<PAGE> 1
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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ParcPlace-Digitalk, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
<PAGE> 2
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
ParcPlace-Digitalk, Inc.
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 28, 1997
--------------------------
The Annual Meeting of Stockholders of ParcPlace-Digitalk, Inc. will be
held on Thursday, August 28, 1997, at 8:00 a.m., local time, at [the Company's
offices located at 999 East Arques Avenue, Sunnyvale, California 94086] for the
following purposes, as more fully described in the accompanying Proxy Statement:
1. To elect directors of the Company.
2. To approve an amendment to the Company's Certificate of
Incorporation to change the name of the corporation to "ObjectShare,
Inc."
3. To approve an amendment to the Company's 1993 Stock Plan to increase
the number of shares authorized for issuance thereunder.
4. To approve an amendment to the Company's 1993 Employee Stock
Purchase Plan to increase the number of shares authorized for
issuance thereunder.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on July 8, 1997 are
entitled to vote at the Annual Meeting and are cordially invited to attend the
meeting. However, to ensure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. If you attend the meeting,
you may vote in person even if you return a proxy.
BY ORDER OF THE BOARD OF DIRECTORS,
Eugene L. Goda
Chairman, President and Chief Executive Officer
Sunnyvale, California
July ___, 1997
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
MEETING, YOU MAY VOTE IN PERSON, EVEN IF YOU RETURN A PROXY.
<PAGE> 4
ParcPlace-Digitalk, Inc.
--------------------------
PROXY STATEMENT FOR 1997
ANNUAL MEETING OF STOCKHOLDERS
--------------------------
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
ParcPlace-Digitalk, Inc. ("ParcPlace-Digitalk" or the "Company") for use at the
Annual Meeting of Stockholders to be held on Thursday, August 28, 1997 at 8:00
a.m., local time. The Annual Meeting will be held at [the Company's offices
located at 999 East Arques Avenue, Sunnyvale, California 94086].
This Proxy Statement and the enclosed form of proxy were mailed to
stockholders on or about July ___, 1997.
RECORD DATE AND STOCK OWNERSHIP
Stockholders of record at the close of business on July 8, 1997, the
record date for the Annual Meeting, are entitled to vote at the meeting. At the
record date, 11,929,351 shares of the Company's Common Stock were issued and
outstanding.
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of the record date as
to each person who is known to the Company to beneficially own more than five
percent of the outstanding shares of its Common Stock. Information regarding the
beneficial ownership of management is set forth later in this Proxy Statement.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OWNED
---------------- ----- -----
<S> <C> <C>
Closeburn Management Ltd. (1) 1,855,700 15.6%
260 Engleburn Avenue
Peterborough, Ontario K9HIS7
Canada
</TABLE>
- ---------------------
(1) Based on information provided as of December 31, 1996, by Closeburn
Management Ltd. ("Closeburn") on a Schedule 13G. As set forth on the Schedule
13G, Closeburn is wholly owned by Michael H. Iles, who may therefore be deemed
the beneficial owner of the shares listed in the table.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of
the record date. Stockholders do not have the right to cumulate their votes in
the election of directors.
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock outstanding on the record
date. The Company intends to include abstentions and broker non-votes as present
or represented for purposes of establishing a quorum for the transaction of
business, but to exclude broker
<PAGE> 5
non-votes from the calculation of shares entitled to vote with respect to any
proposal for which authorization to vote was withheld.
The cost of soliciting proxies will be borne by the Company. The
Company expects to reimburse brokerage firms and other persons representing
beneficial owners of shares for their expense in forwarding solicitation
material to such beneficial owners. The Company may retain a proxy solicitor to
assist in the solicitations of proxies, for which the Company would expect to
pay an estimated fee of $6,000 plus reimbursement of expenses. Proxies also may
be solicited by certain of the Company's directors, officers and regular
employees, without additional compensation, in person or by telephone or
facsimile.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
A board of five directors will be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote all proxies for the
five nominees named below, all of whom are presently directors of the Company.
If any nominee is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. It is not
expected that any nominee will be unable or will decline to serve as a director.
The term of office of each person elected as a director will continue until the
next Annual Meeting of Stockholders. There are no family relationships between
any of the directors or executive officers of the Company.
The Board of Directors recommends a vote FOR the nominees listed
below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION
--------------- --- --------------------
<S> <C> <C>
James C. Anderson 58 Chief Executive Officer of Urlysoft Company
John B. Carrington 53 Chief Executive Officer of Artios, Inc.
Eugene L. Goda 61 President and Chief Executive Officer of the Company
Jos C. Henkens 44 General Partner, Advanced Technology Ventures
Philip C. Kantz 53 President and Chief Executive Officer, Tab Products, Inc.
</TABLE>
James C. Anderson, a founder of Digitalk, Inc. ("Digitalk"), has been
a director of the Company since September 1995. Mr. Anderson has been the Chief
Executive Officer of Urlysoft Company, a provider of Intranet development
software, since November 1996. He was Chairman of the Board of Digitalk, a
provider of software development tools based on the Smalltalk language, from its
inception in 1983 until the merger with the Company in August 1995. Mr. Anderson
was also President and Chief Executive Officer of Digitalk from its inception
until September 1991 and January 1994, respectively. Prior to founding Digitalk,
he was a principal consultant at Computer Sciences Corporation for more than 15
years.
John B. Carrington has been a director of the Company since September
1995. He has been Chief Executive Officer and Chairman of the Board of Artios,
Inc., a provider of automation software for the packaging industry, since August
1996. He was President and a director of Digitalk from September 1991 and Chief
Executive Officer from January 1994 until the merger with the Company in August
1995. Prior to joining Digitalk, he was Chairman of the Board and Chief
Executive Officer of Cogensys Corporation, co-founded State of the Art, Inc.,
and held senior positions with the Del Mar Group, Harte-Hanks Communications,
and Honeywell.
Eugene L. Goda joined the Company as President and Chief Executive
Officer, and Chairman of the Board, on June 10, 1997. From November 1995 until
joining the Company, Mr. Goda was a consultant and private investor. From
October 1991 to October 1995, Mr. Goda served as Chief Executive Officer of
Simulation Sciences, Inc., a software company that develops and markets
simulation tools. From July 1989 to September 1991, he served as Chief Executive
Officer of Meridian Software Systems, a systems software provider. He is also a
director of Powerwave Technologies, Inc.
Jos C. Henkens has been a director of the Company since March 1988.
Mr. Henkens has been a general partner of Advanced Technology Ventures, a
venture capital investment firm, since 1983. He is also a director of
AccelGraphics, Inc., Actel Corporation, Credence Systems Corporation, and a
variety of private companies.
2
<PAGE> 6
Philip C. Kantz has been President and Chief Executive Officer and a
director of Tab Products Co. Inc., a provider of file storage and retrieval and
information management systems, since January 1997. From October 1995 through
November 1996, he served as President and Chief Operating Officer and a director
of Trans Ocean Ltd, a diversified worldwide transportation services company.
From February 1994 through January 1995, Mr. Kantz served as President and Chief
Executive Officer and a director of Transcisco Industries, Inc., an industrial
services company. From 1992 to 1993 he was interim President and Chief Executive
Officer of Genetrix, Inc., a biotechnology services business. He currently
serves as a director of 3Com Corporation, Falcon Building Products, Inc., Mine
Reclamation Corporation, Search Systems Corporation, and SonicForce Corporation.
COMPENSATION OF OUTSIDE DIRECTORS
The Company pays its outside directors a fee, for each meeting
attended, of $1,000 for each meeting of the Board of Directors and $500 for each
meeting of a committee. Under the Company's 1995 Director Stock Option Plan,
outside directors also are granted, upon election to the Board, an option to
purchase 20,000 shares of Common Stock and, assuming at least six months have
elapsed since the initial grant, are granted on June 30 of each year an option
to purchase an additional 5,000 shares of Common Stock. The initial grants vest
monthly over four years and the subsequent grants vest monthly over one year
beginning four years after the date of grant. All the options have an exercise
price equal to 100% of the fair market value of the Common Stock on the date of
grant.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held 11 meetings during the
fiscal year ended March 31, 1997. No nominee attended fewer than 75% of the
meetings of the Board of Directors or of committees on which such person served.
The board of directors has a Compensation Committee that makes recommendations
concerning salaries and incentive compensation for employees of the Company and
an Audit Committee that reviews the results and scope of the audit and other
services provided by the Company's independent auditors. The Compensation
Committee and the Audit Committee, which are both presently comprised of
directors Carrington and Henkens, each held 2 meeting in fiscal 1997. The Board
of Directors does not have a nominating committee or a committee performing the
functions of a nominating committee.
PROPOSAL NO. 2:
CHANGE OF CORPORATE NAME
The Company's Board of Directors has unanimously approved an
amendment to the Company's Certificate of Incorporation to change the name of
the corporation to "ObjectShare, Inc." The name change will become effective
upon the filing of an Amended and Restated Certificate of Incorporation of
ParcPlace-Digitalk, Inc. with the Delaware Secretary of State.
The affirmative vote of a majority of the outstanding shares of
Common Stock of the Company is required to adopt this proposal. The Board of
Directors recommends a vote "FOR" the change in corporate name.
PROPOSAL NO. 3:
AMENDMENT OF 1993 STOCK PLAN
The 1993 Stock Plan provides a means for employees and consultants to
acquire stock of the Company through stock options or stock purchase rights. The
purposes of the plan are to attract and retain qualified personnel and to
provide additional incentives for employees and consultants to promote the
success of the Company.
The Board of Directors in May 1997 adopted an amendment to the 1993
Stock Plan to increase the number of shares available for issuance under the
plan by 300,000 shares. The affirmative vote of a majority of the shares of
ParcPlace Common Stock present or represented and voting at the meeting is
required to adopt this proposal. The Board of Directors recommends a vote "FOR"
amendment of the 1993 Stock Plan.
3
<PAGE> 7
DESCRIPTION OF 1993 STOCK PLAN
Number of Shares. Under the 1993 Stock Plan, as amended, the total
number of shares of Common Stock authorized for issuance is 2,225,000 plus any
number of option shares forfeited under the 1989 Stock Option Plan by expiration
or cancellation of options under such plan since its termination in February
1994. As of March 31, 1997, 296,206 option shares forfeited under the 1989 Stock
Option Plan had been added to the 1993 Stock Plan. Option shares forfeited under
the 1993 Stock Plan by expiration or cancellation of options under the plan are
also available for reissuance under the plan.
Administration. The 1993 Stock Plan is administered by the Board of
Directors of the Company or a committee appointed by the Board of Directors. Any
such committee must consist of directors who are not employees or consultants of
the Company or any subsidiary of the Company, and must have at least two
members. The 1993 Stock Plan is currently administered by the Compensation
Committee of the Board of Directors. By delegated authority, options covering a
limited number of shares may be granted by the Chief Executive Officer of the
Company to any person who is not also an officer or member of the Board of
Directors of the Company.
Eligibility. The 1993 Stock Plan provides that stock options and
stock purchase rights may be granted to employees, officers, directors and
consultants of the Company and its majority-owned subsidiaries, although only
employees may be granted options that are designated as incentive stock options.
As of March 31, 1997, approximately 175 persons were eligible to participate in
the 1993 Stock Plan. The Board of Directors, its committee or the Chief
Executive Officer selects the optionees and determines the number of shares to
be subject to each option or stock purchase right. In making such determination,
there is taken into account the duties and responsibilities of the employee, the
value of the employee's services, the employee's present and potential
contribution to the success of the Company, the anticipated number of years of
future service of the employee and other relevant factors.
Exercise Price; Market Value. The exercise price of options and stock
purchase rights granted under the plan must be at least 85% of the market price
of Common Stock on the date of grant, and in the case of incentive stock options
must be at least 100% of such market price. In the case of an incentive stock
option granted to an optionee who owns more than 10% of the voting power or
value of all classes of stock of the Company, the exercise price must be at
least 110% of such market price. Payment of the exercise price may, depending on
the terms of the option agreement, consist of cash, check, surrender of shares
of Common Stock owned by the optionee, or such other consideration as determined
by the Board of Directors or its committee. On March 31, 1997, the closing price
of the Company's Common Stock as reported on the Nasdaq National Market was
$1.50.
Exercisability. Options granted under the plan generally become
exercisable over 48 months. Each option may be exercised, during the lifetime of
the optionee, only by such optionee.
Duration of Options. Options granted under the plan may have a
maximum term of ten years from the date of grant. An option granted to an
optionee who, immediately before the grant of such option, owns more than 10% of
the voting power or value of all classes of stock of the Company, may not have a
term of more than five years. If an optionee's employment or consulting
relationship with the Company is terminated for any reason, the option must be
exercised within a specified period of time, and thereafter the option shall
terminate. In the event of such early termination, the option may be exercised
only to the extent it was exercisable on the date of termination.
Changes in Capitalization. In the event of changes in the Common
Stock by reason of stock dividends, split-ups or combinations of shares,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or liquidations, the Board or its committee shall make such adjustments in the
option price and the number and class of shares subject to options outstanding
under the plan as it shall deem appropriate. In the event of the proposed
dissolution or liquidation of the Company, outstanding options shall terminate
immediately prior to the consummation of the proposed action unless the Board or
its committee provides otherwise. In the event of the merger of the Company with
or into another corporation, or the sale of all or substantially all of the
Company's assets, each outstanding option and purchase right shall be assumed or
an equivalent option or right shall be substituted by the successor corporation
or its parent or subsidiary. The Board or its committee may, in lieu of such
assumption or substitution, make outstanding options and rights fully
exercisable for a period of fifteen days, after which the options and rights
will terminate.
Amendment and Termination. The 1993 Stock Plan will terminate in
December 2003, unless terminated earlier by the Board of Directors of the
Company. The Board may from time to time amend or terminate the plan as it deems
advisable, although certain amendments require approval of the stockholders. Any
amendment or termination of the plan will not affect outstanding options unless
the optionee and the Company agree in writing.
4
<PAGE> 8
Limits on Grants. In order to preserve the Company's ability to
deduct compensation related to stock options granted under the plan, the plan
provides that no employee may be granted, in any fiscal year of the Company,
options to purchase more than 250,000 shares of Common Stock, except that the
Company may make a one-time grant of up to 500,000 shares in connection with an
employee's initial employment which shall not count against the first
limitation. If in the future such limitations are not required to preserve the
deductibility of compensation related to stock options, the Board of Directors
or its committee may modify or eliminate these limitations.
Tax Information Regarding Stock Options. An optionee who is granted
an incentive stock option will not recognize taxable income either at the time
the option is granted or at the time it is exercised, although exercise of the
option may subject the optionee to the alternative minimum tax. The Company will
not be allowed a deduction for federal income tax purposes as a result of the
exercise of an incentive stock option regardless of the applicability of the
alternative minimum tax. Upon the sale or exchange of the shares at least two
years after grant of the option and one year after exercise of the option, any
gain will be treated as long-term capital gain. If these holding periods are not
satisfied at the time of sale, the optionee will recognize ordinary income equal
to the difference between the exercise price and the lower of (i) the fair
market value of the stock at the date of the option exercise or (ii) the sale
price of the stock, and the Company will be entitled to a deduction in the same
amount. (Different rules may apply upon a premature disposition by an optionee
who is an officer, director or 10% stockholder of the Company.) Any additional
gain or loss recognized on such a premature disposition of the shares will be
characterized as capital gain or loss. If the Company grants an incentive stock
option and as a result of the grant the optionee has the right in any calendar
year to exercise for the first time one or more incentive stock options for
shares having an aggregate fair market value (under all plans of the Company and
determined for each share as of the date the option to purchase the share was
granted) in excess of $100,000, then the excess shares must be treated as
non-statutory options.
An optionee who is granted a non-statutory stock option will also not
recognize any taxable income upon the grant of the option. However, upon
exercise of a non-statutory stock option, the optionee will recognize ordinary
income for tax purposes measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized by an optionee
who is an employee of the Company will be subject to tax withholding by the
Company. Upon resale of the shares by the optionee, any difference between the
sales price and the fair market value at the time of exercise, to the extent not
recognized as ordinary income as described above, will be treated as capital
gain or loss. The Company will be entitled to a deduction for federal income tax
purposes equal to the amount of ordinary income recognized by the optionee.
PROPOSAL NO. 4:
AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN
The Company's 1993 Employee Stock Purchase Plan (the "Purchase Plan")
provides employees of the Company with an opportunity to purchase Common Stock
of the Company through accumulated payroll deductions. The Board of Directors of
the Company amended the Purchase Plan in January 1997 to increase the number of
shares authorized for issuance under the plan by 250,000 shares to a new total
of 700,000 shares.
The affirmative vote of a majority of the shares of ParcPlace Common
Stock present or represented and voting at the meeting is required to adopt this
proposal. The Board of Directors recommends a vote "FOR" amendment of the 1993
Employee Stock Purchase Plan.
DESCRIPTION OF 1993 EMPLOYEE STOCK PURCHASE PLAN
Status of Shares. As of March 31, 1997, 399,170 shares had been
issued under the Purchase Plan and 300,830 shares remained available for future
issuance. On March 31, 1997, the closing price of the Company's Common Stock as
reported on the Nasdaq National Market was $1.50.
Operation of the Purchase Plan. Under the Purchase Plan, the Company
withholds a percentage of each salary payment to participating employees over
offering periods of six months or longer as determined by the Board of Directors
or its committee. Presently, the offering periods are twelve months long. The
offering periods are divided into six-month purchase periods and the accumulated
amounts deducted are used to purchase shares of Common Stock at the end of each
six-month purchase period. The price at which stock is purchased under the
Purchase Plan is equal to 85% of the fair market value of the Common Stock on
the first day of the applicable offering period or the last day of the current
purchase period, whichever is lower. Employees may end their participation in
the offering at any time during the offering period, and participation ends
automatically on termination of employment with the Company.
5
<PAGE> 9
Eligibility; Administration. Employees are eligible to participate in
the Purchase Plan if their customary employment is at least 20 hours per week
and more than five months per calendar year. As of March 31, 1997, approximately
175 employees were eligible to participate in the Purchase Plan. Payroll
deductions may not exceed 10% (or such other maximum percentage between 5% and
15% as the Board of Directors or its committee determines) of an employee's
compensation, including overtime, bonuses, commissions, incentive payments and
other compensation. No employee may purchase more than $25,000 worth of stock in
any offering period. The Purchase Plan is currently administered by the Board of
Directors.
Amendment and Termination. The Board of Directors may amend the
Purchase Plan from time to time or may terminate it or any offering period under
it, without approval of the shareholders. However, to the extent necessary and
desirable to comply with Rule 16b-3 under the Securities Exchange Act (or any
other applicable law or regulation), the Company shall obtain approval of the
shareholders with respect to plan amendments to the extent and in the manner
required by such law or regulation. In the event of a merger or sale of
substantially all of the assets of the Company, the Board may shorten the
offering period or permit the assumption of outstanding rights to purchase
Common Stock. Unless earlier terminated by the Board of Directors, the Purchase
Plan will terminate by its own terms in December 2003.
Tax Consequences of Purchase Plan Transactions. The Purchase Plan,
and the right of participants to make purchases thereunder, is intended to
qualify under the provisions of Sections 421 and 423 of the Code. Under these
provisions, no income is taxable to a participant until the shares purchased
under the Plan are sold or otherwise disposed of. Upon sale or other disposition
of the shares, the participant will generally be subject to tax, depending in
part on how long the shares are held by the participant. If the shares are sold
or otherwise disposed of more than two years from the first day of the offering
period, the participant will recognize ordinary income measured as the lesser of
(a) the excess of the fair market value of the shares at the time of such sale
or disposition over the purchase price, or (b) an amount equal to 15% of the
fair market value of the shares as of the first day of the offering period. Any
additional gain will be treated as long-term capital gain. If the shares are
sold or otherwise disposed of before the expiration of this holding period, the
participant will recognize ordinary income generally measured as the excess of
the fair market value of the shares on the date the shares were purchased by the
participant over the participant's purchase price. Any additional gain or loss
on the sale or disposition will be capital gain or loss. The Company is not
entitled to a deduction for amounts taxed as ordinary income or capital gain to
a participant except to the extent of ordinary income recognized by participants
upon a sale or disposition of shares prior to the expiration of the holding
period described above.
INDEPENDENT AUDITORS
Ernst & Young has audited the Company's annual financial statements
since its inception. Representatives of Ernst & Young are expected to be present
at the Annual Meeting with the opportunity to make a statement if they desire to
do so, and are expected to be available to respond to appropriate questions.
6
<PAGE> 10
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of the record date as
to (i) each director, (ii) each current officer named in the Summary
Compensation Table below and (iii) all directors and executive officers as a
group. The persons named in the table, to the Company's knowledge, have sole
voting and investment power with respect to the shares owned by them, subject to
community property laws.
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME OWNED OWNED(1)
---- ----- --------
<S> <C> <C>
James C. Anderson (2)............................. 294,247 2.5%
John B. Carrington (3)............................ 150,102 1.3%
Eugene L. Goda.................................... 0 *
Jos C. Henkens (4)................................ 507,711 4.3%
Philip C. Kantz (5)............................... 48,774 *
Richard H. Dym (6)................................ 53,016 *
All directors and executive officers as
a group (9 persons) (7)....................... 1,054,642 8.8%
</TABLE>
- ------------------------
* Less than 1%.
(1) Percent of the outstanding shares of Common Stock, treating as
outstanding all shares issuable on exercise of options held by the
particular beneficial owner that are included in the first column.
(2) Includes 4,166 shares subject to options exercisable as of 60 days
after the record date.
(3) Includes 13,166 shares subject to options exercisable as of 60 days
after the record date.
(4) Includes 361,598 shares held by Advanced Technology Ventures II and
130,331 shares held by Advanced Technology Ventures III, as well as
532 shares held by Mr. Henkens and 15,250 shares subject to options
exercisable as of 60 days after the record date by Mr. Henkens. Mr.
Henkens is a general partner of Advanced Technology Ventures. Mr.
Henkens disclaims beneficial ownership of the shares held by Advanced
Technology Ventures, except to the extent of his proportionate
interest therein.
(5) Includes 45,774 shares that are held by a trust for which Mr. Kantz
is executor and as to which he thereby has voting control but no
pecuniary interest.
(6) Includes 53,016 shares subject to options exercisable as of 60 days
after the record date.
(7) Includes 90,598 shares subject to options exercisable as of 60 days
after the record date, held by the 6 directors and officers listed
above and by 3 officers not listed above.
7
<PAGE> 11
EXECUTIVE COMPENSATION INFORMATION
COMPENSATION TABLES
The following table sets forth the compensation paid by the Company
during the fiscal years ended March 31, 1997, 1996 and 1995, to the Chief
Executive Officer, the four other most highly compensated executive officers of
the Company, based on fiscal 1997 salary and bonus, and one additional officer
who was among the most highly compensated but was not serving as an executive
officer at the end of fiscal 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS OF
FISCAL ANNUAL COMPENSATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) (# OF SHARES) COMPENSATION(3)
--------------------------- ---- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
William P. Lyons (4) 1997 $200,000 - - $ 1,066
President and Chief Executive Officer 1996 $200,000 $ 50,000 10,000 $ 1,066
1995 $188,333 - 60,000 $ 1,066
Carolyn V. Aver (4) 1997 $168,750 - 30,000 $ 263
Vice President and Chief Financial Officer 1996 $143,750 $ 22,500 14,500 $ 253
1995 $129,167 - 12,500 $ 254
James C. Clemens (4) 1997 $135,417 - 30,000 $ 3,215
Vice President, Development Services 1996 $ 15,987 - 15,000 -
Richard H. Dym 1997 $199,049 - 25,000 $ 644
Vice President, Marketing 1996 $195,809 $ 13,000 10,100 $ 644
(formerly VP, International Operations) 1995 $132,140 - 11,500 $ 2,406
Michael W. Taylor (4) 1997 $138,689 $ 7,500 10,000 $ 41,326
Vice President, Professional Services 1996 $116,157 $ 5,750 31,150 $ 80
1995 $102,785 - - -
Martin A. Yam (4) 1997 $169,200 $ 21,875 25,000 $ 67,341
Vice President of Sales and Marketing 1996 $ 20,000 $ 12,000 55,000 $ 80
1995 $113,142 $ 40,000 - $ 13,634
</TABLE>
- --------------
(1) The amounts shown as Mr. Dym's salary include commission payments of
$47,049 in fiscal 1997, $68,934 in fiscal 1996 and $14,015 in fiscal
1995. The amounts shown as Mr. Taylor's salary include commission
payments of $15,057 in fiscal 1997 and $8,500 in fiscal 1996. The
amounts shown as Mr. Yam's salary include commission payments of
$71,892 in fiscal 1995. The amounts shown for Mr. Yam are each for
partial years of service, as described in footnote 4 below.
(2) The executive bonus plans for each fiscal year established executive
bonus awards as the product of a target percentage of base salary
times an individual performance multiplier times a Company
performance multiplier. The amount shown for Mr. Taylor in fiscal
1997 represents a one-time incentive bonus based on achievement of
specific near-term objectives. The amount shown for Mr. Yam in fiscal
1997 was pursuant to a first-year guarantee of a portion of target
bonus.
(3) Except as noted in the following sentences, the amounts shown as
other compensation represent life insurance premiums. The amount
shown for Mr. Clemens in fiscal 1997 includes reimbursement of
relocation expenses of $2,625. The amount shown for Mr. Dym in fiscal
1995 includes a travel-savings incentive of $1,772. The amount shown
for Mr. Taylor in fiscal 1997 includes severance and consulting
payments of $40,558. The amount shown for Mr. Yam in fiscal 1997
includes severance of $65,019 and in fiscal 1996 includes payout of
accrued vacation of $13,327.
(4) Mr. Lyons, Ms. Aver, Mr. Clemens and Mr. Taylor resigned from the
Company after the end of fiscal 1997. Mr. Yam left the Company in
February 1997. He had rejoined the Company in February 1996 after
having resigned from the Company in August 1994.
8
<PAGE> 12
The following table sets forth information regarding grants of stock
options made during the fiscal year ended March 31, 1997 to the persons named in
the Summary Compensation Table above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS GRANTED EXERCISE FOR OPTION TERM(3)
OPTIONS TO EMPLOYEES IN OR BASE EXPIRATION ---------------------------
NAME GRANTED(1) LAST FISCAL YEAR PRICE(2) DATE 5% 10%
---- ---------- ---------------- -------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William P. Lyons - - - - - -
Carolyn V. Aver 30,000 1.3% $ 4.50 9/5/06 $ 84,901 $215,155
James C. Clemens 30,000 1.3% $ 2.75 10/11/06 $ 51,884 $131,484
Richard H. Dym 25,000 1.1% $ 4.50 9/5/06 $ 47,167 $119,531
Michael W. Taylor 10,000 0.4% $ 4.50 9/5/06 $ 28,300 $ 71,718
Martin A. Yam 25,000 1.1% $ 9.00 5/9/06 $141,501 $358,592
</TABLE>
- ------------------
(1) The Board of Directors has the discretion, subject to plan limits, to
modify the terms of outstanding options and to reprice the options.
Except as noted, the listed options vest over four years, subject to
agreements providing for acceleration in the event of termination of
employment in connection with a change in control of the Company.
(2) All options were granted with an exercise price equal to the fair
market value of the Common Stock as determined by the Board of
Directors on the date of grant. The exercise price and tax
withholding obligations related to exercise may in some cases, be
paid by delivery of other shares or by offset of the shares subject
to the options.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the 10-year option term. The assumed
5% and 10% rates of stock appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. This table
does not take into account any appreciation in the price of the
Common Stock to date, which exceeds the hypothetical gains shown in
the table.
The following table sets forth, for each person named in the Summary
Compensation Table above, information regarding the exercise of stock options
during the fiscal year ended March 31, 1997 and the year-end value of
unexercised options:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE(2) OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT YEAR-END: OPTIONS AT YEAR-END:
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE(3) EXERCISABLE UNEXERCISABLE(3)
---- --------- ----------- --------------------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William P. Lyons - - 429,121 61,043 $323,474 $ 0
Carolyn V. Aver 4,000 $ 36,000 51,916 50,084 $ 0 $ 0
James C. Clemens - - 3,750 41,250 $ 0 $ 0
Richard H. Dym 4,000 $ 36,000 44,266 41,584 $ 0 $ 0
Michael W. Taylor - - 12,400 - $ 0 -
Martin A. Yam - - 13,750 - $ 0 -
</TABLE>
(1) Calculated on the basis of the fair market value of the Common Stock
on the date of exercise, minus the per share exercise price,
multiplied by the number of shares underlying the option.
(2) Based on a fair market value of $1.50, which was the closing price of
the Common Stock on March 31, 1997.
(3) Shares subject to certain options may be purchased prior to vesting
but will be subject to repurchase until vested.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Company's Board of Directors (the
"Committee") consists of directors John B. Carrington and Jos C. Henkens. The
Committee is responsible for establishing policies and programs that determine
the compensation of the Company's executive officers, as well as supervising and
making recommendations to the Board on general compensation matters. The
Committee also has exclusive authority to grant stock options to executive
officers of the Company under its 1993 Stock Plan.
9
<PAGE> 13
Compensation Philosophy and Policies
The Committee's compensation philosophy is designed to align each
executive's compensation, and therefore the executive's motivation, with that of
the stockholders through both cash and equity incentives. The Company seeks to
attract and retain executive officers of the highest quality by paying salaries
competitive in the industry and ensuring that its executives are rewarded for
their contributions to the Company.
The Committee favors a high-risk/high-reward compensation system,
which emphasizes bonus compensation as a relatively high percentage of base
salary. In addition, executives are encouraged to hold a continuing significant
equity interest in the Company. The Committee believes that broad-based employee
equity ownership provides an important incentive for employee contribution to
the Company's success.
Elements of Compensation
The components of officer compensation include cash compensation,
stock ownership through stock options and participation in a payroll-deduction
stock purchase plan, participation in a 401(k) plan (without matching employer
contributions), supplemental life insurance, and other standard benefits. There
are essentially no other officer perquisites.
Cash compensation consists of base salary, bonuses, and sales
commissions. Base salary is determined on the basis of the level of
responsibility, expertise and experience of the employee, taking into account
competitive conditions in the industry. Cash bonuses awarded to officers and
other key employees are typically based on a target percentage of salary,
adjusted for achievement of revenue and profit goals by the Company and
individual performance evaluations. Compensation of sales executives also
includes sales commissions.
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of the Company are eligible to
participate in the 1993 Stock Plan (the "Option Plan") and the 1993 Employee
Stock Purchase Plan (the "ESPP"). The Option Plan permits the Board of Directors
or any committee delegated by the Board to grant stock options to employees on
such terms as the Board or such committee may determine. The Compensation
Committee presently has sole authority to grant stock options to executive
officers of the Company. In determining the size of the stock option grant to an
officer or other employee, the Committee takes into account equity participation
by comparable employees within the Company, external competitive circumstances,
and other relevant factors. The ESPP permits employees to acquire Common Stock
of a Company through payroll deductions and promotes broad-based equity
ownership throughout the Company.
Fiscal 1997 Executive Compensation
Executive compensation for fiscal 1997 included base salary and, for
sales personnel, sales commissions. Under the executive bonus plan in place for
the year, target bonuses were established with percentage achievement levels
based upon a combination of both Company performance, as determined by revenue
and profit before tax, and individual performance. Applying the formula in the
plan to the Company's performance resulted in no bonuses being paid for the
fiscal year. Executive officers were granted stock options during the fiscal
year, with exercise prices equivalent to the fair market value of the stock on
the date of grant.
Chief Executive Officer Compensation for Fiscal 1997
William P. Lyons, who resigned in June 1997, joined the Company as
its President, Chief Executive Officer and a Director in April 1992. Mr. Lyons'
base salary was established at that time based on a review of a number of
factors, including compensation packages awarded to chief executives of
comparable companies, competitive conditions in the industry, alignment of the
chief executive's compensation with growth in value of the Company's stock and
other relevant factors. No increase from that initial base salary was made until
October 1994, at which time Mr. Lyons' base salary was increased based on
factors substantially identical to those applied in April 1992, and no
additional increases were made after that time.
Tax Deductibility of Executive Compensation
Under Section 162(m) of the Internal Revenue Code, adopted in 1993,
the deductibility of compensation paid to certain executive officers may be
limited if it exceeds $1 million in one year, although performance-based
compensation is excluded from the limitation. Because the targeted cash
compensation for each of the Company's
10
<PAGE> 14
officers is well below the $1 million threshold and, subject to the amendments
described in this proxy statement, options granted under the Option Plan should
meet the Section's requirements for being performance-based, the Section is not
expected to reduce the tax deduction available to the Company. The Company's
policy is to qualify to the extent reasonable its executive officers'
compensation for deductibility under applicable tax laws.
Summary
The Compensation Committee sets policy and administers the Company's
cash and equity incentive programs for the purpose of attracting and retaining
highly skilled executives who will promote the success of the Company's
business.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
John B. Carrington
Jos C. Henkens
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither member of the Compensation Committee is a present or former
employee or officer of the Company, although Mr. Carrington was President and
Chief Executive Officer of Digitalk prior to the merger with the Company in
August 1995. No officer of the Company served as either a member of a
compensation committee of, or as a director of, another company as to which
there was interlocking participation on the Compensation Committee of the
Company.
COMPENSATION OF NEW EXECUTIVE OFFICERS
On June 10, 1997, the Company named Eugene L. Goda to the position of
President and Chief Executive Officer, Ronald J. Clear to the position of Chief
Financial Officer, and James H. Smith to the position of Vice President of
Worldwide Sales. Their annual salaries are $200,000, $175,000, and $195,000,
respectively. Mr. Goda was also appointed Chairman of the Company's Board of
Directors. In connection with their retention, Messrs. Goda, Clear and Smith
were granted options to purchase 650,000, 195,000 and 455,000 shares,
respectively, of the Company's Common Stock at an exercise price of $1.0625 per
share, the market value of the stock on June 10, 1997. The options vest ratably
over 18 months with an initial vesting increment of six months and subsequent
increments of three months, and are subject to immediate full vesting in the
event of an acquisition, merger, or liquidation of the Company. The options each
have a term of five years, plus up to three additional years as may be necessary
to provide the optionee with three years after any termination of employment to
exercise the option. The Company has entered into employment agreements with
each of Messrs. Goda, Clear and Smith setting forth the above salaries and
option provisions, among certain other terms. The employment agreements have an
initial term of six months and are thereafter terminable upon 90 days notice
from either party. If the Company terminates any of the agreements other than
for "cause" (as defined in the agreements), the Company must pay the
individual's salary for the balance of the initial term or, if the initial term
is completed, for 90 days, and the options will continue to vest for the full
remainder of the 18-month vesting periods.
11
<PAGE> 15
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total
stockholder returns for the Company's Common Stock, the Nasdaq Stock Market
index for U.S. companies, and the Nasdaq Computer and Data Processing Services
Stocks index. The graph assumes the investment of $100 on February 1, 1994, the
date of the Company's initial public offering. The data regarding the Company
assumes an investment at the initial public offering price of $15.50 per share
of the Company's Common Stock. The performance shown is not necessarily
indicative of future performance.
COMPARISON OF 38-MONTH CUMULATIVE TOTAL RETURN
AMONG PARCPLACE-DIGITALK, THE NASDAQ STOCK MARKET (U.S. COMPANIES),
AND NASDAQ COMPUTER AND DATA PROCESSING SERVICES STOCKS
PROXY STOCK PERF. DATA
<TABLE>
<CAPTION>
PARCPLACE-DIGITALK NASDAQ (U.S.) C & DP SVCS
<S> <C> <C> <C>
2/1/94 100.00 100.00 100.00
3/31/94 129.03 93.42 96.97
3/31/95 98.39 103.95 130.72
3/31/96 58.87 141.10 185.23
3/31/97 9.68 156.86 202.68
</TABLE>
12
<PAGE> 16
CERTAIN TRANSACTIONS AND REPORTS
Pursuant to the Delaware General Corporation Law ("Delaware Law"),
the Company has adopted provisions in its Certificate of Incorporation that
eliminate the personal liability of its directors and officers to the Company
and its stockholders for monetary damages for breach of the directors' fiduciary
duties in certain circumstances. The Company's Bylaws require the Company to
indemnify its directors, officers, employees and other agents to the fullest
extent permitted by law. The Company has entered into indemnification agreements
with each of its current directors and executive officers that provide for
indemnification to the fullest extent permitted by Delaware Law, including in
circumstances in which indemnification and the advancement of expenses are
discretionary under Delaware Law. The Company believes that the limitation of
liability provisions in its Certificate of Incorporation and the indemnification
agreements will enhance the Company's ability to continue to attract and retain
qualified individuals to serve as directors and officers. There is no pending
litigation or proceeding involving a director, officer or employee of the
Company to which the indemnification agreements would apply. The Company has
entered into agreements with each of its executive officers providing for
acceleration of their options in the event of termination of employment in
connection with a change in control of the Company.
REPORTS UNDER SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16 of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's Common Stock, to file reports of changes in
ownership with the Securities and Exchange Commission ("SEC"). Such persons are
required by SEC regulations to furnish the Company with copies of all Section 16
forms they file. Based on its review of copies of such forms furnished to the
Company on written representations of such persons, the Company believes that
all Section 16 filing requirements were met during fiscal 1997 by such persons.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals that are intended to be presented by stockholders of the
Company at the 1998 Annual Meeting of Stockholders must be received by the
Company no later than March 16, 1998, in order that they may be included in the
proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the accompanying form of proxy to vote the shares they
represent as the Board of Directors may recommend.
AVAILABILITY OF FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. COPIES OF EXHIBITS TO
THE FORM 10-K ARE AVAILABLE, BUT A REASONABLE FEE WILL BE CHARGED TO A
STOCKHOLDER REQUESTING EXHIBITS. REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS,
PARCPLACE-DIGITALK, INC., 999 EAST ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086.
13
<PAGE> 17
PROXY PARCPLACE-DIGITALK, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of ParkPlace-Digitalk, Inc. hereby appoints Eugene
L. Goda and Ronald J. Clear, each with full authority and each with the power to
appoint a substitute, as Proxies to represent the undersigned at the annual
meeting of stockholders to be held on August 28, 1997, and to vote, as
designated below, all shares of Common Stock held on the record date for the
meeting. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
[ ] Check here if you plan to attend the meeting.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
PARCPLACE-DIGITALK, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
1. Election of Directors.
Nominees: James C. Anderson, John B. Carrington, Eugene L. Goda, Jos C.
Henkens, and Phillip C. Kantz. (To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list above.)
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
(name crossed out)
[ ] [ ] [ ]
2. Proposal to approve the change of the corporation's name to "ObjectShare,
Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve an amendment to the 1993 Stock Plan to increase the
number of shares authorized for issuance thereunder.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve an amendment to the 1993 Employee Stock Purchase Plan to
increase the number of shares authorized for issuance thereunder.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Unless a contrary direction is indicated, this proxy will be voted FOR ALL
nominees listed under proposal 1 and FOR Proposals 2, 3 and 4.
[ ] Check here for address change and note on label.
Dated: , 1997
----------------
14
<PAGE> 18
Signature(s)
---------------------------------
----------------------------------------------
Please sign exactly as name appears hereon.
Joint owners should each sign personally.
Executors, trustees, etc. should indicate their
titles when signing.
15
