<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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 (S)240.14a-11(c) or (S)240.14a-12
ON TECHNOLOGY CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee 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>
ON TECHNOLOGY CORPORATION
One Cambridge Center
Cambridge, MA 02142
Dear Stockholder:
The Annual Meeting of Stockholders (the "Meeting") of ON Technology
Corporation (the "Company") will be held at Fleet National Bank, 75 State
Street, Boston, Massachusetts at 10:00 a.m., Eastern Daylight Time, on Friday,
April 30, 1999.
At the Meeting, you will be asked to consider and vote upon the election of
two directors to serve until the annual meeting of the stockholders held in the
year 2002, to approve amendments to the Company's 1995 Directors Stock Option
Plan (the "Directors Plan") to increase the number of shares available under
the Directors Plan from 100,000 shares to 200,000 shares and provide for annual
10,000 share option grants to each of the Company's outside directors, and to
ratify the Board of Directors' selection of Arthur Andersen LLP as the
Company's independent auditors.
In the material accompanying this letter, you will find a Notice of Annual
Meeting of Stockholders, a Proxy Statement relating to the actions to be taken
by the Company's stockholders at the Meeting and a Proxy. The Proxy Statement
more fully describes and includes information about the matters for
consideration at the Meeting.
All stockholders are cordially invited to attend the Meeting in person.
Whether or not you plan to attend the Meeting, however, please complete, sign,
date and return your Proxy in the enclosed envelope. If you attend the Meeting,
you may vote in person as you wish, even though you have previously returned
your Proxy. It is important that your shares be represented and voted at the
Meeting.
Sincerely,
/s/ Herman DeLatte
Herman DeLatte
President and Chief Executive
Officer
<PAGE>
ON TECHNOLOGY CORPORATION
One Cambridge Center
Cambridge, Massachusetts 02142
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of ON
Technology Corporation, a Delaware corporation (the "Company"), which will be
held at Fleet National Bank, 75 State Street, Boston, Massachusetts at 10:00
a.m., Eastern Daylight Time, on Friday, April 30, 1999, for the following
purposes:
1. To elect two Class I directors to serve until the Company's Annual Meeting
of Stockholders held in 2002 and until their successors are duly elected and
qualified;
2. To approve amendments to the 1995 Directors Stock Option Plan increasing
the number of shares available under such plan from 100,000 to 200,000 and
authorizing annual grants of options to purchase 10,000 shares of the Company's
common stock for the Company's outside directors, which options shall vest in
equal quarterly installments over a one year period;
3. To ratify the selection of Arthur Andersen LLP as the independent auditors
of the Company for the fiscal year ending December 31, 1999; and
4. To transact such other business that may properly come before the Meeting
or any postponement or adjournment thereof.
Stockholders of record at the close of business on March 8, 1999 are entitled
to notice of, and to vote at, this Annual Meeting of Stockholders and any
postponement or adjournment thereof. For ten days prior to this Annual Meeting,
a complete list of the stockholders entitled to vote at the meeting will be
available for examination by any stockholder for any purpose relating to the
meeting during ordinary business hours at the principal offices of the Company.
By Order of the Board of
Directors
/s/ John M. Bogdan
John M. Bogdan
Secretary
Cambridge, Massachusetts
March 30, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED REPLY ENVELOPE. BY RETURNING YOUR PROXY CARD, YOU WILL ASSURE
REPRESENTATION OF YOUR SHARES AT THE MEETING. IF YOU ATTEND THE MEETING, YOU
MAY, OF COURSE, VOTE YOUR SHARES IN PERSON EVEN THOUGH YOU HAVE SENT IN YOUR
PROXY. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
ON TECHNOLOGY CORPORATION
One Cambridge Center
Cambridge, Massachusetts 02142
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of proxies to be voted at the Annual Meeting
of Stockholders of the Company to be held at Fleet National Bank, 75 State
Street, Boston, Massachusetts, at 10:00 a.m., Eastern Daylight Time, on Friday,
April 30, 1999, and at any adjournment thereof (the "Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting. This Proxy
Statement and the accompanying proxy card are being mailed on or about March
30, 1999, to the stockholders of record as of the close of business on March 8,
1999 (the "Record Date").
GENERAL INFORMATION
Solicitation of Proxies
The cost of soliciting proxies from stockholders will be borne by the
Company. Copies of solicitation materials will be furnished to banks, brokerage
houses, fiduciaries and custodians holding in their names shares of common
stock beneficially owned by others to forward to such beneficial owners. The
Company may reimburse persons representing beneficial owners of Common Stock
for their costs of forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or employees of the
Company.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked in writing
(including by delivery of a later dated proxy) or in person by notifying the
Secretary of the Meeting, in writing, at any time prior to the voting of the
proxy.
Voting of Proxies
If the enclosed proxy card is properly executed and returned to the Company,
all shares represented thereby will be voted as indicated therein. If a proxy
is returned without instructions, it will be voted FOR the nominees named
therein, FOR the approval of the amendments to the 1995 Directors Stock Option
Plan and FOR the ratification of Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1999.
<PAGE>
Voting Rights and Outstanding Shares
On the Record Date there were 12,462,689 outstanding shares of Common Stock
(excluding 15,000 shares held in treasury), which is the only class of stock
outstanding and entitled to vote at the Meeting. The holders of such shares
will be entitled to cast one vote for each share held of record as of the
Record Date. On the Record Date, the closing sales price of the Common Stock on
the Nasdaq National Market was $1.84375 per share.
The holders of a majority of the shares of Common Stock issued, outstanding
and entitled to vote at the Meeting shall constitute a quorum for the
transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy will be counted for purposes of determining
whether a quorum exists at the Meeting.
The affirmative vote of the holders of a plurality of the shares of Common
Stock voting on the matter is required for the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote is required to approve the
amendments to the Company's 1995 Directors Stock Option Plan and to ratify the
selection of Arthur Andersen LLP as the Company's independent auditors.
Abstentions and shares held by brokers that are present, but not voted because
the brokers do not have the discretionary authority to vote such shares as to a
particular matter, i.e., "broker non-votes," will be counted as present for
purposes of determining if a quorum is present. Abstentions will have the same
effect as a negative vote. Broker non-votes, on the other hand, will have no
effect on the outcome of the vote.
2
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of March 8, 1999, certain information
relating to the beneficial ownership of Common Stock by (i) each person known
by the Company to own beneficially more than 5% of the Company's Common Stock;
(ii) each director of the Company; (iii) the Company's Chief Executive Officer
and each of the other five most highly compensated executive officers of the
Company serving as of December 31, 1998 (collectively, the "Named Executive
Officers"); and (iv) the directors and Named Executive Officers of the Company
as a group:
<TABLE>
<CAPTION>
Number of Shares Percent of
Name of Beneficial Owner Beneficially Owned(1) Common Stock(2)
- ------------------------ --------------------- ---------------
<S> <C> <C>
Herman DeLatte(3)........................ 246,442 1.98%
Christopher A. Risley(4)................. 1,336,524 10.72
Loren K. Platzman(5)..................... 993,479 7.97
Charles River Partnership VI(6).......... 669,468 5.37
c/o Charles River Ventures, Inc.
1000 Winter Street, Suite 3300
Waltham, MA 02154
John M. Bogdan(7)........................ 127,341 1.02
Roy T. Sanford(8)........................ 63,074 *
Edward W. Green(9)....................... 59,562 *
Ram Sudama............................... 0 *
Robert G. Orr............................ 1,500 *
Gina Bornino Miller(10).................. 13,332 *
William C. Hulley(11).................... 530,335 4.26
Robert P. Badavas(10).................... 13,332 *
All directors and executive officers as a
group
(10 persons)(12)........................ 2,391,442 19.19
</TABLE>
- --------
* Less than 1%
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to community
property laws, where applicable.
(2) The percentages shown in this column are calculated from the 12,462,689
shares of Common Stock actually outstanding on March 8, 1999 (excluding
15,000 shares held in treasury), in addition to 341,693 options held by
the persons set forth in this table that are issuable within 60 days from
March 8, 1999.
(3) Includes 93,750 shares exercisable upon the exercise of options.
(4) Includes 286,195 shares of Common Stock held by The Risley Family Limited
Partnership (the "RFLP"). Mr. Risley is a general partner of the RFLP, in
which he holds a 1% general partnership interest. As the general partner,
he has sole voting and investment control over the shares of Common Stock
held by the RFLP. The Risley Children's Trust (the "Risley Trust"), an
irrevocable trust for the benefit of Mr. Risley's children, is the limited
partner of the RFLP. Mr. Risley has no investment or voting control over
the Risley Trust and disclaims beneficial ownership of the Risley Trust's
99% limited partnership interest in the RFLP. Also includes 10,000 shares
issuable upon the exercise of options pursuant to the Company's 1992
Employee and Consultant Stock Option Plan.
3
<PAGE>
(5) Includes 300,000 shares held by Platzman Family Investments L.L.P. and
100,000 shares held by the Loren Platzman and Kathleen Platzman Charitable
Remainder Unitrust.
(6) Includes 529,538 shares of Common Stock held by Charles River Partnership
VI, 93,445 shares of Common Stock held by Charles River Partnership VI-A,
an affiliate of Charles River Partnership VI, 9,138 shares held by Michael
J. Zak, 12,000 shares held by John T. Neises, and 25,347 shares held by
Richard M. Burnes, Jr.. Michael J. Zak is a general partner of Charles
River Partnership VI and Charles River Partnership VI-A. Richard M.
Burnes, Jr. and John T. Neises are also general partners of the general
partner of Charles River Partnership VI and Charles River Partnership VI-
A. Charles River Partnership VI disclaims beneficial ownership of the
shares held by Charles River Partnership VI-A and the shares held by
Messrs. Zak, Burnes and Neises. Charles River Partnership VI-A disclaims
beneficial ownership of the shares held by Charles River Partnership VI
and the shares held by Messrs. Zak, Burnes and Neises. Messrs. Zak, Burnes
and Neises each disclaim beneficial ownership with respect to the shares
held by Charles River Partnership VI and VI-A, except to the extent of his
respective proportionate pecuniary interest therein, and each also
disclaims beneficial ownership with respect to shares held by each of the
other general partners.
(7) Includes 93,917 shares issuable upon the exercise of options.
(8) Includes 31,375 shares issuable upon exercise of options.
(9) Includes 39,562 shares issuable upon the exercise of options.
(10) Includes 10,000 shares issuable upon the exercise of options pursuant to
the Company's 1992 Employee and Consultant Stock Option Plan and 3,332
shares issuable upon the exercise of options pursuant to the Company's
1995 Directors Stock Option Plan.
(11) Includes 10,000 shares issuable upon the exercise of options pursuant to
the Company's 1995 Directors Stock Option Plan and 26,425 shares issuable
upon the exercise of options pursuant to the Company's 1992 Employee and
Consultant Stock Option Plan. Also consists of 483,910 shares of Common
Stock held directly by The P/A Fund, L.P. William C. Hulley, a director of
the Company, is a vice president of Adams Capital Management, Inc., and a
general partner of The P/A Fund, L.P. Mr. Hulley disclaims beneficial
ownership of the shares held by The P/A Fund, L.P. Mr. Hulley assigned all
options he received pursuant to the Company's Director Stock Option Plan
and pursuant to the Company's 1992 Employee and Consultant Stock Option
Plan to The P/A Fund, L.P. and, accordingly, disclaims beneficial
ownership with respect to shares issuable upon the exercise of such
options.
(12) Includes an aggregate of 341,693 shares of Common Stock issuable pursuant
to options exercisable within 60 days from March 8, 1999. Includes 816,530
shares held by affiliates of certain officers and directors of the Company
with respect to which such officers and directors disclaim beneficial
ownership.
4
<PAGE>
ELECTION OF DIRECTORS
(Proposal I)
The Company has a classified Board of Directors consisting of two Class I
Directors, two Class II directors and two Class III directors. The Class I,
Class II and Class III directors currently serve until the annual meetings of
stockholders to be held in 1999, 2000 and 2001, respectively, and until their
respective successors are duly elected and qualified. At each annual meeting,
directors are elected for a full term of three years to succeed those whose
terms are expiring.
The term of office for both Class I directors is currently expiring and both
directors currently serving on the Board are nominated for election at the
Meeting. The persons named in the proxy will vote to elect as directors Messrs.
Hulley and DeLatte, unless the proxy is marked otherwise. Currently, there is a
vacant seat on the Board for a Class II Director. Pursuant to Delaware law and
the Company's By-laws, this vacancy may be filled by a vote of the majority of
the members of the Board then in office.
The Class I directors will be elected to hold office until the Annual Meeting
of Stockholders in 2002 and until each of their successors is duly elected and
qualified. Each of the nominees has indicated his willingness to serve, if
elected; however, if the nominee should be unable to serve, the proxies may be
voted for a substitute nominee designated by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE NAMED
NOMINEES
Board of Directors
The table below sets forth for the current directors, including the Class I
nominees to be elected at this Meeting, certain information with respect to age
and background.
<TABLE>
<CAPTION>
Director
Name Age Since Position with the Company
- ---- --- -------- -------------------------
<S> <C> <C> <C>
Nominees for Class I Director
to be elected at the Annual
Meeting:
William C. Hulley............. 40 1994 Director and Chairman of the Board
Herman DeLatte................ 44 1997 Director, President and CEO
Class II Director:
Gina Bornino Miller........... 38 1998 Director
Class III Directors:
Christopher A. Risley......... 49 1985 Director
Robert P. Badavas............. 46 1998 Director
</TABLE>
5
<PAGE>
Executive Officers
The executive officers of the Company as of March 8, 1999 are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
Herman DeLatte............ 44 President and Chief Executive Officer
John M. Bogdan............ 51 Chief Financial Officer, Vice President, Finance,
Treasurer and Secretary
Edward W. Green........... 56 Vice President, Groupware
Roy T. Sanford............ 44 Vice President, Marketing and Alliances
Ram Sudama................ 50 Chief Technical Officer
Robert G. Orr............. 48 Vice President, North American Sales
Laurent Raynaud........... 37 Managing Director of Europe
</TABLE>
Business Experience of Officers, Directors and Nominees for Director
Herman DeLatte has served as President and Director of the Company since
September 1997 and as Chief Executive Officer of the Company since November
1997. Mr. DeLatte joined the Board of Directors of the Company to fill a
vacancy left when Allan Wallack resigned as a Director. Prior to joining the
Company, Mr. DeLatte was employed by Micrografx Inc. as President and Chief
Operating Officer from September 1994 to May 1997 and as Vice President,
Europe, from August 1991 to September 1994. From May 1997 to September 1997 Mr.
DeLatte enjoyed some personal time.
John M. Bogdan has served as Chief Financial Officer, Vice President, Finance
and Secretary of the Company since October 1994 and as Treasurer since May
1995. From September 1986 to October 1994, Mr. Bogdan was Vice President,
Finance, and Chief Financial Officer of Concord Communications, Inc., a data
communications firm.
Edward W. Green has served as Vice President, Groupware, of the Company since
February 1997. Prior to joining the Company, Mr. Green served as a Vice
President with Dataware Technologies, Inc., from December 1994 to February 1997
and as a Vice President at Infinium Software, Inc. from December 1991 to
December 1994.
Robert G. Orr has served as Vice President, North American Sales, of the
Company since July 1998. Prior to that time, Mr. Orr served as Director,
Eastern Region, for Clarify, Inc. from August 1992 through April 1998, where he
was responsible for the Clarify's sales program in the eastern United States.
From April 1998 until July 1998, Mr. Orr enjoyed some personal time.
Roy T. Sanford has served as Vice President, Marketing and Alliances, of the
Company since April 1997. Prior to joining the Company, Mr. Sanford served as
Director, Enterprise Alliance Program, for EMC Corporation from September 1993
to April 1997. From July 1990 to September 1993, he served as Director of
Integrating Products for BullHN Information Systems, Inc. where he
6
<PAGE>
was responsible for product and industry marketing for domestic manufacturing
and commercial industries.
Ram Sudama has served as Chief Technical Officer of the Company since October
1998. Previously, Mr. Sudama served as a technology advisor to the Board of
Directors of Teradyne, Inc. from January 1998 through September 1998 and as
Chief Executive Officer of Sandalwood Studios, Inc. from June 1997 through
December 1997. From November 1996 through May 1997, Mr. Sudama was Chief
Technical Officer for Borland International Inc. (now known as Inprise
Corporation), providing technical direction for enterprise strategy, and Vice
President of Technology for Open Environment Corp. from August 1993 through
October 1996. From 1981 through July 1993, Mr. Sudama was employed by Digital
Equipment Corporation as a Consultant Engineer.
Laurent Raynaud joined the Company in November 1997 as the Managing Director
of European Partnerships and was promoted to the executive office of Managing
Director of Europe on January 21, 1999. Prior to joining the Company, Mr.
Raynaud held various positions with Micrografx Inc.: Mr. Raynaud was General
Manager for the United Kingdom from January 1992 through November 1993,
Managing Director--Southern Europe from December 1993 through June 1995 and
Managing Director--Europe from July 1995 through June 1997. Mr. Raynaud enjoyed
some personal time from July 1997 through October 1997. Since Mr. Raynaud was
not an executive officer of the Company prior to January 1999 he is not
included as a Named Executive Officer in this Proxy Statement.
Christopher A. Risley served as President and Chief Executive Officer of the
Company from May 1985 through August 1997; Mr. Risley continues to serve as a
Director of the Company, a position he has held since May 1985. From September
1997 through November 1997, Mr. Risley served as a consultant to the Company to
facilitate the sale of certain of the Company's assets to Elron Software, Inc.
Upon completion of that transaction, Mr. Risley enjoyed personal time until
September 1, 1998, at which time he joined Insite Innovations, Inc. as its
Chief Executive Officer. Prior to joining the Company, Mr. Risley served as a
consultant in the areas of marketing, corporate strategies and United States
acquisitions to large European companies.
Robert P. Badavas joined the Board of Directors of the Company on August 1,
1998 as a Class III Director to fill a vacant seat on the Board. Since December
of 1995, Mr. Badavas has served as President and Chief Executive Officer of
Cerulean Technology, Inc., which specializes in wireless mobile information
software. From October 1986 through October 1995, Mr. Badavas served as Senior
Vice President, Chief Financial Officer and Treasurer of Chipcom Corporation
until its merger with 3Com Corporation; both companies engaged in network
computing. At Chipcom, Mr. Badavas was responsible for finance, information
systems, business development and general management of two business units. For
the two month period prior to joining Cerulean Technology, Mr. Badavas enjoyed
personal time. Mr. Badavas also serves as a member of the Board of Directors
for Renaissance Worldwide, Inc., a company listed on the Nasdaq National
Market, which provides strategic and enterprise solutions, implementation and
consulting services.
7
<PAGE>
William C. Hulley has been a director since June 1994 and Chairman of the
Board of Directors of the Company since July 1997. Mr. Hulley was employed from
1989 until 1994 by Fostin Capital Corp., a venture capital company, and has
been a General Partner of Fostin Capital Partners since 1993. Mr. Hulley co-
founded Adams Capital Management, Inc., a private venture capital company, in
1994 and is a Vice President and General Partner. Adams Capital Management is a
managing partner of several venture capital partnerships, including Adam
Capital Management, L.P. and The P/A Fund. Mr. Hulley is a director of several
private companies and not-for-profit corporations.
Gina Bornino Miller joined the Board of Directors of the Company on July 14,
1998 as a Class II Director to fill a vacancy on the Board. Ms. Bornino Miller
was employed as President, Specialty Storage Products Group, of Quantum Corp.
from January 1993 through October 1996, where she was responsible for the non
disk-drive storage products business unit. Ms. Bornino Miller has been self-
employed as a consultant since October 1996 and, since January 1998, has
primarily provided her consulting services to Microbia, Inc., a biotechnology
company. Since the summer of 1998, Ms. Bornino Miller has served as a member of
the Board of Directors of Microbia, Inc.
Committees of the Board of Directors
The Board of Directors has established a Compensation Committee and an Audit
Committee; the Board of Directors does not maintain a Nominating Committee or a
committee performing similar functions. The Compensation Committee is comprised
of three members of the Board of Directors: Messrs. Hulley, Badavas and DeLatte
serve on the Compensation Committee with one vacancy remaining, and Mr. DeLatte
serves as an ex-officio non-voting member. The principal functions of the
Compensation Committee are to review the Company's compensation programs and
policies, to establish compensation for the Company's executive officers, to
review and approve annual bonuses to be paid to such executive officers and to
administer the stock option plans.
The Audit Committee is comprised of three members of the Board of Directors:
Messrs. Risley and Badavas serve on the committee with one vacancy remaining.
The principal functions of the Audit Committee are to nominate the accounting
firm to be appointed as the Company's independent certified public accountants
and to review the plan and scope of the audit, the report of the audit upon its
completion and the adequacy of the Company's internal accounting procedures and
controls. The Audit Committee also maintains a continuing review of the nature
and extent of all services provided to the Company by such accountants and
evaluates their fees and the effects of such services upon their independence.
Meetings and Compensation of Directors
Directors who are not employees of the Company receive a fee of $4,000 for
attendance at each regular and special meeting of the Board of Directors, a fee
of $2,000 for attendance at each meeting of the Audit or Compensation
Committees if the director is a member of such committee, and a fee
8
<PAGE>
of $650 for attendance at each telephonic meeting of the Board of Directors or
the Audit or Compensation Committees, if the director is a member of such
committee. Each of Messrs. Hulley, Risley and Badavas and Ms. Bornino Miller
have elected, for a one year period ending on July 14, 1999, to reduce the cash
compensation which each is entitled to receive for attendance at Board and
committee meetings. As a result, during this one-year period, each of Messrs.
Hulley, Risley and Badavas and Ms. Bornino Miller shall receive a fee of $2,500
for in-person attendance at each meeting of the Board of Directors, $1,000 for
in-person attendance at each meeting of a committee on which he or she is a
member of such committee, $500 for attendance at each telephonic meeting of the
Board of Directors and $250 for attendance at each telephonic meeting of a
committee on which he or she is a member. In consideration for this reduction
in fees, each of Messrs. Hulley, Risley and Badavas and Ms. Bornino Miller
received options to purchase 10,000 shares of Common Stock under the Company's
1992 Employee and Consultants Stock Option Plan at a price per share equal to
the fair market value of the Company's Common Stock on the date of grant. These
options are fully exercisable. Directors who are not employees of the Company
are additionally reimbursed for out-of-pocket expenses incurred in attending
Board of Directors meetings and are eligible to receive options under the
Company's 1995 Directors Stock Option Plan. Directors who are employees of the
Company are not compensated for their service on the Board or any committee
thereof. The Board of Directors and the Compensation Committee each met in
person five times and the Board of Directors, the Compensation Committee and
the Audit Committee met by telephonic means seven, three and one times,
respectively, during 1998.
Section 16(a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were satisfied, except that (i) Edward W.
Green failed to file a Form 4 to reflect a total of two open-market purchase
transactions during February and August 1998, (ii) John M. Bogdan failed to
file a Form 4 to reflect one open-market purchase transaction during February
1998 and (iii) Herman DeLatte failed to file a Form 4 to reflect a total of
three open-market purchase transactions during February 1998. Such required
filings were made on March 11, 1998 for all of the February transactions and
September 15, 1998 for the August transaction.
9
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary of Cash and Certain Other Compensation
The following table sets forth information with respect to the compensation,
for the last three fiscal years, of the Company's Named Executive Officers who
received compensation in excess of $100,000 during fiscal year 1998.
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual
Compensation
-----------------
Securities All
Salary Bonus Underlying Other
Name and Principal Position Year ($) ($) Options (#) Compensation
- --------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Herman DeLatte(1)........... 1998 $250,000 $127,634 -- --
President and Chief
Executive Officer 1997 83,333 62,500 375,000 --
1996 -- -- -- --
John M. Bogdan.............. 1998 147,794 44,181 30,000 --
Chief Financial Officer,
Vice President, 1997 133,750 41,796 43,419 --
Finance, Treasurer and
Secretary 1996 125,000 34,366 20,000 --
Edward W. Green(2).......... 1998 151,550 40,745 5,000 --
Vice President, Groupware 1997 122,500 31,229 90,000 --
1996 -- -- -- --
Roy T. Sanford(3)........... 1998 163,500 72,162 20,000 --
Vice President, Marketing
and Alliances 1997 106,827 40,635 8,000 --
1996 -- -- -- --
Ram Sudama(4)............... 1998 27,500 30,313 50,000 --
Chief Technical Officer 1997 -- -- -- --
1996 -- -- -- --
Robert G. Orr(5)............ 1998 61,875 29,356 60,000 --
Vice President, North
American Sales 1997 -- -- -- --
1996 -- -- -- --
</TABLE>
- --------
(1) Mr. DeLatte joined the Company as President on September 1, 1997 and was
appointed to the office of Chief Executive Officer in November 1997.
(2) Mr. Green joined the Company as Vice President, Groupware, in February
1997.
(3) Mr. Sanford joined the Company as Vice President, Marketing and Alliances,
in April 1997.
(4) Mr. Sudama joined the Company as Chief Technical Officer in October, 1998.
(5) Mr. Orr joined the Company as Vice President, North American Sales, in
July, 1998.
10
<PAGE>
STOCK OPTION GRANTS IN FISCAL YEAR 1998
The following table shows information with respect to stock options granted
to each Named Executive Officer during fiscal year 1998.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------
Potential
Realizable Value
at Assumed Annual
% of Total Rates of Stock
Number of Options Price
Securities Granted to Appreciation for
Name Underlying 1Employees Exercise Option Term
- ---- Options in Fiscal Price Expiration -----------------
Granted(1) Year1 ($/Share)(2) Date 5% 10%
---------- ---------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Herman DeLatte.......... -- -- -- -- -- --
John M. Bogdan.......... 30,000(3) .03% $ 3.375 07/14/08 $164,926 $262,616
Edward W. Green......... 5,000(3) .005 3.375 07/14/08 27,488 43,769
Roy T. Sanford.......... 20,000(3) .02 1.9375 09/14/08 63,120 100,508
Ram Sudama.............. 50,000(3) 5.14 1.96875 10/21/08 160,344 255,322
Robert G. Orr........... 60,000(3) 6.17 3.375 07/14/08 329,851 525,233
</TABLE>
- --------
(1) The options were granted under the Company's 1992 Employee and Consultant
Stock Option Plan. Options are generally subject to the employee's
continued employment. The exercise of options will be accelerated in the
event of certain occurrences including the sale of the Company, the sale of
all or substantially all of the Company's assets or a change in control of
the Company. An individual's eligibility to exercise vested options
generally terminates 90 days after the termination of such individual's
employment relationship with the Company.
(2) The exercise price per share of each option was determined by the Board of
Directors to be equal to the fair market value per share of Common Stock at
the date of grant.
(3) The options become exercisable over a four-year period, 25% on the first
anniversary of the date of grant and 5% at the end of each of the following
three month periods.
Employment Agreements
The Company entered into an Employment Agreement in May 1995 with Mr. Bogdan.
The Employment Agreement was initially for a three year term, fixed base
compensation for the employee and provided for salary increases and bonuses as
the Company's Board of Directors may determine from time to time. This
Employment Agreement automatically renews for 12 month intervals if neither
party has given 30 days' notice of his or its intention not to renew the
Employment Agreement. The Employment Agreement also provides that upon
termination without cause or upon expiration and non-renewal of the agreement,
the employee shall receive severance pay in an amount equal to his aggregate
compensation (including bonuses earned for the prior four quarters) for the
preceding 12 months, together with a continuation of benefits for such 12 month
period. The Employment Agreement provides for health, life insurance and
similar benefits, and requires that for a period of 12 months after any
employment termination, the employee will not directly or indirectly carry on,
be engaged in or have any financial interest in any business involved in LAN-
based groupware applications or workgroup utilities.
11
<PAGE>
Mr. DeLatte joined the Company as President in September 1997 pursuant to the
terms of an Offer Letter dated July 31, 1997 (the "DeLatte Offer"), Mr. Green
joined the Company as Vice President, Groupware, in February 1997 pursuant to
the terms of an Offer Letter dated January 30, 1997 (the "Green Offer") and Mr.
Sudama joined the Company as Chief Technical Officer in October 1998 pursuant
to the terms of an Offer Letter dated October 20, 1998 ("Sudama Offer"). While
no formal employment agreement exists between the Company and any of these
individuals, the DeLatte Offer, the Green Offer and the Sudama Offer each
provide for salary increases and bonuses as the Company's Board of Directors
may determine from time to time. The DeLatte Offer also provides that upon
termination without cause, Mr. DeLatte shall continue to receive his then-
current salary and benefits for a twelve month period. The Green Offer provides
that if Mr. Green's employment is terminated in connection with a transaction
resulting in a change of control of the Company, he shall be entitled to a
severance payment equal to six months' salary; if his employment is terminated
without cause, Mr. Green shall be entitled to a severance payment equal to
three months' salary. The Sudama Offer provides that if Mr. Sudama's employment
is terminated or substantially diminished in nature or status in connection
with a transaction resulting in a change of control of the Company, he shall be
entitled to a severance payment equal to six months' salary. Neither Mr.
Sanford nor Mr. Orr have employment agreements or offer letters specifying
employment or termination provisions different from those provisions generally
applicable to the Company's employees.
The following table shows information with respect to stock options held as
of December 31, 1998 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL-YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-
Unexercised Options at December the-Money Options at
Value 31, 1998 (#) December 31, 1998 ($)(1)
Shares Acquired Realized ----------------------------------- -------------------------
Name on Exercise (#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Herman DeLatte.......... -- -- 78,125 296,875 -- --
John M. Bogdan.......... 3,419 $11,967 81,084 71,417 -- --
Edward W. Green......... -- -- 34,187 60,813 -- --
Roy T. Sanford.......... -- -- 23,375 76,625 -- --
Ram Sudama.............. -- -- -- 60,000 -- --
Robert G. Orr........... -- -- -- 50,000 -- --
</TABLE>
- --------
(1) Calculated based on the fair market value per share of the underlying
securities at December 31, 1998 ($1.375) minus the per share exercise
price.
(2) Calculated based on the fair market value of the underlying securities on
the exercise date minus the exercise price of such options.
12
<PAGE>
During 1998, the Company did not adjust the exercise price of its stock
options previously awarded to its employees, including certain of its executive
officers. During 1997, however, the Company did adjust the exercise price of
its stock options previously awarded to employees. This adjustment was
accomplished by allowing employees holding out-of-the-money options to
surrender the old options and receive new options with a lower exercise price.
The employees had to elect to make this adjustment. Not all employees made this
election; a total of 65,295 options were affected and the new exercise price is
$2.875 for all such options. None of the Company's Named Executive Officers
participated in the 1997 option repricing. There were no option repricings in
any prior fiscal year by the Company.
13
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation program is determined by the
Compensation Committee of the Board of Directors (the "Compensation
Committee"), the voting members of which are non-employee directors. The
Compensation Committee approves compensation policies for the executive
officers of the Company and oversees the general compensation policies of the
Company. The Compensation Committee has furnished the following report:
Compensation Philosophy and Goals
During 1998, the goals of the Company's executive compensation program
remained constant: to attract, retain and motivate the most talented
individuals available in the Company's industry. The elements of compensation
encompassed in the program include base salary, annual cash incentive
compensation and awards of stock options under the Company's incentive
compensation plans. The competitiveness of the Company's executive compensation
approach is reviewed annually and validated with external salary surveys
generally available to the Company through professional affiliations.
The Company utilizes four guiding principles for its executive compensation
approach, which are set forth below. These principles are established to
design, fund and administer the program and form the framework for decision
making.
Stockholder Interests--The financial interests of the stockholders are the
major consideration in the design, funding and administration of all
executive compensation programs.
Executive Compensation--The value of all tangible compensation components
to the executive compensation program are considered in the aggregate.
Consideration of individual components is only performed in the context of
the total executive compensation program.
Group and Individual Achievement--The Company's performance-based executive
compensation program reflects an appropriate balance between group and
individual achievement.
Sustained Performance--An emphasis is placed on the long-term executive
compensation incentives while maintaining an annual cash compensation
program capable of producing focus on near-term results and milestones.
Components of Compensation
Target Annual Cash Compensation. Each executive position in the Company is
compared to similar positions in comparable companies for which data are
available. From this comparison, annual target cash compensation is set to
reflect compensation standards in the industry. The Compensation Committee
gathers data from various external sources available to it through the members'
professional affiliations and, after conferring with the President of the
Company on the
14
<PAGE>
salaries for senior management (excluding his own salary), sets annual salary
levels in the first quarter of each year. The target annual cash compensation
is broken into two separate components: a base salary and an incentive bonus.
During 1998, the Compensation Committee reviewed the target annual cash
compensation levels of all executive officers who were employed at the Company
and, based on the performance of the Company and these executives, approved
increases of 9.4% to 23.6% for such executive officers.
In reviewing the comparable levels of compensation for Chief Executive
Officers, the Compensation Committee determined that Mr. DeLatte's compensation
as the Company's Chief Executive Officer was reasonable in light of both
industry information regarding the range of salaries offered to chief executive
officers of comparable companies and the business judgment of the members of
the Compensation Committee. Mr. DeLatte's equity compensation is structured to
reward Mr. DeLatte upon the Company's financial success.
Base Salary. In general, the Compensation Committee sets the base salary
component of total target annual cash compensation at approximately 75% of the
total cash compensation for executive officers. The intention of the
Compensation Committee is to leave a significant portion of target annual cash
compensation subject to the performance of the Company.
Incentive Bonus. The Compensation Committee awards incentive bonuses as part
of total annual cash compensation based on two objectives: the achievement by
the Company of certain financial targets for annual revenue and operating
income and the achievement by individual executives of certain strategic
objectives. The Company's financial objectives relate entirely to an annual
business plan that is submitted in December by the executive team and the
individual executive's strategic objectives relate to goals established by the
executive and members of the Board of Directors for personal success within the
Company. The bonus system is intended to stimulate successful execution of the
annual business plan. The bonus plan allows for quarterly (partial) payments of
executive bonuses, with the balance of executive bonuses payable only after
completion of the audit following each fiscal year. No incentive bonuses are
paid unless achievement is at least 90% of the annual business plan at various
milestones throughout each fiscal year.
Equity Incentives. The Compensation Committee believes that the executive
compensation program of the Company must motivate the executive officers of the
Company to create core economic value which results in long-term appreciation
in the price of the Common Stock, thus aligning the interests of employees with
the interests of the Company's stockholders and providing a strong incentive
for key executives to remain in the employ of the Company. Additionally, the
appropriate use of equity incentives is a valuable tool in recruiting new
executives for the Company. The Compensation Committee believes that, in the
case of a growth-oriented business such as the Company, a substantial portion
of the compensation of executive officers should be contingent on appreciation
in value of the stockholders' investments. Based on the foregoing principles,
the Compensation Committee awarded options for 30,000 shares to John M. Bogdan,
options for 5,000
15
<PAGE>
shares to Edward W. Green, options for 20,000 shares to Roy T. Sanford, options
for 60,000 shares to Robert G. Orr and options for 50,000 shares to Ram Sudama.
The Committee determined that Mr. DeLatte had a sufficient number of options at
this time. Additionally, the option agreements held by employees of the
Company, including those held by executive officers, were amended by the
Compensation Committee on January 13, 1998 to allow for acceleration of the
vesting of options upon the occurrence of an Organic Event (as defined in the
Stock Option Plan) after an individual has been employed by the Company for
three months, rather than twelve months.
The Committee intends to review the status of equity incentives for senior
executives on a regular basis to insure that key executives of the Company are
appropriately motivated and rewarded.
Certain Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a tax
deduction to publicly held companies for compensation in excess of $1,000,000
paid to the chief executive officer and the four other most highly compensated
executive officers. Compensation based on performance is not subject to this
deduction limit, if certain requirements are met. Based on the compensation
awarded to Mr. DeLatte and the other executive officers of the Company, it does
not appear that the Section 162(m) limitation will have a significant impact on
the Company in the near term. The Compensation Committee plans to structure the
incentive compensation part, which currently consists of the annual cash
incentive compensation and the stock option plan, of its compensation program
to comply with Section 162(m).
The Compensation Committee
William C. Hulley
Robert P. Badavas
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors currently consists of
Messrs. Badavas, Hulley and DeLatte. Mr. Hulley is a general partner of the
general partner of The P/A Fund, an investor that holds less than five percent
(5%) of the Company's Common Stock. Each of the current non-employee directors
is entitled to receive compensation in the form of cash and options to purchase
Common Stock for their services as directors. Mr. Badavas and Hulley, on August
1, 1998 and August 4, 1995, respectively, have received options to purchase
10,000 shares of Common Stock under the Directors Plan, which will be
exercisable in 12 equal quarterly installments commencing on the date of grant
and thereafter on the last day of each of the 11 fiscal quarters commencing
with the first full fiscal quarter after the date of grant. The exercise price
per share is equal to the fair market value of the Company's Common Stock on
the date of grant. Additionally, each of Messrs. Badavas and Hulley elected
during 1998, in consideration for the one-year reduction in fees each is
16
<PAGE>
entitled to received from the Company for attendance at board and committee
meetings during 1998, to receive options to purchase 10,000 shares of Common
Stock under the 1992 Employee and Consultants Stock Option Plan at a price per
share equal to the fair market value of the Company's Common Stock on the date
of grant. These options are fully exercisable. No director or executive officer
of the Company and no member of its Compensation Committee is, or was during
the year ended December 31, 1998, a director or compensation committee member
of any other business entity that had a director that sits on the Company's
Board of Directors or Compensation Committee.
COMPARISON OF STOCKHOLDER RETURN
The line graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return of the Nasdaq Total
U.S. Index and the Nasdaq Computer and Data Processing Index, resulting from an
initial assumed investment of $100 in each, and assuming the reinvestment of
any dividends, for the period beginning on the date of the Company's initial
public offering on August 1, 1995 and ending on December 31, 1998. Stock price
performance shown in the Performance Graph for the Common Stock is historical
and not necessarily indicative of future price performance. The Common Stock
was sold at its initial offering at a price of $15.00 per share, and the
closing sales price of the Common Stock on the Nasdaq National Market on
December 31, 1998, was $1.375.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Date 8/1/95 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C>
ONTC 100.00 70.75 29.25 7.14 7.48
NASDAQ 100.00 106.16 130.26 158.44 221.24
NASDAQ Comp & DP 100.00 103.69 146.93 175.21 321.22
</TABLE>
17
<PAGE>
ADOPTION OF TWO AMENDMENTS TO THE 1995 DIRECTORS STOCK OPTION PLAN
(Proposal II)
Proposed Amendments to the Company's 1995 Directors Stock Option Plan
On March , 1999, the Board of Directors of the Company approved a series of
amendments to the 1995 Directors Stock Option Plan (the "Director Plan") to
provide for (i) an increase in the number of authorized shares in the Director
Plan from 100,000 shares to 200,000 shares and (ii) annual grants of options to
purchase 10,000 shares of the Company's Common Stock to each outside director
of the Company, whether or not such director has received options under any
other option plan of the Company, with such options to vest in equal quarterly
installments over the one year period. In light of market conditions, the Board
has determined that an amendment increasing the number of options an outside
director may receive pursuant to the Director Plan, which is directly tied to
that director's continued service on the Company's Board of Directors, is
necessary to attract and retain qualified individuals as directors. The number
of authorized shares represents the total number of options to purchase shares
available under the Director Plan regardless of the number of options
previously granted, whether exercised or not by such optionees. As of March 8,
1999, the Company had 70,000 shares remaining available for the grant of
additional options, a number that would be insufficient if the amendment
enabling annual grants of options to the Company's outside directors is
approved by the stockholders. These amendments to the Director Plan remain
subject to approval by the stockholders of the Company at this Annual Meeting.
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock present at the Annual
Meeting, in person or by proxy, is necessary to approve the amendments to the
Director Plan.
Description of the 1995 Director Stock Option Plan
The Director Plan was originally adopted by the Company's Board of Directors
(the "Board") and the stockholders of the Company on May 18, 1995, and provides
for the grant of options to the Company's directors who are not employees.
Prior to the adoption of the proposed amendments to the Director Plan, each
outside director of the Company received an automatic grant of options to
purchase 10,000 shares of Common Stock, vesting in equal quarterly installments
on the date of the director's election and on the last day of each of the 11
fiscal quarters thereafter. All options granted under the Director Plan are
non-statutory options not intended to meet the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended to date (the "Code"). The purpose
of the Director Plan is to encourage ownership in the Company by outside
directors of the Company, whose continued services are considered essential to
the Company's future progress, and to provide them with a further incentive to
remain as directors of the Company.
Administration of the Director Plan
The Director Plan is administered and supervised by the Board. The members of
the Board are elected by the stockholders of the Company, generally for three
year staggered terms, in accordance
18
<PAGE>
with the provisions of the Company's Fourth Restated Certificate of
Incorporation and the Amended and Restated By-laws. Grants of stock options
under the Director Plan and the amount and nature of the awards to be granted
are automatic and non-discretionary in accordance with the provisions of the
Director Plan. All questions of interpretation of the Director Plan or of any
options issued under it, however, are determined by the Board and such
determination is final and binding upon all persons having an interest in the
Director Plan. The Board has the authority to delegate its authority under the
Director Plan to a committee of the Board.
Shares Subject to the Director Plan
Prior to adoption of the proposed amendments the number of authorized shares
in the Director Plan is 100,000 shares of the Company's Common Stock. As of
March 8, 1999, 70,000 shares were available for issuance under the Director
Plan pursuant to options currently outstanding or options available for grant.
If an option granted under the Director Plan expires or is terminated without
having been exercised in full, the shares allocable to the unexercised portion
of such option shall again become available for grant pursuant to the Director
Plan.
The Director Plan contains provisions for the disposition of options in the
event of a merger or consolidation (in which the stockholders of the Company
receive distributions of cash or securities of another issue as a result
thereof), or in the event of the sale of all or substantially all of the assets
of the Company, or in the event of a reorganization or liquidation of the
Company. If the outstanding shares of Common Stock of the Company are changed
by reason of any merger, consolidation, sale of all or substantially all of the
assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other distribution with
respect to such shares of Common Stock, or other securities, an appropriate
adjustment will be made in maximum number and kind of shares reserved for
issuance under the Director Plan, the number and kind of shares or other
securities subject to then outstanding options and the price for each share
subject to any then outstanding options, without changing the aggregate
purchase price as to which such options remain exercisable. In the event of a
transaction resulting in a change of control of the Company, eligible Directors
shall have the immediate right to exercise all shares covered by the options
issued pursuant to the Directors Plan. Such exercise, if made, is irrevocable.
General Terms and Conditions of the Director Plan
Types of Options. All options granted under the Director Plan are non-
statutory options not intended to meet the requirements of Section 422 of the
Code.
Option Grant Dates. Options are granted automatically to all eligible
directors on the date that an eligible director is elected and qualified.
Shares Subject to Option. Each option granted under the Director Plan shall
be exercisable for 10,000 shares of Common Stock.
19
<PAGE>
Option Exercise Price. The option exercise price per share for each option
granted under the Director Plan equals (i) the last reported sales price per
share of the Company's Common Stock on the Nasdaq National Market System (or, if
the Company is traded on a nationally recognized securities exchange on the date
of the grant, the reported closing sales price per share of the Company's Common
Stock by such exchange) on the date of grant (or if no such price is reported on
such date, such price is as reported on the nearest preceding date on which such
price is reported) or (ii) if the Common Stock is not traded on the Nasdaq
National Market System or an exchange, the fair market value per share on the
date of grant as determined by the Board.
Nontransferability of Options. Each option granted under the Director Plan by
its terms is not be transferable by the option holder otherwise than by will or
by the laws of descent and distribution and must be exercised during the
lifetime of the option holder only by such option holder.
Duration; Exercise of Options. Each option expires ten years from the date on
which the option is granted. Prior to adoption of the proposed amendment,
options are exercisable on a cumulative basis in twelve equal quarterly
installments over a three-year period with the first quarterly installment
exercisable on the date of grant and the eleven quarterly installments
thereafter exercisable on the last day of each fiscal quarter of the Company,
commencing with the first fiscal quarter after the date of grant. With adoption
of the proposed amendments, options will be exercisable on a cumulative basis
in four equal quarterly installments over a one year period, with the first
installment exercisable on the date of grant and the next three installments
exercisable on the last day of each full fiscal quarter thereafter. No option
may be exercised more than 90 days after the option holder ceases to serve as a
director of the Company for reasons other than the option holder's death.
Exercise Period Upon Death. In the event of the option holder's death while a
director of the Company, options which the option holder might have exercised
but which have not yet been exercised may be exercised within one year after
the date the option holder ceases to be a director by reason of death by the
person or persons to whom the options holder's rights under the option shall
pass by his or her will or by the laws of descent and distribution; provided,
that no option may be exercised after the expiration of ten years from the date
of grant.
Exercise Procedure. Options may be exercised only by written notice to the
Company at its principal office accompanied by payment in cash of the full
consideration for the shares as to which they are exercised.
Eligibility. Directors of the Company who are not employees of the Company or
any subsidiary of the Company are eligible to participate in the Director Plan.
20
<PAGE>
General Restrictions
Participants in the Director Plan generally have no rights as stockholders in
shares of Common Stock until certificates for those shares have been issued. No
certificates for Common Stock will be issued under the Director Plan unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act, any applicable listing requirements of any
national securities exchange upon which stock of the same class is then listed,
and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with. Participants may be required to represent and agree in writing, for
themselves and for their transferees, that the stock acquired by him or them
under the Director Plan is being acquired for investment purposes.
Nothing contained in the Director Plan shall confer upon any participant any
rights with respect to his or her employment by the Company.
The Director Plan does not provide that any person has or may create a lien
on any funds, securities or other property held under the Director Plan.
Effective Date, Amendment, Termination
The Director Plan was adopted by the Board of Directors and approved by the
stockholders of the Company on May 18, 1995. Without approval of the
stockholders of the Company, no revision or amendment shall change the number
of shares subject to the Director Plan or change the designation of the class
of directors eligible to participate in the Director Plan.
The Director Plan shall terminate on August 1, 2005 and thereafter no further
options shall be granted. All options outstanding at the time the Director Plan
terminates shall continue in full force and effect in accordance with and
subject to their terms and the terms and conditions of the Director Plan.
Federal Income Tax Treatment of Participation in the Director Plan
The following is a summary of the federal income tax treatment of non-
qualified stock options. This summary is general and does not apply to gifts or
any dispositions other than sales. Also, under certain circumstances, an option
holder may be entitled to a credit for alternative minimum tax previously paid.
Additionally, in some individual cases, it will be important to consider the
state and foreign tax consequences of participation in the Plan and the effect,
if any, of gift, estate and inheritance taxes.
No taxable income is recognized by the option holder upon the grant of a non-
statutory option. The optionee must recognize as ordinary income in the year in
which the option is exercised the amount by which the fair market value of the
purchased shares on the date of exercised exceeds the
21
<PAGE>
option price. If such a person exercised the option within six months of the
date of grant, upon exercise of such option, no income will be recognized by the
option holder until six months have expired from the date the option was
granted, and the income then recognized will include any changes in the fair
market value of the shares during the period between the date of exercise and
the date six months after the date of the grant, unless the option holder makes
an election under Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "Code") to have the difference between the exercise price and fair market
value at the time of exercise recognized as ordinary income as of the time of
exercise.
The Company will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee. Any additional gain or
any loss recognized upon the subsequent disposition of the purchased shares
will be a capital gain or loss, and will be a long-term gain or loss if the
shares are held for more than one year.
Employee Retirement Income Security Act of 1974
The Director Plan is qualified under Section 401(a) of the Code and the
Company believes that the Director Plan is not subject to the Employee
Retirement Income Security Act of 1974.
Resale of Shares by Officers and Directors
Shares of Common Stock issued under the Director Plan may be resold freely as
the Company filed a Registration Statement on Form S-8 pursuant to the
Securities Act of 1933, as amended, on July 31, 1995 with the Securities and
Exchange Commission covering the shares issued pursuant to the Director Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTES
IN FAVOR OF PROPOSAL II
22
<PAGE>
RATIFICATION OF ARTHUR ANDERSEN LLP
AS THE COMPANY'S INDEPENDENT AUDITORS
(Proposal III)
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999, and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Arthur Andersen LLP
has acted as the Company's auditors since 1987. Representatives of Arthur
Andersen LLP will be present at the Annual Meeting, will have an opportunity to
make a statement if they desire to do so, and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of Arthur Andersen LLP is not
required by the Company's By-laws or otherwise. The Board of Directors,
however, is submitting the selection of Arthur Andersen LLP to the stockholders
as a matter of good corporate practice. If the stockholders fail to ratify the
selection, the Audit Committee and the Board of Directors will reconsider
whether or not to retain such firm. Even if the selection is ratified, the
Audit Committee and the Board, in their discretion, may direct the appointment
of a different independent accounting firm at any time during the year if they
determine that such a change would be in the best interest of the Company and
its stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL III
23
<PAGE>
STOCKHOLDER PROPOSALS FOR
THE NEXT ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders that are intended to be presented at the Company's
Annual Meeting of Stockholders in 2000 must be received at the Company's
executive offices in Cambridge, Massachusetts no later than December 31, 1999,
to be included in the proxy statement and proxy card related to such meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action
at the Annual Meeting, other than the matters set forth herein. Should any
other matter requiring a vote of shareholders arise, the proxies in the
enclosed form of proxy confer upon the person or persons entitled to vote the
shares represented by such proxies discretionary authority to vote the same in
accordance with the best judgment.
By Order of the Board of Directors
/s/ John M. Bogdan
John M. Bogdan
Secretary
March 30, 1999
A copy of the Company's Annual Report to the Securities and Exchange Commission
on Form 10-K for the fiscal year ended December 31, 1998 is available without
charge upon written request to: Investor Relations, ON Technology Corporation,
One Cambridge Center, Cambridge Massachusetts 02142
24
<PAGE>
ON TECHNOLOGY CORPORATION
1995 DIRECTORS STOCK OPTION PLAN
May 18, 1995
ON Technology Corporation, hereinafter called the "Company," hereby adopts
a stock option plan for eligible Directors of the Company pursuant to the
following terms and provisions:
1. Purpose of the Plan. The purpose of this plan, hereinafter called the
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"Plan," is to provide additional incentive to those Directors of the Company who
are not employees of the Company or any of its subsidiaries or affiliates and
who have not received options to purchase shares of the Company's common stock,
$.01 par value (the "Common Stock"), under any other option plan of the Company,
by encouraging them to acquire a new or an additional share ownership in the
Company, thus increasing their proprietary interest in the Company's business
and providing them with an increased personal interest in the Company's
continued success and progress. These objectives will be promoted through the
grant of options to acquire shares of Common Stock of the Company pursuant to
the terms of this Plan. Only those Directors who meet the qualifications stated
above are eligible for and shall receive options under this Plan. Any Director
who would otherwise be eligible to receive options under this Plan may decline
the grant of such options by giving written notice to the Company, in which
event no options will be granted to such declining Director.
2. Compliance with Rule 16b-3. It is the Company's intention that this
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Plan and the options granted hereunder comply with Rule 16b-3 (Reg.
(S)240.16b-3) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and that Plan participants remain disinterested persons for
purposes of administering other employee benefit plans of the Company and having
such other plans be exempt from Section 16(b) of the Exchange Act. Thus, if any
Plan provision is later found not to be in compliance with Rule 16b-3 or if any
Plan provision would disqualify Plan participants from remaining disinterested
persons, that provision shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the Requirements of Rule 16b-3.
3. Effective Date of the Plan. This Plan shall become effective upon
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adoption by the Board of Directors on May 18, 1995, subject to (i) approval by
holders of a majority of the outstanding shares of voting capital stock of the
Company and (ii) the effectiveness of the Registration Statement on Form S-1 to
be filed with the Securities and Exchange Commission in connection with the
initial public offering of the Company's Common Stock. In the event that the
conditions set forth in clauses (i) and (ii) of this paragraph 2 have not
occurred within twelve (12) months after the date this Plan is adopted by the
Board of Directors, this Plan and the options granted hereunder shall be null
and void.
4. Shares Subject to the Plan. The shares to be issued upon the
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exercise of the options granted under this Plan shall be shares of the Common
Stock of the Company. Either treasury or authorized and unissued shares of
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Common Stock, or both, as the Board of Directors shall from time to time
determine, may be so issued. No shares of Common Stock which are subject of any
lapsed, expired or terminated options may be made available for reoffering under
this Plan. If an option granted under this Plan is exercised pursuant to the
terms and conditions of subsection 6(b), any shares of Common Stock which are
the subject thereof shall not thereafter be available for reoffering under this
Plan.
Subject to the provisions of the next succeeding paragraph of this Section
3, the aggregate number of shares of Common Stock for which options may be
granted under this Plan shall be one hundred thousand (100,000) shares of Common
Stock, which number of shares reflects the 1-for-6 reverse stock split to be
effected by the Company on or about May 18, 1995, the same date that this Plan
shall become effective.
In the event that subsequent to the date of adoption of this Plan by the
Board of Directors the Common Stock should, as a result of a stock split, stock
dividend, combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization or other such change, be increased or decreased or changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation, then (i) there shall
automatically be substituted for each share subject to an unexercised option (in
whole or in part) granted under this Plan, each share available for additional
grants of options under this Plan and each share made available for grant to
each eligible Director pursuant to Section 4 hereof, the number and kind of
shares of stock or other securities into which each outstanding share of Common
Stock shall be changed or for which each such share shall be exchanged, (ii) the
option price per share or unit of securities shall be increased or decreased
proportionately so that the aggregate purchase price for the securities subject
to the option shall remain the same as immediately prior to such event, and
(iii) the Board shall make such other adjustments as may be appropriate and
equitable to prevent enlargement or dilution of option rights. Any such
adjustment may provide for the elimination of fractional shares.
5. Grant of Options. Subject to the terms of this Plan, options shall be
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granted to each eligible Director for the purchase of Ten Thousand (10,000)
shares of Common Stock by each such Director at an option price per share equal
to the fair market value of a share of Common Stock of the Company on the date
said options are granted. The date of grant of each such option shall be the
later of (i) the date that an eligible Director is elected and qualified as a
director of the Company or (ii) the effectiveness of the Registration Statement
on Form S-1 to be filed with the Securities and Exchange Commission in
connection with the initial public offering of the Company's Common Stock. Each
such option granted shall be exercisable for a period of ten (10) years from the
date of grant. Options granted under this Plan will be exercisable in twelve
(12) equal quarterly installments with the first quarterly installment
exercisable on the date of grant and the eleven (11) quarterly installments
thereafter exercisable on the last day of each fiscal quarter of the Company
commencing with the first full fiscal quarter after the date of grant. On or
after the third anniversary of the date of grant of an option under this Plan,
such option will be exercisable in full.
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Notwithstanding any provision set forth herein to the contrary, if the
Class I Director(s) of the Company elected in May 1995 are not reelected at the
next annual meeting of stockholders following December 31, 1995, options granted
pursuant to the Plan to such initial Class I Director(s) shall be exercisable
for one-third of the total number of shares of Common Stock subject to the
option; and further provided that if the Class II Director(s) of the Company
elected in May 1995 are not reelected at the next annual meeting of stockholders
following December 31, 1996, options granted pursuant to the Plan to such
initial Class II Director(s) shall be exercisable for two-thirds of the total
number of shares of Common Stock subject to the option.
6. Option Provisions.
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(a) Limitation on Exercise and Transfer of Options. Only the
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Director to whom the option is granted may exercise the same except where a
guardian or other legal representative has been duly appointed for such Director
and except as otherwise provided in the case of such Director's death. No option
granted hereunder shall be transferable otherwise than by the Last Will and
Testament of the Director to whom it is granted or, if the Director dies
intestate, by the applicable laws of descent and distribution or pursuant to a
qualified domestic relations order (as defined in the Internal Revenue Code of
1986, as amended) or Title I of the Employee Retirement Income Security Act, or
the rules thereunder. No option granted hereunder may be pledged or
hypothecated, nor shall any such option be subject to execution, attachment or
similar process.
(b) Exercise of Option. Each option granted hereunder may be
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exercised in whole or in part (to the maximum extent then exercisable) from time
to time during the option period, but this right of exercise shall be limited to
whole shares. Options shall be exercised by the optionee giving written notice
to the Secretary of the Company at its principal business office, by certified
mail, return receipt requested, of intention to exercise the same and the number
of shares with respect to which the Option is being exercised (the "Notice of
Exercise of Option") accompanied by full payment of the purchase price in cash
or, with the consent of the Board, in whole or in part in Common Stock having a
fair market value on the date the option is exercised equal to that portion of
the purchase price for which payment in cash is not made. Such Notice of
Exercise of Option shall be deemed delivered upon deposit into the mails.
(c) Termination of Directorship. Subject to the provisions of the
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second paragraph of Section 5 herein, if the optionee ceases to be a Director of
the Company, his or her option shall terminate three (3) months after the
effective date of termination of his or her directorship and neither he nor she
nor any other person shall have any right after such date to exercise all or any
part of such option. If the termination of the directorship is due to death,
then the option may be exercised within twelve (12) months after the optionee's
death by the optionee's estate or by the person designated in the optionee's
Last Will and Testament or to whom transferred by the applicable laws of descent
and distribution (the "Personal Representative"). Notwithstanding the foregoing,
in no event shall any option be exercisable after the expiration of the option
period and not to any greater extent than the optionee would have been entitled
to exercise the option at the time of death.
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(d) Acceleration of Exercise of Options in Certain Events.
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Notwithstanding anything in the foregoing to the contrary, in the event of a
"change in control" the eligible Director shall have the immediate right and
option (notwithstanding the provisions to paragraph 5 hereof) to exercise the
option with respect to all Common Stock covered by the option, which exercise,
if made, shall be irrevocable. The term "change in control" shall include, but
not be limited to: (i) the first purchase of shares pursuant to a tender offer
or exchange (other than a tender offer or exchange by the Company) for all or
part of the Company's common shares of any class or any securities convertible
into such common shares; (ii) the receipt by the Company of a Schedule 13D or
other advice indicating that a person is the "beneficial owner" (as that term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of twenty
percent (20%) or more of the Company's shares of capital stock calculated as
provided in paragraph (d) of said Rule 13d-3; (iii) the date of approval by
shareholders of the Company of an agreement providing for any consolidation or
merger of the Company in which the Company will not be the continuing or
surviving corporation or pursuant to which shares of capital stock, of any class
or any securities convertible into such capital stock, of the Company would be
converted into cash, securities, or other property, other than a merger of the
Company in which the holders of shares of all classes of the Company's capital
stock immediately prior to the merger would have the same proportion of
ownership of common stock of the surviving corporation immediately after the
merger; (iv) the date of the approval by shareholders of the Company of any
sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company; or
(v) the adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company.
(e) Holding Period. Shares of Common Stock obtained upon the
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exercise of any option granted under the Plan may not be sold by persons subject
to Section 16 of the Exchange Act until six months after the date the option was
granted.
(f) Option Agreements. As a condition to the grant of an option
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under this Plan, each recipient of an option shall execute an option agreement
in such form not inconsistent with the Plan as may be specified by the Board of
Directors.
7. Investment Representation; Approvals and Listing. The options to be
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granted hereunder shall be further conditioned upon receipt of the following
investment representation from the optionee:
"I further agree that any Common Stock of ON Technology Corporation
which I may acquire by virtue of this option shall be acquired for
investment purposes only and not with a view to distribution or resale;
provided, however, that this restriction shall become inoperative in
the event the said Common Stock subject to this option shall be
registered under the Securities Act of 1933, as amended, or in the
event there is presented to ON Technology Corporation an opinion of
counsel satisfactory to ON Technology Corporation to the effect that
the offer or sale of the Common Stock subject to this option may be
lawfully made without registration of the said Common Stock under the
Securities Act of 1933, as amended."
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The Company shall not be required to issue any certificate or certificates for
Common Stock upon the exercise of an option granted under this Plan prior to (i)
the obtaining of any approval from any governmental agency which the Company
shall, in its sole discretion, determine to be necessary or advisable, (ii) the
admission of such Common Stock to listing on any national securities exchange on
which the Common Stock may be listed, (iii) the completion of any registration
or other qualification of the Common Stock under any state or federal law or
ruling or regulations of any governmental body which the Company shall, in its
sole discretion, determine to be necessary or advisable or the determination of
the Company, in its sole discretion, that any registration or other
qualification of the Common Stock is not necessary or advisable and (iv) the
obtaining of an investment representation from the optionee in the form stated
above or in such other form as the Company, in its sole discretion, shall
determine to be adequate.
8. General Provisions. For all purposes of this Plan the fair market
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value of a Common Share shall be determined as follows: so long as the Common
Stock of the Company are listed upon an established stock exchange or exchanges
such fair market value shall be determined to be the highest closing price of
such Common Stock on such stock exchange or exchanges on the day the option is
granted (or the date the Common Stock are tendered as payment, in the case of
determining fair market value for that purpose) or if no sale of such Common
Stock shall have been made on any stock exchange on that day, then on the
closest preceding day on which there was a sale of such Common Stock; and during
any period of time as such Common Stock are not listed upon an established stock
exchange the fair market value per share shall be the mean between dealer "Bid"
and "Ask" prices of such Common Stock in the over-the-counter market on the day
the option is granted (or the day the Common Stock are tendered as payment, in
the case of determining fair market value for that purpose), as reported by the
National Association of Securities Dealers, Inc.
The liability of the Company under this Plan and any distribution of Common
Stock made hereunder is limited to the obligations set forth herein with respect
to such distribution and no term or provision of this Plan shall be construed to
impose any liability on the Company in favor of any person with respect to any
loss, cost or expense which the person may incur in connection with or arising
out of any transaction in connection with this Plan, including, but not limited
to, any liability to any Federal, state, or local tax authority and/or any
securities regulatory authority.
Nothing in this Plan or in any option agreement shall confer upon any
optionee any right to continue as a Director of the Company, or to be entitled
to any remuneration or benefits not set forth in this Plan or such option.
Nothing contained in this Plan or in any option agreement shall be
construed as entitling any optionee to any rights of a shareholder as a result
of the grant of an option until such time as Common Stock are actually issued to
such optionee pursuant to the exercise of an option.
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This Plan may be assumed by the successors and assigns of the Company.
This Plan shall not be amended more than once every six months, other than
to comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder.
The cash proceeds received by the Company from the issuance of Common Stock
pursuant to this Plan will be used for general corporate purposes or in such
other manner as the Board of Directors deems appropriate.
The expense of administering this Plan shall be borne by the Company.
The captions and section numbers appearing in this Plan are inserted only
as a matter of convenience. They do not define, limit, construe or describe the
scope or intent of the provisions of this Plan.
9. Termination of the Plan. This Plan shall terminate ten (10) years from
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the date of the effectiveness of the Registration Statement on Form S-1 to be
filed with the Securities and Exchange Commission in connection with the initial
public offering of the Company's Common Stock and thereafter no options shall be
granted hereunder. All options outstanding at the time of termination of this
Plan shall continue in full force and effect in accordance with and subject to
their terms and the terms and conditions of this Plan.
10. Taxes. Appropriate provisions shall be made for all taxes required
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to be withheld and/or paid in connection with the Options or the exercise
thereof, and the transfer of shares of Common Stock pursuant thereto, under the
applicable laws or other regulations of any governmental authority, whether
federal, state, or local and whether domestic or foreign.
11. Changes in Governing Rules and Regulations. All references herein
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to the Internal Revenue Code of 1986, as amended, or sections thereof, or to
rules and regulations of the Department of Treasury or of the Securities and
Exchange Commission, shall mean and include the Code sections thereof and such
rules and regulations as are now in effect or as they may be subsequently
amended, modified, substituted or superseded.
Adopted by the Board of Directors on
May 18, 1995
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AMENDMENTS TO THE DIRECTOR STOCK OPTION PLAN
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To be adopted at the Annual Meeting on April 30, 1999
1. The reference to "one hundred thousand (100,000)" in paragraph 2 of Section
4 (which is captioned "Shares Subject to this Plan") be and hereby is deleted
and "two hundred thousand (200,000)" is substituted in lieu thereof.
2. The second sentence of the first paragraph of Section 5 (which is captioned
"Grant of Options") is deleted in its entirety and the following be and hereby
is inserted in lieu thereof:
"The date of grant of each such option shall be the date on which an
eligible Director is elected (or re-elected) and qualified as a director of
the Company and, provided the individual continues to serve as a Director
of the Company on the annual anniversary of his or her election (or re-
election), each annual anniversary thereafter during such eligible
Director's three-year term."
3. The fourth sentence of the first paragraph of Section 5 (which is captioned
"Grant of Options") is deleted in its entirety and the following be and hereby
is inserted in lieu thereof:
"Options granted under this Plan will be exercisable in four (4) quarterly
installments with the first quarterly installment exercisable on the date
of grant and the three (3) quarterly installments thereafter exercisable on
the last day of each fiscal quarter of the Company commencing with the
first full fiscal quarter after the date of grant. Such option shall be
exercisable in full on and after the first anniversary thereof."
4. The phrase in the first sentence of Section 1 that reads "and who have not
received options to purchase shares of the Company's common stock, $.01 par
value per share (the "Common Stock")," is hereby deleted in its entirety.
5 The phrase "Common Stock" in the second sentence of Section is deleted and
"the common stock of the Company, $.01 par value (the "Common Stock")," is
inserted in lieu thereof.
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[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
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ON TECHNOLOGY CORPORATION
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Mark box at right if an address change or comment has been noted on [_]
the reverse side of this card.
CONTROL NUMBER:
RECORD DATE SHARES:
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Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- -----Stockholder sign here --------------------------- Co-owner sign here ------
For All With- For All
1. Election of Directors. Nominees hold Except
William C. Hulley [_] [_] [_]
Herman DeLatte
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the nominee's name. Your shares
will be voted "For" the remaining nominee.
For Against Abstain
2. To approve amendments to the 1995 [_] [_] [_]
Directors Stock Option Plan.
For Against Abstain
3. To ratify the appointment of Arthur [_] [_] [_]
Andersen LLP as independent auditors.
For Against Abstain
4. In their discretion, the proxies are [_] [_] [_]
authorized to vote upon any other
business that may properly come before
the meeting or any adjournments thereof.
DETACH CARD DETACH CARD
ON TECHNOLOGY CORPORATION
Dear Stockholder,
Please take note of the important information enclosed
with this Proxy Ballot. There are a number of issues
related to the management and operation of your
Corporation that require your immediate attention and
approval. This is discussed in detail in the enclosed
proxy materials.
Your vote counts, and you are strongly encouraged to
exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how
your shares will be voted. Then sign the card, detach it
and return your proxy vote in the enclosed postage paid
envelope.
Your vote must be received prior to the Annual
Meeting of Stockholders, April 30, 1999.
Thank you in advance for your prompt consideration
of these matters.
Sincerely,
ON Technology Corporation
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ON TECHNOLOGY CORPORATION
One Cambridge Center, Cambridge, MA 02142
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 30, 1999
The undersigned hereby appoints as Proxies Herman DeLatte and John M. Bogdan,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated on the reverse side, all shares of capital
stock of ON Technology Corporation (the "Company") held of record by the
undersigned on March 8, 1999 at the Annual Meeting of Stockholders to be held on
April 30, 1999 and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN WITH RESPECT TO A
PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
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| Please sign exactly as your name(s) appear(s) on the books of the Company. |
| Joint owners should each sign personally. Trustees and other fiduciaries |
| should indicate the capacity in which they sign, and where more than one |
| name appears, a majority must sign. If the shareholder is a corporation, |
| the signature should be that of an authorized officer who should indicate |
| his or her title. |
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
___________________________________ _____________________________________
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