other act, whether of a similar character or
otherwise.
7. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Notice of Exercise. Any Option granted under the Plan may be exercised
by the optionee by delivering to the Chief Financial Officer of the Company
(or such other representative of the Company as the Option Committee may
designate) on any business day a written notice specifying the number (which
shall be consistent with the provisions of Section 5(b) hereof) of shares of
Common Stock the optionee then desires to purchase (the "Notice").
(b) Payment. Payment for the shares of Common Stock purchased pursuant to
the exercise of an Option shall be made either (i) in cash or by check
representing good funds in an amount equal to the option price for the number
of shares of Common Stock specified in the Notice (the "Total Option Price"),
or (ii) if authorized by the applicable option agreement, by the valid and
properly completed transfer to the Company of a number of shares of Common
Stock having a fair market value, determined as provided in Section 5(c)
hereof, equal to or
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less than the Total Option Price, plus cash or check in an amount equal to the
excess, if any, of the Total Option Price over the fair market value of such
shares of Common Stock.
8. NOTICE OF DISPOSITION; WITHHOLDING; ESCROW
An optionee shall immediately notify the Company in writing of any sale,
transfer, assignment or other disposition (or action constituting a
disqualifying disposition within the meaning of Section 421 of the Code) of
any shares of Common Stock acquired through exercise of an Incentive Option,
within two (2) years after the grant of such Incentive Option or within one
(1) year after the acquisition of such shares of Common Stock, setting forth
the date and manner of disposition, the number of shares of Common Stock
disposed of and the price at which such shares of Common Stock were disposed
of. The Company shall be entitled to withhold from any compensation or other
payments then or thereafter due to the optionee such amounts as may be
necessary to satisfy any withholding requirements of federal or state law or
regulation and, further, to collect from the optionee any additional amounts
which may be required for such purpose as a condition of delivering the shares
of Common Stock acquired pursuant to an Option. The Option Committee may, in
its discretion, require shares of Common Stock acquired by an optionee upon
exercise of an Incentive Option to be held in an escrow arrangement for the
purpose of enabling compliance with this Section 8.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) Events for Adjusting Number and Price. If the shares of Common Stock as
a whole are changed into or exchanged for a different number or kind of shares
or securities of the Company, whether through reorganization,
recapitalization, reclassification, stock dividend or other distribution,
split, combination of interests, exchange of interests, change in corporate
structure or the like, an appropriate and proportionate adjustment shall be
made in the number and kind of shares of Common Stock subject to the Plan and
in the number, kind, and per share exercise price of shares of Common Stock
subject to unexercised Options or portions thereof granted prior to any such
change. In the event of any such adjustment in an outstanding Option, the
optionee thereafter shall have the right to purchase the number of shares of
Common Stock under such Option at the per share price, as so adjusted, which
the optionee could purchase at the total purchase price applicable to the
Option immediately prior to such adjustment.
(b) Option Committee and Board Action. Adjustments under this Section 9
shall be determined by the Option Committee and approved and ratified by the
Board of Directors of the Company, and such determinations shall be
conclusive. The Option Committee shall have the discretion, and power in any
such event to determine and to make effective provision for acceleration of
the time or times at which any Option or portion thereof shall become
exercisable. No fractional interests shall be issued under the Plan on account
of any adjustment specified above.
10. AMENDMENT OR TERMINATION OF PLAN.
The Board of Directors of the Company may modify, revise or terminate this
Plan at any time and from time to time, except that, other than as provided in
Section 9 hereof, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations
at an annual or special meeting held within twelve (12) months before or after
the date of adoption of such amendment, where such amendment will:
(a) increase the number of shares of Common Stock as to which Options may
be granted under the Plan;
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(b) change in substance Section 4 hereof relating to eligibility to
participate in the Plan;
(c) change the minimum purchase price of Incentive Options to be granted
under the Plan;
(d) increase the maximum term of Options provided herein; or
(e) otherwise materially increase the benefits accruing to participants
under the Plan.
Except as provided in Section 9 hereof, rights and obligations under any
Option granted before any amendment of the Plan shall not be altered or
impaired by such amendment, except with the consent of the optionee.
11. EFFECTIVE DATE; NONEXCLUSIVITY
(a) Effective Date. This Plan will be deemed to have been adopted and to be
effective when approved by the stockholders of the Company in compliance with
Temporary Regulation (S)14a-422A-2 under the Code.
(b) Nonexclusivity. The adoption of the Plan shall not be construed as
creating any limitations on the power of the Board of Directors of the Company
to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
(a) Securities Laws. If in the opinion of legal counsel for the Company the
issuance or sale of any shares of Common Stock pursuant to the exercise of an
Option would not be lawful for any reason, including without limitation the
inability of the Company to obtain from any governmental authority or
regulatory body having jurisdiction the authority deemed by such counsel to be
necessary to such issuance or sale, the Company shall not be obligated to
issue or sell any shares of Common Stock pursuant to the exercise of an Option
to an Optionee or any other authorized person unless a registration statement
that complies with the provisions of the Securities Act of 1933, as amended,
(the "Act") in respect of such shares of Common Stock is in effect at the time
thereof, or other appropriate action has been taken under and pursuant to the
terms and provisions of the Act, or the Company receives evidence satisfactory
to such counsel that the issuance and sale of such shares of Common Stock, in
the absence of an effective registration statement or other appropriate
action, would not constitute a violation of the Act or any applicable state
securities law. The Company is in no event obligated to register any such
shares of Common Stock, to comply with any exemption from registration
requirements or to take any other action which may be required in order to
permit, or to remedy or remove any prohibition or limitation on, the issuance
or sale of such shares of Common Stock of any optionee or other authorized
person.
(b) Withholding Taxes. As a condition of exercise of an Option, the Company
may, in its sole discretion, withhold or require the optionee to pay or
reimburse the Company for any taxes which the Company determines are required
to be withheld in connection with the grant or any exercise of an Option.
(c) Governing Law. The Plan shall be interpreted such that all options
hereunder intended to be Incentive Options shall meet the requirements
therefor set forth in Section 422 of the Code (and any applicable regulations,
rulings or judicial decisions interpreting said Section). Otherwise, the Plan
shall be governed by and interpreted under the laws of the State of Delaware.
13. TERMINATION OF GRANTING OF OPTIONS UNDER THE PLAN
No Option may be granted under the Plan after the tenth anniversary of the
effective date of the Plan.
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CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
Proxy For Annual Meeting of Stockholders
May 14, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James K. Sims and Arthur M. Toscanini and
each or both of them, proxies, with full power of substitution to vote all
shares of stock of the Company which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Cambridge Technology Partners (Massachusetts),
Inc. to be held on Wednesday, May 14, 1997, at 10:00 A.M., at the Downtown Club,
State Street Bank Building, 225 Franklin Street, Boston, Massachusetts, and at
any adjournment thereof, upon matters set forth in the Notice of Annual Meeting
of Stockholders and Proxy Statement dated March 26, 1997, at copy of which has
been received by the undersigned. The proxies are further authorized to vote, in
their discretion, upon such other business as may properly come before the
meeting or any adjournment thereof.
(Continued on the reverse side)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR FIXING THE NUMBER OF DIRECTORS AND THE
ELECTION OF DIRECTORS AS DESCRIBED IN ITEM 1 AND FOR THE PROPOSALS IN ITEMS 2, 3
AND 4.
Please Mark your
votes as indicated in this
example.
/ X /
1. To fix the Board of Directors at eight and to elect a Board of Directors for
the ensuing year:
FOR WITHHELD Nominees: James K. Sims, Warren V. Musser, Jean C.
Tempel, Robert E. Keith, Jr., Jack L. Messman, John W.
Poduska, Sr., James I. Cash, Jr., James D. Robinson III
---------------------------------------------------------
FOR (except vote withheld from above nominee(s)).
2. To amend the 1991 Stock Option Plan (the "Plan") to (i) increase the number
of shares of Common Stock available for issuance under the 1991 Plan from
15,000,000 to 19,000,000 and (ii) provide for the transferability of stock
options as authorized by the Management Resource Committee of the Board of
Directors.
FOR AGAINST ABSTAIN
3. To ratify the selection of the firm of Coopers & Lybrand L.L.P. as
independent accountants for the fiscal year ending December 31, 1997.
FOR AGAINST ABSTAIN
4. To transact such other business as may properly come before the meeting and
any adjournments thereof.
Date: , 1997
------------
Signature(s) of Stockholder(s)
----------------------------------------------
Print Name(s)
(If signing as attorney, executor, trustee or
guardian, please give your full title as such.
If shares are held jointly, each holder
should sign.)
/ / Check this box if you plan on attending
the Annual Meeting of Stockholders in person.
