<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- ----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------------------
(5) Total fee paid:
- ----------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- ----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- ----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- ----------------------------------------------------------------------------
(3) Filing Party:
- ----------------------------------------------------------------------------
(4) Date Filed:
- ----------------------------------------------------------------------------
<PAGE> 2
[SEEC LETTERHEAD]
July 1, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of SEEC, Inc. to be held on Thursday, August 6, 1998, at 10:00 A.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 6, 1998.
Sincerely,
/s/RAVINDRA KOKA
----------------
Ravindra Koka
President and
Chief Executive Officer
<PAGE> 3
SEEC, INC.
PARK WEST ONE, SUITE 200, CLIFF MINE ROAD
PITTSBURGH, PENNSYLVANIA 15275
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, AUGUST 6, 1998
------------------------
The Annual Meeting of Shareholders (the "Annual Meeting") of SEEC, Inc., a
Pennsylvania corporation (the "Company"), will be held on Thursday, August 6,
1998, at 10:00 A.M., local time, at The Pittsburgh Airport Marriott, 100 Aten
Road, Coraopolis, Pennsylvania, for the following purposes:
1. To elect two Class II directors to serve for a term of three years
and until their respective successors are duly elected and qualified;
2. To approve the adoption of the SEEC, Inc. 1998 Employee Stock
Purchase 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 15, 1998 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
July 1, 1998
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.
PARK WEST ONE, SUITE 200, CLIFF MINE ROAD
PITTSBURGH, PENNSYLVANIA 15275
------------------------
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 1998 Annual
Meeting of Shareholders, together with any and all adjournments and
postponements thereof (the "Annual Meeting"), to be held on Thursday, August 6,
1998, at 10:00 a.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, is
first being sent to shareholders on or about July 1, 1998.
RECORD DATE; VOTING SECURITIES; VOTING AND PROXIES
The Board has fixed the close of business on June 15, 1998 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
6,076,546 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.
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 articles of incorporation do not permit
cumulative voting in the election of directors. The Board is currently comprised
of seven 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 II directors expires at the Annual Meeting. The terms of the Class III
and Class I directors will expire at the 1999 and 2000 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 II directors are nominees for election this year
for a three-year term expiring at the 2001 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 II 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 II directors and each continuing Class III and Class I
director.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<S> <C>
Radha R. Basu........................ Radha R. Basu has been a director of SEEC since August 1996.
Age 47 Ms. 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 India Software Operations,
where she was responsible for starting up Hewlett Packard
Company's operations in India.
John D. Godfrey...................... John D. Godfrey has been Vice President, Professional
Age 49 Services, and Secretary of SEEC since May 1989, and was
elected a director of SEEC in March 1996. Prior to joining
the Company, Mr. Godfrey served in various management
positions at Cimflex Teknowledge Corp., a software
development company, from November 1985 to May 1989, was
director of engineering for American Auto-Matrix, Inc., a
manufacturer of general purpose micro-processor-based
network systems for control of building environments, from
March 1984 to August 1985 and director of engineering for
PERQ Systems Corp., a manufacturer of computer engineering
workstations, from March 1983 to March 1984, and served as
manager of graphic information systems for Mellon Bank, N.A.
from September 1976 to November 1981.
</TABLE>
DIRECTORS CONTINUING AS CLASS III DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<S> <C>
Ravindra Koka........................ Ravindra Koka is a co-founder of SEEC and has been President
Age 47 and 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 in
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 software development company, a senior systems
analyst and mainframe application developer for Roan
Consolidated Mines, Ltd., a copper mining company, and a
visiting scientist and Adjunct Associate Professor at
Carnegie Mellon University's Department of Computer Science.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<S> <C>
Raj Reddy, Ph.D...................... Raj Reddy is a co-founder of SEEC and has served as a
Age 60 director since SEEC's inception in 1988. He serves as a
consultant in a scientific or engineering capacity from time
to time on projects for SEEC, 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 custom software
development and systems integration services company, a
member of the Board of Directors of Telxon Corporation, a
systems integration services company that provides
tele-transaction computers and radio frequency data
collection systems, and a member of the Technical Advisory
Board of Microsoft Corporation. In February 1997, Dr. Reddy
was appointed by President Clinton to membership on the
Presidential Advisory Committee on High-Performance
Computing and Communications, Information Technology, and
the Next Generation Internet.
</TABLE>
DIRECTORS CONTINUING AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
------------ --------------------------------------
<S> <C>
Abraham Ostrovsky.................... Abraham Ostrovsky has been a director of SEEC since January
Age 55 1997. Mr. Ostrovsky serves on the Boards of Indigo NV
("Indigo") and NetManage. He served on the Board of Andyne
Computing until its aquisition by Hummingbird. Since 1995,
Mr. Ostrovsky has also been Chairman of JetForm Corporation
("Jetform"), a provider of forms-based workflow automation
software. 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..................... Stanley A. Young has been a director of SEEC since it was
Age 71 founded in 1988. Mr. Young has been active as a consultant
and venture capital investor for the past 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, Andyne
Computing, Ltd., a software development company, and
Compressent, Inc. ("Compressent"), a developer of color fax
software. Mr. Young was formerly a director and seed
investor in Parametric Technology Corporation.
Glen F. Chatfield.................... Mr. Chatfield was elected to the Board of Directors in April
Age 56 1998. Mr. Chatfield was President of Chatfield Enterprises
from April 1990 to November 1992, and has been President of
Optimum Power Technology, Inc. since December 1992, Chairman
of Emprise Technologies, Inc. since December 1992, and
General Partner of CEO Venture Fund since January 1986. He
was a founder of Duquesne Systems, Inc. a predecessor of
LEGENT Corporation, which was acquired by Computer
Associates International, Inc.
</TABLE>
4
<PAGE> 8
BOARD OF DIRECTORS AND COMMITTEES
The Board met six times during the fiscal year ended March 31, 1998. The
Board has an Audit Committee and a Compensation Committee to assist in the
management of the affairs of the Company.
The Board does not have a standing Nominating Committee. The Board will
consider nominees recommended by shareholders provided that shareholders submit
the names of nominees in writing to the Secretary of the Company together with a
statement of the nominee's qualifications. Such information should be received
no later than 120 days in advance of the annual meeting with respect to
nominations.
The Audit Committee is 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 other
duties as directed by the Board. The Audit Committee is also 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 met once during fiscal 1998.
The Compensation Committee is responsible for administering the Stock
Option Plans (defined below), 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 met twice during fiscal 1998.
No director attended fewer than 75% of the total number of meetings of the
Board and of all committees on which the director serves during the fiscal year
ended March 31, 1998.
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
47 Director
John D. Godfrey...................... Vice President--Professional Services, Secretary and
49 Director
Richard J. Goldbach.................. 42 Treasurer and Chief Financial Officer
Allen D. Gart........................ 57 Vice President--International 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.
In August 1997, Mr. Goldbach assumed the role of Treasurer of the Company. 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, and was named Vice-President International Sales effective April 1, 1998.
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.
5
<PAGE> 9
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 of the
executive officers for the fiscal year ended March 31, 1998. Excluding Ravindra
Koka, the Company's President and Chief Executive Officer, none of the other
executive officers received total compensation in excess of $100,000 for the
fiscal years ended March 31, 1997 or 1996. Messrs. Goldbach and Gart joined the
company during the fiscal year ended March 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ------------
SECURITIES
UNDERLYING
FISCAL ANNUAL INCENTIVE OTHER STOCK
NAME AND PRINCIPAL POSITION(S) YEAR SALARY BONUS COMPENSATION OPTIONS
------------------------------ ---- ------ ----- ------------ -------
<S> <C> <C> <C> <C> <C>
Ravindra Koka........................ 1998 $180,000 $139,605 -- 25,000
President and 1997 100,409 -- -- --
Chief Executive Officer 1996 86,980 -- -- --
John D. Godfrey...................... 1998 $136,000 $ 84,412 -- 10,000
Vice President-- 1997 90,080 -- -- --
Professional Services, 1996 78,283 -- -- --
Secretary and Director
Richard J. Goldbach.................. 1998 $110,500 $ 95,184 -- 10,000
Treasurer and 1997 46,811 -- -- --
Chief Financial Officer 1996 -- -- -- --
Allen D. Gart........................ 1998 $100,000 $ 40,000 $99,752(1) 15,000
Vice President-- 1997 30,369 10,000 19,519(1) 15,000
International Sales 1996 -- -- -- --
</TABLE>
- ---------------
(1) Amount represents sales commissions.
STOCK OPTIONS
The Company currently maintains two stock option plans under which stock
option awards may be made to eligible employees of the company: the 1994 Stock
Option Plan and the 1997 Stock Option Plan (collectively "the Stock Option
Plans"). The number of shares authorized to be issued under the Plans 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, 1998, the numbers of options granted and outstanding under the 1994
Stock Option Plan and the 1997 Stock Option Plan were 222,064 and 121,750,
respectively.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE OF
ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(C)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ------------------------------- ---------- -------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ravindra Koka.................. 25,000(a) 10.85% $16.25 3/3/08 $255,488 $647,458
John D. Godfrey................ 10,000(a) 4.34% $16.25 3/3/08 $102,195 $258,983
Richard J. Goldbach............ 10,000(a) 4.34% $16.25 3/3/08 $102,195 $258,983
Allen D. Gart.................. 15,000(a) 6.51% $16.25 3/3/08 $153,293 $388,475
15,000(b) 6.51% $ 8.25 4/2/07 $ 77,826 $197,226
</TABLE>
- ---------------
(a) Options granted in 1998 are exercisable starting January 1, 1999, with 25%
of the shares becoming exercisable at that time. An additional 25% of the
option shares become exercisable on each successive January 1st, with all
option shares exercisable on January 1, 2002, with a maximum term of ten
years.
(b) Options are exercisable starting January 3, 1999, with 50% of the shares
becoming exercisable at that time. All options are exercisable on January 3,
2000, with a maximum term of ten years.
(c) Amounts assume that options will be held to the maximum term before
expiration. There is no assurance provided to any executive officer or any
other holder of the Company's securities that the actual stock price
appreciation over the ten-year option term will be at the assumed 5% or 10%
annual rates of compounded stock price appreciation or at any other defined
level and that no exercises occur before the holding period. Unless the
market price of the Common Stock appreciates over the option term, no value
will be realized from the option grants made to the executive officers.
The following table sets forth certain information with respect to the
value of options held by the executive officers of the Company on March 31,
1998. Messrs. Koka, Godfrey, Goldbach and Gart did not exercise any options to
purchase common stock during the fiscal year ended March 31, 1998.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END (1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ravindra Koka.......................... 5,431 25,000 $ 70,657 $ --
John D. Godfrey........................ 4,888 10,000 $ 63,837 $ --
Richard J. Goldbach.................... 13,578 28,104 $134,151 $178,868
Allen D. Gart.......................... 15,000 60,000 $142,500 $363,750
</TABLE>
- ---------------
(1) Represents the difference between the closing price of $13.50 per share of
Common Stock as reported on the Nasdaq Stock Market on March 31, 1998 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. 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 thirty 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
7
<PAGE> 11
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
below), SEEC, for any reason, terminates the employee's employment or the
employee resigns "for good reason" (as defined below), 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 compensates 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 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 the first and second anniversaries of their
commencement of service as directors. On August 8, 1997, SEEC granted to each of
Radha R. Basu, Abraham Ostrovsky and Stanley Young, the Company's non-employee
directors, ten year options to purchase 15,000 shares of Common Stock at $20.75
per share. The options vest ratably over a three-year period following the date
of grant.
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
The Compensation Committee (the "Committee") determines compensation levels
for the Company's executive officers. Below is a report submitted by Dr. Reddy
and Ms. Basu, the members of the Committee, addressing the Company's
compensation policies for fiscal year 1998 as they impacted the executive
officers of the Company, including Ravindra Koka, President and Chief Executive
Officer; John D. Godfrey, Vice President--Professional Services, Secretary and
Director; Richard J. Goldbach, Treasurer and Chief Financial Officer; and Allen
D. Gart, Vice President--International 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-
8
<PAGE> 12
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.
The Committee believes that the annual remuneration for executive officers
should be set so that a large percentage of total cash compensation is at risk
under the incentive programs. For fiscal year 1998, the Committee made its
compensation decisions based on a review of the Company's fiscal year 1997
performance and on the Company's budget and other projections for fiscal year
1998. Executive officer incentive compensation was tied to Company-wide
achievement of financial goals.
COMPONENTS OF COMPENSATION
The components of compensation for the Company's executive officers, which
are designed to reflect the compensation philosophy, are addressed below:
(a) Salary. The Committee established salaries for the executive
officers based upon recommendations by Mr. Koka and consideration of
various subjective factors such as the responsibilities, positions and
qualifications of the executives, the Company's financial position and
operating results, and salaries paid to executives in comparable companies.
No formal surveys or analyses of comparable companies' compensation
practices were undertaken. However, the Committee did rely on their
collective experience and knowledge of compensation practices in
determining the salary levels for the executives. For fiscal year 1998, Mr.
Gart's salary was established by the terms of his employment agreement. The
salaries for Messrs. Koka, Godfrey and Goldbach were established at
designated levels at the beginning of fiscal year 1998, with a provision
that the salaries would be adjusted upward and retroactively, contingent
upon the Company's attainment of a cumulative revenue goal set by the
Committee. That revenue goal was reached during fiscal year 1998;
consequently, the executives' base and cumulative salaries were adjusted.
(b) Short-Term Incentive Compensation/Bonus Pool. For fiscal year
1998, the Company's executive management bonus plan was designed to provide
short-term incentive bonuses for the achievement of specified performance
goals. The Committee established that payment of any bonuses was contingent
upon the Company's attainment of its target financial goals for revenues
and pre-tax, pre-bonus earnings. In addition, individual performance goals
were incorporated into the calculation of certain bonuses. For performance
above the Company's targeted financial goals, additional bonuses would be
paid, except for Mr. Gart, whose bonus had a pre-determined maximum.
Consistent with the Committee's compensation philosophy of tying a large
percentage of total compensation to performance, the target bonuses for
Messrs. Koka, Godfrey and Goldbach were established at 32% to 35% of total
compensation. For Mr. Gart, target short-term incentive compensation,
consisting of commissions and bonus, was set at 56% of total compensation.
The Company's performance for fiscal year 1998 was above the target
financial goals set by the Committee at the beginning of the fiscal year.
Incentive bonuses were accrued for fiscal year 1998 for the executive
officers, and other incentive compensation was paid or accrued for Mr.
Gart, in the amounts set forth in the Summary Compensation Table above.
(c) Stock Options. The primary purpose of granting stock options is
to link the executive officers' financial success to that of the
shareholders of the Company. The exercise prices of stock options are
determined by the Committee, but may not be less than the fair market value
of the Company's Common Stock as of the date of grant. Stock options
granted to the executive officers during fiscal year 1998 are listed on the
table entitled "Option Grants in Last Fiscal Year".
FISCAL YEAR 1998 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
Reference is made to the discussion above with respect to subjective
criteria applicable to fiscal year 1998 compensation for executive officers,
including Ravindra Koka, the Company's President and Chief Executive Officer.
9
<PAGE> 13
The Committee approved an increase in Mr. Koka's annual salary from
$107,800 to $180,000, contingent on the Company's attainment of a cumulative
revenue goal. As that revenue goal was attained during fiscal year 1998, Mr.
Koka's salary was adjusted retroactively to the beginning of the fiscal year.
As described above, Mr. Koka's bonus for fiscal year 1998 reflects the
Company's above-target performance. The bonus accrued for Mr. Koka was 78% of
his base salary, compared to a target bonus of 53% of base salary.
The Committee approved a grant of 25,000 incentive stock options with an
exercise price of $16.25 to Mr. Koka during fiscal year 1998, in recognition of
his responsibilities as the Company's CEO and the Company's ability to achieve
its financial and other growth objectives. The grant of options to Mr. Koka is
designed to promote and reward long-term performance by the Company which the
Committee believes will be substantially dependent upon Mr. Koka's leadership.
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. 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
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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.
All Forms 3, 4 and 5 have been filed within the guidelines of the
Commission during fiscal year 1998, with the exception of Form 4 filed for Allen
D. Gart, for the purchase and subsequent sale of 500 shares of common stock in
April 1997 and May 1997, respectively. Mr. Gart's Form 4 was filed with the
Commission in August 1997. In making this disclosure, the Company has relied
solely on copies of the reports that its directors and officers have filed with
the Commission.
10
<PAGE> 14
PERFORMANCE GRAPH
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, 1998, 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
Nasdaq Computer
National and Data
Market Processing
Measurement Period Composite Services
(Fiscal Year Covered) SEEC, Inc. Index Stock Index
<S> <C> <C> <C>
Jan. 22, 1997 100.00 100.00 100.00
Mar. 31, 1997 112.10 87.90 84.10
Mar. 31, 1998 186.20 133.40 147.10
</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. Ravindra Koka, the President and
C.E.O., a director and a principal shareholder of SEEC, owns approximately 14%
and Shankar Krish, an employee of SEEC, owns approximately 8% of the outstanding
capital stock of ERA. Mr. Koka and Mr. Krish are also directors of ERA. Until
February 27, 1998, SEEC had owned approximately 5% of the outstanding capital
stock of ERA. In addition, ERA owns 226,305 shares of Common Stock of SEEC.
Since SEEC's inception in 1988, ERA had 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.
11
<PAGE> 15
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 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 reflected the predecessor basis of ERA in the products,
consistent with the Company's accounting policy of expensing all research and
development costs.
ERA had also agreed to assist SEEC in developing new products and
technologies. Pursuant to the Product Purchase Agreement, ERA had the
non-exclusive right to perform design and development work with respect to
SEEC's products pursuant to specified development schedules. In addition, ERA
had agreed to maintain in India the necessary infrastructure and personnel to
support such design and development work, 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 reengineering, and from all database
reengineering and reverse engineering products and services. This obligation to
pay ICICI on behalf of ERA was paid in full in fiscal 1998. 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. Also
effective January 1, 1997 SEEC and ERA each had 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. During fiscal 1998, the
Company paid to ERA sales support and maintenance support fees related to
certain U.S. sales where ERA was instrumental in effecting the sale and for
which ERA was expected to provide ongoing maintenance support to the customer.
SEEC incurred a total of $373,000, $166,000 and $79,000 in royalties and fees
due to ERA during fiscal 1998, 1997 and 1996.
Pursuant to the Product Purchase Agreement, upon a change of control of
ERA, SEEC had the right to repurchase some or all of the shares of Common Stock
owned by ERA. SEEC also had 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 did not purchase ERA's facilities, ERA had 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 had 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 paid 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 1998, 1997 and 1996, ERA paid $300,000,
$206,000 and $11,500 respectively, in royalties to SEEC. The agreement was for a
term of three years. SEEC could 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.
12
<PAGE> 16
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 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.
On February 27, 1998, SEEC and ERA entered into an agreement whereby ERA
transferred its distribution rights for SEEC products, plus certain fixed assets
and 30 ERA employees engaged in SEEC-related research and development, sales and
administration, to SEEC for consideration of approximately $1,047,000. The
acquisition was effective at the close of business on February 28, 1998, at
which time the Product Purchase Agreement and Marketing Agreement were
terminated, and SEEC assumed control and responsibility for product distribution
and development efforts. Final closing of the acquisition is scheduled to take
place during the Company's first quarter of fiscal 1999. At closing, the
purchase price consisting of approximately $1,042,000 in cash will be remitted
to ERA. As further consideration for the acquisition, SEEC also agreed to
relinquish its approximate 5% ownership in ERA. This consideration is valued at
$5,000, the amount of SEEC's original investment in ERA, previously reflected in
the Company's financial statements. SEEC Technologies Asia Private Limited
("SEEC Asia") was formed as a wholly-owned subsidiary of SEEC to effect the
acquisition and to hold and manage the acquired rights, certain assets and
SEEC-related product development projects.
Transactions between SEEC and its officers, directors and principal
shareholders and their affiliates, including the acquisition transaction between
SEEC and ERA, have been or will be approved by a majority of the Board of
Directors, including a majority of the disinterested directors, and are or will
be on terms no less favorable to SEEC than could be obtained from unaffiliated
third parties.
STOCK PURCHASES
In March 1996, Dr. Reddy, Chairman of the Board of SEEC, and Mr. Koka and
Mr. Godfrey, each an officer and director of SEEC, purchased from SEEC 33,945,
34,643 and 22,886 shares of Common Stock, respectively, at a price of $0.02 per
share, pursuant to the exercise of warrants issued to them in April 1993.
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.
13
<PAGE> 17
In September 1996, Radha R. Basu, a director of the Company, 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, by exercising warrants issued in connection with the demand notes and
Subordinated Notes described above for Messrs. Young and Ostrovsky.
In December 1997, Amar Foundation purchased from SEEC 42,998 shares of
Common Stock at a price of $.02 per share, pursuant to the exercise of a warrant
issued in connection with the demand note described above for Amar Foundation.
REGISTRATION RIGHTS
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 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 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
estimated to be approximately 400,000. 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.
SEEC also granted certain registration rights to H.C. Wainwright, Inc. and
Cruttenden Roth Incorporated in connection with the warrants issued to them in
connection with the Company's initial public offering in January 1997.
14
<PAGE> 18
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of SEEC's Common Stock as of June 15, 1998 by each person
known by SEEC to be the beneficial owner of more than 5% of the outstanding
Common Stock of SEEC on such date, by (i) each director of SEEC, (ii) certain
executive officers of SEEC, and (iii) all directors and executive officers of
SEEC as a group.
<TABLE>
<CAPTION>
SHARES OWNED BENEFICIALLY(1)
-----------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT(2)
------------------------ ------ ----------
<S> <C> <C>
Ravindra Koka............................................... 499,594(3) 8.2%
Raj Reddy................................................... 491,741(4) 8.1%
Crestone Capital Management................................. 389,235(5) 6.4%
John D. Godfrey............................................. 218,735(6) *
Stanley A. Young............................................ 59,516(7) *
Glen F. Chatfield........................................... 50,348(8) *
Richard J. Goldbach......................................... 17,081(9) *
Allen D. Gart............................................... 15,000(10) *
Abraham Ostrovsky........................................... 12,751(11) *
Radha R. Basu............................................... 11,402(12) *
All directors and executive officers as a group
(9 persons)............................................... 1,376,168(13) 22.4%
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Shares of Common Stock subject to
options or warrants exercisable within 60 days of June 15, 1998 are deemed
outstanding for computing the percentage beneficially owned by the person
or group holding such options or warrants, but are not deemed outstanding
for computing the percentage of any other person. Except as noted, each
shareholder has sole voting power and sole investment power with respect to
all shares beneficially owned by such shareholder.
(2) Based upon 6,076,546 shares outstanding as of the Record Date.
(3) Includes 5,431 shares issuable upon the exercise of outstanding options and
141,949 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 shareholder,
with respect to which Mr. Koka disclaims any beneficial interest. Mr.
Koka's address is in care of SEEC, Inc., Park West One, Suite 200, Cliff
Mine Road, Pittsburgh, Pennsylvania 15275.
(4) Dr. Reddy's address is in care of SEEC, Inc., Park West One, Suite 200,
Cliff Mine Road, Pittsburgh, Pennsylvania 15275.
(5) Based on information as of March 31, 1998 contained in a Schedule 13F filed
by Crestone Capital Management with the Securities and Exchange Commission.
Crestone Capital Management's address is 7720 East Belleview Avenue, Suite
220, Englewood, Colorado, 80111.
(6) Includes 4,888 shares 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., Park West One, Cliff Mine Road, Suite 200, Pittsburgh,
PA 15275.
(7) Includes 5,000 shares issuable upon the exercise of outstanding options.
Mr. Young's address is in care of Young Management Group, Inc., 24 New
England Executive Park, Burlington, Massachusetts 01803.
(8) Mr. Chatfield's address is in care of Optimum Power Technology, 3117
Washington Pike, Bridgeville, PA 15017.
15
<PAGE> 19
(9) Includes 13,578 shares issuable upon the exercise of outstanding options.
Mr. Goldbach's address is in care of SEEC, Inc., Park West One, Suite 200,
Cliff Mine Road, Pittsburgh, Pennsylvania 15275.
(10) Represents 15,000 shares issuable upon the exercise of outstanding options.
Mr. Gart's address is in care of SEEC, Inc., Park West One, Suite 200,
Cliff Mine Road, Pittsburgh, Pennsylvania 15275.
(11) Includes 7,263 shares issuable upon the exercise of outstanding options.
Mr. Ostrovsky's address is 24115 Hillview Road, Los Altos, CA 94024.
(12) Includes 7,263 shares issuable upon the exercise of outstanding options.
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.
(13) Includes 58,423 shares issuable upon exercise of outstanding options.
ADOPTION OF THE SEEC, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
The 1998 Employee Stock Purchase Plan (the "Plan") was adopted by the
Company's Board of Directors on June 17, 1998. The Directors hold to the view
that ownership of Company Common Stock by the Company's employee team fosters
increased awareness of and commitment to corporate-wide goals and objectives. A
principal goal of the Plan is to broaden beyond upper management the base of
employees who have an ownership interest in Company shares; consequently, the
Plan is deliberately structured to attract investment from all levels of the
Company and it contains limitations on participation by the Company's employees
who own a significant amount of stock. THE BOARD OF DIRECTORS RECOMMENDS THAT
THE SHAREHOLDERS VOTE FOR APPROVAL OF ADOPTION OF THE PLAN.
The principal features of the Plan are summarized below. The summary is
qualified in its entirety by the full text of the Plan, which is set forth as
Exhibit A to this Proxy Statement.
GENERAL
The purpose of the Plan is to promote the continued success of the Company
by encouraging eligible employees of the Company and its subsidiaries to
purchase shares of Common Stock of the Company and by facilitating those
purchases through periodic sales of Company shares directly to employees,
financed by payroll deductions or by other cash payments.
The aggregate number of shares which may be issued and sold under the Plan
is 300,000 shares of Common Stock, subject to proportionate adjustment in the
event of stock splits and similar events.
There will be no charges or credits to the Company's reported earnings in
connection with the issuance and sale of shares under the Plan.
ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors, (the "Committee") which is authorized to interpret the Plan and to
prescribe rules, regulations and procedures governing its operation.
ELIGIBILITY OF EMPLOYEES
All employees of the Company and of any subsidiary designated by the
Committee are eligible to participate in the Plan. As of March 31, 1998, an
estimated 107 employees were eligible for participation.
No employee will be eligible to participate in the Plan during a Purchase
Period (as described below) if the employee owns shares which, when added to the
maximum number of shares the employee may purchase under the Plan and any
outstanding stock options, would exceed 5% of the voting power or value of the
Company's outstanding Common Stock.
16
<PAGE> 20
PURCHASE PERIODS AND PAYROLL DEDUCTIONS
The Plan will be implemented by sequential Offering Periods of
approximately 24 months duration, and each Offering Period will contain four
Purchase Periods of approximately six months duration. The first Offering Period
will extend from the effective date of the Plan to August 31, 2000. Subsequent
Offering Periods will commence on the first day of February and August of each
year, commencing February 1, 1999, and end on the last day of the second January
and July, respectively, occurring thereafter. The first Purchase Period will
commence on the effective date of the Plan and end on January 31, 1999.
Subsequent Purchase Periods will begin on or about each February 1 and August 1
and will end on or about each July 31 and January 31, respectively. The
Committee may establish a different duration for one or more future Offering
Periods or different commencing or ending dates for such Offering Periods;
provided, however, that no Offering Period may have a duration exceeding 27
months.
Eligible employees may participate in the Plan during any Period by filing
a payroll deduction authorization form by the enrollment deadline established
for that period. Participants may authorize payroll deductions of between 1% and
10%, in whole percentages, of compensation (including base wages or salary,
commissions, overtime, bonuses, annual awards, incentive payments and all other
compensation paid in cash) for each pay period ending during the Offering
Period. The deduction will be credited to a stock purchase account to be applied
at the end of each Purchase Period in the Offering Period to the purchase of
Common Stock. No interest on payroll deductions will be credited to
participating employees' stock purchase accounts.
At any time a Participant may withdraw all or any portion of the payroll
deductions credited to his or her Plan account and not previously applied toward
the purchase of Common Stock. A Participant who withdraws the entire balance
credited to his or her Plan account shall be deemed to have withdrawn from the
Plan.
In addition, at any time and from time to time the Committee may designate
an offering period during which employees will be entitled to purchase shares of
Common Stock for cash.
PURCHASE OF COMMON STOCK
The purchase price of shares of Common Stock purchased under the Plan by
payroll deduction will be the lower of (a) 85% of the fair market value of the
Common Stock as of the first day of any 24 month offering period or (b) 85% of
the fair market value of the Common Stock as of the last day of the Purchase
Period. In the case of cash purchases, the purchase price will be the lower of
(a) 85% of the fair market value of the Common Stock as of the first day of any
offering period established by the Committee or (b) 85% of the fair market value
of the Common Stock as of the purchase date. Fair market value will generally be
interpreted as the mean between the publicly reported bid and ask prices per
share of the Common Stock for the date for which the fair market value is to be
determined.
Effective as of the closing day of a Purchase Period, the balance in each
participating employee's stock purchase account will automatically be applied to
the purchase of a number of whole shares of Common Stock equal to the balance in
the account divided by the purchase price. As soon as practicable after the end
of the Purchase Period, employees will receive certificates for the number of
whole shares purchased. Unless otherwise requested by the employee, any
remaining account balance will be retained for the following Purchase Period.
CALENDAR YEAR PURCHASE LIMITATION
The maximum number of shares which may be purchased by any employee in a
calendar year is equal to the quantity determined by dividing $25,000 by the
Fair Market Value of a share of Common Stock as of the first day of an Offering
Period.
TERMINATION OF EMPLOYMENT
Participation in the Plan will conclude as of the date of an employee's
termination of employment, whether by death, retirement, disability or other
cause. Should termination of employment occur on or before the last day of a
Purchase Period, payroll deductions will cease, no shares will be purchased and
the balance in
17
<PAGE> 21
the employee's stock purchase account will be refunded as soon as practicable.
In the event that death is the cause of termination, the refund will be made to
the employee's legal representative.
AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the Plan at any time. Without
shareholder approval, however, no amendment may increase the total number of
shares which may be issued and sold under the Plan.
Unless previously terminated by the Board, the Plan will terminate on the
last day of the Purchase Period that participating employees become entitled to
purchase a number of shares equal to or greater than those remaining available
for purchase under the Plan.
If on the last day of a Purchase Period the number of shares eligible for
purchases by employees is greater than the number of shares remaining available,
the Committee will allocate the available shares among the participating
employees in such manner as it deems fair and which complies with the
requirements of Section 423 of the Internal Revenue Code. If during a Purchase
Period it appears that, at the end of the Purchase Period, the shares eligible
for purchase through authorized payroll deductions may exceed the shares
remaining available, the Committee may reduce the payroll deductions authorized
by participating employees. Following any termination of the Plan, any balances
in employees' stock purchase accounts not applied to the purchase of shares will
be refunded.
FEDERAL INCOME TAX
The principal Federal income tax consequences of participation in the Plan
can be summarized as follows:
Under Federal income tax law, participants in the Plan are viewed as having
been granted a stock option on the first day of the Purchase Period and as
having exercised the stock option by the automatic purchase of shares on the
last day of the Purchase Period. A participant, therefore, will not recognize
taxable income either at the time of grant of the option or on the date the
shares are purchased. Instead, a participant will generally recognize taxable
income only upon disposition of the Common Stock acquired under the Plan or upon
death.
The Company will generally be entitled to a deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of the disqualifying disposition. In all other
cases, no deduction with respect to options granted or shares of Common Stock
issued under the Plan is allowed for the Company or one of its subsidiaries.
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
1999 Annual Meeting, shareholder proposals must be received by the Company no
later than February 28, 1999 and must otherwise comply with the requirements of
Rule 14a-8.
AUDITORS
The Company engaged BDO Seidman, LLP, independent certified public
accountants, as auditors for the fiscal year ended March 31, 1998. 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.
18
<PAGE> 22
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, 1998 as filed with the
Securities and Exchange Commission without any charge by writing to: Investor
Relations, SEEC, Inc. Park West One, Suite 200, Pittsburgh, Pennsylvania 15275.
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 judgment upon such matters.
By order of the Board of Directors,
JOHN D. GODFREY
Vice President and Secretary
19
<PAGE> 23
EXHIBIT A
SEEC, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN
1.1 ESTABLISHMENT AND EFFECTIVE DATE. The SEEC, Inc. 1998 Employee Stock
Purchase Plan (the "Plan") is hereby established effective as of the date the
Plan is approved by the Board (the "Effective Date") subject to approval by the
holders of a majority of the shares of Common Stock of the Company at an annual
or special meeting of the shareholders held on or before the first anniversary
of the Effective Date, and no Purchase Rights granted hereunder shall be
exercisable prior to such approval. If the Plan is not so approved, the Plan
shall not become effective.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
Company and its shareholders by providing an incentive to attract, retain and
reward Eligible Employees of the Participating Company Group and by motivating
such persons to contribute to the growth and profitability of the Participating
Company Group. The Plan provides Eligible Employees with an opportunity to
acquire a proprietary interest in the Company through the purchase of Stock. The
Company intends that the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Code (including any amendments or replacements of such
section), and the Plan shall be so construed.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued.
1.4 STRUCTURE OF PLAN. The Plan is structured to permit Eligible Employees
to purchase Stock at a discount from its fair market value (a) by way of
periodic purchases from payroll deductions and (b) by way of periodic offerings
of Stock for cash that may be made to Eligible Employees from time to time.
2. DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. Any term not expressly defined in the Plan but defined
for purposes of Section 423 of the Code shall have the same definition herein.
Whenever used herein, the following terms shall have their respective meanings
set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.
(c) "Committee" means the Compensation Committee of the Board.
(d) "Company" means SEEC, Inc., a Pennsylvania corporation, or any
successor corporation thereto, and its subsidiaries.
(e) "Compensation" means, with respect to any Offering Period, base wages
or salary, commissions, overtime, bonuses, annual awards, other
incentive payments, and all other compensation paid in cash during
such Offering Period before deduction for any contributions to any
plan maintained by a Participating Company and described in Section
401(k) or Section 125 of the Code. Compensation shall not include
reimbursements of expenses, allowances, long-term disability, workers
compensation, fringe benefits or any amount deemed received without
the actual transfer of cash or any amounts directly or indirectly
paid pursuant to the Plan or any other stock purchase or stock option
plan, or any other compensation not included above.
(f) "Designated Offerings" has the meaning specified in Section 11.1.
(g) "Designated Purchase Periods" has the meaning specified in Section
11.1.
20
<PAGE> 24
PROXY -- SEEC, INC.
ANNUAL MEETING OF SHAREHOLDERS AUGUST 6, 1998
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 15, 1998, 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 6, 1998 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> 25
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
SEEC, INC.
AUGUST 6, 1998
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 Radha R. Basu 1998 Employee Stock
John D. Godfrey Purchase Plan
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 1, 1998.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
</TABLE>
SIGNATURE(S)__________________________________________ DATE______________, 1998
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.
