SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [X] Definitive Proxy Statement
[ ] Confidential, for Use of the [ ] Definitive Additional Materials
Commission Only (as permitted by [ ] Soliciting Material Pursuant to
Rule 14a-6(e)(2)) Rule 14a-11(c) or Rule 14a-12
VIASOFT, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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5) Total fee paid:
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[ ] 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:
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[VIASOFT LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
Viasoft, Inc. (the "Company") will be held at the Embassy Suites Resort, 2630
East Camelback Road, Phoenix, Arizona on Wednesday, November 18, 1998 at 10:00
a.m. for the following purposes:
1. To elect five directors to the Board of Directors to serve until the
next Annual Meeting of Stockholders and until their successors have
been duly elected and qualified;
2. To approve amendments to the Viasoft, Inc. 1997 Equity Incentive Plan
(the "1997 Plan") providing for an additional 850,000 shares that may
be issued pursuant to future grants of Awards under the 1997 Plan;
3. To approve an amendment to the Viasoft, Inc. Employee Stock Purchase
Plan (the "Purchase Plan"), providing for an additional 400,000 shares
for issuance under the Purchase Plan;
4. To ratify the selection of Arthur Andersen LLP as independent auditors
of the Company for its fiscal year ending June 30, 1999; and
5. To transact such other business as may properly come before the Annual
Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on September 23,
1998 are entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. The Company will make available an
alphabetical list of stockholders entitled to vote at the Annual Meeting for
examination by any stockholder. The stockholder list will be available for
inspection at the Company's principal office in Phoenix, Arizona from November
6, 1998 until the Annual Meeting, and at the Annual Meeting on November 18,
1998.
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended June 30, 1998 accompanies this Notice.
By Order of the Board of Directors
Catherine R. Hardwick
Vice President, General Counsel
and Secretary
Phoenix, Arizona
October 15, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES
MAY BE REPRESENTED AT THE MEETING.
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VIASOFT, INC.
3033 NORTH 44TH STREET
PHOENIX, ARIZONA 85018
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PROXY STATEMENT
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FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 18, 1998
This Proxy Statement is being first mailed on or about October 15, 1998
to stockholders of Viasoft, Inc. (the "Company" or "Viasoft") by the Board of
Directors (the "Board") to solicit proxies for use at the 1998 Annual Meeting of
Stockholders (the "Meeting") to be held at the Embassy Suites Resort, 2630 East
Camelback Road, Phoenix, Arizona on Wednesday, November 18, 1998, at 10:00 a.m.,
local time, or at such other time and place to which the Meeting may be
adjourned.
The only items of business which management currently intends to
present at the Meeting are listed in the preceding Notice of Annual Meeting of
Stockholders and are explained in more detail on the following pages.
RECORD DATE AND VOTING SECURITIES
The record date for determining the stockholders entitled to notice of
and to vote at the Meeting was the close of business on September 23, 1998 (the
"Record Date"), at which time the Company had issued and outstanding 18,462,921
shares of Common Stock, $0.001 par value ("Common Stock"). The Common Stock
constitutes the only class of outstanding voting shares of the Company.
QUORUM, PROXIES AND COUNTING VOTES
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the outstanding Common Stock entitled to vote is necessary to
constitute a quorum. An inspector of elections appointed by the Board shall
determine the shares represented at the Meeting and the validity of proxies and
shall count all votes. The vote on each proposal submitted to stockholders is
tabulated separately. Each stockholder of record on the Record Date is entitled
to one vote on each proposal that comes before the Meeting for each share then
held. Shares represented by proxies pursuant to which votes have been withheld
from any nominee for director, or which contain one or more abstentions, are
counted as present or represented for purposes of determining both (i) the
presence or absence of a quorum for the Meeting and (ii) the total number of
shares entitled to vote. A "broker non-vote" occurs when a broker or other
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because the broker does not have discretionary
voting power for the proposal not voted and has not received instructions from
the beneficial owner. Broker non-votes are counted as present or represented for
purposes of determining the presence or absence of a quorum for the Meeting, but
are not counted for purposes of determining the number of shares entitled to
vote with respect to any proposal for which the broker lacks discretionary
authority.
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All shares represented by valid proxies will be voted in accordance
with the directions specified on each proxy. Any proxy on which no direction is
specified will be voted FOR Proposals 1, 2, 3 and 4. By returning the proxy, a
stockholder also authorizes management to vote the stockholder's shares in
accordance with management's best judgment in response to other proposals that
properly come before the Meeting. Management of the Company currently knows of
no other proposals to come before the Meeting.
REVOCATION OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by advising the transfer agent in
writing of the stockholder's desire to revoke the proxy, by submitting a duly
executed proxy dated subsequent to the original proxy, or by attending the
Meeting and voting in person. Please note, however, that if a stockholder's
shares are held of record by a broker, bank or other nominee and that
stockholder wishes to vote at the Meeting, the stockholder must bring to the
Meeting a letter from the broker, bank or other nominee confirming that
stockholder's beneficial ownership of the shares. Written notification to the
transfer agent, Harris Trust and Savings Bank, must be delivered to Shareholder
Services, Post Office Box A3504, Chicago, IL 60690-9502.
SOLICITING PROXIES
The expenses of soliciting proxies to be voted at the Meeting,
including the cost of preparing, printing and mailing the Notice of Annual
Meeting of Stockholders, this Proxy Statement, the Annual Report and the
accompanying proxy card, will be paid by the Company. Following the original
mailing of the proxies and other soliciting materials, the Company and/or its
agents may also solicit proxies by mail, telephone, facsimile, telegraph or in
person. The Company has also retained Corporate Investor Communications, Inc.,
111 Commerce Road, Carlstadt, NJ 07072-2586, to assist in the solicitation of
proxies, for an approximate cost of $5,500.00, plus reasonable expenses. Brokers
and other persons holding stock in their names, or in the names of nominees,
will be requested to forward proxy material to the beneficial owners of the
stock and to obtain proxies, and the Company will defray reasonable expenses
incurred in forwarding such material.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Each of the persons named below has been nominated for election as a
director of the Company to serve until the 1999 Annual Meeting of Stockholders
and until his successor has been duly elected and qualified. Each of the
nominees listed below was elected by the stockholders at the last annual meeting
and is currently a director. All of the nominees have agreed to serve if
elected. The Board knows of no reason why any such nominee should be unable to
serve, but if such should be the case, the shares represented by duly executed
proxies received by the Company will be voted for the election of a substitute
nominee selected by the Board.
NOMINEES
The names of the nominees and certain information about them, as of
August 31, 1998, are set forth below:
DIRECTOR
NAME OF NOMINEE AGE POSITION SINCE
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Steven D. Whiteman 47 Chairman of the Board, Chief 1994
Executive Officer and Director
John J. Barry III(1)(2) 58 Director 1991
Alexander S. Kuli(2) 53 Director 1994
J. David Parrish(1) 56 Director 1994
Arthur C. Patterson(1) 54 Director 1984
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(1) Member of Compensation Committee
(2) Member of Audit and Finance Committee
STEVEN D. WHITEMAN has served as Chief Executive Officer and a director
since January 1994 and as Chairman of Board of Directors since April 24, 1997.
Mr. Whiteman served as President of the Company from May 1993 to April 1998, and
prior to that, he served as Vice President of Sales and Marketing of the Company
from December 1990. Mr. Whiteman serves on the boards of directors of Unify
Corporation and Actuate Software Corporation.
JOHN J. BARRY III has served as a director of the Company since August
1991. Mr. Barry presently provides strategic and management consulting services
to senior management in the information technology and other industries. Mr.
Barry was the Chairman, President and Chief Executive Officer of Petroleum
Information Corporation, an energy industry information solutions company, in
Houston, Texas, from May 1991 through December 1996. Mr. Barry serves on the
boards of directors of several privately held companies.
ALEXANDER S. KULI has served as a director of the Company since April
1994. In April 1998, Mr. Kuli became Advisor to Senior Staff for Tivoli Systems,
Inc., a vendor of distributed software products. Prior to that, Mr. Kuli served
as Vice President, Worldwide Sales for Tivoli from January 1993 to October 1997
and as Vice President from October 1997 until April 1998. Prior to joining
Tivoli, Mr. Kuli served as Vice President, Worldwide Sales for Candle
Corporation, a vendor of mainframe systems performance management software, from
October 1985 through December 1992. Mr. Kuli serves on the board of directors of
Oberon Software, Inc.
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J. DAVID PARRISH has served as a director of the Company since January
1994. Mr. Parrish is an independent consultant in the software services
industry. Mr. Parrish served as the Senior Vice President of Walker Interactive
Systems, Inc., a financial application software company, from November 1989 to
August 1997.
ARTHUR C. PATTERSON has served as a director of the Company since
September 1984. He served as President of the Company from October 1984 to June
1985. Mr. Patterson is a founder and General Partner of Accel Partners, a
venture capital firm. Mr. Patterson also serves on the boards of directors of
PageMart Wireless, Inc., Unify Corporation and Actuate Software Corporation, as
well as several other privately held software and telecommunication companies.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
BOARD COMMITTEES
The Board is responsible for the overall affairs of the Company. To
assist it in carrying out this responsibility, the Board has delegated certain
authority to designated committees, the current membership and duties of which
are as follows:
AUDIT AND FINANCE COMMITTEE COMPENSATION COMMITTEE
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Alexander S. Kuli, Chairman John J. Barry III, Chairman
John J. Barry III(1) J. David Parrish
Arthur C. Patterson
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(1) Mr. Barry was appointed to the Audit and Finance Committee on January 21,
1998.
AUDIT AND FINANCE COMMITTEE. The Audit and Finance Committee of the
Board reviews the internal accounting procedures of the Company and consults
with and reviews the services provided by the Company's independent public
accountants. This Committee met once during the last fiscal year.
COMPENSATION COMMITTEE. The Compensation Committee of the Board reviews
and recommends to the Board the compensation and benefits of all executive
officers of the Company and reviews general policy relating to compensation and
benefits of employees of the Company. The Compensation Committee also
administers the issuance of stock options and other awards under the Company's
stock plans. The Compensation Committee met once and held two telephonic
meetings during the last fiscal year.
NOMINATIONS. The Company does not have a standing nominating committee.
The function of nominating directors is carried out by the entire Board of
Directors.
Pursuant to the Company's Bylaws, a stockholder may nominate persons
for election as director, provided that the stockholder (a) is a stockholder of
record at the time of the nomination and is entitled to vote at the meeting of
stockholders to which the nomination relates, and (b) complies with the notice
procedures of Article III of the Bylaws. That Article provides that the
nominating stockholder must deliver written notice of the nomination to the
Company's Secretary not earlier than the 90th day nor later than the 60th day
prior to the first anniversary of the preceding year's annual meeting. The
required notice must contain certain information, including information about
the nominee, as prescribed in the Bylaws. The deadline for a stockholder to
deliver notice of a nomination for the election of directors at
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the 1998 Annual Meeting of Stockholders was September 16, 1998. No nominations
were received from any stockholder for the Meeting.
BOARD MEETINGS
The Board held four regular meetings and six special telephonic
meetings during the fiscal year ended June 30, 1998. No incumbent director
attended fewer than 75% of the aggregate of all meetings of the Board and the
committees, if any, of which the director was a member during the fiscal year
ended June 30, 1998.
DIRECTOR COMPENSATION
In accordance with the Company's policy, non-employee directors are
paid a $1,000 fee for each Board meeting and a $500 fee for each standing
Committee meeting attended plus reimbursement of reasonable, out-of-pocket
expenses incurred in attending such meetings. The Chairman of each standing
Committee is paid an annual retainer of $2,000 upon election as Chairman. In
addition, each non-employee Director is paid an annual retainer of $5,000 upon
re-election to the Board at each annual meeting of stockholders. Each
non-employee director also participates in the Company's Outside Director Stock
Option Plan (the "Director Plan"). Pursuant to the Director Plan, each
non-employee director who is re-elected to the Board is automatically granted an
option to purchase 10,000 shares of Common Stock. The exercise price for such
options is the closing price of Common Stock on that date. Each person who is
elected for the first time to be a non-employee director of the Company is
automatically granted an option to purchase 20,000 shares of Common Stock, at
the closing price of the Common Stock on the grant date, under the terms and
conditions of the Director Plan. Directors who are also employees of the Company
receive no additional compensation for serving as a director or committee
member.
VOTE REQUIRED
Directors are elected by a plurality of the shares present, in person
or by proxy, and entitled to vote at the Meeting, provided that a quorum is
present. Votes may be cast FOR the nominees or WITHHELD. In addition, a
stockholder may indicate that he or she is voting FOR the nominees except for
any nominee(s) specified in writing on the proxy card. The five nominees who
receive the greatest number of votes cast FOR the election of such nominees
shall be elected as Directors. As a result, any vote other than a vote FOR the
nominee will have the practical effect of voting AGAINST the nominee. An
abstention will have the same effect as voting WITHHELD for the election of
directors, and, pursuant to Delaware law, a broker non-vote will not be treated
as voting in person or by proxy on the proposal.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION
OF EACH OF THE NOMINATED DIRECTORS
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PROPOSAL NO. 2
PROPOSAL TO AMEND THE COMPANY'S
1997 EQUITY INCENTIVE PLAN
The 1997 Equity Incentive Plan (the "1997 Plan"), which replaced the
1994 Equity Incentive Plan (the "1994 Plan"), was approved by the Company's
stockholders and became effective on November 14, 1997. Under the 1997 Plan,
850,000 shares, plus certain shares of the Company's common stock that (i) were
available for future awards under the 1994 Plan on the effective date of the
1997 Plan, and (ii) are subject to awards under the 1994 Plan but are forfeited
or terminate, expire or lapse for any reason, are reserved for issuance.
Based on the Company's philosophy of rewarding and motivating its
employees, and due to the Company's expansion and acquisitions and the ongoing
recruitment of highly qualified and experienced personnel, the Company has
awarded stock option grants under the 1997 Plan totaling 1,091,051 shares of
Common Stock as of September 23, 1998. As of September 23, 1998, the Record
Date, there are 60,998 shares remaining available for future grants under the
1997 Plan.
The Board of Directors has approved amendments to the 1997 Plan,
subject to approval by the Company's stockholders. The amendments to the 1997
Plan will increase the number of shares of Common Stock that may be issued
pursuant to future grants of awards under the 1997 Plan by 850,000 shares from
1,156,049 shares as of September 23, 1998, to 2,006,049 shares. Except for
awards of Incentive Stock Options which are limited to 1,700,000 shares,
additional shares that may become available from time to time as a result of
forfeitures, terminations, expirations or lapses under the 1994 Plan will also
be available for grants of awards under the 1997 Plan. The additional shares of
Common Stock will be made available either from the authorized but unissued
shares of the Company's Common Stock or from shares of Common Stock reacquired
by the Company, including shares repurchased on the open market.
The proposed increase in issuable shares is the only proposed change to
the 1997 Plan. The major features of the 1997 Plan, none of which will be
affected by the proposed amendments, are summarized below, but this summary is
qualified in its entirety by reference to the actual text of the 1997 Plan.
Capitalized terms not otherwise defined have the meanings given to them in the
1997 Plan. A copy of the proposed amendments to the 1997 Plan are set forth in
Appendix A to this Proxy Statement.
The market price of the Company's Common Stock as of August 31, 1998
was $6.50, based on the closing price reported by The Nasdaq Stock Market.
1997 EQUITY INCENTIVE PLAN
PURPOSE
The 1997 Plan is designed to promote the interests of the Company by
enabling the Company to motivate, attract and retain the services of persons
upon whose judgment, efforts and contributions the continued success of the
Company's business depends, and by aligning the personal interests of those
persons with the interests of the Company's stockholders.
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ADMINISTRATION
The 1997 Plan is administered by a Committee of two or more
non-employee Board members as appointed by the Board of Directors. The Committee
has the power and authority, among other things, to (i) designate participants
and to determine the types of Awards granted to each participant, (ii) determine
the number of shares reserved under such Award or grant, the exercise price,
terms and conditions, duration and payment provisions of the Awards, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award and accelerations or waivers thereof, (iii) interpret
the 1997 Plan, and any Award or grant thereunder and any documentation
evidencing the 1997 Plan, Award or grant, (iv) establish, adopt or revise any
regulations or rules deemed appropriate for the administration of the 1997 Plan
and (v) make all other decisions and determinations or interpretations required
regarding the 1997 Plan.
ELIGIBILITY
Awards or grants under the 1997 Plan may be made to any individual who
is an officer, director or other employee (including employees who also are
directors or officers), consultant, independent contractor, or adviser of the
Company or its subsidiaries, and to other individuals the Company proposes to
engage in one of the foregoing capacities, as determined by the Committee.
PLAN AWARDS
The 1997 Plan provides for the grant of (i) Incentive Stock Options,
(ii) Non-Qualified Stock Options, (iii) Restricted Stock and (iv) Stock
Reference Awards.
A stock option is the right to purchase shares of the Company's Common
Stock at a set price specified in the Award agreement. An Incentive Stock Option
("ISO") is an option that is intended to satisfy the requirements specified in
Section 422 of the Internal Revenue Code. Under the Code, ISOs may only be
granted to employees. A Non-Qualified Option is any stock option other than an
Incentive Stock Option. An award of Restricted Stock is a grant of Common Stock
or an offer to sell shares of Common Stock to a participant subject to
restrictions on sale of the shares of Common Stock or other transfer by the
participant as may be determined by the Committee. The 1997 Plan permits the
Committee to grant or sell Restricted Stock to participants with certain vesting
restrictions or a risk of forfeiture for a period to be determined by the
Committee as of the date of the award. A Stock-Reference Award is an award
payable in, valued in whole or in part by reference to, or otherwise based on or
related to shares of Common Stock of the Company.
The 1997 Plan grants the Committee discretion to determine when stock
options or other awards will become exercisable and the vesting period of
options and awards. Vesting of stock options and other exercisable rights
granted under the 1997 Plan may be accelerated, and restrictions on other
outstanding awards may lapse, upon a change in control of the Company as defined
in the 1997 Plan.
No individual may be granted Awards of Options or Restricted Stock for
more than 250,000 shares of the Company's Common Stock in any one fiscal year,
provided that Awards for up to 500,000 shares may be granted in the fiscal year
during which a participant becomes an employee of the Company. The maximum
payment (or value of stock issued) under a Stock-Reference Award to any one
individual is $500,000 for any annual performance period. Restricted Stock and
Stock-Reference Awards may be subject to performance goal requirements based on
one or more business criteria, which may include, among other things, stock
price, market share, sales, earnings, earnings per share, return on equity or
costs. The Committee may designate one or more performance goal criteria for any
Award.
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The 1997 Plan generally provides that no right or interest of a
participant in any award made under the 1997 Plan may be sold, assigned or
otherwise transferred other than by will, beneficiary designation, or the laws
of descent and distribution, with limited exceptions as provided by applicable
law, but grants the Committee the discretion to determine whether a participant
may assign or otherwise transfer any of his or her rights to specified
individuals or classes of individuals, or to a trust, partnership or other
entity for the benefit of those individuals.
If the Company subdivides the outstanding Common Stock, declares a
stock dividend, declares or implements a dividend other than a stock dividend in
an amount that has a material effect on the price of the Common Stock, or
implements a combination or consolidation of the outstanding Common Stock, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it deems appropriate in the shares applicable to future and
outstanding Awards, exercise prices and other references to Common Stock under
the Plan. If the Company is a party to a merger, consolidation or other
reorganization, outstanding Awards shall be subject to the agreement of merger,
consolidation or reorganization. Such an agreement may provide, among other
things, for the continuation of outstanding Awards, for their assumption by the
surviving corporation, for substitution by the surviving corporation of its own
awards, for accelerated vesting, accelerated expiration and/or lapse of
restrictions, or for cash settlement. If the agreement does not provide for one
of those alternatives, then vesting of all outstanding options, and other
exercisable rights under the 1997 Plan is accelerated and all restrictions on
other Awards lapse, upon the effectiveness of the transactions contemplated by
such agreement. If any Awards under the 1997 Plan or the 1994 Plan are
forfeited, terminate, expire or lapse for any reason, any shares of Common Stock
subject to the Award will become available for additional grants under the 1997
Plan. In addition, any shares of Common Stock delivered to the Company in
payment for Common Stock purchased under the 1997 Plan or the 1994 Plan (or
related withholding taxes) will become available for additional grants under the
1997 Plan.
AMENDMENT, DURATION, TERMINATION OF THE 1997 PLAN
The 1997 Plan was approved by the Company's stockholders and became
effective on November 14, 1997. If not terminated sooner in accordance with its
terms, the 1997 Plan shall terminate upon the earlier of (a) November 14, 2007,
or (b) the date on which all shares available for issuance under the 1997 Plan
have been awarded. With the approval of the Board, the Committee may terminate,
amend or modify the 1997 Plan. Any such terminations, amendments or
modifications shall be subject to the approval of the Company's stockholders
where required by applicable laws, regulations and rules.
GENERAL RESTRICTIONS
The following actions are not permissible with respect to more than 10%
of the total shares authorized under the 1997 Plan: (a) amending an outstanding
Option to decrease the exercise price; (b) issuing a Non-Qualified Option with
an exercise price of less than 100% of the Fair Market Value; (c) granting Stock
Awards that are not subject to any restrictions or performance conditions unless
the award is in lieu of cash compensation and is valued at Fair Market Value;
and (d) granting Restricted Stock Awards that are not subject to either (i) a
vesting condition or repurchase option on behalf of the Company that is measured
over not less than three years, or (ii) performance criteria that must be
satisfied prior to vesting and an additional vesting condition or repurchase
option on behalf of the Company that is measured over not less than one year.
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FEDERAL INCOME TAX INFORMATION
The rules governing the tax treatment of Common Stock-based awards,
including options and stock acquired upon the exercise of options, are quite
technical. Therefore, the description of tax consequences set forth below is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the tax
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws. The federal income tax consequences
of the grant of Awards under the 1997 Plan and the subsequent disposition of
shares of Common Stock acquired thereby may be summarized as set forth below.
INCENTIVE STOCK OPTIONS. An employee is not taxed for regular income
tax purposes either at the time of the award or at the time of exercise of the
option. The difference between the exercise price and the fair market value of
the stock at the time of exercise, however, generally constitutes income for
alternative minimum tax purposes. Generally, the Company is not entitled to a
deduction with respect to the grant or exercise of an ISO. If an employee holds
the stock acquired upon exercise of an ISO for at least two years from the date
of the grant and at least one year following the date of exercise, the
difference between the amount paid for the stock and the subsequent sales price
is treated as long-term capital gain or loss. If these holding period
requirements are not satisfied, the employee is generally taxed, at ordinary
income tax rates, on the difference between the exercise price and the fair
market value of the stock as of the date of exercise and the Company is then
entitled to a corresponding deduction.
NON-QUALIFIED STOCK OPTIONS. The grant of a Non-Qualified Stock Option
typically does not produce any taxable income for the participant, and the
Company is not entitled to a deduction at that time. Upon exercise of a
Non-Qualified Stock Option, the optionee normally will recognize taxable
ordinary income equal to the excess of the stock's fair market value on the date
of exercise over the option exercise price. Subject to the requirements of
reasonableness, and the satisfaction of any reporting obligations, the Company
will generally be entitled to a business expense deduction equal to the taxable
ordinary income recognized by the optionee. Upon disposition of the stock, the
optionee will recognize a capital gain or loss equal to the difference between
the selling price and the sum of the amount paid for such stock plus any amount
recognized as ordinary income upon exercise of the option. Such gain or loss
will be long-term or short-term depending on whether the stock was held for more
than the applicable holding period.
LIMITATION ON COMPENSATION DEDUCTION. Publicly-held corporations are
precluded from deducting compensation paid to certain of their executive
officers in excess of $1.0 million. The employees covered by the $1.0 million
limitation on deductibility of compensation include the chief executive officer
and those employees whose annual compensation is required to be reported to the
Securities and Exchange Commission because the employee is one of the Company's
four highest compensated employees for the taxable year (other than the chief
executive officer).
Compensation attributable to stock options and other Common Stock-based
awards generally is included in an employee's compensation for purposes of the
$1.0 million limitation on deductibility of compensation. However, there is an
exception to the $1.0 million deduction limitation for compensation (including
compensation attributable to stock options) paid pursuant to a qualified
performance-based compensation plan. Compensation attributable to a stock option
is deemed to satisfy the qualified performance-based compensation exception if
(i) the grant is made by a Compensation Committee comprised of qualifying
outside directors, (ii) the plan under which the options may be granted states
the maximum number of shares with respect to which options may be granted during
a specified period to any employee, (iii) under the terms of the option, the
amount of compensation the employee would
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receive is based solely on an increase in the value of the shares after the date
of the grant (e.g., the option is granted at fair market value as of the date of
the grant) and (iv) the individuals eligible to receive grants, the maximum
number of shares for which grants may be made to any employee, the exercise
price of the options and other disclosures required by SEC proxy rules are
disclosed to, and subsequently approved by stockholders. The exercise price of
all options intended to qualify for this exemption will be at least the fair
market value of the Common Stock on the date of grant.
Compensation attributable to Restricted Stock and Stock-Reference
Awards is deemed to satisfy the qualified performance-based compensation
exception if (a) the grant is made by a Compensation Committee composed of
qualifying outside directors, (b) the plan under which the options may be
granted states the maximum amount of compensation payable to participants under
such Awards, (c) the terms of the Award base compensation solely on attainment
of one or more pre-established objective performance goals, (d) the Compensation
Committee certifies in writing to satisfaction of the performance goals and
other material terms and (e) the individuals eligible to receive grants, a
description of the business criteria on which the performance goals are based,
the maximum amount of compensation payable, and other disclosures required by
the SEC proxy rules are disclosed to, and subsequently approved by, the
stockholders.
In order to satisfy the stockholder approval requirements applicable to
qualified performance-based compensation plans, there must be a separate
stockholder vote in which a majority of the votes cast on the issue are cast in
favor of approval. The amendments to the 1997 Plan are being submitted to
stockholders at the Meeting in part, to satisfy this requirement. If the
stockholder approval and the other requirements applicable to qualified
performance-based compensation plans are satisfied (including grant by a
committee of qualifying outside directors), the $1.0 million compensation
deduction limitation will not apply to stock options with an exercise price
equal to or greater than the fair market value of the underlying shares on the
date of grant and the Committee will have the authority to grant Restricted
Stock and Stock-Reference Awards to which that limitation will not apply.
VOTE REQUIRED
Approval of the amendments to the 1997 Plan require the affirmative
vote of a majority of the shares present, in person or by proxy, and entitled to
vote at the Meeting, provided that a quorum is present. Votes may be cast FOR or
AGAINST the proposal, and stockholders may also ABSTAIN from voting on the
proposal. Abstentions will be counted as present or represented for purposes of
determining both the presence or absence of a quorum and the number of shares
entitled to vote on the proposal and as a practical matter will have the same
effect as a vote AGAINST the proposal. Broker non-votes will be counted as
present or represented for purposes of determining the presence or absence of a
quorum but will not be counted for purposes of determining the number of shares
entitled to vote on the proposal. The practical effect of broker non-votes is to
reduce the number of affirmative votes required to achieve a majority for the
proposal by reducing the total number of shares from which the majority is
calculated.
THE BOARD RECOMMENDS A VOTE FOR THE
PROPOSED AMENDMENTS TO THE 1997 EQUITY INCENTIVE PLAN
10
<PAGE>
PROPOSAL NO. 3
PROPOSAL TO AMEND THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was
approved by the stockholders in November 1994 as a qualified employee stock
purchase plan under Section 423 of the Internal Revenue Code. On November 15,
1996, the stockholders approved an amendment to the Purchase Plan which
increased the total number of shares to be purchased under the Purchase Plan to
a total of 800,000.
Based on the Company's philosophy of promoting superior levels of
performance from, and encouraging stock ownership by, eligible employees, the
Company has issued 604,597 shares of Common Stock pursuant to the Purchase Plan
and estimates that the remaining 195,403 shares available under the Purchase
Plan may be issued on the next purchase date, October 31, 1998.
The Board of Directors has approved an amendment to the Purchase Plan,
subject to approval by the Company's stockholders. The amendment to the Purchase
Plan will increase the number of shares of Common Stock that may be issued
pursuant to the Purchase Plan from 800,000 to 1,200,000. The additional shares
of Common Stock will be made available either from the authorized but unissued
shares of the Company's Common Stock or from shares of Common Stock reacquired
by the Company, including shares repurchased on the open market.
The major features of the Purchase Plan, none of which will be affected
by the proposed amendment, are summarized below, but this summary is qualified
in its entirety by reference to the actual text of the Purchase Plan.
Capitalized terms not otherwise defined have the meanings given to them in the
Purchase Plan. A copy of the proposed amendment to Article 6 of the Purchase
Plan is set forth in Appendix B to this Proxy Statement.
EMPLOYEE STOCK PURCHASE PLAN
PURPOSE
The Purchase Plan is designed to allow eligible employees to purchase
shares of Common Stock, at semi-annual intervals, through periodic payroll
deductions.
ADMINISTRATION
The Purchase Plan, which became effective February 28, 1995, is
administered by the Compensation Committee of the Board.
ELIGIBLE EMPLOYEES
Each full-time employee who is customarily employed for more than five
months per calendar year and more than 20 hours per week by the Company or any
participating subsidiary is eligible to participate in the Purchase Plan. As of
June 30, 1998, approximately 406 of the 541 eligible employees of the Company
were enrolled in the Purchase Plan, at varying payroll deduction amounts and
percentages of salary.
11
<PAGE>
OPTION TERMS
OFFERING PERIODS
The Purchase Plan is implemented in a series of successive offering
periods, each with a duration of up to twenty-seven (27) months. The Purchase
Plan is currently in its second offering period, which will end on the last
business day in April 1999. An individual who is an eligible employee on the
first day of a particular offering period must join that offering period on its
commencement date; otherwise, he or she will be barred from participation until
the beginning of the next offering period. Individuals who first become eligible
employees after the start of a particular offering period must join that
offering period on the first semi-annual entry date after commencement of their
employment or be barred from participation in that particular offering period.
At the time the participant joins the offering period, he or she will be granted
a purchase right to acquire shares of Common Stock at semi-annual intervals over
the remainder of that offering period. The purchase dates will occur on the last
business day in April and October each year, and all payroll deductions
collected from the participants for the semi-annual period of participation
ending with such purchase date will automatically be applied to the purchase of
Common Stock.
PURCHASE PRICE
The purchase price per share under the Purchase Plan will be
eighty-five percent (85%) of the lower of (i) the fair market value of the
Common Stock on the participant's entry date into the offering period or (ii)
the fair market value on the semi-annual purchase date. For any participant who
first joins the offering period after the commencement date of an offering
period, the clause (i) amount will not be less than the fair market value of the
Common Stock on such commencement date of that offering period. The fair market
value on the commencement date for the second offering period under the Purchase
Plan was $44.25. The fair market value on each subsequent entry date will be the
closing selling price of the Common Stock on the date in question, as quoted on
The Nasdaq Stock Market (or principal stock exchange if then so traded).
PURCHASE LIMITATIONS
The purchase price is to be paid through periodic payroll deductions
not to exceed 10% of the participant's total compensation (as defined in the
Purchase Plan) during each semi-annual period of participation within the
offering period, but in no event more than $7,500 per semi-annual purchase date
nor more than $25,000 worth of Common Stock (based on the fair market value of
the Common Stock on his or her entry date into the offering period) in any one
calendar year. In addition, not more than 200,000 shares in the aggregate may be
purchased by all participants on any one semi-annual purchase date.
RESTRICTIONS ON TRANSFER
Options received under the Purchase Plan, as well as payroll deductions
credited to a participant's account, may not be sold, assigned or otherwise
transferred, other than by will or the laws of descent and distribution and
other limited statutory rights. Any attempted transfer shall be without effect,
except that the Company may treat such an act as an election to terminate
participation in an offering period.
12
<PAGE>
DURATION, TERMINATION OF THE PURCHASE PLAN
The Company shall have the right, exercisable in the sole discretion of
the Compensation Committee, to terminate all outstanding purchase rights under
the Purchase Plan immediately following the close of any semi-annual period. If
the Company elects to exercise this right, the Purchase Plan shall terminate in
its entirety. If not terminated sooner, the Purchase Plan shall terminate on
December 31, 2003.
FEDERAL INCOME TAX INFORMATION
Options and shares purchased by participants under the Purchase Plan
are subject to certain federal income tax consequences pursuant to Section 423
of the Code. No taxable income is recognized by a participant upon the grant of
a right to purchase, or upon the purchase of shares, under the Purchase Plan.
The amount of a participant's payroll contributions under the Purchase Plan,
however, remains taxable as ordinary income to the participant at the time of
the payroll deduction. Additionally, there are no federal tax consequences to
the Company upon the grant of a right to purchase to a participant, or upon a
participant's purchase of shares, under the Purchase Plan.
If the shares of Common Stock are sold or disposed of at least two
years after the first day of a subscription period with respect to which the
participant purchases the shares and at least one year after the date of
purchase, then the participant will recognize ordinary income equal to the
lesser of (a) the excess of the fair market value of the shares at the time of
such disposition over the purchase price of the shares, or (b) the excess of the
fair market value of the shares on the date of grant of purchase rights over the
purchase price. Any further gain upon such disposition will be taxed as a
long-term capital gain at the income tax rate then in effect. If the shares are
sold and the sale price is less than the purchase price, then there is no
ordinary income, and the participant will have a long-term capital loss equal to
the difference between the sale price and the purchase price. The ability of a
participant to utilize such a capital loss will depend upon the participant's
other tax attributes and other statutory limitations.
If a participant sells or otherwise transfers shares less than two
years after the first day of a subscription period with respect to which he or
she purchases the shares or within one year after the date of purchase (a
"disqualifying disposition"), then at that time the participant will realize
ordinary income in an amount equal to the fair market value of the shares on the
date of purchase minus the purchase price of the shares. This excess will
constitute ordinary income for the year of sale or other disposition even if no
gain is realized on the sale or a gratuitous transfer of shares is made. The
balance of the gain will be taxed as a capital gain at the rate then in effect.
If the shares of Common Stock are sold for less than their fair market value on
the date of purchase, then the same amount of ordinary income will be attributed
to the participant and a capital loss will be recognized equal to the difference
between the sale price and the fair market value of the shares on the date of
purchase. The ability of a participant to utilize such a capital loss will
depend upon the participant's other tax attributes and other statutory
limitations.
In the event of a disqualifying disposition, the Company will recognize
a tax deduction in an amount equal to the fair market value of the shares on the
date of sale minus the participant's purchase price. If a participant does not
make a disqualifying disposition, then the Company will have no federal tax
consequences.
13
<PAGE>
AMENDMENT
The Board of Directors may alter, amend, suspend or discontinue the
Purchase Plan following the close of any semi-annual period. However, the Board
may not, without the approval of the Company's stockholders, materially increase
the number of shares issuable under the Purchase Plan or the maximum number of
shares which may be purchased per participant or in the aggregate during any one
semi-annual period, except that the Committee shall have the authority,
exercisable without such stockholder approval, to effect adjustment to the
extent necessary to reflect changes in the Company's capital structure. In
addition, the Board may not alter the exercise price formula so as to reduce the
exercise price payable for the shares usable under the Purchase Plan, or
materially increase the benefits accruing to participants under the Purchase
Plan or materially modify the requirements for eligibility to participate in the
Purchase Plan, without approval of the Company's stockholders.
MARKET PRICE
The market price of the Company's Common Stock as of August 31, 1998
was $6.50, based on the closing price reported by The Nasdaq Stock Market.
VOTE REQUIRED
Approval of the amendment to the Purchase Plan requires the affirmative
vote of a majority of the shares present, in person or by proxy, and entitled to
vote at the Meeting, provided that a quorum is present. Votes may be cast FOR or
AGAINST the proposal, and stockholders may also ABSTAIN from voting on the
proposal. Abstentions will be counted as present or represented for purposes of
determining both the presence or absence of a quorum and the number of shares
entitled to vote on the proposal and as a practical matter will have the same
effect as a vote AGAINST the proposal. Broker non-votes will be counted as
present or represented for purposes of determining the presence or absence of a
quorum but will not be counted for purposes of determining the number of shares
entitled to vote on the proposal. The practical effect of broker non-votes is to
reduce the number of affirmative votes required to achieve a majority for the
proposal by reducing the total number of shares from which the majority is
calculated.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT
TO THE EMPLOYEE STOCK PURCHASE PLAN
14
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit and
Finance Committee, has selected Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending June 30, 1999, and has further directed that
management submit the selection of independent auditors for ratification by the
stockholders at the Meeting. Arthur Andersen LLP began auditing the Company's
financial statements with the fiscal year ended June 30, 1984. Representatives
of Arthur Andersen LLP are expected to be present at the Meeting, will have the
opportunity to make a statement if they wish to do so and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Arthur Andersen LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Arthur Andersen LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the election, the Audit and Finance Committee
and the Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit and Finance Committee and the Board in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such an appointment would be in the
best interests of the Company and its stockholders.
VOTE REQUIRED
Ratification of Arthur Andersen LLP as the Company's independent
auditors for the current fiscal year requires the affirmative vote of a majority
of the shares present, in person or by proxy, and entitled to vote at the
Meeting, provided that a quorum is present. Votes may be cast FOR or AGAINST the
proposal, and stockholders may also ABSTAIN from voting on the proposal.
Abstentions will be counted as present or represented for purposes of
determining both the presence or absence of a quorum and the number of shares
entitled to vote on the proposal and as a practical matter will have the same
effect as a vote AGAINST the proposal. Broker non-votes will be counted as
present or represented for purposes of determining the presence or absence of a
quorum and will be counted for purposes of determining the number of shares
entitled to vote on the proposal. The practical effect of broker non-votes is a
vote AGAINST the proposal.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock, as of August 31, 1998, by
(a) each stockholder who is known by the Company to own beneficially more than
5% of the Common Stock, (b) each executive officer of the Company named in the
Summary Compensation Table below, (c) each director of the Company and (d) all
directors and executive officers of the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT(1)
------------------------------------ ------------ ----------
Putnam Investments, Inc. (2) 2,518,000 13.6
One Post Office Square
Boston, Massachusetts 02109
T. Rowe Price Associated (3) 1,461,500 7.9
100 East Pratt Street
Baltimore, MD 21202
Steven D. Whiteman (4) 341,472 1.8
Arthur C. Patterson (5) 77,914 *
John J. Barry III (6) 26,828 *
Kevin M. Hickey (7) 77,713 *
Colin J. Reardon (8) 80,887 *
J. David Parrish (9) 17,669 *
Alexander S. Kuli (10) 33,001 *
Jean-Luc G. Valente (11) 24,187 *
Abbott H. Ezrilov (12) 26,449 *
All Executive Officers and Directors as a Group 806,762 4.2
(14 persons) (13)
- ----------
* Represents beneficial ownership of less than 1%.
16
<PAGE>
(1) Except as otherwise noted, and subject to community property laws where
applicable, each of the stockholders named in the table has sole voting and
investment power with respect to all shares shown as beneficially owned by
the stockholder. Applicable percentages are based on 18,562,921 shares of
Common Stock outstanding as of August 31, 1998, adjusted as required by
rules promulgated by the SEC.
(2) Represents 1,259,000 shares held by Putnam Investments, Inc. ("PI"),
245,719 shares held by Putnam Investment Management, Inc. ("PIM") and
1,013,281 shares held by The Putnam Advisory Company, Inc. ("PAC"), each a
registered investment adviser under the Investment Advisers Act of 1940.
PI, PIM and PAC are deemed to be beneficial owners of the shares held by
their respective investment advisory clients. PI, a wholly owned subsidiary
of Marsh & McLennan Company, Inc. ("M&McL"), is the sole owner of PIM and
PAC. PI and M&McL disclaim the power to vote or dispose of, or to direct
the voting or disposition of, any of the securities owned by PIM and PAC.
(3) Represents 600,000 shares held by T. Rowe Price Science & Technology Fund
and 650,000 shares held by T. Rowe Price New Horizons Fund. T. Rowe Price
Science & Technology Fund and T. Rowe Price New Horizons Fund are both
registered investment advisers under the Investment Advisers Act of 1940
and are deemed to be beneficial owners of the shares held by their
respective investment advisory clients. The remaining 211,500 shares are
held in other client accounts.
(4) Includes 33,000 shares held by a trust for the benefit of Steven D. and
Beverly C. Whiteman, of which Mr. Whiteman is trustee, and 113,751 shares
that Mr. Whiteman may acquire upon the exercise of options exercisable
within 60 days of August 31, 1998.
(5) Includes 30,001 shares that Mr. Patterson may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(6) Includes 3,333 shares that Mr. Barry may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(7) Includes 72,992 shares that Mr. Hickey may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(8) Includes 79,166 shares that Mr. Reardon may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(9) Includes 17,001 shares that Mr. Parrish may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(10) Includes 30,001 shares that Mr. Kuli may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(11) Represents 24,187 shares that Mr. Valente may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998. Mr. Valente resigned
from the Company effective September 30, 1998.
(12) Includes 25,850 shares that Mr. Ezrilov may acquire upon the exercise of
options exercisable within 60 days of August 31, 1998.
(13) Includes 477,550 shares that such executive officers and directors may
acquire upon the exercise of options exercisable within 60 days of August
31, 1998.
17
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company are elected to serve annual terms
at the first Board meeting following the Meeting. Certain information concerning
the Company's executive officers, as of October 1, 1998, is set forth below:
NAME AGE POSITION
---- --- --------
Steven D. Whiteman 47 Chairman of the Board and Chief Executive Officer
Kevin M. Hickey 40 President and Chief Operating Officer
Mark R. Schonau 42 Senior Vice President, Finance and Administration,
Chief Financial Officer and Treasurer
Catherine R. Hardwick 39 Vice President, General Counsel and Secretary
Colin J. Reardon 45 Senior Vice President, International Operations
Abbott H. Ezrilov 57 Vice President, Channel Sales and Vendor
Relationships
David M. Lee 31 Vice President, Development
Robert K. Young 39 Vice President, Global Services
Kevin J. Donoghue 38 Vice President, Sales - The Americas
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities during the fiscal years ended June 30,
1998, 1997 and 1996 by the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers, which ranking
is based on salary and bonus earned during the fiscal year ended June 30, 1998
(together, the "Named Executive Officers").
18
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL
FISCAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Steven D. Whiteman(1) 1998 $220,000 $ 48,595 50,000 $ 2,817(2)
Chairman of the Board and 1997 $200,000 $181,980 --- $ 1,885(2)
Chief Executive Officer 1996 $186,000 $ 81,500 130,000 $ 1,954(2)
Kevin M. Hickey 1998 $165,000 $ 81,202(3) 80,000 $ 2,817(2)
President and Chief 1997 $137,500 $227,151(3) 40,000 $ 1,885(2)
Operating Officer 1996 $132,000 $151,003(3) 100,000 $ 2,110(2)
Colin J. Reardon 1998 $175,777 $121,363(3) 35,000 $14,630(4)
Senior Vice President, 1997 $163,256 $202,000(3) 40,000 $ 8,170(4)
International Operations 1996 $148,530 $ 80,872(3) 146,668 $ 6,967(4)
Jean-Luc G. Valente (5) 1998 $178,500 $ 23,075 16,667 $ 2,817(2)
Senior Vice President, 1997 $170,000 $ 74,580 --- $ 2,116(2)
Marketing 1996 $ 30,295 --- 80,000 ---
Abbott H. Ezrilov (6) 1998 $118,067 $116,878(3) 15,000 $ 2,817(2)
Vice President, Channel
Sales and Vendor
Relationships
</TABLE>
- ----------
(1) In fiscal years 1992 through 1994, Mr. Whiteman purchased an aggregate of
380,000 shares of restricted stock pursuant to four restricted stock
purchase agreements at the then current fair market value as determined by
the Board. The purchase price for Mr. Whiteman's restricted stock was paid
through cash payments and execution of full-recourse promissory notes. Mr.
Whiteman's aggregate restricted stock holdings as of June 30, 1998 were
194,000 shares, valued (net of the purchase prices paid) at $3,097,122. All
restricted stock purchased is subject to the Company's option to repurchase
such shares upon termination of employment and certain other events. The
Company's repurchase option expires as to an equal portion of the
restricted stock annually over periods from four to five years. Holders of
restricted stock are entitled to receive any dividends declared on the
Company's Common Stock. Restricted stock is entitled to full voting and
dividend rights.
(2) Amounts represent Company matching and discretionary contributions under
the 401(k) Profit Sharing Plan and Trust.
(3) Amounts represent bonus and commission payable.
(4) The Company provides a contribution to Mr. Reardon's private pension plan
that matches his private contributions, up to a maximum of 5% of his base
salary and, beginning in fiscal year 1998, 2.5% of his on-target earnings
per year. The Company's matching contribution is paid directly to the
pension company administering Mr. Reardon's account, on a monthly basis.
(5) Mr. Valente commenced his employment with the Company on April 11, 1996.
Mr. Valente resigned from his employment with the Company effective
September 30, 1998.
(6) Mr. Ezrilov was elected to the position of Vice President, Sales - The
Americas in April 1998 and became Vice President, Channel Sales and Vendor
Relationships in August 1998.
19
<PAGE>
OPTION GRANTS, EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information regarding stock
option grants to the Named Executive Officers during the fiscal year ended June
30, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(4)
-------------------------------------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE OR
OPTIONS FISCAL BASE PRICE EXPIRATION
NAME GRANTED YEAR(2) ($/SHARE)(3) DATE 5% 10%
- ---- ------- ------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Steven D. Whiteman 50,000(1) 5.59% $34.7500 11/26/07 $1,092,704.42 $2,769,127.52
Kevin M. Hickey 50,000(1) 5.59% $34.7500 11/26/07 $1,092,704.42 $2,769,127.52
30,000(1) 3.35% $13.0625 6/11/08 $246,448.09 $624,547.82
Colin J. Reardon 35,000(1) 3.91% $34.7500 11/26/07 $764,893.09 $1,938,389.27
Jean-Luc G. Valente 10,000(1) 1.12% $30.6875 2/4/08 $192,992.04 $489,079.72
6,667(1) .75% $16.0000 5/5/08 $67,085.45 $170,007.69
Abbott H. Ezrilov 5,000(1) .56% $30.6875 2/4/08 $96,496.02 $244,539.86
10,000(1) 1.12% $16.0000 5/5/08 $100,623.14 $254,998.80
</TABLE>
- ----------
(1) The stock options were granted under the Company's 1997 Plan. Twenty-five
percent of the options become exercisable on the first anniversary of the
date of grant and cumulatively thereafter, 6.25% of the shares shall become
exercisable at the end of each three-month period.
(2) Based on an aggregate of 894,718 shares subject to options granted to
employees in the fiscal year ended June 30, 1998.
(3) The exercise price per share under each option was equal to the fair market
value of the Common Stock on the date of grant.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date and are not presented to forecast possible future
appreciation, if any, in the price of the Common Stock. The gains shown are
net of the option exercise price, but do not include deductions for taxes
or other expenses associated with the exercise of the options or the sale
of the underlying shares. The actual gains, if any, on the stock option
exercises will depend on the future performance of the Common Stock, the
optionee's continued employment through applicable vesting periods and the
date on which the options are exercised.
20
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME EXERCISE REALIZED(1) OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END ($)(2)
- ---- -------- ----------- -------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
Steven D. Whiteman --- --- 105,626/74,374 $1,287,369.69/$297,070.31
Kevin M. Hickey 16,088 $816,466.00 61,743/127,249 $615,097.93/$410,855.82
Colin J. Reardon --- --- 55,834/99,165 $475,548.54/$524,479.27
Jean-Luc G. Valente 7,500 $144,378.75 13,625/58,916 $69,834.94/$217,800.65
Abbott H. Ezrilov 1,900 $53,463.10 19,100/38,000 $53,269.05/$66,274.25
</TABLE>
- ----------
(1) The "Value Realized" reflects the appreciation on the date of exercise,
based on the excess of the fair market value of the shares on the date of
exercise over the exercise price. These amounts do not necessarily reflect
cash realized upon the sale of those shares, as an executive officer may
keep the shares exercised, or sell them at a different time and price.
(2) The "Value" set forth in this column is based on the difference between the
fair market value at June 30, 1998 ($16.188 per share as quoted on The
Nasdaq Stock Market), and the option exercise price, multiplied by the
number of shares underlying the option.
EMPLOYMENT AND CONSULTING AGREEMENTS
Mr. Reardon was employed by the Company effective August 1, 1994. At
that time, the Company entered into an employment agreement with Mr. Reardon
which sets forth the basic terms of his employment, including salary, working
hours and holidays, vacation and sick time and a car allowance. In addition, the
agreement provides that it is terminable by either party upon six months written
notice and that the Company may pay Mr. Reardon his salary and contractual
benefits for the six month period in lieu of notice.
Mr. Hickey has an agreement with the Company that in the event of his
termination, without cause, the Company will continue to pay his base salary and
health benefits for a period of six months after the termination.
Pursuant to the terms of various purchase agreements between the
Company and each of the executive officers relating to stock options and
restricted stock, the Company has agreed to accelerate the vesting of options,
or waive its right of repurchase, in the case of restricted stock, in the event
of a change of control of the Company (as defined in the applicable agreement).
Restricted stock agreements and stock options granted under the 1986 Stock
Option Plan provide that one-half of the shares subject to the agreement would
automatically vest if the executive officer's employment is terminated or if he
suffers a material reduction in his level of responsibility and authority within
six months after a change of control of the Company. The 1994 Equity Incentive
Plan provides that all outstanding options and other awards granted thereunder
vest automatically upon a change in control. Award agreements under the 1997
Plan generally provide for the vesting of options to accelerate to provide the
greater of one
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<PAGE>
additional year of vesting or total vesting of one-half of the outstanding
option upon a change in control of the Company, subject to certain limitations.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board (the "Compensation Committee")
is made up of three non-management directors. Working with the chief executive
officer, the Compensation Committee is responsible for developing and
implementing compensation policies and programs for the executive officers of
the Company. During fiscal 1998, the Compensation Committee also was responsible
for administering the 1994 Plan, the 1997 Plan and the Purchase Plan.
For fiscal year 1998, the process utilized by the chief executive
officer and the Compensation Committee in determining executive officer
compensation levels took into account both qualitative and quantitative factors.
Among the factors considered were informal research into compensation levels at
other similarly sized growth companies. However, no formal study was conducted
and the Compensation Committee made the final compensation decisions.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The guiding principle behind the Compensation Committee's compensation
programs is to align compensation of executive officers of the Company with the
Company's business objectives, desired corporate performance, Company values and
stockholder interests. Supporting this philosophy, the objectives of the
compensation program are to (a) provide rewards that are closely linked to
Company and individual performance, (b) provide incentives to achieve long-term
corporate goals and enhance stockholder value and (c) ensure that executive
compensation is at levels which enable the Company to attract and retain the
highly qualified and productive people critical to the long-term success of the
Company.
The key elements of the Company's executive compensation program
include a base salary and certain employee benefits, short term performance
incentives and long-term equity incentives.
BASE SALARIES AND EMPLOYEE BENEFITS
Base salaries for executive officers are initially determined by
evaluating the responsibilities of the position, the experience and knowledge of
the individual and the competitive marketplace for executive talent. Annual
salary adjustments, if any, are determined primarily by evaluating the
performance of each executive officer, including the individual's contributions
to corporate goals, any increases in responsibilities and attainment of specific
individual objectives, as well as past performance and potential with the
Company. Other factors include growth in the Company's size and complexity, cost
of living increases, internal compensation equity considerations and overall
Company performance. For fiscal 1998, the base salaries of the executive
officers as a group were increased at an average rate of 8.25%.
Certain employee benefits are also provided to executive officers,
including life and health insurance, long-term disability insurance and the
right to participate in the Company's Employee Stock Purchase Plan, and either
(i) the Company's 401(k) plan and the Deferred Compensation Plan in the United
States, or (ii) a private pension plan in the United Kingdom.
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<PAGE>
SHORT TERM PERFORMANCE INCENTIVES
EXECUTIVE BONUS PLAN. Most of the Company's executive officers
participated in the Viasoft Executive Bonus Plan for fiscal year 1998 (the
"Bonus Plan"). The Bonus Plan is designed to reward executive officers for the
Company's financial performance above certain set targets. The Compensation
Committee set annual "Net Income" goals and annual target bonuses for each
executive officer, based primarily on the degree of responsibility of the
officer for the overall achievement of the Company's Net Income goals, taking
into consideration other incentive compensation. For example, the potential
annual bonus for the Senior Vice President, International Operations under the
Bonus Plan was substantially lower than those of many of the other executive
officers in light of the potential commissions and quarterly bonuses for such
officer described below.
The Bonus Plan provided that if the Company achieved at least 85% but
less than 90% of the annual goal, one-half of the target bonus would have been
paid. If the Company achieved 90% but less than 105% of the annual goal, target
bonuses were based on the percent of the goal achieved, with additional
incentives if Net Income surpassed the annual goal by five percent or more. The
Compensation Committee designed the Bonus Plan to pay bonuses only for
performance substantially greater than actual performance for the previous
fiscal year. Because the Company did not achieve the financial objectives set
for fiscal year 1998, annual bonuses paid under the Bonus Plan totaled $109,030,
which was a decrease of $324,261, or approximately 75%, from fiscal year 1997.
Annual bonuses under the Bonus Plan were paid to seven executive officers and
ranged from $5,118 to $31,595 in fiscal year 1998. See "Executive Compensation -
Summary Compensation Table."
In addition to annual goals and target bonuses, the Committee also set
quarterly goals and target bonuses. Similar to the annual target bonuses, the
quarterly target bonuses are based primarily on the degree of responsibility of
the officer for the overall achievement of the quarterly goals, taking into
consideration other incentive compensation. For all executive officers other
than the Senior Vice President, International Operations and the Vice President,
Sales - The Americas, the Committee set a quarterly "Net Income" goal. If the
Company did not achieve the set quarterly Net Income goal, no target bonus would
have been paid for that quarter, and the target bonus would not be recoverable
in subsequent quarters. The quarterly Net Income goals were met in the first and
second quarters of fiscal 1998. As a result, quarterly bonuses paid under the
Bonus Plan totaled an aggregate of $28,500 per quarter for each of the two
quarters in which the Net Income goals were met, representing bonuses paid to
six officers.
REVENUE COMMISSIONS. A key component of compensation for executive
officers responsible for the sales of products and services of the Company is
payment of commissions. Commissions are set at a percentage of revenue derived
from the officer's territorial area of responsibility. During fiscal 1998, the
Executive Vice President and Chief of Operations (who in April 1998 was promoted
to President and Chief Operating Officer), the Senior Vice President,
International Operations and the Vice President, Sales - The Americas, had
compensation plans in which they were assigned revenue quotas that supported the
Company's objectives and which provided a set percentage as a commission for
revenue received from the license of products and the provision of professional
services within their respective territories. The commission rate increased for
revenue generated over the assigned quotas. Because the executive officers
eligible for revenue commissions failed to achieve their respective revenue
quotas in fiscal year 1998, their revenue commissions in fiscal year 1998 were
significantly lower than commissions paid in fiscal year 1997. In addition, the
Executive Vice President and Chief of Operations received lower commissions in
fiscal year 1998 as a result of changes in his overall compensation plan
resulting from his changed responsibilities with the Company. Along with revenue
commissions, the Vice President, Sales - The Americas received a quarterly
target bonus based on quota performance
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<PAGE>
against year-to-date targets established by the Company. As a result, a
significant portion of the compensation of the executive officers who are
directly responsible for sales of the Company's products and services is
dependent on achieving specified revenue goals.
PROFIT BONUSES. In addition to revenue commissions, the Senior Vice
President, International Operations was also paid quarterly bonuses based on the
achievement of budgeted profit objectives for the Company's international
operations. The Compensation Committee set quarterly "Operations Profitability"
goals for the Company's international operations. If international operations
did not achieve at least 75% of the set quarterly profitability goal, no target
bonus was paid for that quarter, and the target bonus would not be recoverable
in subsequent quarters. If international operations achieved at least 75% but no
more than 90% of the quarterly profitability goal, one-half of the target bonus
was paid. If international operations achieved over 90% of the quarterly
profitability goal, the target bonus was based on the percent of the goal
achieved, with additional incentives if international operations surpassed the
quarterly profitability goal by 10% or more. This profitability component was
designed to provide significant incentive for the Senior Vice President,
International Operations to achieve performance at or above the Operations
Profitability goals. The Senior Vice President, International Operations
received profit bonuses in three quarters in fiscal 1998 totaling an average of
$4,933 for each such quarter.
LONG TERM EQUITY INCENTIVES
Long-term incentive compensation, in the form of stock options or
restricted stock, vesting over a period of years, allows the executive officers
to share in any appreciation in value of the Company's Common Stock and directly
aligns the officers' interests with those of its stockholders. This strategy
encourages creation of stockholder value over the long term because the full
benefit of the compensation cannot be realized unless stock price appreciation
occurs over several years. The Compensation Committee frequently awards stock
options to employees appointed as officers of the Company, either upon joining
the Company or upon appointment as an officer. Mr. Young, Vice President, Global
Services, received options upon joining the Company in June 1998. Mr. Hickey
received 30,000 options after being promoted to President and Chief Operating
Officer in April 1998. Additional grants of options are made at various times,
taking into consideration the existing levels of stock ownership, previous
grants of stock options, job responsibilities and individual performance. A
total of 350,000 options were granted to executive officers during fiscal year
1998.
STOCK OPTION REPLACEMENT
On May 5, 1998, the Compensation Committee approved a plan to allow
employees holding outstanding stock options granted October 6, 1997 with an
exercise price of $49.00 to replace them with options having an exercise price
of $16.00 per share, which represented the fair market value of the Common Stock
on May 5, 1998. The plan provided for replacement options to be granted covering
two shares of Common Stock for every three shares covered by the October 6, 1997
option grants. The replacement options were new option grants with a new vesting
schedule that began on May 5, 1998. A total of 35 employees were eligible to
participate in the option replacement program. At the time of the option
replacement, three executive officers of the Company, Messrs. Valente, Lee and
Ezrilov, were members of the group of employees eligible to participate in the
option replacement program. One other employee who participated in the option
replacement program, Mr. Donoghue, was not an executive officer at the time of
the option repricing, but was later elected as an executive officer.
The Compensation Committee views equity incentives as a significant
factor in attracting, retaining and motivating key employees. The disparity
between the original exercise price of the October 6, 1997 grants and the market
price for the Company's Common Stock did not, in the judgment
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<PAGE>
of the Compensation Committee, provide a meaningful incentive to employees
holding such options. The Compensation Committee believes that the option
replacement will allow the Company to more fully realize the benefits of its
long-term incentive compensation strategy.
The Company has not repriced stock options in the past 10 years, except
for the option replacement program described above. The following table sets
forth information with respect to the repricing of stock options held by any
executive officer of the Company during the last 10 years.
10-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM REMAINING
OPTIONS/SARS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME AND POSITION DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
----------------- ---- ------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Jean-Luc G. Valente(1) 5-5-98 10,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Senior Vice President,
Marketing
Abbott H. Ezrilov(2) 5-5-98 15,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Vice President, Channel
Sales and Vendor
Relationships
David M. Lee(2) 5-5-98 50,000 $16.00 $49.00 $16.00 5 Years, 5 Months
Vice President,
Development
Kevin J. Donoghue(3)
Vice President, Sales - 5-5-98 10,000 $16.00 $49.00 $16.00 5 Years, 5 Months
The Americas
</TABLE>
- ----------
(1) Mr. Valente resigned from his employment with the Company effective
September 30, 1998.
(2) Messrs. Ezrilov and Lee were elected executive officers of the Company in
April 1998.
(3) Mr. Donoghue was elected Vice President, Sales - The Americas in August
1998.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation for the Company's Chief Executive Officer, Steven D.
Whiteman, was determined based on the same policies and criteria as the
compensation of the other executive officers, as discussed above. During fiscal
year 1998, Mr. Whiteman's compensation included a base salary and cash bonuses.
Mr. Whiteman's salary for fiscal year 1998 was set at $220,000, an increase of
$20,000, or 10% from the prior fiscal year. This increase was due to the
Compensation Committee's subjective evaluation of Mr. Whiteman's performance in
fiscal year 1997. A significant portion of Mr. Whiteman's total compensation for
fiscal 1998 was in the form of cash bonuses under the Bonus Plan, which tied his
compensation to the achievement of financial performance objectives;
specifically, budgeted Net Income goals. The Compensation Committee believed
that approximately one-third of Mr. Whiteman's cash
25
<PAGE>
compensation should be variable and based on the performance of the Company and
designed the mix of salary and bonuses to meet that objective at 100%
performance by the Company of the Net Income goals set in the Bonus Plan.
Because the Company did not achieve the financial objectives set, Mr. Whiteman's
performance bonuses under the Bonus Plan during fiscal 1998 totaled $48,595,
which was a decrease of $133,385, or approximately 73%, from fiscal year 1997.
Mr. Whiteman's performance bonuses under the Bonus Plan during fiscal year 1998
accounted for approximately 22% of his total cash compensation. The Compensation
Committee believes that this mix of compensation properly rewards and provides
incentives to Mr. Whiteman for his overall responsibility for the performance of
the Company.
TAX CONSIDERATIONS
In August 1993, as part of the Omnibus Budget Reconciliation act of
1993, Section 162(m) of the Internal Revenue Code was enacted, which provides
for an annual one million dollar limitation on the deduction that an employer
may claim for compensation of certain executives. While no one executive officer
will approach the one million dollar limitation in cash compensation, it is
possible that one or more executive officers will in the future have taxable
compensation in excess of one million dollars as a result of the exercise and
sale of Viasoft Common Stock received from stock options.
Section 162(m) of the Code provides certain exceptions to the one
million dollar deduction limitation, and it has been the policy of the
Compensation Committee to review the possible exceptions and exemptions and to
implement them when needed, to the extent feasible and in the best interests of
the Company. Consequently, the Compensation Committee recommended and the
Company included certain provisions in the 1997 Plan that exempts stock options
and other grants of equity compensation under the 1997 Plan from the one million
dollar limitation. See the discussion of Proposal 2 above. Certain previously
granted stock options of the Company are not exempt from the one million dollar
limitation.
This report is submitted by the members of the Compensation Committee
J. David Parrish John J. Barry III, Chair Arthur C. Patterson
26
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
In accordance with Section 16(a) of the Securities Exchange Act of 1934
and the regulations of the Securities and Exchange Commission, the Company's
directors, executive officers and certain other 10% stockholders are required to
file reports of ownership and changes in ownership with the SEC and The Nasdaq
Stock Market and to furnish the Company with copies of all such reports they
file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that during fiscal 1998 all filings required under Section 16(a)
applicable to its directors, executive officers and 10% stockholders were
satisfied, except as described below. Alexander S. Kuli acquired 3,000 shares
through an open market transaction in April 1998. This acquisition was reported
late on a Form 5 filed in August 1998.
COMPANY STOCK PERFORMANCE GRAPH
The Company Stock Performance Graph below compares the cumulative total
stockholder return on the Common Stock of the Company, on a quarterly basis,
from March 1, 1995 (the date of its initial public offering) to June 30, 1998
(the last day of the Company's most recent fiscal year) and the two-month period
ended August 31, 1998, with the cumulative total return on The Nasdaq Stock
Market for United States companies ("Nasdaq Stock Market Index") and the Nasdaq
Computer and Data Processing Stocks ("Nasdaq Computer Index") over the same
period. This graph assumes a $100 investment at March 1, 1995 in the Company's
Common Stock and in each of the indexes and reinvestment of all dividends, if
any.
The graph displayed below is presented in accordance with Securities
and Exchange Commission requirements. Stockholders are cautioned against drawing
any conclusions from the data contained therein, as past results are not
necessarily indicative of future performance. This graph is not intended to
reflect the Company's forecast of future financial performance.
27
<PAGE>
DATE VIASOFT NASDAQ US NASDAQ COMP&DP
---- ------- --------- --------------
3/1/95 100 100 100
3/31/95 108 103 107
6/30/95 164 118 127
9/29/95 163 132 138
12/29/95 148 134 145
3/29/96 352 140 151
6/28/96 808 151 168
9/30/96 1050 157 172
12/31/96 1181 164 179
3/31/97 813 155 166
6/30/97 1269 184 213
9/30/97 1238 215 232
12/31/97 1056 202 219
3/31/98 684 236 290
6/30/98 405 243 322
8/31/98 163 193 254
STOCKHOLDER PROPOSALS
Stockholders may submit proposals to be considered for stockholder
action at the 1999 Annual Meeting of Stockholders and inclusion in the Company's
Proxy Statement and proxy card if they do so in accordance with the appropriate
regulations of the Securities and Exchange Commission. For such proposals to be
considered for inclusion in the Proxy Statement and form of proxy for the 1999
Annual Meeting of Stockholders, proposals must be received by the Company no
later than June 18, 1999. Such proposals should be directed to Viasoft, Inc.,
3033 North 44th Street, Phoenix, Arizona 85018 to the attention of the
Secretary. The Company received no such proposals for the 1998 Annual Meeting of
Stockholders.
If a stockholder desires to bring proper business before an annual
meeting of stockholders which is not the subject of a proposal timely submitted
for inclusion in the Company's Proxy Statement and proxy card as described
above, the stockholder must follow procedures outlined in the Company's Bylaws.
Pursuant to the Company's Bylaws, a stockholder may propose business to be
considered at an annual meeting of the Stockholders, provided that the
stockholder (a) is a stockholder of record at the time of giving notice to the
Company of the proposal and is entitled to vote at the annual meeting of
stockholders where the proposal will be considered, and (b) complies with the
notice procedures of Article III of the Company's Bylaws. That Article provides
that the proposing stockholder must deliver written notice of the proposal to
the Company's Secretary not earlier than the 90th day nor later than the 60th
day prior to the first anniversary of the preceding year's annual meeting. The
required notice must contain certain information, including information about
the stockholder, as prescribed by the Bylaws. The deadline for a stockholder to
deliver notice of a proposal for consideration at the 1998 Annual Meeting of
Stockholders was September 16, 1998. The Company did not receive any notices
from stockholders for business to be conducted at the Meeting.
The Company's Bylaws also provide procedures for stockholders to
nominate directors for election at an annual meeting of stockholders. These
procedures were previously discussed in this Proxy Statement. See "Board of
Directors Meetings and Committees."
28
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no matter other than those described in
this Proxy Statement that will be presented for consideration at the Meeting.
However, should any other matters properly come before the Meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying proxy to vote in accordance with their best judgment in the
interest of the Company.
ADDITIONAL INFORMATION
The Company's Annual Report to Stockholders and the Company's Form 10-K
for the fiscal year ended June 30, 1998, accompany this Proxy Statement. The
Annual Report and Form 10-K are not to be deemed part of this Proxy Statement.
A COPY OF THE COMPANY'S FORM 10-K ANNUAL REPORT REQUIRED TO BE FILED
WITH THE SEC, INCLUDING FINANCIAL STATEMENTS BUT NOT INCLUDING EXHIBITS, IS
ENCLOSED. AN ADDITIONAL COPY WILL BE FURNISHED AT NO CHARGE TO EACH PERSON TO
WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A WRITTEN REQUEST OF SUCH
PERSON ADDRESSED TO VIASOFT, INC., 3033 NORTH 44TH STREET, PHOENIX, ARIZONA
85018 TO THE ATTENTION OF THE SECRETARY.
By Order of the Board of Directors
Catherine R. Hardwick
Vice President, General Counsel and
Secretary
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL MEETING.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING AND YOUR COOPERATION WILL BE
APPRECIATED.
29
<PAGE>
APPENDIX A
PROPOSED AMENDMENTS TO
THE VIASOFT, INC. 1997 EQUITY INCENTIVE PLAN
The first paragraph of Article 3 of the 1997 Equity Incentive Plan is amended as
follows:
3.1 NUMBER OF SHARES. The maximum number of shares of Stock reserved
and available for delivery pursuant to Awards or which may be used to provide a
basis of measurement or valuation of an Award shall be equal to the sum of (a)
1,700,000 shares, plus (b) any shares of Stock available for future awards under
the Predecessor Plan as of the Effective Date, plus (c) the additional shares of
Stock described below in this Article 3. No additional grants shall be made
under the Predecessor Plan after the Effective Date. The limitations of this
Article 3 shall be subject to adjustment as provided in Section 11.1.
Section 3.4(a) of the Company's 1997 Equity Incentive Plan is amended as
follows:
(a) The maximum number of shares of Stock that may be
delivered pursuant to Awards of Incentive Stock Options shall be 1,700,000
shares.
<PAGE>
APPENDIX B
PROPOSED AMENDMENT TO
THE VIASOFT, INC. EMPLOYEE STOCK PURCHASE PLAN
The first paragraph of Section 6 of Article 3 of the Employee Stock
Purchase Plan is amended as follows:
6. STOCK SUBJECT TO PLAN.
(a) The Common Stock purchasable by Participants under the Plan
shall, solely in the discretion of the Committee, be made
available from either authorized but unissued shares of Common
Stock or from shares of Common Stock reacquired by the
Company, including shares of Common Stock purchased on the
open market. The total number of shares which may be issued
under the Plan shall not exceed 1,200,000 shares (subject to
adjustment as provided herein.).
<PAGE>
APPENDIX C
STOCKHOLDER'S PROXY CARD
1998 ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, NOVEMBER 18, 1998
The undersigned hereby appoints Steven D. Whiteman, Mark R. Schonau and
Catherine R. Hardwick, and each of them, as proxies to attend the 1998 Annual
Meeting of Stockholders of the Company to be held on Wednesday, November 18,
1998 at 10:00 a.m., mountain standard time, in Phoenix, Arizona and any
adjournment thereof and vote shares of Common Stock held by the undersigned as
indicated on the reverse side of this card upon (i) the election of Directors,
(ii) amendments to the Viasoft, Inc. 1997 Equity Incentive Plan to increase the
number of shares that may be issued pursuant to future grants of Awards by
850,000 shares, (iii) an amendment to the Viasoft, Inc. Employee Stock Purchase
Plan to provide for an additional 400,000 shares for issuance thereunder, (iv)
ratification of the Company's selection of independent auditors and (v) such
other matters as may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF VIASOFT, INC. PURSUANT TO A
SEPARATE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT, RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED. THIS CARD SHOULD BE MAILED IN THE ENCLOSED ENVELOPE IN TIME
TO REACH THE COMPANY'S PROXY TABULATOR, HARRIS TRUST AND SAVINGS BANK, 311 WEST
MONROE STREET, 11TH FLOOR, CHICAGO, IL 60606, BY 9:00 A.M., MOUNTAIN STANDARD
TIME, ON WEDNESDAY, NOVEMBER 18, 1998.
ELECTION OF DIRECTORS
Nominees: John J. Barry III, Alexander S. Kuli, J. David Parrish,
Arthur C. Patterson, Steven D. Whiteman
FOR* WITHHELD *Except: ___________________________________
___________________________________
APPROVE AMENDMENTS TO THE VIASOFT, INC. 1997 EQUITY INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES THAT MAY BE ISSUED PURSUANT TO FUTURE GRANTS OF AWARDS
UNDER THE 1997 PLAN BY 850,000 SHARES.
FOR AGAINST ABSTAIN
APPROVE AN ADDITIONAL 400,000 SHARES FOR ISSUANCE UNDER THE EMPLOYEE STOCK
PURCHASE PLAN.
FOR AGAINST ABSTAIN
RATIFY SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
FOR AGAINST ABSTAIN
The Board of Directors recommends a vote FOR the above actions, which are
proposed by the Board (as described in the accompanying Proxy Statement). IF YOU
SIGN AND RETURN THIS CARD WITHOUT MARKING, THE PROXY CARD WILL BE TREATED AS
BEING FOR EACH ITEM.
Dated:__________________________, 1998
Signature(s)__________________________
______________________________________
PLEASE SIGN HERE EXACTLY AS YOUR NAME(S) APPEAR ON THIS PROXY CARD.
GIVE TITLE IF YOU SIGN AS TRUSTEE, CORPORATE OFFICER, EXECUTOR, ADMINISTRATOR OR
GUARDIAN.
