<PAGE>
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 Section 240.14a-11(c) or Section
240.14a-12
4FRONT SOFTWARE INTERNATIONAL, 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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC.
5650 GREENWOOD PLAZA BOULEVARD
ENGLEWOOD, COLORADO 80111
303-721-7341
November 7, 1997
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 11:00 A.M. on Wednesday, December 10, 1997, at the
offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103.
At the meeting you will be asked to elect seven directors of the Company and
to approve an amendment to the Company's Certificate of Incorporation which
would change the Company's name to 4Front Technologies, Inc. In addition, we
will be pleased to report on the affairs of the Company and a discussion period
will be provided for questions and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to be
present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
Anil Doshi
Chairman of the Board
of Directors
Mark Ellis
President
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
Englewood, Colorado
November 7, 1997
Notice is hereby given that the Annual Meeting of Stockholders of 4Front
Software International, Inc. will be held on Wednesday, December 10, 1997 at
11:00 A.M. at the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New
York, New York 10103 for the following purposes:
(1) To elect seven directors to serve for the ensuing year;
(2) To approve an amendment to the Company's Certificate of Incorporation
which would change the Company's name to 4Front Technologies, Inc.; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record at the close of business on November 3, 1997, will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
CRAIG KLEINMAN
SECRETARY
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC.
5650 GREENWOOD PLAZA BOULEVARD
ENGLEWOOD, COLORADO 80111
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.001 per share (the "Common Stock"), of 4Front Software International, Inc.
(the "Company") in connection with the solicitation by the Board of Directors of
the Company of proxies for use at the Annual Meeting of Stockholders to be held
on Wednesday, December 10, 1997, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.
Proxies for use at the meeting are being solicited by the Board of Directors
of the Company. Proxies will be mailed to stockholders on or about November 7,
1997 and will be solicited chiefly by mail. The Company will make arrangements
with brokerage houses and other custodians, nominees and fiduciaries to send
proxies and proxy material to the beneficial owners of the shares and will
reimburse them for their expenses in so doing. Should it appear desirable to do
so in order to ensure adequate representation of shares at the meeting,
officers, agents and employees of the Company may communicate with stockholders,
banks, brokerage houses and others by telephone, facsimile or in person to
request that proxies be furnished. All expenses incurred in connection with this
solicitation will be borne by the Company. The Company has no present plans to
hire special employees or paid solicitors to assist in obtaining proxies, but
reserves the option of doing so if it should appear that a quorum otherwise
might not be obtained.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby to approve Proposal Nos. 1 and 2 as set forth in
the accompanying Notice of Annual Meeting of Stockholders and in accordance with
their best judgment on any other matters which may properly come before the
meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on November 3, 1997 are
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On November 3, 1997 there were 6,588,643 shares of
Common Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have
<PAGE>
not been received from the beneficial owner. The effect of broker non-votes on
the specific items to be brought before the Annual Meeting of Stockholders is
discussed under each item.
2
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of October 1, 1997, except as
otherwise noted in the footnotes), regarding the beneficial ownership
(determined in accordance with the rules of the Securities and Exchange
Commission (the "SEC"), which generally attributes beneficial ownership of
securities to persons who possess sole or shared voting power and/or investment
power with respect to those securities) of the Company's Common Stock of: (i)
each person known by the Company to own beneficially more than five percent of
the Company's outstanding Common Stock; (ii) each director and nominee for
director of the Company; (iii) each executive officer named in the Summary
Compensation Table (see "Executive Compensation"); and (iv) all directors and
executive officers of the Company as a group. Except as otherwise specified, the
named beneficial owner has the sole voting and investment power over the shares
listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ---------------------------------------------------------------------------- ---------------------- ---------------
<S> <C> <C>
Anil Doshi (1).............................................................. 959,700 13.83%
Mark Ellis (2).............................................................. 547,300 8.02%
Kenneth Newell (3).......................................................... 262,578 3.90%
Terence Burt (4)............................................................ 237,582 3.54%
Craig Kleinman (5).......................................................... 82,500 1.25%
Brian Murray................................................................ 12,500 *
Arthur Keith Ross (6)....................................................... 185,950 2.81%
FMR Corporation (7)......................................................... 435,000 6.66%
All Directors and Executive Officers as a Group (8 persons) (8)............. 2,277,610 29.17%
</TABLE>
- ------------------------
* Less than 1%
(1) Includes 25,000 shares of Common Stock and 20,000 shares of Common Stock
issuable pursuant to immediately exercisable warrants which are owned by
Aliki Financial Corp., a corporation in which Mr. Doshi has a 65% interest.
Also includes 270,000 shares of Common Stock purchasable pursuant to
immediately exercisable options, and 112,000 shares purchasable pursuant to
immediately exercisable warrants. Mr. Doshi disclaims beneficial ownership
of the shares owned by Aliki Financial Corp. other than the shares in which
he has a pecuniary interest.
(2) Includes 25,000 shares of Common Stock and 20,000 shares of Common Stock
issuable pursuant to immediately exercisable warrants which are owned by
Aliki Financial Corp., a corporation in which Mr. Ellis has a 35% interest.
Also includes 270,000 shares of Common Stock purchasable pursuant to
immediately exercisable options. Mr. Ellis disclaims beneficial ownership of
the shares owned by Aliki Financial Corp. other than the shares in which he
has a pecuniary interest.
(3) Consists of (i) 26,737 shares of Common Stock held directly by Mr. Newell,
(ii) 7,051 shares of Common Stock owned by Mr. Newell's wife, (iii) 28,790
shares of Common Stock owned by Lex Nominees International, as nominee for a
Jersey resident settlement established for the benefit of Mr. Newell and his
wife and children, and (iv) 200,000 shares of Common Stock purchasable
pursuant to immediately exercisable options.
(4) Consists of (i) 441 shares of Common Stock held directly by Mr. Burt, (ii)
33,347 shares of Common Stock owned by Mr. Burt's wife, (iii) 28,794 shares
of Common Stock owned by Lex Nominees International, as nominee for a Jersey
resident settlement established for the benefit of Mr. Burt and his wife and
children, and (iv) 175,000 shares of Common Stock purchasable pursuant to
immediately exercisable options.
(5) Includes 75,000 shares of Common Stock purchasable pursuant to immediately
exercisable options.
(6) Includes 87,100 shares of Common Stock purchasable pursuant to immediately
exercisable options and warrants.
3
<PAGE>
(7) The information contained herein is set forth in Schedule 13G, dated
February 14, 1997, filed by the beneficial owner. The 13G states that the
beneficial owner has sole voting and dispositive power with respect to such
shares.
(8) Includes 1,074,500 shares of Common Stock issuable pursuant to options and
199,100 shares of Common Stock issuable pursuant to warrants which are
exercisable within 60 days of October 1, 1997.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Seven directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a director and
their principal occupations or employment during the past five years are:
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- ------------------------------------------ --- ----------------- ----------------------------------------------
<S> <C> <C> <C>
Anil Doshi................................ 53 1993 Chairman of the Board of Directors, Chief
Executive Officer and a Director of the
Company since April 1993. Mr. Doshi co-founded
Communic8 Software (the Company's
predecessor-in-interest) in January 1990 and
served as its Chairman from April 1992 to
March 1993. Mr. Doshi is a Fellow of the
Institute of Chartered Accountants in England
and Wales, and he is also an Associate of the
Institute of Taxation. From January 1990 until
October 1990, Mr. Doshi served as Deputy
Chairman of PPI Enterprises, Inc., a New York
based holding company ("PPI"). From 1986 to
1990, Mr. Doshi served as a consultant to
Polly Peck International, PPI's parent
company.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- ------------------------------------------ --- ----------------- ----------------------------------------------
<S> <C> <C> <C>
Mark Ellis................................ 44 1993 President, Chief Operating Officer and
Director of the Company since April 1993. Mr.
Ellis co-founded Communic8 Software and served
as a director from January 1992 until March
1993. From September 1988 to January 1991, Mr.
Ellis served as the President of PPI. As
President of PPI, he managed that company's
American expansion program and negotiated a
number of acquisitions in the U.S., including
the $875 million acquisition of Del Monte
Tropical Fruit from RJR Nabisco. Mr. Ellis
attended St. John's College at Cambridge
University in England and received a B.A. in
Law in 1975, an L.L.B in 1976 and an M.A. in
Law in 1978.
Kenneth Newell............................ 54 1996 Director of the Company since April 1996 and a
co-founder of K2 Group Plc (now 4Front Group
Plc), the Company's wholly-owned U.K.
operating subsidiary, in 1988. Mr. Newell has
been 4Front Group Plc's Chief Executive since
1990. Prior to establishing K2 he worked for
four years at Star Computer Group, a publicly
listed U.K. company, and one of the early
implementers of the open systems computing
concept in the U.K., where he held a number of
positions, including Sales Director from 1985
through 1988. Mr. Newell is a Fellow of the
Institute of Chartered Secretaries and
Administrators following study at the City of
London College.
Terence Burt.............................. 41 1997 Mr. Burt became a Director of the Company in
April 1997. He co-founded K2 Group Plc (now
4Front Group Plc) in 1988, and was Managing
Director of the Company's systems integration
division between 1990 and 1996. He became
Managing Director of the Company's services
division in 1996. Mr. Burt graduated from the
University of Herfordshire where he qualified
as an Associate of the Association of Cost and
Management Accountants.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- ------------------------------------------ --- ----------------- ----------------------------------------------
<S> <C> <C> <C>
Craig Kleinman............................ 41 1993 Secretary and a Director of the Company since
April 1993. Mr. Kleinman had served as Chief
Financial Officer of the Company from April
1993 until April 1996. For more than five
years, Mr. Kleinman has been a stockholder in
the certified public accounting firm Kleinman,
Guerra & Company, P.C. Mr. Kleinman received a
B.S. degree in accounting from the University
of Colorado in 1978 and is a member of the
American Institute of Certified Public
Accountants.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
- ------------------------------------------ --- ----------------- ----------------------------------------------
<S> <C> <C> <C>
Brian V. Murray........................... 50 1996 Director of the Company since April 1996. Mr.
Murray is President and Chief Executive
Officer of B.V. Murray & Co., an investment
banking firm, which he founded in July 1996.
Prior thereto, Mr. Murray held various
positions at Bear, Stearns & Co., Inc. from
1976 until July 1996, most recently as a
Senior Managing Director.
Arthur Keith Ross......................... 45 1996 Director of the Company since February 1996.
Mr. Ross is currently a private investor and a
consultant to the London law firm, Denton,
Hall and Burgin. From 1986 to 1994, Mr. Ross
was a partner in the London law firm Clifford
Chance, which he joined in 1984. Mr. Ross
headed the Clifford Chance Southeast Asian
office in Singapore from 1988 to 1991. Mr.
Ross attended Christ's College at Cambridge
University in England and received a BA in Law
in 1973 and an MA in Law in 1976.
</TABLE>
All directors hold office until the next meeting of the stockholders of the
Company and until their successors are elected and qualified.
The Board of Directors has an Audit Committee which is charged with
reviewing the Company's internal accounting procedures and consulting with and
reviewing the selection of the Company's independent auditors. The Audit
Committee currently consists of Messrs. Doshi, Ross and Murray. The Audit
Committee was formed in fiscal 1997. During fiscal 1997, the Audit Committee met
once. The Board of Directors also has a Compensation Committee charged with
recommending to the Board the compensation for the Company's executives and
administering the Company's stock option plans. The Compensation Committee is
currently composed of Messrs. Doshi, Ellis, Murray and Ross. The Compensation
Committee was formed in fiscal 1997. During fiscal 1997, the Compensation
Committee met once. The Board of Directors has also established an Executive
Committee charged with exercising powers of the Board of Directors expressly
delegated to it. The Executive Committee is currently composed of Messrs. Doshi
and Ellis. During fiscal 1997, the Executive Committee met once. Each director
attended all of the meetings of all committees of the Board of Directors on
which he served.
During the fiscal year ended January 31, 1997, the Board of Directors acted
six times by unanimous written consent in lieu of a meeting and met once.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act, as amended (the "Exchange
Act") requires the Company's executive officers and directors, and persons who
beneficially own more than ten percent of the Company's Common Stock, to file
initial reports of ownership and reports of changes in ownership with the SEC
and the National Association of Securities Dealers, Inc. Executive officers,
directors and greater than ten percent beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
7
<PAGE>
Based upon on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.
VOTE REQUIRED
The seven nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them,
a quorum being present, shall be elected as directors. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1--ELECTION OF DIRECTORS" TO BE
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL THEREOF.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation paid or to be paid by the Company as well as certain other
compensation awarded, earned by and paid, during the fiscal years indicated, to
the Chairman of the Board and Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company for such period in all
capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
ALL
SECURITIES OTHER
UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS STOCK OPTIONS SATION(2)
- --------------------------------------------------------- ----------- --------- --------- ------------- -----------
Anil Doshi............................................... 1996 $ 169,821 $ 24,105 0 $ 19,631
Chairman of the Board 1995 38,196 0 120,000 0
and Chief Executive 1994 0 0 150,000 0(4)
Officer(3)
Mark Ellis............................................... 1996 $ 158,336 $ 24,105 0 $ 15,260
President and Chief 1995 36,158 0 120,000 10,266
Operating Officer(5) 1994 0 0 150,000 10,560
Kenneth Newell........................................... 1996 $ 129,902 $ 24,105 0 $ 25,604
Chief Executive--4Front 1995 107,107 23,626 109,300 29,580
Group 1994 90,993 0 90,700 28,064
Terence Burt............................................. 1996 $ 110,080 $ 44,996 0 $ 21,526
Managing Director--Systems 1995 94,506 39,378 98,050 13,368
Integration Development 1994 84,920 11,503 66,950 13,053
Joel Jervis.............................................. 1996 $ 110,080 $ 44,996 0 $ 21,809
Former Managing Director-- 1995 73,946 10,238 0 11,420
Products Division(6) 1994 0 0 0 0
</TABLE>
- ------------------------
(1) Represents the period beginning February 1 of the year indicated and ending
January 31 of the following year.
(2) As to Mr. Doshi, represents contributions made by the Company to Mr. Doshi's
Executive Pension Plan and Insurance Benefits. As to Messrs. Ellis, Newell,
Burt and Jervis, represents the dollar value of car allowance, insurance
benefits and contributions to voluntary money purchase pensions plans.
(3) Mr. Doshi entered into an employment agreement with the Company in November
1995, which provides for an annual base salary of $200,000 as of February 1,
1997. See "--Employment Arrangements." Prior to November 1995, Mr. Doshi did
not receive any salary compensation for services rendered to the Company.
(4) Does not include a consulting fee of $150,000 incurred by the Company and
payable to Aliki Financial Corp., in which Mr. Doshi has a 65% interest and
Mr. Ellis has a 35% interest. Such fee has not yet been paid by the Company.
(5) Mr. Ellis entered into an employment agreement with the Company in November
1995, which provides for an annual base salary of $175,000 as of February 1,
1997. See "--Employment Arrangements." Prior to November 1995, Mr. Ellis did
not receive any salary compensation for services rendered to the Company.
(6) Compensation received subsequent to April 6, 1995, the effective date of the
Company's acquisition of CCG Holdings Limited.
9
<PAGE>
STOCK OPTIONS
There were no options granted to any of the Company's executive officers
named in the Summary Compensation Table during the year ended January 31, 1997.
In February 1997, Mr. Burt received options to purchase 10,000 shares of Common
Stock at a per share exercise price of $3.375, equal to the fair market value of
the Common Stock on the date of grant.
The following table sets forth at January 31, 1997 the number of securities
underlying unexercised options and the value of unexercised options held by each
of the executive officers named in the Summary Compensation Table who held
options at January 31, 1997. Mr. Jervis exercised 53,639 options during the
fiscal year ended January 31, 1997, at an exercise price per option of $.01. The
Common Stock received by Mr. Jervis upon such exercise has not been sold. No
other options were exercised in the fiscal year ended January 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR END OPTIONS AT YEAR END(1)
-------------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE
- --------------------------------------------------------------- ----------- ------------------- ---------------------------
<S> <C> <C> <C>
Anil Doshi..................................................... 270,000 0 0
Mark Ellis..................................................... 270,000 0 0
Kenneth Newell................................................. 200,000 0 0
Terence Burt................................................... 165,000 0 0
Joel Jervis.................................................... 0 0 0
</TABLE>
- ------------------------
(1) Computed based upon the difference between the stock option exercise price
and the closing price of the Company's Common Stock on January 31, 1997
($4.00).
EMPLOYMENT ARRANGEMENTS
The Company has entered into employment agreements with Messrs. Doshi and
Ellis effective as of November 1, 1995. These agreements are terminable at any
time after an initial term of three years on one year's notice. Under such
agreements, Messrs. Doshi and Ellis are entitled to base annual salaries as of
February 1, 1997 of L125,000 ($200,000) and L110,000 ($176,000), respectively,
plus pension contributions not to exceed 7% of such base salaries. Prior to the
execution of such employment agreements, neither Messrs. Doshi nor Ellis had
received salary compensation for services performed for the Company and its
affiliates.
Messrs. Newell and Burt entered into employment agreements with 4Front Group
at salaries as of January 31, 1997 of L90,000 ($144,225) and L85,000 ($136,213),
respectively.
No other executive officer is currently party to an employment agreement
with the Company. As appropriate, other employment contracts may be entered into
with other key executives.
STOCK OPTION AWARDS
In May 1996, the Company adopted the 1996 4Front Software International,
Inc. Equity Incentive Plan (the "Plan") which provides for the issuance of
incentive stock options ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and non-qualified stock
options ("NQSOs") to purchase an aggregate of up to 400,000 shares of the Common
Stock of the Company. The Plan was approved by stockholders on February 5, 1997
and pursuant to the Plan a total of 247,000 options, exercisable between $3 3/8
and $5 3/4 per share, being at an above market value at time of grant, have been
granted to employees and to two directors.
10
<PAGE>
The purpose of the Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of the Company and its subsidiaries and affiliates, by
offering them an opportunity to participate in the Company's future performance
through awards of stock options. The Plan is administered by the Compensation
Committee. Under the Plan, stock options ("Plan Options") may be granted to
certain directors, officers, employees, consultants, independent contractors and
advisors of the Company or its subsidiaries or affiliates. By encouraging stock
ownership, the Company seeks to attract, retain and motivate such persons and to
encourage such employees and persons to devote their best efforts to the
business and financial success of the Company. The Company also believes that
stock incentive programs, such as the Plan, are commonly employed by companies
as an important element of a total compensation program.
Grants under the Plan may consist of ISOs or NQSOs or a combination thereof.
Employees, officers, consultants, and certain directors and advisors of the
Company and its subsidiaries and affiliates whom the Compensation Committee
deems to have contributed significantly to the Company or who have the potential
to contribute to the future success of the Company will be eligible to receive
any of the different types of awards under the Plan. Directors who are not
employees of the Company, consultants and advisors will be entitled to receive
only NQSOs under the Plan.
An optionee will not realize taxable income upon the grant of an option. In
general, the holder of an NQSO (within the meaning of Section 422 of the Code)
will realize ordinary income when the option is exercised equal to the excess of
the value of the stock over the exercise price (i.e., the option spread), and
the Company receives a corresponding deduction, subject to the executive
compensation deduction limitations of Section 162(m) of the Code. (If the
optionee is subject to the six-month restrictions on sale of Common Stock under
Section 16(b) of the Exchange Act, the optionee generally will recognize
ordinary income on the date the restrictions lapse, unless an early income
recognition election is made.) Upon a later sale of the stock, the optionee will
realize gain or loss equal to the difference between the selling price and the
value of the stock at the time the option was exercised.
The holder of an ISO will not realize taxable income upon the exercise of
the option (although the option spread is an item of tax preference income
potentially subject to the alternative minimum tax). If the stock acquired upon
exercise of the ISO is sold or otherwise disposed of within two years from the
option grant date or within one year from the exercise date, then, in general,
gain realized on the sale is treated as ordinary income to the extent of the
option spread at the exercise date, and the Company receives a corresponding
deduction, subject to the executive compensation deduction limitations of
Section 162(m) of the Code. Any remaining gain is treated as capital gain. If
the stock is held for at least two years from the grant date and one year from
the exercise date, then gain or loss realized upon the sale will be capital gain
or loss and the Company will not be entitled to a deduction. A special basis
adjustment is applied to reduce the gain for alternative minimum tax purposes.
It is possible that all or a portion of the compensation realized under the
Plan by certain executive officers will not be deductible by the Company by
reason of the executive compensation deduction limitations of Section 162(m) of
the Code. Accordingly, although the Company expects that the Compensation
Committee will take into consideration the non-deductibility of compensation
attributable to a particular award under the Plan, no assurance can be given
that all or part of any such compensation will be deductible by the Company.
COMPENSATION OF DIRECTORS
Messrs. Murray and Ross each receive compensation of $15,000 per year. In
addition, Mr. Murray received options to purchase 10,000 shares of Common Stock
at an exercise price of $5.75 per share. No other director receives any
compensation for services as a director.
11
<PAGE>
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended (the
"Securities Act"), or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Compensation Committee of the Board of Directors currently consists of
Messrs. Doshi, Ellis, Murray and Ross. The Compensation Committee administers
the Company's executive compensation programs, monitors corporate performance
and its relationship to compensation of executive officers, and makes
appropriate recommendations concerning matters of executive compensation.
COMPENSATION PHILOSOPHY
The Company believes that executive compensation should be closely related
to increased stockholder value. One of the Company's strengths contributing to
its successes is a strong management team. The compensation program is designed
to enable the Company to attract, retain and reward capable employees who can
contribute to the continued success of the Company, principally by linking
compensation with the attainment of key business objectives. Equity
participation and a strong alignment to stockholders' interests are key elements
of the Company's compensation philosophy. Accordingly, the Company's executive
compensation program is designed to provide competitive compensation, support
the Company's strategic business goals and reflect the Company's performance.
The compensation program reflects the following principles:
- Compensation should encourage increased stockholder value.
- Compensation programs should support the short- and long-term strategic
business goals and objectives of the Company.
- Compensation programs should reflect and promote the Company's values and
reward individuals for outstanding contributions toward business goals.
- Compensation programs should enable the Company to attract and retain
highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components, base
salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance and resources of the
Company, general economic conditions as well as a number of factors relating to
the particular individual, including the performance of the individual
executive, and level of experience, ability and knowledge of the job.
INCENTIVES
Incentives consist of stock options and, to a lesser extent, cash awards.
The Committee strongly believes that the pay program should provide employees
with an opportunity to increase their ownership and potentially gain financially
from Company stock price increases. By this approach, the best interests of
stockholders, executives and employees will be closely aligned. Therefore,
executives and other employees
12
<PAGE>
are eligible to receive stock options, giving them the right to purchase shares
of Common Stock of the Company at a specified price in the future. The grant of
options is based primarily on a key employee's potential contribution to the
Company's growth and profitability, based on the Committee's discretionary
evaluation. Options are granted at the prevailing market value of the Company's
Common Stock and will only have value if the Company's stock price increases.
Generally, grants of options vest over a period of time and executives must be
employed by the Company for such options to vest. The granting of cash awards is
discretionary and is not dependent on any one factor.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR THE FISCAL YEAR
ENDED JANUARY 31, 1997
In November 1995, Mr. Doshi entered into an employment agreement with the
Company which currently provides for an annual base salary of L125,000
($200,000). Prior thereto, Mr. Doshi had not received compensation for services
rendered to the Company.
The employment arrangements with Mr. Doshi are deemed appropriate by the
Compensation Committee considering the overall performance of the Company and
Mr. Doshi.
TAX EFFECTS
Changes made in 1993 to the Internal Revenue Code of 1986, as amended (the
"Code"), impose certain limitations on the deductibility of executive
compensation paid by public companies for taxable years beginning in or after
1994. In general, under the limitations, the Company will not be able to deduct
annual compensation paid to certain executive officers in excess of $1,000,000
except to the extent that such compensation qualifies as "performance-based
compensation" (or meets other exceptions not here relevant). Non-deductibility
would result in additional tax cost to the Company. It is possible that at least
some of the cash and equity-based compensation paid or payable to the Company's
executive officers will not qualify for the "performance-based compensation"
exclusion under the deduction limitation provisions of the Code. Nevertheless,
the Committee anticipates that in making compensation decisions it will give
consideration to the net cost to the Company (including, for this purpose, the
potential limitation on deductibility of executive compensation).
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. The Committee believes its
compensation practices are directly tied to stockholder returns and linked to
the achievement of annual and longer-term financial and operational results of
the Company on behalf of the Company's stockholders. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during fiscal 1996
adequately reflect the Company's compensation goals and policies.
COMPENSATION COMMITTEE
Anil Doshi
Mark Ellis
Brian Murray
Arthur Keith Ross
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Doshi, Ellis,
Murray and Ross. Messrs. Doshi and Ellis abstain from votes on their
compensation.
13
<PAGE>
THE COMPANY'S PERFORMANCE
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
<TABLE>
<CAPTION>
Mar- Apr- May- Jun- Aug- Nov- Dec- Feb- Mar-
95 95 95 95 Jul-96 95 1-Sep Oct-95 95 95 Jan-96 96 96
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFST..... 100 100 90 80 100 70 90 90 95 82.6 135.6 95 87.6
IXK...... 100 108.15 111.04 125.73 134.62 134.97 137.91 145.91 143.13 136.93 136.84 147.84 142.09
CCMP..... 100 102.97 105.48 113.88 122.15 124.45 127.31 126.4 129.22 128.36 129.29 135.12 134.37
RTY...... 100 101.94 103.51 108.63 114.79 116.93 118.88 113.46 118.19 121.02 120.79 124.57 126.68
Apr- May- Jun- Aug- Sep- Nov- Dec-
96 96 96 Jul-96 96 96 Oct-96 96 96 Jan-97
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFST..... 100 160 122.6 105 100 80 80 90 87.6 80
IXK...... 161.26 169.13 161.27 148.15 154.46 174.98 177.99 196.02 194.03 217.99
CCMP..... 145.25 151.7 144.57 131.83 139.26 149.68 149.02 157.7 157.51 168.34
RTY...... 133.39 138.59 132.75 121.03 127.88 132.67 130.44 135.62 138.88 141.5
</TABLE>
The above Graph compares the performance of the Company ("FFST") from March
20, 1995, the date that the Company's Common Stock commenced trading publicly,
through January 31, 1997, against the performance of the Nasdaq Composite Index
("CCMP"), the Russell 2000 Index ("RTI") and the Nasdaq Computer Index ("IXK"),
an index comprised of 702 computer companies, including the Company.
PROPOSAL NO. 2--AMENDMENT TO CERTIFICATE OF INCORPORATION
The Company's Board of Directors has unanimously approved an amendment to
the Company's Certificate of Incorporation which would change the name of the
Company to 4Front Technologies, Inc. The full text of the amendment is set forth
in Exhibit 1 hereto. The change of name will be effective upon the filing of
such amendment with the Delaware Secretary of State. The new name is being
adopted to more accurately reflect the breadth of services offered by the
Company, of which software-related services is only a part.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
issued, outstanding and entitled to vote, present or represented at the meeting,
a quorum being present, is required for the adoption of this proposal. Broker
non-votes with respect to this matter will be treated as neither a vote "for" or
a vote "against" the matter, although they will be counted in determining if a
quorum is present. However, abstentions will be considered in determining the
number of votes required to attain a majority of the shares present or
represented at the meeting and entitled to vote. Accordingly, an abstention from
voting by a stockholder present in person or by proxy at the meeting has the
same legal effect as a vote "against" the matter because it represents a share
present or represented at the meeting and entitled to vote, thereby increasing
the number of affirmative votes required to approve this proposal.
14
<PAGE>
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 2--AMENDMENT TO
CERTIFICATE OF INCORPORATION" TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG have been the independent auditors for the Company since December 1995,
and will serve in that capacity for the 1998 fiscal year. A representative of
KPMG will be present at the Annual Meeting and will have an opportunity to make
a statement if he desires to do so, and will respond to appropriate questions
from stockholders.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 1998
Annual Meeting of Stockholders of the Company must be received by the Company no
later than May 1, 1998 for inclusion in the Board of Directors' proxy statement
and form of proxy relating to that meeting.
15
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend the Annual
Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Craig Kleinman
SECRETARY
Dated: November 7, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 31, 1997 WILL BE SENT WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN
WRITING FROM: 4FRONT SOFTWARE INTERNATIONAL, INC., ATTENTION: CRAIG KLEINMAN,
5650 GREENWOOD PLAZA BOULEVARD, ENGLEWOOD, COLORADO 80111.
16
<PAGE>
EXHIBIT 1
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
4FRONT SOFTWARE INTERNATIONAL, INC.
* * * * *
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
4FRONT SOFTWARE INTERNATIONAL, INC.
2. The certificate of incorporation of the corporation is hereby amended by
striking out Article First thereof and by substituting in lieu of said Article
the following new Article:
"The name of the corporation is 4FRONT TECHNOLOGIES, INC."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of SECTIONS 228
and 242 of the GENERAL CORPORATION LAW OF THE STATE OF DELAWARE.
Signed and attested to on , 1997.
-------------------------------------
Mark Ellis
President
Attest:
- --------------------------------------------------------------------------------
Craig Kleinman
Secretary
<PAGE>
- ------ Please mark your
X votes as in this
- ------ example.
Nominees: Anil Doshi
Mark Ellis
Kenneth Newell
Terence Burt
FOR WITHHOLD Craig Kleinman
----- ----- Arthur Keith Ross
1. ELECTION Brian V. Murray
OF
DIRECTORS ----- -----
(Instruction: To withhold authority to vote
for any individual nominee, write that
nominee's name below.)
____________________________________________
FOR AGAINST ABSTAIN
------ ----- -----
2. APPROVAL OF THE
COMPANY'S
CHANGE OF NAME ------ ----- -----
3. Transaction of such other business as may
properly come before the meeting and any
adjournments thereof.
Note: This proxy will be voted as specified. If no
specification is made, it will be voted FOR all
nominees in proposal 1 and FOR proposal 2. The
proxies are authorized to vote in their discretion
with respect to other members which may come
before the meeting.
SIGNATURE____________________DATE_______ SIGNATURE____________________DATE______
(SIGNATURE IF HELD JOINTLY)
NOTE: Please mark, date and sign exactly as name appears hereon, including
designation as executor, trustee, etc. if applicable. A corporation must
sign in its name by the President or other authorized officer. All
co-owners must sign. Please return the proxy card promptly using the
enclosed envelope.
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Anil Doshi and Mark Ellis, and each of
them, with full power of substitution, as proxies to vote on behalf of the
undersigned all shares which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the offices of
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103 at
11:00 A.M. on Wednesday, December 10, 1997, and at any adjournments thereof,
with all powers the undersigned would possess if personally present, upon the
matters set forth in the Notice of Annual Meeting and Proxy Statement, as
directed on the reverse side hereof.
Any proxy heretofore given by the undersigned with respect to such
shares is hereby revoked. Receipt of the Notice of Annual Meeting and Proxy
Statement is hereby acknowledged.
(To be Completed, Signed and Dated on Reverse Side)
