<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SEEC, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(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> 2
LOGO
June 30, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of SEEC, Inc. to be held on Friday, August 8, 1997, at 1:00 p.m., at The
Pittsburgh Airport Marriott, 100 Aten Road, in Coraopolis, Pennsylvania.
The Annual Meeting will begin with a report on Company operations, followed
by discussion and voting on the matters described in the accompanying Notice of
Annual Meeting and Proxy Statement.
Please read the accompanying Notice of Annual Meeting and Proxy Statement
carefully. Whether or not you plan to attend, you can ensure that your shares
are represented and voted at the Annual Meeting by promptly completing, signing,
dating and returning the enclosed proxy card in the envelope provided.
We look forward to seeing you on August 8, 1997.
Sincerely,
/s/ Ravindra Koka
Ravindra Koka
President and
Chief Executive Officer
SEEC, Inc. o 5001 Baum Blvd. o Pittsburgh, PA 15213 o 412-682-4991
o Fax 412-682-4958 o WEB: www.seec.com
<PAGE> 3
SEEC, INC.
5001 BAUM BOULEVARD
PITTSBURGH, PENNSYLVANIA 15213
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, AUGUST 8, 1997
------------------------
The Annual Meeting of Shareholders (the "Annual Meeting") of SEEC, Inc., a
Pennsylvania corporation (the "Company"), will be held on Friday, August 8,
1997, at 1:00 p.m., local time, at The Pittsburgh Airport Marriott, 100 Aten
Road, Coraopolis, Pennsylvania, for the following purposes:
1. To elect two Class I directors to serve for a term of three years
and until their respective successors are duly elected and qualified;
2. To approve the SEEC, Inc. 1997 Stock Option Plan.
3. To transact such other business as may properly come before the
Annual Meeting and any and all adjournments and postponement thereof.
The Board of Directors has fixed the close of business on June 27, 1997 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournment or postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Annual Meeting.
A complete list of the shareholders entitled to vote at the Annual Meeting
will be available at the Annual Meeting for examination by any shareholder, for
any purpose germane to the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOU ARE CORDIALLY
INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THE RETURN OF THE ENCLOSED PROXY
CARD WILL NOT AFFECT YOUR RIGHT TO REVOKE YOUR PROXY OR TO VOTE IN PERSON IF YOU
DO ATTEND THE ANNUAL MEETING.
By Order of the Board of
Directors,
JOHN D. GODFREY
Vice President and Secretary
Pittsburgh, Pennsylvania
June 30, 1997
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE IT,
SIGN IT AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE> 4
SEEC, INC.
5001 BAUM BOULEVARD
PITTSBURGH, PENNSYLVANIA 15213
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of SEEC, Inc., a Pennsylvania
corporation (the "Company" or "SEEC"), for use at the Company's 1997 Annual
Meeting of Shareholders, together with any and all adjournments and
postponements thereof (the "Annual Meeting"), to be held on Friday, August 8,
1997, at 1:00 p.m., local time, at The Pittsburgh Airport Marriott, 100 Aten
Road, Coraopolis, Pennsylvania 15108, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders (the "Notice"). This Proxy
Statement, together with the accompanying Notice and the enclosed proxy card,
are first being sent to shareholders on or about June 30, 1997.
RECORD DATE; VOTING SECURITIES; VOTING AND PROXIES
The Board has fixed the close of business on June 27, 1997 as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting. On the Record Date, there were
5,003,096 shares of Common Stock of the Company, par value $.01 per share
("Common Stock"), outstanding and entitled to vote. Each share of Common Stock
is entitled to one vote per share on each matter properly brought before the
Annual Meeting. Abstentions may be specified as to all proposals to be brought
before the Annual Meeting other than the election of directors.
Shares can be voted at the Annual Meeting only if the shareholder is
present in person or is represented by proxy. If the enclosed proxy card is
properly executed and returned prior to voting at the Annual Meeting, the shares
represented thereby will be voted in accordance with the instructions marked
thereon. In the absence of instructions, shares represented by executed proxies
will be voted as recommended by the Board. Brokers, banks, and other nominee
holders will be requested to obtain voting instructions of beneficial owners of
shares registered in their names, and shares represented by a duly completed
proxy submitted by such a nominee holder on behalf of a beneficial owner will be
voted to the extent instructed by the nominee holder on the proxy card. Rules
applicable to nominee holders may preclude them from voting shares held by them
in nominee capacity on certain kinds of proposals unless they receive voting
instructions from the beneficial owners of the shares (the failure to vote in
such circumstances is referred to as a "broker non-vote").
The Board knows of no matters which are to be brought before the Annual
Meeting other than those set forth in the accompanying Notice. If any other
matters properly come before the Annual Meeting, the persons named in the
enclosed proxy card, or their duly appointed substitutes acting at the Annual
Meeting, will be authorized to vote or otherwise act thereon in accordance with
their judgment on such matters.
Any shareholder may revoke his or her proxy at any time prior to its
exercise by attending the Annual Meeting and voting in person, by notifying the
Secretary of the Company of such revocation in writing or by delivering a duly
executed proxy bearing a later date, provided that such notice or proxy is
actually received by the Company prior to the taking of any vote at the Annual
Meeting.
The cost of solicitation of proxies for use at the Annual Meeting will be
borne by the Company. Solicitations will be made primarily by mail or by
facsimile, but regular employees of the Company may solicit proxies personally
or by telephone.
<PAGE> 5
QUORUM; VOTES REQUIRED
The presence at the Annual Meeting, in person or by proxy, of shares of
Common Stock representing at least a majority of the total number of shares of
Common Stock entitled to vote on the Record Date will constitute a quorum for
purposes of the Annual Meeting. Shares represented by duly completed proxies
submitted by nominee holders on behalf of beneficial owners will be counted as
present for purposes of determining the existence of a quorum (even if some such
proxies reflect broker non-votes). In addition, abstentions will be counted as
present for purposes of determining the existence of a quorum.
Under applicable Pennsylvania law, directors are to be elected by a
plurality of the votes of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting. Accordingly, and in accordance with
the Company's Amended and Restated By-Laws, the two nominees for election as
directors who receive the highest number of votes actually cast will be elected.
Broker non-votes will be treated as shares that neither are capable of being
voted nor have been voted and, accordingly, will have no effect on the outcome
of the election of directors.
The proposal to ratify the Company's 1997 Stock Option Plan requires the
affirmative vote of a majority of the shares present and entitled to vote at the
Annual Meeting. Abstentions will be counted as shares present at the Annual
Meeting and will thus increase the minimum number of affirmative votes necessary
to approve this proposal. Because they will not be recorded as votes in favor of
such proposals, however, abstentions will have the effect of votes against such
proposals. Broker non-votes with respect to these proposals will be treated as
shares not capable of being voted on these proposals; accordingly, broker
non-votes will have no effect either on the minimum number of affirmative votes
necessary to approve such proposal or on the outcome of voting on such proposal.
ELECTION OF DIRECTORS
The Amended and Restated By-Laws of the Company provide that the number of
directors (which is to be not less than three) is to be determined from time to
time by resolution of the Board. The Board is currently comprised of six
persons.
The members of the Board are divided into three classes, designated Class
I, Class II, and Class III. Each class is to consist, as nearly as may be
possible, of one-third of the total number of members of the Board. The term of
the Class I directors expires at the Annual Meeting. The terms of the Class II
and Class III directors will expire at the 1998 and 1999 Annual Meetings of
Shareholders, respectively. At each Annual Meeting, the directors elected to
succeed those whose terms expire are of the same class as the directors they
succeed and are elected for a term to expire at the third Annual Meeting of
Shareholders after their election and until their successors are duly elected
and qualified. A director of any class who is elected to fill a vacancy
resulting from an increase in the number of directors holds office for the
remaining term of the class to which he is elected and a director who is elected
to fill a vacancy arising in any other manner holds office for the remaining
term of his predecessor.
The two incumbent Class I directors are nominees for election this year for
a three-year term expiring at the 2000 Annual Meeting of Shareholders. In the
election, the two persons who receive the highest number of votes actually cast
are elected. The proxies named in the proxy card intend to vote for the election
of the two Class I nominees listed below unless otherwise instructed. If a
holder does not wish his or her shares to be voted for a particular nominee, the
holder must identify the exception in the appropriate space provided on the
proxy card, in which event the shares will be voted for the other listed
nominees. If any nominee becomes unable to serve, the proxies may vote for
another person designated by the Board or the Board may reduce the number of
directors. The Company has no reason to believe that any nominee will be unable
to serve.
2
<PAGE> 6
Set forth below is certain information with regard to the two nominees for
election as Class I directors and each continuing Class II and Class III
director.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
Abraham Ostrovsky............. Mr. Ostrovsky has been a director of SEEC since January
Age 53 1997. Mr. Ostrovsky has been Chairman and Chief Executive
Officer of Compressent, Inc. since February 1996. Mr.
Ostrovsky is also Chairman of JetForm Corporation, a
provider of forms-based workflow automation software, a
position he has held since 1993. He joined JetForm in 1991
as Chief Operating Officer and was Chief Executive Officer
from 1991 to 1995. Prior to joining JetForm, Mr. Ostrovsky
was concurrently the Senior Vice President of Erskine House
PLC, an office equipment dealership, and the Chairman of
Savin Florida, a subsidiary of Erskine House, from 1988 to
1990.
Stanley A. Young.............. Mr. Young has been a director of SEEC since it was founded
Age 70 in 1988. Mr. Young has been active as a consultant and
venture capital investor for the past twenty-five years and
is Chairman, President and Chief Executive Officer of Young
Management Group, Inc., a management and financial
consulting firm. Mr. Young is a director of JetForm
Corporation, Andyne Computer, Inc. and Compressent, Inc. Mr.
Young was formerly a director and seed investor in
Parametric Technology Corporation.
</TABLE>
DIRECTORS CONTINUING AS CLASS II DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
Radha R. Basu................. Ms Basu was elected a director of SEEC in August 1996. Ms
Age 46 Basu is the General Manager of Hewlett Packard Company's
Enterprise Solutions Organization, a position she has held
since November 1996. Ms Basu has held various positions
since joining Hewlett Packard in 1978, including General
Manager of International Software Operations from 1990 to
1996, and Operations Manager for the India Software
Operation, where she was responsible for starting up Hewlett
Packard Company's operations in India.
John D. Godfrey............... Mr. Godfrey has been Vice President--Professional Services,
Age 47 and Secretary of SEEC since 1989, and was elected a director
of SEEC in March 1996. Prior to joining SEEC, Mr. Godfrey
served in various management positions at Cimflex
Teknowledge Corp., was director of engineering for American
AutoMatrix, Inc. and PERQ Systems Corp. and served as a
manager of graphic information systems for Mellon Bank, N.A.
</TABLE>
3
<PAGE> 7
DIRECTORS CONTINUING AS CLASS III DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIP
- ------------------------------ ------------------------------------------------------------
<S> <C>
Ravindra Koka................. Mr. Koka is a co-founder of SEEC and has been President and
Age 46 Chief Executive Officer and a director of SEEC since its
inception in 1988. Mr. Koka is a founding shareholder and
director of ERA Software Systems Private Limited ("ERA"), a
software consulting firm based in India and a shareholder of
SEEC, and a founding shareholder and director of ACS
Technologies Limited, an Indian company engaged in providing
computer hardware maintenance and service. Prior to founding
SEEC, Mr. Koka was a program analyst with System Development
Corp., a senior systems analyst and mainframe application
developer for Roan Consolidated Mines, and a visiting
scientist and Adjunct Associate Professor at Carnegie Mellon
University's Department of Computer Science.
Raj Reddy, Ph.D............... Dr. Reddy is a co-founder of the Company and has served as a
Age 59 director since the Company's inception in 1988. He serves as
a consultant in a scientific or engineering capacity from
time to time on projects for the Company, and has served as
Chairman of the Board since February 1988. Dr. Reddy is Dean
of the School of Computer Science and the Herbert A. Simon
University Professor of Computer Science and Robotics at
Carnegie Mellon University. He joined Carnegie Mellon's
Department of Computer Science in September 1969 and served
as Director of the Robotics Institute from September 1979 to
September 1992. Dr. Reddy is Chairman of the Board of
Directors of Carnegie Group, Inc., a member of the Board of
Directors of Telxon Corporation and a member of the
Technical Advisory Board of Microsoft Corporation.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
The Board met seven times during the year ended March 31, 1997. The Board
has an Audit Committee and a Compensation Committee, both of which were formed
in anticipation of the Company's initial public offering. The Board does not
have a standing Nominating Committee.
The Audit Committee is also responsible, to the extent provided in the
authorizing Board resolutions, for making an annual recommendation, based on a
review of qualifications, to the Board for the appointment of independent public
accountants to audit the financial statements of SEEC and to perform such other
duties as the Board may from time to time prescribe. The Audit Committee will
also be responsible for reviewing and making recommendations to the Board with
respect to (i) the scope of audits conducted by SEEC's independent public
accountants and (ii) the accounting methods and the system of internal control
used by SEEC. In addition, the Audit Committee will review reports from SEEC's
independent public accountants concerning compliance by management with
governmental laws and regulations and with SEEC's policies relating to ethics,
conflicts of interest and disbursements of funds. The members of the Audit
Committee are Mr. Ostrovsky and Mr. Young. The Audit Committee did not meet
prior to March 31, 1997.
The Compensation Committee is responsible for administering the Company's
Stock Option Plans, to the extent provided in the authorizing Board resolutions
for such plans, and for reviewing and making recommendations to the Board with
respect to the salaries, bonuses and other compensation of executive officers,
including the terms and conditions of their employment, and other compensation
matters. The members of the Compensation Committee are Dr. Reddy and Ms Basu.
The Compensation Committee did not meet during fiscal 1997.
No director attended fewer than 75% of the total number of meetings of the
Board during the fiscal year ended March 31, 1997.
4
<PAGE> 8
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Ravindra Koka.................. President, Chief Executive Officer, Treasurer and
46 Director
John D. Godfrey................ Vice President--Professional Services, Secretary and
48 Director
Richard J. Goldbach............ 41 Chief Financial Officer
Allen D. Gart.................. 56 Vice President--Americas Sales
</TABLE>
Additional information regarding Messrs. Koka and Godfrey is set forth
above under "Election of Directors."
Richard J. Goldbach joined SEEC in October 1996 as Chief Financial Officer.
Mr. Goldbach had previously served as Finance Director for ADVO, Inc., a direct
mail marketing company, from May 1991 to September 1996, and as Chief Financial
Officer and Treasurer of Scribe Systems, Inc., a computer software publishing
company, from January 1986 to December 1990. Prior to that time, Mr. Goldbach
was a senior manager in the audit department of Arthur Andersen LLP. He is a
certified public accountant.
Allen D. Gart joined SEEC in January 1997 as Vice President--Americas
Sales. Prior to joining SEEC, Mr. Gart served in a number of senior sales
management positions with computer software and hardware companies. Most
recently, Mr. Gart served as Vice President for Essence Systems, Inc., from
January 1996 through December 1996. Prior to that, Mr. Gart was Director of
National Accounts for Legent Corporation from January 1993 to December 1995. Mr.
Gart served as Vice President--North American Sales for Resumix (Ceridian
Corporation) from April 1991 to December 1993 and Senior Vice President for
Computer Associates (Cullinet) from November 1982 through March 1991. Mr. Gart
has also served in various sales management positions with IBM and AMDAHL
Corporation.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information regarding compensation paid to
Ravindra Koka, the Company's President and Chief Executive Officer, for the
years ended March 31, 1997, 1996, and 1995. No other Executive Officers received
total compensation in excess of $100,000 for the fiscal years ended March 31,
1997, 1996 or 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY
-------------------------------------------------------- ----------- ------------
<S> <C> <C>
Ravindra Koka........................................... 1997 $100,409
President and Chief Executive Officer 1996 86,980
1995 86,800
</TABLE>
STOCK OPTIONS
The Company currently maintains the SEEC, Inc. 1994 Stock Option Plan (the
"1994 Plan") under which stock option awards may be made to eligible employees
of the Company. The number of shares authorized to be issued under the 1994 Plan
may be adjusted to prevent dilution or enlargement of rights in the event of any
stock dividend, reorganization, reclassification, recapitalization, stock split,
combination, merger, consolidation or other relevant capitalization change. As
of March 31, 1997, there were 157,770 options granted and outstanding under the
1994 Plan. No stock options were granted to Mr. Koka during the fiscal year
ended March 31, 1997.
5
<PAGE> 9
The following table sets forth certain information with respect to the
value of options held by Ravindra Koka, the President and Chief Executive
Officer, on March 31, 1997. Mr. Koka did not exercise any options to purchase
common stock during the fiscal year ended March 31, 1997.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
HELD AT FISCAL YEAR-END FISCAL YEAR-END (1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ravindra Koka...................... 5,431 -- $41,493 $--
</TABLE>
- ---------
(1) Represents the difference between the closing price per share of Common
Stock as reported on the Nasdaq Market on March 31, 1997 ($8.13) and the
exercise price of the options, multiplied by the number of shares of Common
Stock issuable upon exercise of the options.
EMPLOYMENT AGREEMENTS
Effective October 1, 1996, SEEC entered into a two-year employment
agreement with Ravindra Koka pursuant to which he agreed to serve as SEEC's
President and Chief Executive Officer at a base annual salary of $98,000, which
increased to $107,800 upon the closing of SEEC's initial public offering in
January 1997. The agreement renews automatically at the end of the initial two
year term and each renewal term for a one year period unless either party gives
30 days notice of intent not to renew. The agreement is terminable by SEEC
immediately for cause. The agreement prohibits Mr. Koka from directly or
indirectly selling products that compete with SEEC's products for two years
following termination under specified circumstances of his employment with SEEC,
and from improperly disclosing or using SEEC's proprietary information. Mr.
Koka's employment agreement also includes the provisions relating to severance
described below. SEEC has also entered into employment agreements with Messrs.
Godfrey, Goldbach, and Gart.
The employment agreements with each of Messrs. Koka, Godfrey, and Goldbach
provide that if, on or after the date of a "Change in Control" (as defined in
the employment agreements), SEEC, for any reason, terminates the employee's
employment or the employee resigns "for good reason" (as defined in the
employment agreements), then SEEC shall pay to the employee within five days
following the date of termination or date of resignation: (i) the employee's
salary and benefits through the termination date or resignation date, both as in
effect on the date prior to the date of the Change in Control, and (ii) the
amount of any bonus payable to the employee for the year in which the Change in
Control occurred, pro-rated to take into account the number of days that have
elapsed in such year prior to the termination date or resignation date. In
addition, during a specified period following the termination or resignation
date, SEEC shall continue to pay to the employee his annual salary, as in effect
on the day prior to the date of the Change in Control on the dates when such
salary would have been payable had the employee remained employed by SEEC and
shall continue to provide to the employee during such specified period, at no
cost to the employee, the benefits the employee was receiving on the day prior
to the date of the Change in Control, or benefits substantially similar thereto.
The specified period is twelve months for Mr. Koka and nine months for Messrs.
Godfrey and Goldbach.
The employment agreement with Mr. Gart is essentially the same as those
described above, except that for a twelve-month period following the termination
or resignation date, or until the starting date of Mr. Gart's employment or
consulting arrangement with a new company, SEEC shall continue to pay Mr. Gart
at an annualized rate of 50% of total target compensation, or at an annualized
rate of 75% of total target compensation in the event of a Change in Control.
Total target compensation consists of base salary, commissions and bonus.
COMPENSATION OF DIRECTORS
SEEC pays its non-employee directors $2,000 per Board meeting attended in
person and $1,000 per Board meeting attended by telephone. Directors who are
employees do not receive any compensation for
6
<PAGE> 10
services performed in their capacity as directors. SEEC reimburses each director
for reasonable out-of-pocket expenses incurred in attending meetings of the
Board of Directors and any of its committees.
In connection with their agreeing to serve on the Board of Directors, on
September 30, 1996, SEEC granted to each of Radha R. Basu and Abraham Ostrovsky
ten-year options to purchase 4,526 shares of Common Stock at $3.62 per share.
The options vest 50% each on August 31, 1997 and August 31, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board consists of Dr. Reddy and Ms Basu.
The Compensation Committee is empowered to recommend to the Board compensation
decisions for the Company's executive officers.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee determines compensation for the Company's
executive officers. As of March 31, 1997 the executive officer group included
Ravindra Koka, President and Chief Executive Officer; John D. Godfrey, Vice
President--Professional Services and Secretary; Richard J. Goldbach, Chief
Financial Officer; and Allen D. Gart, Vice President--Americas Sales.
GENERAL COMPENSATION PHILOSOPHY
The Company's compensation philosophy is that a significant portion of an
executive's income should be based upon financial performance of the Company. In
addition, compensation should reflect not only short-term performance but should
also provide long-term incentives designed to tie the executive's economic
return to the return of the Company's shareholders. Finally, the Committee
believes that as a technology-based company, the Company must encourage and
reward development of new technologies that contribute to the Company's growth.
1997 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVE OFFICERS
The salaries of the executive officers for fiscal 1997, including the
President and Chief Executive Officer, were determined by Mr. Koka after
informal discussions with Mr. Reddy and Ms. Basu. Mr. Koka's determinations were
based upon various subjective factors such as the responsibilities, positions
and qualifications of the executives, the Company's current financial position
and operating results, and salaries paid to executives in comparable companies.
In making such determinations, Mr. Koka did not undertake a formal survey or
analysis of compensation paid to executives in other companies.
Subsequent to March 31, 1997, the Compensation Committee met formally to
consider compensation plans for the executive officers for the fiscal year
ending March 31, 1998. Such plans will incorporate the general compensation
philosophy described above.
INTERNAL REVENUE CODE SECTION 162(M)
The Committee reviewed the potential consequences of Section 162(m) of the
Internal Revenue Code with respect to executive compensation. Section 162(m)
imposes a limit on tax deductions for annual compensation in excess of
$1,000,000 paid to any of the five most highly compensated executive officers.
The Company does not anticipate that Section 162(m) will have an adverse effect
on the Company in the short-term. In this regard, base salary and bonus levels
are expected to remain well below the $1,000,000 limitation in the foreseeable
future. In addition, the SEEC, Inc. 1997 Stock Option Plan has been designed to
qualify potential benefits under that plan as "performance based" compensation
which may be excluded from the compensation used to determine the $1,000,000
limitation. Over the longer term, the Committee will continue to examine the
effects of this tax provision and will monitor the level of compensation paid to
the executive officers in order to ameliorate, to the extent possible, the
potential adverse effects of Section 162(m).
DR. RAJ REDDY RADHA R. BASU
7
<PAGE> 11
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE JANUARY 22, 1997
The following graph shows the cumulative total shareholder return on the
Common Stock from January 22, 1997 (the first day of trading of the Company's
Common Stock upon its initial public offering) through March 31, 1997, as
compared to the returns of the Nasdaq National Market Composite Index and the
Nasdaq Computer and Data Processing Services Stock Index. The graph assumes that
$100 was invested in the Common Stock on January 22, 1997, and in the Nasdaq
National Market Composite Index and the Nasdaq Computer and Data Processing
Services Stock Index and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
Nasdaq Computer
and Data
Nasdaq National Processing
Measurement Period Market Composite Services Stock
(Fiscal Year Covered) SEEC, Inc.. Index Index
<S> <C> <C> <C>
Jan. 22, 1997 100.00 100.00 100.00
Mar. 31, 1997 112.07 87.96 84.25
</TABLE>
CERTAIN TRANSACTIONS
The following is a summary of certain transactions to which SEEC was or is
a party and in which certain executive officers, directors or shareholders of
SEEC had or have a direct or indirect material interest, all of which were made
on terms no less favorable to the Company than those available from unaffiliated
parties.
ERA RELATIONSHIP
SEEC has certain relationships and has engaged in certain transactions with
ERA, an Indian software development company. SEEC owns approximately 9%,
Ravindra Koka, the President and C.E.O., a director and a principal shareholder
of SEEC, approximately 14% and Shankar Krish, an employee of SEEC, approximately
8% of the outstanding capital stock of ERA. Mr. Koka and Mr. Krish are also
directors of ERA. In addition, ERA owns 226,305 shares of Common Stock of SEEC.
Since SEEC's inception in 1988, ERA has provided certain research and
development services to SEEC. SEEC's initial development of its COBOL
maintenance products was funded in part by a grant from the Industrial Credit
and Investment Corporation of India, Ltd. ("ICICI") pursuant to a Cooperation
and Project Financing Agreement among ICICI, SEEC and ERA. The Cooperation and
Project Financing Agreement provided that SEEC and ERA would each have an
ownership interest in all products developed with funds provided thereunder.
In March 1996, SEEC and ERA entered into the Product Purchase Agreement,
pursuant to which ERA transferred to SEEC its 35% ownership interest in
jointly-owned products and technologies, including
8
<PAGE> 12
COBOL Analyst, COBOL Slicer, Object Designer, Date Analyzer and related
derivative and add-on products, all products developed pursuant to the
Cooperation and Project Financing Agreement. In consideration of ERA's transfer
of its ownership interest in the products and technology, SEEC issued 226,305
shares of Common Stock to ERA. The transaction was assigned a nominal value of
$2,263 (the par value of the shares issued). The assigned value reflects the
predecessor basis of ERA in the products, consistent with the Company's
accounting policy of expensing all research and development costs.
ERA also agreed to assist SEEC in developing new products and technologies.
Pursuant to the Product Purchase Agreement, ERA has the non-exclusive right to
perform design and development work with respect to SEEC's products pursuant to
specified development schedules. In addition, ERA has agreed to maintain in
India the necessary infrastructure and personnel to support such design and
development work. ERA has also agreed to transfer to SEEC the necessary manpower
for product support and to maintain a team of personnel in India for maintenance
of SEEC's products.
In consideration of ERA's developmental obligations under the Product
Purchase Agreement, SEEC agreed to pay ERA certain research and development
fees. Through December 31, 1996, SEEC was obligated to pay ERA a research and
development fee equal to 10% of its gross receipts from the products so
developed by ERA prior to the date of the Product Purchase Agreement, but not
less than $12,000 per quarter, and thereafter on mutually agreed terms. SEEC
also agreed to pay to ICICI on behalf of ERA 5% of its gross receipts from
products and services derived from COBOL redevelopment, and from all database
reengineering and reverse engineering products and services. As of March 31,
1997, the balance of the maximum royalty payable to ICICI on behalf of ERA was
$90,000. In addition, during the first three years of the Product Purchase
Agreement, SEEC had agreed to pay ERA a maintenance fee at a flat rate of $5,000
per month, and, in the next three years, $6,000 per month as long as the Product
Purchase Agreement remained in effect. Effective January 1, 1997, the Company
and ERA agreed to amend the Product Purchase Agreement to eliminate the research
and development fee (royalty) and the monthly maintenance fee described above.
Concurrently, the Company and ERA agreed to a schedule of research and
development projects to be performed by ERA at specified rates for the benefit
of the Company. The total estimated cost of the projects pursuant to the initial
schedule is $92,000. Other projects may be added as identified and agreed to by
the Company and ERA. Also effective January 1, 1997, SEEC and ERA each has the
right to terminate the Product Purchase Agreement upon certain events of
default, upon the change of control of the other party or upon 12 months notice.
SEEC incurred a total of $87,000, $79,000 and $166,000 in royalties and fees due
to ERA during fiscal 1995, 1996 and 1997.
Pursuant to the Product Purchase Agreement, upon a change of control of
ERA, SEEC has the right to repurchase some or all of the shares of Common Stock
owned by ERA. SEEC also has the right to purchase ERA's research and development
facilities upon the occurrence of certain events including a change of control
of ERA, a termination of the Product Purchase Agreement by ERA upon 12 months
notice, certain defaults by ERA, or an initial public offering by ERA. In the
event SEEC does not purchase ERA's facilities, ERA has agreed to maintain those
facilities at a minimum of the same size and quality as prior to the change of
control. In the event of a change of control of SEEC, ERA has the right to
request a renegotiation of any or all of the research and development provisions
of the Product Purchase Agreement.
Pursuant to a Marketing Agreement dated March 1, 1996, SEEC granted ERA the
non-exclusive right to distribute SEEC's products in India only. Under such
agreement, ERA pays SEEC a royalty of 50% (40% during the first six months of
the agreement) of SEEC's suggested international list price for all products
distributed by ERA. During fiscal 1996 and 1997, ERA paid $11,500 and $206,000,
respectively, in royalties to SEEC. The agreement is for a term of three years.
SEEC may terminate the agreement (i) for cause; (ii) at any time after the first
12 months by paying ERA an amount equal to 150% of ERA's gross revenues for the
previous 12 months from sales of SEEC's products; (iii) at any time after the
first 18 months upon failure of the parties to agree upon minimum sales by ERA
or upon a business plan for ERA's marketing of the products; or (iv) upon
failure of ERA to achieve the agreed upon minimum sales of SEEC's products.
SEEC, ERA and certain of the shareholders of SEEC had entered into a
Shareholders Agreement dated March 31, 1996. The agreement prohibited ERA from
transferring any of its shares of Common Stock without
9
<PAGE> 13
the prior written consent of SEEC. Further, SEEC and the other parties to the
Agreement had the right to purchase the shares of Common Stock held by ERA in
the event ERA wished to sell such shares. The Shareholders Agreement terminated
upon the consummation of SEEC's initial public offering.
SEEC anticipates that in the future decisions must be made with respect to
various categories of transactions between SEEC and ERA, such as the terms and
conditions under which ERA may provide research and development for SEEC,
whether SEEC will acquire ERA's research and development facilities and whether
SEEC and ERA will enter into a business combination. All future transactions
between SEEC and its officers, directors and principal shareholders and their
affiliates, including future transactions between SEEC and ERA outside the
ordinary course, will be approved by a majority of the Board of Directors,
including a majority of the disinterested directors, and will be on terms no
less favorable to SEEC than could be obtained from unaffiliated third parties.
STOCK PURCHASES
In July 1996, Dr. Reddy purchased from SEEC 30,184 shares of Common Stock
at a price of $3.31 per share by converting $75,000 in advances, plus accrued
interest, made by Dr. Reddy to SEEC from August 1990 to September 1992. The
advances were deemed to have accrued interest at a rate of 7% per annum.
In July 1996, Mr. Koka and Mr. Godfrey purchased from SEEC 31,909 and
20,918 shares of Common Stock, respectively, at a price of $3.31 per share. Mr.
Koka and Mr. Godfrey paid for their shares by converting demand notes issued to
them by SEEC in March 1992 to evidence deferred salaries owed to them. The
demand notes bore interest at a rate of 7% per annum and were in the respective
principal amounts of $76,541 and $50,565.
In July 1996, Stanley Young, a director of SEEC, purchased from SEEC 30,571
shares of Common Stock at a price of $3.31 per share by converting two demand
notes issued to him by SEEC in August 1990 and June 1991 in connection with two
$25,000 loans by Mr. Young to SEEC, and by converting the principal and accrued
interest of a $25,000 10% Subordinated Note purchased by Mr. Young in September
1992.
In July 1996, Amar Foundation, a shareholder of SEEC, purchased from SEEC
38,888 shares of Common Stock at a price of $3.31 per share by converting a
demand note issued by SEEC in June 1991 in connection with a $95,000 loan by
Amar Foundation to SEEC. The note bore interest at a rate of 7% per annum.
In July 1996, Abraham Ostrovsky, who became director of SEEC in January
1997, purchased from SEEC 2,660 shares of Common Stock at a price of $3.31 per
share by converting a $6,250 10% Subordinated Note purchased by Mr. Ostrovsky in
April 1992.
In September 1996, Radha R. Basu, a director of SEEC, purchased 4,139
shares of Common Stock at a price of $3.62 per share.
In September 1996, Shyamala Reddy and Geetha Reddy, each of whom is a
daughter of Dr. Reddy, purchased 32,588 and 10,862 shares of Common Stock,
respectively, at a price of $3.62 per share.
In March 1997, Stanley Young and Abraham Ostrovsky purchased from SEEC
33,945 and 2,828 shares of Common Stock, respectively, at a price of $.02 per
share, pursuant to the exercise of warrants issued in connection with the demand
notes and Subordinated Notes described above for Messrs. Young and Ostrovsky.
REGISTRATION RIGHTS AGREEMENT
SEEC has entered into a Registration Rights Agreement, dated as of August
15, 1996 (the "Registration Rights Agreement"), with certain holders of its
Common Stock. The Registration Rights Agreement provides that each of the
parties will have the right, commencing on October 20, 1997 (the date which is
270 days following the date of the Company's initial public offering), to demand
registration of some or all of their shares under the Securities Act of 1933
(the "Securities Act") in connection with the offering thereof on a firm
commitment underwritten basis, subject to the demand being made by the holders
of at least a majority
10
<PAGE> 14
of the securities registerable thereunder. The aggregate number of shares of
Common Stock outstanding as to which such demand registration rights may be
exercised is 448,450. The Registration Rights Agreement also provides that each
of the parties has the right, whenever SEEC proposes to register any of its
securities, to require that SEEC include in such registration some or all of
each of the parties' shares.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of May 30, 1997 by each person who is
known by the Company to have been the beneficial owner of more than five percent
of the Company's Common Stock on such date, by each director and Named Executive
Officer of the Company and by all directors and executive officers of the
Company as a group (based on 5,003,096 shares of Common Stock outstanding as of
such date).
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY
-----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
-------------------------------------------------------------- --------- -------
<S> <C> <C>
Ravindra Koka................................................. 524,594(1) 10.5%
Raj Reddy..................................................... 516,741(2) 10.3%
Adam D. Young................................................. 456,006(3) 9.1%
Trainer, Wortham & Company, Inc............................... 390,575(4) 7.8%
Amar Foundation............................................... 308,191(5) 6.1%
John D. Godfrey............................................... 230,735(6) 4.6%
Stanley A. Young.............................................. 64,516(7) 1.3%
Radha R. Basu................................................. 4,139(8) *
Abraham Ostrovsky............................................. 5,488(9) *
Richard J. Goldbach........................................... 3,503(10) *
All directors and executive officers as a group (8) persons... 1,349,716(11) 26.9%
</TABLE>
- ---------
* Less than 1%
(1) Includes 5,431 shares of Common Stock issuable upon the exercise of
outstanding options and 148,110 shares of Common Stock owned by Ravindra
Koka Retained Annuity Trust, of which Mr. Koka is trustee. Does not include
226,305 shares of Common Stock owned by ERA, of which Mr. Koka is a
director and stockholder, with respect to which Mr. Koka disclaims any
beneficial interest. Mr. Koka's address is in care of SEEC, Inc., 5001 Baum
Boulevard, Pittsburgh, Pennsylvania 15213.
(2) Dr. Reddy's address is in care of SEEC, Inc., 5001 Baum Boulevard,
Pittsburgh, Pennsylvania 15213.
(3) Includes 150,870 shares of Common Stock owned by Adam D. Young Qualified
Annuity Trust, of which Mr. Young's wife is trustee. Mr. Young's address is
10 Riverside Drive, Marblehead, Massachusetts 01945.
(4) Based on information as of March 31, 1997 contained in a Schedule 13F filed
by Trainer, Wortham & Company, Inc. with the Securities and Exchange
Commission. Trainer, Wortham & Company, Inc's address is 845 Third Avenue,
New York, New York, 10022.
(5) Includes 42,998 shares of Common Stock issuable upon the exercise of
outstanding warrants. Amar Foundation's address is 630 Los Trancos Road,
Portola Valley, California 94025.
11
<PAGE> 15
(6) Includes 4,888 shares of Common Stock issuable upon the exercise of
outstanding options and 1,000 shares owned by Mr. Godfrey's spouse. Mr.
Godfrey's address is in care of SEEC, Inc., 5001 Baum Boulevard,
Pittsburgh, Pennsylvania 15213.
(7) Mr. Young's address is in care of Young Management Group, Inc., 24 New
England Executive Park, Burlington, Massachusetts 01803.
(8) Ms. Basu's address is in care of Hewlett Packard Company, International
Software Operation, 19410 Homestead Road, Mail Stop 43-UR, Cupertino,
California 95014-0691.
(9) Mr. Ostrovsky's address is in care of Compressent, Inc., 2105 Hamilton
Avenue, Suite 140, San Jose, California 95125.
(10) Mr. Goldbach's address is in care of SEEC, Inc., 5001 Baum Boulevard,
Pittsburgh, Pennsylvania 15213.
(11) Includes 10,319 shares issuable upon the exercise of outstanding options.
ADOPTION OF THE SEEC, INC. 1997 STOCK OPTION PLAN
At the Annual Meeting, the Board is submitting the SEEC, Inc. 1997 Stock
Option Plan (the "Option Plan") to the shareholders for approval. The Board of
Directors recommends a vote FOR the proposal to adopt the Option Plan. A copy of
the Option Plan in the form proposed to be considered by the shareholders is set
forth in Appendix A to this Proxy Statement.
Set forth below is a description of the material features of and other
information relating to the Option Plan.
General Information. The Board adopted the Option Plan on June 6, 1997. The
Option Plan permits the Company to grant to participants incentive stock options
as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), non-statutory stock options, (that is to say, stock options not meeting
the requirements of Section 422), stock appreciation rights ("SARs") and limited
stock appreciation rights ("LSARs"). The term "option" as used in this Proxy
Statement without further qualification means any of the foregoing.
The Option Plan is administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). The Committee has neither
determined the number of options to be awarded in fiscal year 1998 nor the
identity of the recipients.
Shares Available for Issuance. Options to purchase up to 650,000 shares of
Common Stock may be granted under the Option Plan. It is the intent of the Board
and the Compensation Committee that the 650,000 share amount will be sufficient
to cover option grants for a period of three years.
Persons Who May Participate in the Option Plan. Those eligible for
participation in the Option Plan are key employees of the Company and its
subsidiaries, including directors and officers of the Company who are employees
who share the responsibility for the management, growth or protection of the
business of the Company or any subsidiary.
Purchase of Securities Pursuant to the Option Plan; Payment for Securities
Offered. The purchase price at which an option may be exercised ("exercise
price") will be determined by the Committee at the time the option is granted.
In no event, however, will the exercise price be less than the "fair market
value" of the Common Stock, defined in the Option Plan as the average of the
"bid" and "ask" price per share of Common Stock as quoted in a publication
chosen by the Committee on the business day immediately prior to the date as of
which fair market value is to be determined. In addition, the exercise price of
an incentive stock option granted to an optionee who owns more than 10% of the
combined voting power of all classes of the Company's outstanding stock must be
at least 110% of the fair market value of the Common Stock on the date of grant.
12
<PAGE> 16
An optionee may exercise an option by giving written notice to the Company
and by paying the exercise price in cash, or by surrendering other shares of
Common Stock with a market value equal to the exercise price.
All securities to be issued upon exercise of options granted under the
Option Plan will be issued by the Company out of its authorized, unissued stock
or out of repurchased shares held by the Company, or partly each. Such
repurchased shares held by the Company may have been purchased by the Company on
the open market or in private transactions from time to time.
SARs. The Option Plan provides that SARs may be granted in connection with
either incentive stock options (at the time such stock option is granted) or
non-statutory stock options (at the time such stock option is granted or at any
time thereafter during the option term). SARs are exercisable only to the extent
the related stock option is exercisable and only by the same person or persons
entitled to exercise the related stock option.
Each SAR entitles the holder to surrender the related stock option, or any
portion thereof, in exchange for that number of shares of Common Stock having an
aggregate fair market value equal to the excess of the fair market value per
share of Common Stock on the date of exercise over the option exercise price per
share, multiplied by the number of shares covered by the stock option or portion
thereof being surrendered. However, the Committee, in its discretion, may
determine that the obligation of the Company with respect to a SAR be paid in
cash or part in cash and part in shares (subject to certain limitations in the
case of persons subject to Section 16 of the Exchange Act at the time of
exercise).
LSARs. The Option Plan provides for the grant, in the discretion of the
Committee, of LSARs in connection with all or part of an incentive stock option
at the time of the grant of such option, or in connection with a non-statutory
option at the time such option is granted or at any time thereafter during the
term of such option.
Each LSAR entitles the holder of the related stock, upon exercise of the
LSAR, to surrender the stock option and any related SAR, to the extent
unexercised, and receive an amount of cash, in respect of each share of Common
Stock subject to such stock option (or the portion thereof surrendered), equal
to the excess of the fair market value per share of the Common Stock over the
exercise price of such stock option. LSARs shall be exercisable for a period of
60 days following the occurrence of certain events specified in the Option Plan
relating to a change in control or possible change in control of the Company. No
LSAR may be exercised until the holder has completed at least six months of
continuous service with the Company or a subsidiary immediately following the
date of grant of the LSAR.
Resale Restrictions. A participant who is granted an option under the
Option Plan may not transfer the option other than by will or by the laws of
descent and distribution. No person other than the participant to whom an option
is granted may exercise such option during such participant's lifetime.
Termination; Amendment. The Option Plan terminates on June 6, 2007, subject
to earlier termination by the Board. The Board has the authority to amend or
terminate the Option Plan, provided that such amendment or termination does not
adversely affect any outstanding option, SAR or LSAR unless the holder of such
option has consented in writing thereto. In addition, no such amendment of the
Option Plan shall, without prior shareholder approval, (a) increase the number
of shares which may be issued or delivered under the Option Plan, or (b) make
any changes in the class of eligible employees.
Exercise of Options Under Certain Events. The Option Plan provides that in
the event a participant's employment with the Company is voluntarily terminated
with the Company's consent or as a result of retirement under a retirement plan
of the Company, the participant will have three months to exercise any vested
incentive stock options. If a participant's employment terminates as a result of
retirement under a retirement plan of the Company, however, the participant will
have twelve months to exercise any non-statutory stock options, whether or not
vested at the time of termination. If a participant's employment with the
Company is voluntarily terminated with the Company's consent, the participant
will have twelve months to exercise any vested nonstatutory stock options. In
the case of termination of employment arising from disability or death, the
participant or the participant's estate or beneficiary, as the case may be, will
have
13
<PAGE> 17
twelve months to exercise any stock options outstanding, whether or not vested
at the time of termination. The ability of the participant to exercise options
in each case described above is subject to any earlier expiration date of such
options.
In addition, each option granted under the Option Plan shall become
exercisable in full upon certain events relating to a change in control or
possible change in control of the Company, whether or not such option is then
exercisable under the stock option agreement relating to such option.
Forfeitures and Penalties; Liens. Options issued under the Option Plan will
cease to become exercisable upon the termination of the participant's employment
by the Company for any reason other than voluntary termination with the consent
of the Company or a subsidiary, retirement under any retirement plan of the
Company or a subsidiary, voluntary termination while disabled with the consent
of the Company, or death. In addition, all options granted under the Option Plan
expire on the tenth anniversary of the date of the grant (except that any
incentive stock option granted to a holder of more than 10% of the combined
voting power of all classes of the Company's outstanding stock expires on the
fifth anniversary of the date of the grant), and no options may be granted after
June 6, 2007.
Income Tax Consequences of Plan Participation. Set forth below is a brief
description of certain aspects of the Federal income tax consequences of the
grant and exercise of options under the Option Plan and any subsequent
disposition of stock acquired thereby (based upon provisions of the Code and the
Treasury regulations promulgated thereunder).
Non-Statutory Stock Options. A participant who is granted a
non-statutory stock option will not realize taxable income at the time such
option is granted or when it vests. In general, a participant will be
subject to tax at ordinary income rates (see "Rate Structure" below) in the
year of exercise on the excess of the fair market value of the shares
underlying the option on the date of exercise over the option exercise
price (the "spread"). Because the spread is compensation income for federal
income tax purposes, income tax withholding requirements apply upon
exercise, and the Corporation will receive a corresponding deduction. The
participant's basis in the shares so acquired will be equal to the fair
market value thereof on the exercise date (i.e., the option exercise price
plus the spread upon which the participant is taxed). Upon subsequent
disposition of such shares, the participant will realize long-term capital
gain or loss if he has held the shares for more than one year since the
option was exercised; otherwise, such capital gain or loss will be
short-term.
Incentive Stock Options. A participant is not taxed at the time an
incentive stock option is granted. The tax consequences upon exercise and
later disposition depend upon the participant's employee status at certain
determination points and on whether the participant meets certain holding
period requirements.
(a) If the participant was an employee of the Company or any of its
subsidiaries at all times during the period beginning on the date on which
the option was granted and continuing to the date which is three months (12
months in the case of disability or death) before the option is exercised
(the "employment rule"), and if the participant (other than a participant
who dies and his or her heirs) holds the shares of stock acquired upon
exercise of the option until the later of two years after the option grant
date or one year after the exercise date (the "holding period rule"), then,
for regular tax purposes, the participant will not realize income upon
exercise or vesting of the option and the Company will not be allowed an
income tax deduction at any time. For purposes of the alternative minimum
tax ("AMT"), the spread (as defined above) will be recognized as an item of
adjustment for the year of exercise. The difference between the option
exercise price and the amount realized upon disposition of the shares by
the participant will constitute a long-term capital gain or loss if the
participant has held the shares for more than one year since the option was
exercised; otherwise, such capital gain or loss will be short-term.
(b) If the participant meets the employment rule but fails to observe
the holding period rule, (i) the spread (as of the option exercise date or
any later date as might apply under the rules discussed above with respect
to non-statutory stock options), but not more than the gain realized, will
be treated as ordinary income, (ii) the balance of gain (if any), or the
amount of any loss, will be treated as capital gain or loss (long-term or
short-term depending on the length of time the stock was held after the
option
14
<PAGE> 18
was exercised), (iii) any item of adjustment for AMT purposes will be
eliminated, and (iv) the Company will be entitled to a deduction equal to
the amount of ordinary income upon which the participant is taxed.
(c) If a participant exercises an incentive stock option but does not
meet the employment rule, the option will be treated as a non-statutory
stock option, the federal income tax treatment of which is described above.
SARs and LSARs. A participant is not taxed upon the grant of SARs or
LSARs. Upon exercise of such rights, he or she will be taxed at ordinary
income tax rates (subject to withholding) on the amount of cash received
and/or the current fair market value of stock received, and the Company
will be entitled to a corresponding deduction. The participant's basis in
any shares acquired through the exercise of SARs and LSARs will be equal to
the amount of ordinary income on which he or she was taxed, and upon
subsequent disposition, any gain or loss will be a capital gain or loss
(long-term or short-term depending on the length of time the shares were
held).
Rate Structure. Except where the special holding period rules for
incentive stock options apply, a capital gain or loss is long-term or
short-term depending upon whether the stock has been held for more than one
year. For individuals under the present rate structure provided by the
Code, both ordinary income and short-term capital gain are taxed at a
maximum rate of 39.6%, and long-term capital gain is taxed at a maximum
rate of 28%. Pending legislation, if enacted, would reduce the long-term
capital gains rate below 28%.
Interest of Nominees in Option Plan. Neither of the persons nominated for
election to the Board of Directors at the 1997 Annual Meeting is presently
eligible to receive grants of options under the Option Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's directors, officers, and persons who are directly
or indirectly the beneficial owners of more than 10% of the Common Stock of the
Company are required to file with the Securities and Exchange Commission (the
"Commission"), within specified monthly and annual due dates, a statement of
their initial beneficial ownership and all subsequent changes in ownership of
Common Stock. Rules of the Commission require such persons to furnish the
Company with copies of all Section 16(a) forms they file.
For the fiscal year ended March 31, 1997 certain officers and directors of
the Company had not filed the required Section 16(a) Form 4 or Form 5 on a
timely basis to report changes in beneficial ownership of Common Stock. The
transactions in question were: (a) the purchase of 3,503 shares by Mr. Goldbach,
Chief Financial Officer, and 1000 shares by the spouse of Mr. Godfrey, Vice
President--Professional Services, Secretary and Director, both at $7.25 per
share through the initial public offering on January 22, 1997, and (b) the
purchase of 33,945 and 2,828 shares by Messrs. Young and Ostrovsky,
respectively, both of whom are Directors, at a price of $.02 per share pursuant
to the exercise of warrants on March 25, 1997. The required forms to report
these transactions were filed in June 1997 with the Securities and Exchange
Commission.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, shareholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next Annual Meeting of Shareholders by submitting such
proposals to the Company in a timely manner. In order to be so included for the
1998 Annual Meeting, shareholder proposals must be received by the Company no
later than March 2, 1998 and must otherwise comply with the requirements of Rule
14a-8.
15
<PAGE> 19
AUDITORS
The Company engaged BDO Seidman, LLP, independent certified public
accountants, as auditors for the fiscal year ended March 31, 1997. A
Representative of BDO Seidman, LLP is expected to be present at the Annual
Meeting, and will have the opportunity to make a statement and respond to
appropriate questions.
FORM 10-K
SHAREHOLDERS MAY OBTAIN A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1997 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE BY WRITING TO: INVESTOR
RELATIONS, SEEC, INC., 5001 BAUM BOULEVARD, PITTSBURGH, PENNSYLVANIA 15213.
ADDITIONAL INFORMATION
The Company knows of no other matters which will be presented to
shareholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying Proxy to vote such Proxy in
accordance with their judgement upon such matters.
By Order of the Board of
Directors,
JOHN D. GODFREY
Vice President and Secretary
16
<PAGE> 20
APPENDIX A
SEEC, INC.
1997 STOCK OPTION PLAN
The purposes of the 1997 Stock Option Plan (the "Plan") are to encourage
eligible employees of SEEC, INC. (the "Corporation") and its Subsidiaries,
including directors and officers of the Corporation who are employees, to
increase their efforts to make the Corporation and each Subsidiary more
successful, to provide an additional inducement for such employees to remain
with the Corporation or a Subsidiary, to reward such employees by providing an
opportunity to acquire the Common Stock, par value $.01 per share, of the
Corporation (the "Common Stock") on favorable terms and to provide a means
through which the Corporation may attract able persons to enter the employment
of the Corporation or one of its Subsidiaries. For purposes of the Plan, the
term "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing more than fifty percent
(50%) of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
SECTION 1
ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Corporation (the "Committee").
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operation of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee, shall be
the acts of the Committee.
SECTION 2
ELIGIBILITY
Those employees of the Corporation or any Subsidiary who share the
responsibility for the management, growth or protection of the business of the
Corporation or any Subsidiary shall be eligible to receive stock options (with
or without stock appreciation rights) as described herein.
Subject to the provisions of the Plan, the Committee shall have full and
final authority, in its discretion, to grant stock options (with or without
stock appreciation rights) as described herein and to determine the employees to
whom stock options (with or without stock appreciation rights) shall be granted
and the number of shares to be covered by each stock option. In determining the
eligibility of any employee, as well as in determining the number of shares
covered by each stock option, the Committee shall consider the position and the
responsibilities of the employee being considered, the nature and value to the
Corporation or a Subsidiary of his or her services, his or her present and/or
potential contribution to the success of the Corporation or a Subsidiary and
such other factors as the Committee may deem relevant.
17
<PAGE> 21
SECTION 3
SHARES AVAILABLE UNDER THE PLAN
The aggregate number of shares of the Common Stock which may be issued or
delivered and as to which stock options may be granted under the Plan is 650,000
shares of Common Stock. All such shares are subject to adjustment and
substitution as set forth in Section 6.
If any stock option granted under the Plan is canceled by mutual consent or
terminates or expires for any reason without having been exercised in full, the
number of shares subject to such stock option shall again be available for
purposes of the Plan, except that to the extent that stock appreciation rights
granted in conjunction with a stock option under the Plan are exercised and the
related stock option surrendered, the number of shares available for purposes of
the Plan shall be reduced by the number of shares, if any, of Common Stock
issued or delivered upon exercise of such stock appreciation rights.
The shares which may be issued or delivered under the Plan may be either
authorized but unissued shares or repurchased shares or partly each.
SECTION 4
GRANT OF STOCK OPTIONS,
STOCK APPRECIATION RIGHTS, AND
LIMITED STOCK APPRECIATION RIGHTS
The Committee shall have authority, in its discretion, to grant "incentive
stock options" pursuant to Section 422 of the Internal Revenue Code of 1986 (the
"Code"), to grant "non-statutory stock options" (stock options which do not
qualify under such Section 422 of the Code) or to grant both types of stock
options (but not in tandem). The Committee also shall have the authority, in its
discretion, to grant stock appreciation rights in conjunction with incentive
stock options or non-statutory stock options with the effect provided in Section
5(D). Stock appreciation rights granted in conjunction with an incentive stock
option may only be granted at the time such incentive stock option is granted.
Stock appreciation rights granted in conjunction with a non-statutory stock
option may be granted either at the time such stock option is granted or at any
time thereafter during the term of such stock option. The Committee shall also
have the authority, in its discretion, to grant limited stock appreciation
rights in accordance with the provisions of, and subject to the terms and
conditions set forth in, Section 8.
No employee shall be granted a stock option or stock options under the Plan
(disregarding canceled, terminated or expired stock options) for an aggregate
number of shares in excess of ten percent (10%) of the total number of shares
which may be issued or delivered under the Plan. For the purposes of this
limitation, any adjustment or substitution made pursuant to Section 6 with
respect to shares which have not been issued or delivered under the Plan upon
the exercise of stock options shall also be made with respect to shares already
issued or delivered under the Plan upon the exercise of stock options and with
respect to shares which would have been issued or delivered under the Plan but
for the exercise of stock appreciation rights in lieu of the exercise of stock
options prior to such adjustment or substitution.
SECTION 5
TERMS AND CONDITIONS OF STOCK OPTIONS AND
STOCK APPRECIATION RIGHTS
Stock options and stock appreciation rights granted under the Plan shall be
subject to the following terms and conditions:
(A) The purchase price at which each stock option may be exercised
(the "option price") shall be such price as the Committee, in its
discretion, shall determine but shall not be less than one hundred percent
(100%) of the fair market value per share of Common Stock covered by the
stock option on the
18
<PAGE> 22
date of grant, except that in the case of an incentive stock option granted
to an employee who, immediately prior to such grant, owns stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or any Subsidiary (a "Ten Percent
Employee"), the option price shall not be less than 110% of such fair
market value on the date of grant. For purposes of this Section 5(A), the
fair market value of the Common Stock shall be determined as provided in
Section 5(H). Also, for purposes of this Section 5(A), an individual (i)
shall be considered as owning not only shares of the Common Stock owned
individually, but also all shares that are at the time owned, directly or
indirectly, by or for the spouse, ancestors, lineal descendants and
brothers and sisters (whether by the whole or half blood) of such
individual and (ii) shall be considered as owning proportionately any
shares owned, directly or indirectly, by or for any corporation,
partnership, estate or trust in which such individual shall be a
stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one or more of
the following ways:
(i) in cash; and/or
(ii) in shares of the Common Stock (which are owned by the
optionee free and clear of all liens and other encumbrances and which
are not subject to the restrictions set forth in Section 7) having a
fair market value on the date of exercise of the stock option,
determined as provided in Section 5(H), equal to the option price for
the shares being purchased.
If the option price is paid in whole or in part in shares of Common
Stock, any portion of the option price representing a fraction of a share
shall be paid in cash. The date of exercise of a stock option shall be
determined under procedures established by the Committee, and the option
price shall be payable at such time or times as the Committee, in its
discretion, shall determine. No shares shall be issued or delivered upon
exercise of a stock option until full payment of the option price has been
made. When full payment of the option price has been made and subject to
the restrictions set forth in Section 7, the optionee shall be considered
for all purposes to be the owner of the shares with respect to which
payment has been made. Payment of the option price with shares shall not
increase the number of shares of Common Stock which may be issued or
delivered under the Plan as provided in Section 3.
(C) Subject to Section 9 hereof, no stock option shall be exercisable
during the first six months of its term, except that this limitation on
exercise shall not apply (i) if the optionee dies during such six-month
period or (ii) if the optionee becomes disabled within the meaning of
Section 422(c)(6) of the Code (a "Disabled Optionee"), or if his or her
employment is voluntarily terminated with the consent of the Corporation or
a Subsidiary during such six-month period. No incentive stock option shall
be exercisable after the expiration of ten years (five years in the case of
a Ten Percent Employee) from the date of grant. No non-statutory stock
option shall be exercisable after the expiration of ten years and six
months from the date of grant. Subject to this Section 5(C) and Sections
5(F), 5(G) and 5(H), stock options may "vest" and be exercised at such
times, in such amounts and subject to such restrictions as shall be
determined, in its discretion, by the Committee and set forth in individual
stock option agreements.
(D) Stock appreciation rights shall be exercisable to the extent that
the related stock option is exercisable and only by the same person or
persons who are entitled to exercise the related stock option. Stock
appreciation rights shall entitle the optionee to surrender the related
stock option, or any portion thereof, and to receive from the Corporation
in exchange therefor that number of shares of Common Stock having an
aggregate fair market value equal to the excess of the fair market value of
one share of Common Stock on such date of exercise over the option price
per share, multiplied by the number of shares covered by the stock option,
or portion thereof, which is surrendered. Cash shall be paid in lieu of any
fractional shares. The Committee shall have the authority, in its
discretion, to determine that the obligation of the Corporation shall be
paid in cash or part in cash and part in shares. The date of exercise of
stock appreciation rights shall be determined under procedures established
by the Committee, and payment under this Section 5(D) shall be made by the
Corporation as soon as practicable after the date of exercise. To the
extent that a stock option as to which stock appreciation rights have been
granted in conjunction therewith is exercised, the stock appreciation
rights shall be canceled. For the purposes of
19
<PAGE> 23
this Section 5(D), the fair market value of Common Stock shall be
determined as provided in Section 5(H).
(E) No stock option or stock appreciation rights shall be transferable
by an optionee other than by will, or if an optionee dies intestate, by the
laws of descent and distribution of the state of domicile of the optionee
at the time of death, and all stock options and stock appreciation rights
shall be exercisable during the lifetime of an optionee only by the
optionee.
(F) Unless otherwise determined by the Committee and set forth in the
stock option agreement referred to in Section 5(G) or an amendment thereto:
(i) If the employment of an optionee who is not a Disabled
Optionee is voluntarily terminated with the written consent of the
Corporation or a Subsidiary or an optionee retires under any retirement
plan of the Corporation or a Subsidiary, any then outstanding incentive
stock option held by such an optionee shall be exercisable (to the
extent exercisable on the date of termination of employment) by such an
optionee at any time prior to the expiration date of such incentive
stock option or within three months after the date of termination of
employment, whichever is the shorter period;
(ii) If the employment of an optionee who is not a Disabled
Optionee is voluntarily terminated with the written consent of the
Corporation or a Subsidiary, any then outstanding non-statutory stock
option held by such an optionee shall be exercisable (to the extent
exercisable on the date of termination of employment) by such an
optionee at any time prior to the expiration date of such non-statutory
stock option or within one year after the date of termination of
employment, whichever is the shorter period;
(iii) If an optionee retires under any retirement plan of the
Corporation or a Subsidiary, any then outstanding non-statutory stock
option held by such an optionee shall be exercisable (whether or not
exercisable on the date of termination of employment) by such an
optionee at any time prior to the expiration date of such non-statutory
stock option or within one year after the date of termination of
employment, whichever is the shorter period;
(iv) If the employment of an optionee who is a Disabled
Optionee is voluntarily terminated with the written consent of the
Corporation or a Subsidiary, any then outstanding stock option held by
such optionee shall be exercisable in full (whether or not so
exercisable on the date of termination of employment) by the optionee at
any time prior to the expiration date of such stock option or within one
year after the date of termination of employment, whichever is the
shorter period; and
(v) Following the death of an optionee during employment, any
outstanding stock option held by the optionee at the time of death shall
be exercisable in full (whether or not so exercisable on the date of the
death of the optionee) by such optionee's estate or by the person or
persons entitled to do so under the will of the optionee, or, if the
optionee shall fail to make testamentary disposition of the stock option
or shall die intestate, by the legal representative of the optionee, at
any time prior to the expiration date of such stock option or within one
year after the date of death, whichever is the shorter period. Following
the death of an optionee after termination of employment but during a
period when a stock option is exercisable as provided in clauses (i),
(ii), (iii) and (iv) above, any outstanding stock option held by the
optionee at the time of death shall be exercisable by such optionee's
estate or by such person or persons entitled to do so under the Will of
the optionee or by such legal representative to the extent the stock
option was exercisable by the optionee at the time of death at any time
prior to the expiration date of such stock option or within one year
after the date of death, whichever is the shorter period.
(vi) If the employment of an optionee terminates for any
reason other than voluntary termination with the consent of the
Corporation or a Subsidiary, retirement under any retirement plan of the
Corporation or a Subsidiary, voluntary termination while a Disabled
Optionee with the consent of the Corporation or death, the rights of
such optionee under any then outstanding stock
20
<PAGE> 24
option shall terminate at the time of such termination of employment. In
addition, if an optionee engages in the operation or management of a
business, whether as owner, partner, officer, director, employee or
otherwise and whether during or after termination of employment, which
is in competition with the Corporation or any of its Subsidiaries, the
Committee may in its discretion immediately terminate all stock options
held by the optionee.
Whether termination of employment is a voluntary termination with the
written consent of the Corporation or a Subsidiary, whether an optionee is
a Disabled Optionee and whether an optionee has engaged in the operation or
management of a business which is in competition with the Corporation or
any of its Subsidiaries shall be determined in each case by the Committee
and any such determination by the Committee shall be final and binding.
(G) All stock options and stock appreciation rights shall be confirmed
by a stock option agreement, or an amendment thereto, which shall be
executed by the Chief Executive Officer or the President (if other than the
Chief Executive officer) on behalf of the Corporation and by the employee
to whom such stock options and stock appreciation rights are granted.
(H) Fair market value of the Common Stock,
(i) so long as the Common Stock is listed for trading on the
NASDAQ Small-Cap Market or the NASDAQ National Market, shall be as set
forth in such reliable publication as the Committee, in its discretion,
may choose to rely upon, by taking the average of the "bid" and "ask"
prices per share of the Common Stock as quoted in such reliable
publication on the trading date immediately preceding the date as of
which fair market value is to be determined, or
(ii) in the event the Common Stock ceases to be listed for trading on
either of such NASDAQ Markets and is traded on another exchange, shall be
as set forth in such reliable publication as the Committee, in its
discretion, may choose to rely upon, by taking the average of the highest
and lowest price per share of the Common Stock as quoted in such reliable
publication on the nearest date before the date as of which fair market
value is to be determined or by such other reasonable method or formula as
may be determined by the Committee in its discretion.
(I) The obligation of the Corporation to issue or deliver shares of
Common Stock under the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares, if deemed necessary or appropriate by counsel for
the Corporation, (ii) the condition that the shares shall have been listed
(or authorized for listing upon official notice of issuance) upon each
stock exchange on which such shares may then be listed and (iii) all other
applicable laws, regulations, rules and orders which may then be in effect.
Subject to the foregoing provisions of this Section 5 and the other
provisions of the Plan, any stock option or stock appreciation rights granted
under the Plan shall be subject to such other terms and conditions as the
Committee shall deem advisable.
SECTION 6
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of Common Stock, the number of shares of Common Stock then
subject to any outstanding stock option and the number of shares which may be
issued or delivered under the Plan but are not then subject to an outstanding
stock option shall be adjusted by adding thereto the number of shares which
would have been distributable thereon if such shares had been outstanding on the
date fixed for determining the stockholders entitled to receive such stock
dividend or distribution.
If the outstanding shares of Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation,
21
<PAGE> 25
then there shall be substituted for each share of Common Stock subject to any
then outstanding stock option and for each share of Common Stock which may be
issued or delivered under the Plan but is not then subject to an outstanding
stock option, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock shall be so changed or for which
each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for in this
Section 6, the aggregate option price for all shares subject to each then
outstanding stock option prior to such adjustment or substitution shall be the
aggregate option price for all shares of stock or other securities (including
any fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6 shall require
the Corporation to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this Section 6
requires the approval of shareholders in order to enable the Corporation to
grant incentive stock options, then no such adjustment or substitution shall be
made without prior shareholder approval. Notwithstanding the foregoing, in the
case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 424 of the Code, the Committee
may elect that such adjustment or substitution not be made but rather shall use
reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee in its sole discretion shall deem equitable and
which will not result in any disqualification, modification, extension or
renewal (within the meaning of Section 424 of the Code) of such incentive stock
option.
SECTION 7
RESTRICTIONS ON TRANSFER OF
CERTAIN SHARES
Shares of Common Stock acquired under exercise of an option by a person
then subject to the provisions of Section 16 of the Exchange Act shall not be
sold or otherwise transferred prior to the expiration of six months after the
date of grant of the stock option. Shares of Common Stock acquired under
exercise of an incentive stock option shall not be sold or otherwise transferred
until after the expiration of any holding period required by Section 422 of the
Code, as may be amended from time to time. The Corporation is authorized to (i)
retain the certificate(s) representing such shares or place such certificates in
the custody of its transfer agent, (ii) place a restrictive legend on such
shares, and/or (iii) issue a stop transfer order to the transfer agent with
respect to such shares in order to enforce the transfer restrictions of this
Section.
SECTION 8
LIMITED STOCK APPRECIATION RIGHTS
Limited stock appreciation rights may in the discretion of the Committee,
be granted in connection with all or part of (i) an incentive stock option
granted under this Plan at the time of the grant of such stock option or (ii) a
non-statutory option, at the time such option is granted or at any time
thereafter during the term of the such option.
Limited stock appreciation rights shall entitle the holder of an option in
connection with which such limited stock appreciation rights are granted, upon
exercise of the limited stock appreciation rights, to surrender the stock
option, or any applicable portion thereof, and any related stock appreciation
rights, to the
22
<PAGE> 26
extent unexercised, and to receive an amount of cash determined pursuant to this
Section 8. Such option, and any related stock appreciation rights, shall, to the
extent so surrendered, thereupon cease to be exercisable.
Limited stock appreciation rights shall be subject to the following terms
and conditions and to such other terms and conditions not inconsistent with the
Plan as shall from time to time be approved by the Committee.
(A) Limited stock appreciation rights shall be exercisable, subject to
Section 8(B), during any one or more of the following periods:
(i) for a period of 60 days beginning on the date on which
shares of Common Stock are first purchased pursuant to a tender offer or
exchange offer (other than such an offer by the Corporation), whether or
not such offer is approved or opposed by the Corporation and regardless
of the number of shares of Common Stock purchased pursuant to such
offer;
(ii) for a period of 60 days beginning on the date the
Corporation acquires knowledge that any person or group deemed a person
under Section 13(d)(3) of the Exchange Act (other than any director of
the Corporation on January 30, 1997, any Affiliate or Associate of any
such director (with such terms having the respective meanings set forth
in Rule 12b-2 under the Exchange Act as in effect on January 30, 1997),
any member of the family of any such director, any trust (including the
trustees thereof) established by or for the benefit of any such persons,
or any charitable foundation, whether a trust or a corporation
(including the trustees and directors thereof) established by or for the
benefit of any such persons), in a transaction or series of transactions
shall become the beneficial owner, directly or indirectly (with
beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of securities of the
Corporation entitling the person or group to 20% or more of all votes
(without consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all shareholders of the
Corporation would be entitled if the election of Directors were an
election held on such date;
(iii) for a period of 60 days beginning on the date of filing
under the Exchange Act of a Statement on Schedule 13D, or any amendment
thereto, by any person or group deemed a person under Section 13(d)(3)
of the Exchange Act, disclosing an intention or possible intention to
acquire or change control of the Corporation;
(iv) for a period of 60 days beginning on the date, during any
period of two consecutive years, when individuals who at the beginning
of such period constitute the Board of Directors of the Corporation
cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the shareholders of the
Corporation, of each new Director was approved by a vote of at least
two-thirds of the Directors then still in office who were Directors at
the beginning of such period; and
(v) for a period of 60 days beginning on the date of approval
by the shareholders of the Corporation of an agreement (a
"reorganization agreement") providing for (a) the merger or
consolidation of the Corporation with another corporation where the
shareholders of the Corporation, immediately prior to the merger or
consolidation, do not or will not beneficially own, immediately after
the merger or consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such shareholders to
50% or more of all votes (without consideration of the rights of any
class of stock to elect directors by a separate class vote) to which all
shareholders of such corporation would be entitled in the election of
Directors or where the members of the Board of Directors of the
Corporation, immediately prior to the merger or consolidation, do not or
will not, immediately after the merger or consolidation, constitute a
majority of the Board of Directors of the corporation issuing cash or
securities in the merger or consolidation or (b) the sale or other
disposition of all or substantially all the assets of the Corporation.
(B) Subject to Section 9 hereof, limited stock appreciation rights
shall in no event be exercisable unless and until the holder of the limited
stock appreciation rights shall have completed at least six months of
continuous service with the Corporation or a Subsidiary, or both,
immediately following the date upon which the limited stock appreciation
rights shall have been granted.
23
<PAGE> 27
(C) Upon exercise of limited stock appreciation rights, the holder
thereof shall be entitled to receive an amount of cash in respect of each
share of Common Stock subject to the related option equal to the excess of
the fair market value of such share over the option price of such related
option, and for this purpose fair market value shall mean the highest last
sale price of the Common Stock as reported on the NASDAQ during the period
beginning on the 90th day prior to the date on which the limited stock
appreciation rights are exercised and ending on such date, except that (a)
in the event of a tender offer or exchange offer for Common Stock, fair
market value shall mean the greater of such last sale price or the highest
price paid for Common Stock pursuant to any tender offer or exchange offer
in effect at any time beginning on the 90th day prior to the date on which
the limited stock appreciation rights are exercised and ending on such
date, (b) in the event of the acquisition by any person or group of
beneficial ownership of securities of the Corporation entitling the person
or group to 10% or more of all votes to which all shareholders of the
Corporation would be entitled in the election of Directors or in the event
of the filing of a Statement on Schedule 13D, or any amendment thereto,
disclosing an intention or possible intention by any person or group to
acquire control of the Corporation, fair market value shall mean the
greater of such last sale price or the highest price per share paid for
Common Stock shown on the Statement on Schedule 13D, or any amendment
thereto, filed by the person or group becoming a 10% beneficial owner or
disclosing an intention or possible intention to acquire control of the
Corporation and (c) in the event of approval by shareholders of the
Corporation of a reorganization agreement, fair market value shall mean the
greater of such last sale price or the fixed or formula price specified in
the reorganization agreement if such price is determinable as of the date
of exercise of the limited stock appreciation rights. Any securities or
property which are part or all of the consideration paid for Common Stock
in a tender offer or exchange offer or under an approved reorganization
agreement shall be valued at the higher of (a) the valuation placed on such
securities or property by the person making the tender offer or exchange
offer or by the corporation other than the Corporation issuing securities
or property in the merger or consolidation or to whom the Corporation is
selling or otherwise disposing of all or substantially all the assets of
the Corporation and (b) the valuation placed on such securities or property
by the Committee.
(D) To the extent that limited stock appreciation rights shall be
exercised, the option in connection with which such limited stock
appreciation rights shall have been granted shall be deemed to have been
exercised and any related stock appreciation rights shall be canceled. To
the extent that the option in connection with which limited stock
appreciation rights shall have been granted or any related stock
appreciation rights shall be exercised, the limited stock appreciation
rights granted in connection with such option shall be canceled.
SECTION 9
ACCELERATION OF THE EXERCISE DATE OF
STOCK OPTIONS AND RELATED STOCK APPRECIATION RIGHTS
Notwithstanding any other provision of this Plan, all stock options and
stock appreciation rights shall become exercisable upon the occurrence of any of
the events specified in Section 8(A) whether or not such options are then
exercisable under the provisions of the applicable agreements relating thereto,
except that if stock appreciation rights have been granted along with limited
stock appreciation rights to the same option holder with respect to the same
option, in no event may the stock appreciation rights be exercised for cash
during any of the 60-day periods provided for in Section 8.
SECTION 10
EFFECT OF THE PLAN ON THE RIGHTS
OF EMPLOYEES AND EMPLOYER
Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right to
be granted a stock option (with or without stock appreciation
24
<PAGE> 28
rights) under the Plan and nothing in the Plan, in any stock option or stock
appreciation rights granted under the Plan or in any stock option agreement
shall confer any right to any employee to continue in the employment of the
Corporation or any Subsidiary or interfere in any way with the rights of the
Corporation or any Subsidiary to terminate the employment of any employee at any
time.
SECTION 11
AMENDMENT
The right to alter and amend the Plan at any time and from time to time and
the right to revoke or terminate the Plan are hereby specifically reserved to
the Board; provided always that no such revocation or termination shall
terminate any outstanding stock option or stock appreciation rights theretofore
granted under the Plan; and provided further that no such alteration or
amendment of the Plan shall, without prior stockholder approval (a) increase the
total number of shares which may be issued or delivered under the Plan, or (b)
make any changes in the class of eligible employees. No alteration, amendment,
revocation or termination of the Plan shall, without the written consent of the
holder of a stock option or stock appreciation rights theretofore granted under
the Plan, adversely affect the rights of such holder with respect to such stock
option or stock appreciation rights.
SECTION 12
EFFECTIVE DATE AND DURATION OF PLAN
The effective date and date of adoption of the Plan shall be June 6, 1997
(the "Effective Date"), the date of adoption of the Plan by the Board, provided
that such adoption of the Plan by the Board is approved by the affirmative vote
of the holders of at least a majority of the outstanding shares of Common Stock
at a meeting of such holders duly called, convened and held within one year of
the Effective Date. No stock option or stock appreciation rights granted under
the Plan prior to such shareholder approval may be exercised until after such
approval. No stock option or stock appreciation rights may be granted under the
Plan subsequent to June 6, 2007.
25
<PAGE> 29
PROXY -- SEEC, INC.
ANNUAL MEETING OF SHAREHOLDERS AUGUST 8, 1997
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, RAJ REDDY and RAVINDRA KOKA, and each
with full power to act without the other, as proxies, with full power of
substitution, for and in the name of the undersigned to vote and act with
respect to all shares of common stock of SEEC, Inc. (the "Company") standing
in the name of the undersigned on June 27, 1997, or with respect to which the
undersigned is entitled to vote and act, at the Annual Meeting of Shareholders
of the Company to be held August 8, 1997 and at any and all adjournments
thereof, with all the powers the undersigned would possess if personally
present, and particularly, but without limiting the generality of the foregoing:
--------------
SEE REVERSE
SIDE
--------------
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 30
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
SEEC, INC.
AUGUST 8, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
PLEASE MARK YOUR
A [ X ] VOTES AS IN THIS
EXAMPLE
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] NOMINEES: 2. Approve the SEEC, Inc. [ ] [ ] [ ]
Directors Abraham Ostrovsky 1997 Stock Option Plan
Stanley Young
3. To vote in their discretion [ ] [ ] [ ]
For, except vote withheld from the following nominee(s): upon such other matters as
may properly come before the
----------------------------------------------------- meeting or any adjournment
thereof.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, THIS PROXY
WILL BE VOTED FOR ITEMS 1, 2 AND 3 IF NO CHOICE IS SPECIFIED.
The undersigned hereby revokes all proxies heretofore given
by the undersigned to vote or act at said meeting, and hereby
ratifies and confirms all that said proxies, or their
substitutes, or any of them, may lawfully do by virtue
hereof. Receipt is hereby acknowledged of the notice of
annual meeting and proxy statement of the Company, dated
June 27, 1997.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
</TABLE>
SIGNATURE(S)__________________________________________ DATE______________, 1997
NOTE: Please sign exactly as your name appears hereon. When signing as
Attorney, Executor, Administrator, Trustee, etc. or as Officer of a
Corporation, please give your full title as such. For joint accounts, each
joint owner should sign.
