<PAGE> 1
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 14a-11(c) or 14a-12
PROJECT SOFTWARE & DEVELOPMENT, INC.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(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)(1) 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:
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<PAGE> 2
PROJECT SOFTWARE & DEVELOPMENT, INC.
------------------------
NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 31, 1998
------------------------
Notice is hereby given that a Special Meeting in Lieu of Annual Meeting of
Stockholders of Project Software & Development, Inc. (the "Company") will be
held at the offices of the Company, 100 Crosby Drive, Bedford, Massachusetts on
Tuesday, March 31, 1998, beginning at 10:00 A.M., local time, for the following
purposes:
1. To elect one Class II Director for a three-year term;
2. To ratify the appointment by the Board of Directors of Coopers &
Lybrand L.L.P. as the Company's independent public accountants for the
current fiscal year; and
3. To transact such further business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Wednesday,
February 18, 1998, as the record date for the determination of the stockholders
of the Company entitled to notice of, and to vote at, said Meeting and any
adjournment thereof. Only stockholders of record on such date are entitled to
notice of, and to vote at, said Meeting or any adjournment thereof.
By Order of the Board of Directors,
/s/ Paul D. Birch
--------------------------
PAUL D. BIRCH
Clerk
Bedford, Massachusetts
March 6, 1998
- - --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
- - --------------------------------------------------------------------------------
<PAGE> 3
PROJECT SOFTWARE & DEVELOPMENT, INC.
100 CROSBY DRIVE
BEDFORD, MASSACHUSETTS 01730
(781) 280-2000
------------------------
PROXY STATEMENT
------------------------
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 31, 1998
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about March 6, 1998 in connection with the solicitation by
the Board of Directors of Project Software & Development, Inc. (the "Company")
of proxies to be used at a Special Meeting in Lieu of Annual Meeting of
Stockholders of the Company, to be held on Tuesday, March 31, 1998, and at any
and all adjournments thereof (the "Annual Meeting"). When proxies are returned
properly executed, the shares represented will be voted in accordance with the
stockholders' directions. Stockholders are encouraged to vote on the matters to
be considered. If no choice has been specified by a stockholder with respect to
a proposal as to which the Board of Directors has made a recommendation,
however, the shares covered by any executed proxy will be voted as indicated in
this proxy statement. Any stockholder may revoke his proxy at any time before it
has been exercised.
The Board of Directors of the Company has fixed the close of business on
Wednesday, February 18, 1998, as the record date for the determination of the
stockholders of the Company entitled to notice of, and to vote at, the Annual
Meeting. Only stockholders of record on such date are entitled to notice of, and
to vote at, the Annual Meeting. At the close of business on the record date,
there were issued and outstanding 9,923,789 shares of the Company's Common
Stock, $.01 par value (the "Common Stock"), entitled to cast 9,923,789 votes.
QUORUM AND TABULATION OF VOTES
The By-Laws of the Company provide that the holders of a majority of shares
of Common Stock issued and outstanding and entitled to vote thereat will
constitute a quorum at the Annual Meeting. Shares of Common Stock represented by
a properly signed and returned proxy will be treated as present at the Annual
Meeting for purposes of determining a quorum. In general, votes withheld from
any nominee for election as director, abstentions (if applicable) and broker
"non-votes" (if applicable) are counted as present or represented for purposes
of determining the presence or absence of a quorum for the Annual Meeting. A
"non-vote" occurs when a broker or nominee holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because, in respect
of such other proposal, the broker or nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
The affirmative vote of a plurality of the shares of Common Stock properly
cast at the Annual Meeting will be necessary to elect the Class II Director
(Proposal One). The affirmative vote of a majority of the shares of Common Stock
properly cast at the Annual Meeting will be necessary to approve the Company's
1
<PAGE> 4
independent accountants (Proposal Two). Abstentions, votes "withheld" from
director-nominees, and broker "non-votes" will not be included in calculating
the number of votes cast on such Proposals.
Votes will be tabulated by the Company's transfer agent, BankBoston, N.A.
The vote on each matter submitted to stockholders will be tabulated separately.
PROPOSAL ONE
ELECTION OF DIRECTOR
The Company, as a Massachusetts corporation with a class of voting stock
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which elected in 1996 to be subject to relevant provisions of
Massachusetts law, has a Board of Directors consisting of five directors,
divided into three classes, as nearly equal in size as practicable, referred to
as Class I, Class II and Class III.
The term of Charles S. Jones, the Company's current Class II Director, will
expire at the Annual Meeting to be held on March 31, 1998. Mr. Jones has advised
the Company that he does not intend to stand for re-election as a director. The
terms of the Company's Class III Directors, William G. Nelson and Norman E.
Drapeau, Jr., expire at the annual meeting to be held with respect to the
Company's 1998 fiscal year. Mr. Drapeau was elected by the Board of Directors as
a Class III Director in January 1998, to fill a vacancy created by the
resignation of Michael D. Marvin as a Class III Director of the Company. The
terms of the Company's Class I Directors, David M. Sample and Robert L. Daniels,
will expire at the annual meeting to be held with respect to the end of the 1999
fiscal year. The Directors in each Class serve for a term of three years and
until their successors are duly elected and qualified. As the term of one Class
expires, a successor director or directors for that Class are elected at the
annual meeting of stockholders for that year.
Robert L. Daniels, a director of the Company and the beneficial owner of
approximately 32% of the Company's outstanding Common Stock, has notified the
Company in writing that he intends to nominate Alan L. Stanzler for election as
a Class II Director at the Annual Meeting. For information concerning Mr.
Stanzler, see "Directors and Executive Officers." Mr. Stanzler has not been
nominated by the Board of Directors of the Company. However, the Board of
Directors has not nominated any other person for election as a Class II Director
at the Annual Meeting to fill the vacancy created by the expiration of the term
of Mr. Jones, and has determined that Mr. Daniels' nomination of Mr. Stanzler at
the Annual Meeting would be permissible under provisions of the Company's
by-laws requiring advance notice of stockholder nominations. The Board of
Directors does not intend to solicit proxies in opposition to the election of
Mr. Stanzler. If Mr. Stanzler is nominated at the Annual Meeting by Mr. Daniels,
and if stockholders so instruct, proxies in the accompanying form will be voted
in favor of electing Mr. Stanzler as a Class II Director, to hold office until
the annual meeting to be held with respect to the 2000 fiscal year and until his
successor is elected and qualified or until he sooner dies, resigns, is removed
or becomes disqualified. If no choice is specified by a stockholder on the
enclosed proxy, the shares represented will be WITHHELD from Mr. Stanzler.
Mr. Stanzler has agreed to serve if nominated and elected. In the event
that Mr. Stanzler is not nominated, or is unable or declines to serve as a
director at the time of the Annual Meeting, proxies will be voted for such other
nominee as is then designated by the Board.
THE BOARD OF DIRECTORS NEITHER RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALAN
L. STANZLER AS A CLASS II DIRECTOR NOR RECOMMENDS THAT THEY WITHHOLD AUTHORITY
TO ELECT MR. STANZLER. THE BOARD OF DIRECTORS DOES, HOWEVER, URGE STOCKHOLDERS
TO COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY TO THE COMPANY IN
ORDER THAT THEIR SHARES MAY BE REPRESENTED AT THE ANNUAL MEETING.
2
<PAGE> 5
DIRECTORS AND EXECUTIVE OFFICERS
The directors, expected nominee for director and executive officers of the
Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David M. Sample................. 49 President, Chief Executive Officer and Chairman of the Board of
Directors -- Class I
Paul D. Birch................... 39 Executive Vice President -- Finance and Administration, Chief
Financial Officer and Treasurer
Norman E. Drapeau, Jr........... 37 Executive Vice President, Chief Operating Officer and Director --
Class III
John W. Young................... 45 Executive Vice President -- Research and Development
Robert L. Daniels............... 56 Director -- Class I
Charles S. Jones(1)(2).......... 49 Director -- Class II
William G. Nelson(1)(2)......... 63 Director -- Class III
Alan L. Stanzler................ 54 Expected nominee as Class II Director
</TABLE>
- - ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
DAVID M. SAMPLE joined the Company as Chairman of the Board of Directors,
President and Chief Executive Officer on February 24, 1997. From 1986 to 1997,
Mr. Sample held various positions with Hyperion Software Corp., most recently as
senior vice president of international operations and North American sales.
During 1995 Mr. Sample was in charge of Hyperion's Pillar Software subsidiary
and, prior to that, served as senior vice president and general manager of
Hyperion's United Kingdom business.
PAUL D. BIRCH joined the Company in 1991 as Vice President, Finance, was
appointed Vice President, Finance and Administration in 1992 and Executive Vice
President - Finance and Administration in 1996. Since 1992 he has been the Chief
Financial Officer of the Company, and since 1993 has held the additional office
of Treasurer.
NORMAN E. DRAPEAU, JR. joined the Company in 1982 as an applications
analyst. Since that time, he has held various positions with the Company,
including, from 1984 to 1987, that of Manager of Customer Support and from 1989
through 1991, that of Director, Product Marketing. In 1991, Mr. Drapeau was
appointed Vice President, Corporate Marketing, in 1992 was appointed Vice
President - Americas and in July 1996 was appointed Executive Vice President
- - -Worldwide Sales and Marketing, serving in that capacity until January 1998. In
January 1998, Mr. Drapeau was appointed Executive Vice President and Chief
Operating Officer and was also elected a director of the Company.
JOHN W. YOUNG originally joined the Company in 1985 and served until 1988
as MAXIMO Product Manager. From 1988 to 1992, Mr. Young was Vice President of
Sales of Comac Systems Corporation, a software application company. In 1992 he
rejoined the Company as Director of MAXIMO Product Design, was appointed Vice
President - Research and Development of the Company in 1995 and was appointed
Executive Vice President - Research and Development of the Company in February,
1998.
ROBERT L. DANIELS founded the Company in 1968 and has been a director since
that time. Mr. Daniels served as Chairman of the Board and Chief Executive
Officer from 1968 to 1996 and as President from 1968 to 1995.
3
<PAGE> 6
CHARLES S. JONES has been a director of the Company since 1994. Since 1991,
Mr. Jones has been Chairman and Chief Executive Officer of First Funding
Corporation, an investment banking advisory company. Since September 1997, Mr.
Jones has been a director of GEAC Computer Corporation Limited, a producer of
computer hardware and software. Mr. Jones also is a director of Farrel
Corporation, a global manufacturer of polymer processing equipment for the
rubber and plastic industry. Mr. Jones also serves as a director of a number of
privately-held companies.
WILLIAM G. NELSON has been a director of the Company since 1994. Since
1996, Mr. Nelson has been Chairman of the Board and Chief Executive Officer of
GEAC Computer Corporation Limited. From 1995 until 1996, Mr. Nelson was Chairman
and Chief Executive Officer of HarrisData, a developer and licensor of
application software. Mr. Nelson served as President and Chief Executive Officer
of Pilot Software, Inc. from 1991 to 1994. Mr. Nelson also is a director of
Manugistics, Inc. and serves as a director of a number of privately-held
companies.
ALAN L. STANZLER is expected to be nominated by Robert L. Daniels for
election as a Class II Director at the Annual Meeting. Mr. Stanzler served as a
director of the Company from 1992 to 1994, and as Clerk of the Company from 1990
to 1996. Since 1995, Mr. Stanzler has been a member of the law firm of Davis,
Malm & D'Agostine, P.C., and from 1978 until 1995 he was a partner in the law
firm of Finnegan & Stanzler, P.C.
All directors hold office until the expiration of their respective terms as
described above and until their respective successors are duly elected and
qualified. Executive officers of the Company are appointed by and serve at the
discretion of the Board of Directors.
COMMITTEES AND MEETINGS OF THE BOARD
During the fiscal year ended September 30, 1997 ("fiscal 1997"), the Board
met twelve times and acted once by unanimous written consent. No incumbent
director attended fewer than 75% of the total number of meetings held by the
Board and Committees of the Board on which he served.
The Board of Directors has an Audit Committee and a Compensation Committee,
but does not have a nominating committee or other committee performing similar
function. The Audit Committee (currently composed of Messrs. Jones and Nelson)
reviews the internal accounting procedures of the Company and consults with and
reviews the services provided by the Company's independent auditors. The Audit
Committee met ten times during fiscal 1997. The Compensation Committee
(currently composed of Messrs. Nelson and Jones) has general responsibility for
the Company's executive compensation policies and practices, including making
specific recommendations to the Board concerning compensation for the Company's
executive officers and administering the Company's 1994 Incentive and
Nonqualified Stock Option Plan (the "1994 Stock Option Plan") and 1994 Employee
Stock Purchase Plan (the "Stock Purchase Plan"). The Compensation Committee met
once and acted six times by unanimous written consent during fiscal 1997.
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
DIRECTORS' COMPENSATION
Members of the Board of Directors who are not employees of the Company or
one of the Company's subsidiaries ("Outside Directors") receive fees of $2,500
per quarter plus $500 for each meeting of the Board of Directors or Committee of
the Board which they attend, and are reimbursed for out-of-pocket expenses
incurred in the performance of their duties as directors of the Company.
Directors who are employees of the Company are not paid any separate fees for
serving as directors.
4
<PAGE> 7
Pursuant to the Company's 1994 Stock Option Plan (the "Option Plan"), each
Outside Director, upon first joining the Board, is automatically granted an
option to purchase 12,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock (determined in accordance with the
terms of the Option Plan) on the date of grant, vesting in three equal annual
installments beginning on the first anniversary of the date of grant. In
addition, each Outside Director who continues to serve as a director following
any annual meeting of stockholders of the Company or special meeting in lieu
thereof is automatically granted, immediately following such meeting of
stockholders, an option to purchase 4,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock (determined in
accordance with the terms of the Option Plan) on the date of grant, vesting in
full on the last day of December in the year in which the option is granted.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
information concerning the compensation earned by the Company's Chief Executive
Officer and the four other most highly paid executive officers of the Company
(collectively, the "named executive officers") for services rendered in all
capacities to the Company during fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------- -------------
AWARDS
-------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS(#)(1) COMPENSATION
--------------------------- ------ --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
David M. Sample................. 1997 $167,146 $ 96,250(3) $101,778(4) 350,000(5) $ --
Chairman of the Board, Chief 1996 -- -- -- -- --
Executive Officer and 1995 -- -- -- -- --
President
Paul D. Birch................... 1997 166,500 13,655(6) -- 20,000 2,250
Executive Vice President, 1996 146,500 140,802(6) -- 40,000(7) 2,250
Chief Financial Officer 1995 129,000 184,566(6) -- 30,000 2,310
and Treasurer
Norman E. Drapeau, Jr........... 1997 152,500 95,885(8) -- 24,999 2,250
Executive Vice President and 1996 120,833 184,517(8) -- 50,000(7) 2,250
Chief Operating Officer 1995 93,000 153,627(8) -- 13,500 2,310
William J. Sawyer............... 1997 147,500 8,086(6) -- -- 2,250
Executive Vice President, 1996 136,250 72,073(6) -- 20,000 2,250
Operations(9) 1995 123,750 90,909(6) -- 13,500 1,670
John W. Young................... 1997 135,000 7,686(6) -- 9,999 2,250
Executive Vice President 1996 115,000 40,000(10) -- 20,000(7) 2,250
-- Research and Development 1995 97,500 11,851(10) -- 9,000 1,678
</TABLE>
- - ---------------
(1) Represents shares of Common Stock issuable upon exercise of stock options
granted under the Company's 1994 Stock Option Plan.
(2) The amounts reported represent contributions made by the Company pursuant
to the Company's 401(k) Plan and Trust for fiscal 1997 and for the fiscal
years ended September 30, 1996 and 1995 ("fiscal 1996 and "fiscal 1995,"
respectively).
(3) Bonus paid pursuant to Mr. Sample's offer letter from the Company dated
January 30, 1997. See "Employment Contracts."
5
<PAGE> 8
(4) Includes $75,000 representing partial forgiveness by the Company of an
interest-free loan to Mr. Sample. Also includes $22,778 representing
reimbursement of moving costs. See "Employment Contracts".
(5) Includes a grant of a nonqualified option to purchase 200,000 shares of
Common Stock which was cancelled at Mr. Sample's election on July 31, 1997.
See "Employment Contracts".
(6) Represents bonuses paid under the Company's 1997 Executive Bonus Plan (the
"1997 Bonus Plan"), 1996 Executive Bonus Plan and 1995 Executive Bonus
Plan, respectively. The participants in the 1997 Bonus Plan were Messrs.
Sample, Birch, Sawyer and Young. Under the 1997 Bonus Plan, the
participants received bonuses if the Company's income before income taxes
and extraordinary items ("Plan Income") exceeded targets for any of the
quarters of fiscal 1997 and its Plan Income for the fiscal year exceeded
$25,250,000. Of the foregoing bonuses, a portion of the amount earned was
paid on a current basis upon completion of the quarter and a portion was
paid to the executives following the end of the fiscal year when it was
determined that the cumulative Plan Income target for fiscal 1997 was met.
(7) Represents options cancelled at the option-holder's election on July 31,
1997. See "Compensation Committee Report on Executive Compensation --
Report on Repricing of Options".
(8) Represents bonus paid under Mr. Drapeau's individual incentive compensation
plan designed to reward him for achievement of quarterly and annual revenue
and contribution targets for his geographical territory.
(9) Mr. Sawyer resigned from his employment by the Company in November 1997.
(10) Represents bonuses paid under the Company's 1996 Employee Bonus Plan and
1995 Employee Bonus Plan, respectively.
Option Grants in Last Fiscal Year. The following table sets forth certain
information regarding stock options granted during fiscal 1997 by the Company to
the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF
NUMBER OF STOCK PRICE
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(4)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR(%)(2) ($/SH)(3) DATE 5%($) 10%($)
---- ------------- ----------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
David M. Sample............. 100,000(5) 18.2% $ 21.125 2/4/07 1,328,500 3,366,500
50,000(6) 9.1 23.6875 9/23/07 744,625 1,887,625
200,000(7) 36.5 30.00 cancelled -- --
Paul D. Birch............... 20,000(5) 3.7 21.125 8/14/06 265,700 673,300
Norman E. Drapeau, Jr. ..... 24,999(5) 4.6 21.125 8/14/06 332,112
William J. Sawyer(8)........ -- -- -- -- -- --
John W. Young............... 9,999(5) 1.8 21.125 8/14/06 132,837 336,616
</TABLE>
- - ---------------
(1) Represents shares of Common Stock issuable upon exercise of incentive stock
options granted under the Company's 1994 Stock Option Plan.
6
<PAGE> 9
(2) The Company granted to employees options for the purchase of an aggregate of
548,098 shares of Common Stock in fiscal 1997 pursuant to the 1994 Stock
Option Plan. This includes options cancelled in exchange for the grant of
new options as set forth in note 5 to this table.
(3) All options were granted at exercise prices not less than the fair market
value of the Common Stock on the date of grant.
(4) Potential realizable value means the value of the shares of Common Stock
underlying the option, at the specified assumed annual rates of stock price
appreciation, compounded over the option term (10 years). Actual gains, if
any, realized on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the values reflected in this table will be
realized.
(5) Represents options to acquire shares of Common Stock granted as of July 31,
1997 conditioned upon the exchange for cancellation of options granted on or
after August 1, 1996 to acquire a number of shares equal to at least twice
the number set forth in this column. All such options retain the expiration
date of the cancelled options, and are exercisable as to 25% of the shares
covered as of the date nine years prior to the expiration date and become
exercisable as to a further 25% annually thereafter.
(6) All such options expire ten years after the date of grant, and first become
exercisable as to 25% of the shares covered on the first anniversary of the
date of grant and as to a further 25% annually thereafter.
(7) Represents an option granted to Mr. Sample on February 5, 1997 and cancelled
at Mr. Sample's election. See "Employment Contracts".
(8) Mr. Sawyer resigned from his employment by the Company in November 1997.
Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information concerning stock options exercised during fiscal 1997
and stock options held as of September 30, 1997 by each of the named executive
officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED VALUE FISCAL YEAR-END AT FISCAL YEAR END($)(2)
ON REALIZED --------------------------------- ---------------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ----------- -------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
David M. Sample............. -- -- -- 150,000 -- $175,000
Paul D. Birch............... -- -- 32,500 45,000 $358,535 $357,405
Norman E. Drapeau, Jr....... -- -- 18,624 31,125 $140,639 $162,516
William J. Sawyer........... -- -- 17,375 27,375 $129,703 $129,703
John W. Young............... 3,000 $38,875 7,000 14,999 $ 26,313 $ 86,686
</TABLE>
- - ---------------
(1) Value is based on the last sale price of the Common Stock on the exercise
date, as reported by the Nasdaq National Market, or the price at which
shares acquired upon exercise of the option were actually sold (in the event
of a concurrent exercise and sale), less the applicable option exercise
price.
(2) Value is based on the last sale price of the Common Stock on September 30,
1997, as reported by the Nasdaq National Market ($22.875 per share), less
the applicable option exercise price. These values have not been and may
never be realized. Actual gains, if any, on exercise will depend on the
value of the Common Stock on the date of the sale of the shares.
(3) Mr. Sawyer resigned from his employment by the Company in November 1997.
7
<PAGE> 10
Stock Option Repricings. The following table sets forth all stock option
repricings during fiscal 1997 and during the Company's last ten (10) fiscal
years relating to the persons listed in the Summary Compensation Table.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF LENGTH OF
SECURITIES SECURITIES ORIGINAL
UNDERLYING UNDERLYING EXERCISE MARKET OPTION TERM
OPTIONS OPTIONS PRICE AT PRICE NEW REMAINING
PRIOR TO AFTER TIME OF AT TIME EXERCISE AT DATE OF
NAME DATE REPRICING REPRICING REPRICING OF REPRICING PRICE REPRICING
---- ---- ---------- ---------- --------- ------------ -------- -----------
($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
David M. Sample................ 7/31/97 200,000 100,000 42.50 21.125 21.125 2/5/07
Paul D. Birch.................. 7/31/97 6,450 3,225 31.00 21.125 21.125 8/14/06
7/31/97 33,550 16,775 31.00 21.125 21.125
Norman E. Drapeau, Jr. ........ 7/31/97 7,923 3,961 31.00 21.125 21.125 8/14/06
7/31/97 42,077 21,038 31.00 21.125 21.125 8/14/06
William J. Sawyer.............. -- -- -- -- -- -- --
John W. Young.................. 7/31/97 9,723 4,861 31.00 21.125 21.125 8/14/06
7/31/97 10,277 5,138 31.00 21.125 21.125 8/14/06
</TABLE>
CERTAIN TRANSACTIONS
Real Estate Interest. Mr. Daniels is a 1.69% limited partner in the
Charles Square Limited Partnership, a real estate partnership which operates the
hotel, retail and office complex in Cambridge, Massachusetts in which the
Company occupied its corporate headquarters pursuant to a 13-year lease which
expired on December 31, 1997. The Company incurred base rent, real estate taxes,
operating expenses and parking of approximately $2,000,000 to the partnership in
fiscal 1997. In December 1997, the Company relocated its corporate headquarters
to 100 Crosby Drive, Bedford, Massachusetts.
Employment Contracts. In connection with the employment of Mr. Sample as
President and Chief Executive Officer of the Company, the Company entered into
an offer letter with Mr. Sample dated January 30, 1997 (the "Offer Letter"). The
Offer Letter provides, among other things, that Mr. Sample will be paid a base
salary of $22,917 per month, subject to annual review after September 30, 1997,
and will generally be entitled to receive up to one hundred percent (100%) of
his base salary as a bonus under the Company's Executive Bonus Plan depending
upon the Company's performance. For fiscal 1997 any such bonus was to be
pro-rated, but was guaranteed to be at least sixty percent (60%) of the maximum
payable after such pro-ration. Mr. Sample's actual bonus for fiscal 1997 was
$96,250. Pursuant to the terms of the Offer Letter, the Company granted to Mr.
Sample a non-qualified stock option to acquire 200,000 shares of Common Stock,
which would have vested in four equal annual installments. However, that option
was cancelled at Mr. Sample's election, and a new option to acquire 100,000
shares was granted to Mr. Sample in its place, pursuant to an offer extended to
all employees of the Company who received option grants between August 1, 1996
and May 7, 1997. The replacement option also vests in four equal annual
installments. The Offer Letter also provides that the Company will pay one
year's severance pay in the event of the termination of Mr. Sample's employment
under certain circumstances and that the Company will reimburse certain moving
costs and extend to Mr. Sample an interest-free loan of up to $300,000 for use
solely to acquire a new residence, which loan will be forgiven with respect to
one eighth of the amount thereof at the close of business on the last business
day of each calendar quarter if Mr. Sample is still employed by the Company. The
Company forgave $75,000 of such loan during fiscal 1997.
8
<PAGE> 11
On February 11, 1997, the Company entered into a consulting contract with
Mr. Daniels (the "Consulting Contract"). The Consulting Contract provided, among
other things, that Mr. Daniels would be retained as a consultant to the Company
at an annual rate of compensation of $50,000, the amount of such compensation
and the continuation of his engagement as a consultant to be subject to change
at the discretion of the Chief Executive Officer. The Consulting Contract also
provided for the continuation of certain employment benefits during the period
of his retention as a consultant for the Company. Finally, Mr. Daniels was
allowed to retain his executive assistant at the Company's expense for not more
than six months, and to continue to occupy his office at the Company's
headquarters in Cambridge subject to the Chief Executive Officer's review. The
Consulting Contract terminated in August 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William G. Nelson and Michael D. Marvin served on the Compensation
Committee during fiscal 1997. Neither Mr. Nelson nor Mr. Marvin, nor any
executive officer of the Company, has any relationship requiring disclosure by
the Company pursuant to item 402(j) of Regulation S-K promulgated by the SEC.
Mr. Marvin resigned as a director of the Company on January 8, 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee established by the Board of Directors is
composed of two non-employee directors of the Company, currently William G.
Nelson and Charles S. Jones. Mr. Jones was appointed to fill the vacancy on the
Compensation Committee created by the resignation of Michael D. Marvin as a
director in January 1998. The Compensation Committee has general responsibility
for the Company's executive compensation policies and practices, including
making specific recommendations to the Board concerning compensation for the
Company's executive officers. The following report is made by Messrs. Nelson and
Marvin as the members of the Compensation Committee during fiscal 1997, and
summarizes the Company's executive officer compensation policies for fiscal
1997.
Compensation Objectives
The Company's executive compensation programs are generally designed to
relate a substantial part of executive compensation to improvements in the
Company's financial performance and corresponding increases in stockholder
value. Decisions concerning executive compensation are guided by the following
underlying principles:
- to establish incentives that will link executive officer compensation to
the Company's financial performance and will motivate executives to
attain the Company's quarterly and annual financial targets; and
- to provide a total compensation package which is competitive within the
software industry and will assist the Company in attracting and retaining
executives who will contribute to the long term financial success of the
Company.
In connection with establishing base salaries for executive officers and
the Company's other cash compensation programs the Compensation Committee
reviewed a professionally-prepared analysis which included surveys of comparable
software companies.
The Securities and Exchange Commission requires that this Report comment
upon the Compensation Committee's policy with respect to Section 162(m) of the
Internal Revenue Code of 1986, as amended, which limits the Company's tax
deduction with regard to compensation in excess of $1 million paid to the chief
executive officer and the four most highly compensated officers (other than the
chief executive officer) at the end of any fiscal year unless the compensation
qualifies as "performance-based compensation." The
9
<PAGE> 12
Compensation Committee's policy with respect to Section 162(m) is to make every
reasonable effort to cause compensation to be deductible by the Company while
simultaneously providing executive officers of the Company with appropriate
rewards for their performance.
Executive Compensation Programs
The Company's compensation package consists of three principal components:
(1) salary; (2) bonuses tied to quarterly and annual earnings performance; and
(3) where appropriate to provide longer-term incentive to executive officers,
stock options. The Company's executive officers are also eligible to participate
in other employee benefit plans, including health and life insurance plans, a
401(k) retirement plan and a stock purchase plan, on substantially the same
terms as other employees who meet applicable eligibility criteria, subject to
any legal limitations on the amounts that may be contributed or the benefits
that may be payable under these Company plans.
The Company's executive officer compensation policy emphasizes bonuses and
stock options which align the interests of management with the stockholders'
interest in the financial performance of the Company for fiscal quarters, the
fiscal year and the longer term. Consistent with this approach, in fiscal 1997,
a substantial part of cash compensation for all executives was tied to the
Company's performance. In setting salaries, primary consideration was given to
the executive officers' salaries for the previous fiscal year, with adjustments
for certain officers in light of industry conditions, individual contributions
and the improved financial performance of the Company.
In fiscal 1997, the Company maintained an Executive Bonus Plan (the "1997
Bonus Plan") intended by the Compensation Committee to align the interests of
its participants with those of the stockholders and provide additional incentive
to executives to enhance Company performance. The participants in the 1997 Bonus
Plan were Messrs. Sample, Birch, Sawyer and Young. Under the 1997 Bonus Plan,
participants received bonuses if the Company's income before income taxes and
extraordinary items ("Plan Income") exceeded targets for any of the quarters of
fiscal 1997 and its Plan Income for the fiscal year exceeded $25,250,000. The
quarterly targets were established based on the growth objectives of the
Company's operating plan for the year and were set for the three month periods
ending December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997
at $5,400,000, $5,900,000, $6,550,000 and $7,400,000, respectively. The target
bonus ranged from 100% of base salary in the case of Mr. Sample to 50% of salary
in the case of Messrs. Sawyer and Young. In addition, Plan participants were
entitled to incremental bonuses of up to an aggregate of 6% of the excess in any
quarter of the Company's Plan Income over such quarterly targets and 9% of the
excess of the Company's Plan Income over such annual target. For fiscal 1997,
Plan participants earned target bonuses only for the first quarter of fiscal
1997. No incremental bonuses were paid. Mr. Drapeau, as a sales executive, was
rewarded with a cash bonus for achievement of revenue and contribution targets
for his geographical territories under his personal plan and did not participate
in the 1997 Bonus Plan.
In fiscal 1997, stock options were an important component of the Company's
approach to compensation for its executive officers. Options under the Company's
1994 Stock Option Plan were granted to Mr. Sample in September 1997 in order to
provide him additional long term incentives to act on behalf of the Company. In
addition, the named executive officers, along with certain other employees of
the Company, were offered the opportunity to participate in the cancellation and
replacement of certain options. See "Option Grants in Last Fiscal Year" and
"Report on Repricing of Options." In determining the size of stock option grants
to executive officers, the Compensation Committee emphasized the seniority,
responsibilities and performance of the executive. The Compensation Committee
believes that stock options with future vesting dates provide a significant
incentive to executive officers to continue their employment with the Company
and create long term value for its stockholders.
10
<PAGE> 13
Chief Executive Officer Compensation
Consistent with the overall executive officer compensation policy, the
Company's approach to the Chief Executive Officer's compensation package in
fiscal 1997 was to be competitive with other high growth companies in the
software industry and to tie a large percentage of the Chief Executive Officer's
total compensation package to Company performance. The Compensation Committee
believes that this approach provides additional incentive to the Chief Executive
Officer to achieve the Company's performance goals and enhance stockholder
value.
Mr. Sample has served as Chief Executive Officer of the Company since
February 24, 1997. His salary for fiscal 1997 was designed to give him assurance
of a base level of compensation, commensurate with his position and duration of
employment with the Company and competitive with salaries for officers holding
comparable positions in the software industry. His bonus under the 1997 Bonus
Plan was guaranteed under the terms of the Offer Letter to be at least sixty
percent (60%) of his pro-rated target bonus. See "Certain Transactions --
Employment Contracts."
Report on Repricing of Options
Consistent with the compensation objectives noted above, during fiscal 1997
the Company granted stock options to certain of its employees, including the
named executive officers, at a price per share equal to the fair market value of
the Common Stock on the date of grant. In April 1997, the market price of the
Common Stock experienced a precipitous decline of more than 50%. In the judgment
of the Compensation Committee, as a result of this decline, the options granted
to the Company's employees since August 1, 1996 were no longer serving the
incentive purposes for which they had been intended. To restore appropriate
incentives to these employees, including the named executive officers, the
Committee voted in May 1997 to offer to each employee of the Company who, on or
after August 1, 1996, was granted options to purchase shares of Common Stock at
a price equal to or greater than $31.00 per share, the opportunity to cancel and
replace such options. With respect to each such cancelled option, each such
employee would receive a new option to purchase one half of the number of shares
covered by such cancelled option at a price per share equal to the fair market
value of the Common Stock on the date of cancellation. Each of the named
executive officers, with the exception of Mr. Sawyer, elected to participate in
the repricing. Except as described above, each reissued option retained the
terms (including vesting schedule, expiration date and characterization as
either incentive or non-qualified stock option) of the option it replaced.
The Compensation Committee
William G. Nelson
Michael D. Marvin
11
<PAGE> 14
PERFORMANCE GRAPH
The following Performance Graph compares the performance of the Company's
cumulative stockholder return with that of a broad market index, the Nasdaq
Stock Market Index for U.S. Companies and a published industry index, the Nasdaq
Computer & Data Processing Index. The cumulative stockholder returns for shares
of the Company's Common Stock and for the market and industry indexes are
calculated assuming $100 was invested on April 21, 1994, the date on which the
Company's Common Stock commenced trading on the Nasdaq National Market. The
Company paid no cash dividends during the periods shown. The performance of the
market and industry indexes is shown on a total return (dividends reinvested)
basis.
[PERFORMANCE CHART OMITTED]
<TABLE>
<CAPTION>
PROJECT SOFTWARE & NASDAQ COMPUTER &
DEVELOPMENT, INC. NASDAQ STOCK MARKET (U.S.) DATA PROCESSING
<S> <C> <C> <C>
04/21/94 100 100 100
9/94 154 106 113
9/95 446 147 180
9/96 724 174 224
9/97 392 239 303
</TABLE>
* $100 INVESTED ON 4/21/94 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
12
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of February 18, 1998 by
(i) each person known by the Company to own beneficially more than five percent
of the Common Stock as of such date, (ii) each director of the Company, (iii)
each named executive officer, (iv) each expected nominee as a director of the
Company and (v) all executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------
NAME NUMBER PERCENT
---- ------ -------
<S> <C> <C>
Robert L. Daniels(2)(3)..................................... 3,155,760 31.8%
20 University Road
Cambridge, MA 02138
Susan H. Daniels(2)(3)...................................... 1,050,754 10.6%
First Union Corporation(4).................................. 642,281 6.5%
One First Union Center
Charlotte, NC 28288
Kopp Investment Advisors, Inc.(5)........................... 1,052,879 10.6%
6600 France Avenue
South Edina, MN 55435
Paul D. Birch(6)............................................ 56,733 *
Norman E. Drapeau, Jr.(7)................................... 27,624 *
Charles S. Jones (8)........................................ 20,600 *
William G. Nelson(9)........................................ 41,000 *
David M. Sample(10)......................................... 25,000 *
William J. Sawyer(11)....................................... 1,564 *
Alan L. Stanzler(12)........................................ 143,000 1.4%
John W. Young(13)........................................... 12,250 *
All directors and executive officers as a group
(9 persons) (2)(3)(6)(7)(8)(9)(10)(11)(13)(14)............ 3,341,143 33.1%
</TABLE>
- - ---------------
* Less than one percent.
(1) The persons named in this table have sole voting and investment power with
respect to the shares listed, except as otherwise indicated. The inclusion
herein of shares listed as beneficially owned does not constitute an
admission of beneficial ownership. On February 18, 1998 there were issued
and outstanding 9,923,789 shares of Common Stock.
(2) Includes shares held by Robert L. Daniels as Trustee of the 1996 Daniels
Voting Trust (the "Voting Trust"). Of the 2,038,758 shares subject to the
Voting Trust, 1,022,629 are owned beneficially by Mr. Daniels and 1,016,129
are owned beneficially by Susan H. Daniels. Mr. Daniels, as Trustee, has
sole voting power with respect to the shares subject to the Voting Trust.
Mr. Daniels also owns 1,117,002 shares free of the Voting Trust, and Mrs.
Daniels also owns 34,625 shares free of the Voting Trust. Each of Mr.
Daniels and Mrs. Daniels disclaims beneficial ownership of the shares
beneficially owned by the other. Mr. and Mrs. Daniels are divorced.
(3) Excludes 120,000 shares held in three trusts for the benefit of Mr.
Daniels' three children. Each of Robert L. Daniels and Susan H. Daniels
disclaims beneficial ownership of these shares.
13
<PAGE> 16
(4) This information is as of February 11, 1998, and is based solely on a
report on Schedule 13G filed by First Union Corporation with the SEC,
pursuant to Section 13(g) of the Securities Exchange Act.
(5) This information is as of February 6, 1998, and is based upon a report on
Schedule 13G filed by Kopp Investment Advisors, Inc. with the SEC, pursuant
to Section 13(g) of the Securities Exchange Act.
(6) Includes 55,000 shares issuable pursuant to outstanding stock options
exercisable within 60 days of the date of this table.
(7) Represents shares issuable pursuant to outstanding stock options
exercisable within 60 days of the date of this table.
(8) Includes 20,000 shares issuable pursuant to outstanding stock options
exercisable within 60 days of the date of this table.
(9) Includes 26,000 shares issuable pursuant to outstanding stock options
exercisable within 60 days of the date of this table.
(10) Includes 25,000 shares issuable pursuant to outstanding stock options
exercisable within 60 days of the date of this table.
(11) In November 1997 Mr. Sawyer resigned from his employment by the Company.
(12) Includes 120,000 shares held in three trusts for the benefit of Mr.
Daniels' three children. Mr. Stanzler has sole voting power with respect to
the shares held by these trusts. Also includes 9,000 shares issuable
pursuant to outstanding stock options exercisable within 60 days of the
date of this table. Also includes 14,000 shares underlying Stock
Appreciation Rights granted to Mr. Stanzler by Mr. Daniels, exercisable for
five years from December 8, 1997.
(13) Represents shares issuable pursuant to outstanding stock options
exercisable within 60 days of the date of this table.
(14) Includes 1,564 shares owned by Mr. Sawyer. See note 11.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
Although Massachusetts law does not require that the selection by the Board
of Directors of the Company's accountants be approved each year by the
stockholders, the Board believes it is appropriate to submit its selection to
the stockholders for their approval and to abide by the result of the
stockholders' vote. The Board of Directors recommends that the stockholders
ratify the appointment of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as
independent accountants to audit the financial statements of the Company for the
fiscal year ending September 30, 1998.
Representatives of Coopers & Lybrand will be present at the Annual Meeting,
will have an opportunity to make a statement if they wish, and will be available
to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF COOPERS & LYBRAND AS INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 1998.
14
<PAGE> 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater-than-10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon review of Forms 3 and 4 and amendments thereto furnished
to the Company during fiscal 1997 and Forms 5 and amendments thereto furnished
to the Company with respect to fiscal 1997, or written representations that Form
5 was not required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-10%
stockholders were fulfilled in a timely manner, with the exception of one late
Form 3 and one late Form 4 (concerning one option exercise and sale of the
underlying stock) by Mr. Young; one late Form 5 (concerning a single
non-discretionary formula grant of options to acquire Common Stock) by each of
Messrs. Jones, Nelson and Marvin; one late Form 4 by Mr. Daniels in his
individual capacity (relating to three transactions involving the sale of
shares); one late Form 3 and one late Form 5 by Mr. Daniels in his capacity as
trustee of the 1996 Daniels Voting Trust (relating to the initial contribution
of shares to the 1996 Daniels Voting Trust); and one late Form 3 and two late
Forms 4 (relating to five transactions involving the sale of shares) by Mrs.
Daniels. After investigating these matters, the Company has concluded that any
omissions were inadvertent, and that none of the transactions gave rise to
liability under Section 16(b) of the Exchange Act for recapture of short-swing
profits.
SOLICITATION
No compensation will be paid by any person in connection with the
solicitation of proxies. Brokers, banks and other nominees will be reimbursed
for their out-of-pocket expenses and other reasonable clerical expenses incurred
in obtaining instructions from beneficial owners of the Common Stock. In
addition to the solicitation by mail, special solicitation of proxies may, in
certain instances, be made personally or by telephone by directors, officers and
certain employees of the Company. It is expected that the expense of such
special solicitation will be nominal. All expenses incurred in connection with
this solicitation will be borne by the Company.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials related to the
1999 Annual Meeting of Stockholders or Special Meeting in lieu thereof must be
received by the Company at its Executive Offices no later than November 6, 1998
or, if the date of such meeting is more than 30 calendar days before or after
March 31, 1999, a reasonable time before the solicitation of proxies by the
Company with respect to such meeting is made.
In addition, the Company's By-Laws provide that a stockholder must give
written notice to the Company of any business to be conducted at any meeting of
stockholders in accordance with the procedural requirements fully set forth in
Article III of the Company's By-Laws. In the case of a regularly scheduled
annual meeting, such notice must be given not less than sixty days prior to the
scheduled annual meeting describing any proposal to be brought before such
meeting, even if such item is not to be included in the Company's proxy
statement relating to such meeting. To bring an item of business before the 1999
Annual Meeting, a stockholder must deliver the requisite notice of such item to
the Company no later than December 11, 1998.
15
<PAGE> 18
MISCELLANEOUS
The Board does not intend to present to the Annual Meeting any business
other than the proposals listed herein, and the Board was not aware, a
reasonable time before mailing this Proxy Statement to stockholders, of any
other business which properly may be presented for action at the Annual Meeting.
If any other business should come before the Annual Meeting, the persons present
will have discretionary authority to vote the shares they own or represent by
proxy in accordance with their judgment.
AVAILABLE INFORMATION
Stockholders of record on February 18, 1998 will receive a Proxy Statement
and the Company's Annual Report to Stockholders, which contains detailed
financial information concerning the Company. The Annual Report is not
incorporated herein and is not deemed a part hereof. The Company will mail,
without charge, a copy of the Company's Annual Report on Form 10-K (excluding
exhibits) to any stockholder solicited hereby who requests it in writing. Please
submit any such written request to Mr. Paul D. Birch, Project Software &
Development, Inc., 100 Crosby Drive, Bedford, Massachusetts 01730.
16
<PAGE> 19
1286-PS-98
<PAGE> 20
DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PROJECT SOFTWARE & DEVELOPMENT, INC. THE BOARD OF DIRECTORS MAKES NO
RECOMMENDATION REGARDING PROPOSAL 1 (ELECTION OF A CLASS II DIRECTOR). THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
(RATIFICATION OF AUDITORS).
P PROJECT SOFTWARE & DEVELOPMENT, INC. P
R Proxy for Special Meeting R
O in Lieu of Annual Meeting of Stockholders O
X to be held on March 31, 1998 X
Y Y
The undersigned stockholder of Project Software & Development, Inc. (the
"Company"), revoking all prior proxies, hereby appoints David M. Sample and Paul
D. Birch, and each or either of them acting singly, proxies, with full power of
substitution, to vote all shares of capital stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
at the offices of the Company, 100 Crosby Drive, Bedford, Massachusetts, on
Tuesday, March 31, 1998, beginning at 10:00 A.M., local time, and at any
adjournments thereof, upon matters set forth in the Notice of Special Meeting in
Lieu of Annual Meeting dated March 4, 1998 and the related Proxy Statement,
copies of which have been received by the undersigned, and in their discretion
upon any business that may properly come before the meeting or any adjournments
thereof. Attendance of the undersigned at the meeting or any adjourned session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate the intention of the undersigned to vote the shares
represented hereby in person prior to the exercise of this proxy.
-------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-------------
<PAGE> 21
<TABLE>
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
<S> <C>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO PROPOSAL 1 BELOW (ELECTION
OF A CLASS II DIRECTOR), THE SHARES REPRESENTED BY THIS PROXY WILL BE WITHHELD FROM ALAN L. STANZLER IF MR. STANZLER IS NOT
NOMINATED OR IS UNABLE OR DECLINES TO SERVE AS A DIRECTOR AT THE TIME OF THE SPECIAL MEETING IN LIEU OF ANNUAL MEETING, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR SUCH OTHER NOMINEE AS IS THEN DESIGNATED BY THE BOARD OF DIRECTORS. IF NO
DIRECTION IS GIVEN WITH RESPECT TO PROPOSAL 2 BELOW (RATIFICATION OF AUDITORS), THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR THE PROPOSAL.
FOR AGAINST ABSTAIN
1. To elect Alan L. Stanzler as a Class II Director of the 2. To approve the proposal to ratify the
Company for a term of three years. selection of Coopers & Lybrand LLP as [ ] [ ] [ ]
the Company's independent accountants.
FOR WITHHELD
[ ] [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please promptly date and sign this proxy and mail it in the enclosed
envelope to assure representation of your shares. No postage need be
affixed if mailed in the United States.
Please sign exactly as name(s) appear on stock certificate. If
stockholder is a corporation, please sign full corporate name by
president or other authorized officer and, if a partnership, please
sign full partnership name by an authorized partner or other person.
Signature: _______________________________ Date: ___________ Signature: __________________________________ Date: __________________
</TABLE>
