<PAGE>
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EAGLE POINT SOFTWARE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
================================================================================
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
4131 Westmark Drive
Dubuque, Iowa 52002-2627
(319) 556-8392
Dear Stockholder:
On behalf of the Board of Directors and management of Eagle Point Software
Corporation, I cordially invite you to attend the 1999 Annual Meeting of
Stockholders of Eagle Point Software Corporation to be held at 3:00 p.m., local
time, on Thursday, December 16, 1999, at the Eagle Point Software Corporate
Headquarters, 4131 Westmark Drive, Dubuque, Iowa 52002-2627.
The matters to be considered at the meeting are described in the accompanying
Proxy Statement. It is important that your shares be represented at the Annual
Meeting regardless of the number of shares you hold. You are urged to specify
your voting preference by marking, dating and signing the enclosed proxy card
and returning it in the enclosed business reply envelope. No postage is
required if mailed in the United States. If you wish to vote in accordance with
the Directors' recommendations, all you need to do is date and sign the proxy
card and return it in such envelope.
We hope you can attend the 1999 Annual Meeting, but in any event, please
complete and return the proxy card. If you do attend and wish to vote in
person, you may revoke your proxy at that time.
Sincerely,
Rodney L. Blum
Chairman
November 15, 1999
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 16, 1999
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of Eagle Point
Software Corporation, a Delaware corporation (the "Company"), will be held at
3:00 p.m., local time, on Thursday, December 16, 1999 at the Eagle Point
Software Corporate Headquarters, 4131 Westmark Drive, Dubuque, Iowa 52002-2627,
for the purpose of considering and acting upon the following matters:
1. To elect two directors to the Board of Directors of the Company, to
serve for a three-year term;
2. To approve the Eagle Point Software Corporation 1999 Stock Option Plan;
3. To approve amendments to the Eagle Point Software Corporation 1995
Employee Stock Purchase Plan;
4. To ratify the appointment of Deloitte & Touche LLP as independent
accountants for the Company for the fiscal year ending June 30, 2000.
5. To transact such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
Stockholders of record at the close of business on November 15, 1999 are
entitled to receive notice of and to vote at the Annual Meeting or any
postponement or adjournment thereof. A list of such stockholders will be
available for examination by any stockholder for any purpose germane to the
Annual Meeting, during normal business hours, at the principal executive office
of the Company, 4131 Westmark Drive, Dubuque, Iowa 52002-2627, for a period of
ten days prior to the Annual Meeting.
The matters to be considered at the meeting are described in the accompanying
Proxy Statement. It is important that your shares be represented at the Annual
Meeting regardless of the number of shares you hold. You are urged to specify
your voting preference by marking, dating and signing the enclosed proxy card
and returning it in the enclosed business reply envelope. No postage is
required if mailed in the United States. If you wish to vote in accordance with
the Directors' recommendations, all you need do is date and sign the proxy card
and return it in such envelope.
By order of the Board of Directors,
Dennis J. George
Secretary
November 15, 1999
<PAGE>
EAGLE POINT SOFTWARE CORPORATION
PROXY STATEMENT
General Information
This Proxy Statement (the "Proxy Statement") is being furnished to the holders
of Common Stock, $.01 par value ("Common Stock"), of Eagle Point Software
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board" or
the "Board of Directors") for use at the 1999 Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held at 3:00 p.m., local time, on
Thursday, December 16, 1999, at the Company's corporate headquarters, 4131
Westmark Drive, Dubuque, Iowa 52002-2627 and at any and all adjournments or
postponements thereof. The Company's principal executive office is located at
4131 Westmark Drive, Dubuque, Iowa 52002-2627.
Each holder of record of Common Stock at the close of business on November 15,
1999 (the "Record Date") is entitled to receive notice of and to vote at the
Annual Meeting. The holders of a majority of the shares of Common Stock
outstanding and entitled to vote must be present in person or represented by
proxy at the Annual Meeting in order for a quorum to be present. At the close
of business on the Record Date there were 4,846,476 shares of Common Stock
outstanding, each of which entitles the registered holder thereof to one vote.
If you are unable to attend the Annual Meeting, you may vote by proxy. The
proxy holders will vote your shares according to your instructions. If you
return a properly signed and dated proxy card but do not mark a choice on one or
more items, your shares will be voted in accordance with the recommendations of
the Board for such items as set forth in this Proxy Statement. The proxy card
gives authority to the proxy holders to vote your shares in their discretion on
any other matter presented at the Annual Meeting. A proxy may indicate that all
or a portion of the shares represented by that proxy are not being voted by a
stockholder with respect to a particular matter. Any such non-voted shares will
be considered present for the purpose of determining the presence of a quorum.
You may revoke your proxy at any time prior to voting at the Annual Meeting by
delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy or by attending and voting in person at the Annual
Meeting.
The Company will bear the cost of preparing, handling, printing and mailing this
Proxy Statement, the related proxy card and any additional material which may be
furnished to stockholders, as well as the actual expense incurred by brokerage
houses, fiduciaries and custodians in forwarding such materials to beneficial
owners of Common Stock held in their names. The solicitation of proxies will be
made by the use of the mail and through direct communication with certain
stockholders or their representatives by certain officers, directors or
employees of the Company who will receive no additional compensation therefore.
This Proxy Statement and the related proxy card are first being mailed to
stockholders of the Company on or about November 15, 1999.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors consists of five persons and is divided into three
staggered classes, each class serving a three-year term. The term of Class II
Directors expires on the date of the Annual Meeting. The nominees for Class II
Director, if elected, will serve three years until the 2002 Annual Meeting of
Stockholders, or until their successors have been elected and qualified. The
current Class III and Class I Directors will continue in office until the 2000
and 2001 Annual Meetings of Stockholders, respectively.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Class II nominees recommended by the Board of Directors. Directors
are elected by a plurality of the votes cast. Stockholders may not cumulate
their votes. In the event that any nominee of the Company is unable or declines
to serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them for the nominees recommended by the Board of Directors.
NOMINEES FOR DIRECTOR
Class II - Nominees to Serve Until 2002 Annual Meeting of Stockholders:
John F. Biver, age 44, co-founded the Company in 1983 and has served as Vice
President - Civil Division since January 1990. Mr. Biver has served as a
director of the Company since its inception. Prior to founding the Company, Mr.
Biver was a registered Professional Engineer with the civil engineering firm of
Wright, Kilby, Sejkoara and Associates.
James P. Hickey, age 42, has been a Director of the Company since August 30,
1995 and is a member of the Audit Committee and the Compensation Committee of
the Board of Directors of the Company. Since 1989, Mr. Hickey has been a
Principal of William Blair & Company, an investment banking firm.
The Board of Directors unanimously recommends that stockholders vote FOR each of
the nominees listed above (Proposal 1).
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class I - Directors Serving Until 2001 Annual Meeting of Stockholders:
Dennis J. George, age 36, has served as Vice President, Chief Financial Officer,
Treasurer, Secretary and a director of the Company since April 1989. During
1988 he was the Financial Budget Analyst for the Ertl Company, a manufacturer of
agricultural model toys. During 1987 he served as Finance Manager for D.D.S., a
provider of turn-key computer systems to the auto, large truck and implement
dealer markets.
Thomas O. Miller, age 48, has been a Director of the Company since August 30,
1995 and is a member of the Audit Committee and the Compensation Committee of
the Board of Directors of the Company. Since March of 1997, Mr. Miller has been
Senior Vice President of Intermec Technologies Corporation
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<PAGE>
("Intermec"), a manufacturer of hand-held data systems. In March of 1997
Intermec acquired Norand Corporation ("Norand"), also a manufacturer of hand-
held data systems. From September 1995 until March 1997 he served as Senior Vice
President of Norand, from 1993 until September 1995 he served as Vice President-
Mobile Systems of Norand and from 1990 until 1992 he served as Vice President-
Marketing of Norand.
Class III - Director to Serve Until 2000 Annual Meeting of Stockholders:
Rodney L. Blum, age 44, has served as Chairman of the Board, President and Chief
Executive Officer of the Company since January 1990. From May 1988 until he
joined the Company in 1990, Mr. Blum was Director of Sales and Marketing of
D.D.S., a provider of turn-key computer systems to the auto, large truck and
implement dealer markets. From 1980 until May 1988 he served in various
marketing and management positions at CyCare Systems, Incorporated, a provider
of computerized information processing systems to the healthcare industry. Mr.
Blum is a director of American Trust and Savings Bank and is a member of the
Board of Trustees for the Herbert Hoover Presidential Library.
DIRECTORS - MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors met five times during the fiscal year ended June 30, 1999
("Fiscal 1999"), pursuant to regularly scheduled meetings. No director attended
fewer than 75 percent of the meetings of the Board and committees thereof on
which he served.
The Board of Directors has established two committees: an Audit Committee and a
Compensation Committee. As of June 30, 1999 and as of the date of this Proxy
Statement, the Audit Committee is comprised of Messrs. George, Hickey and
Miller. The Audit Committee reviews the results and scope of the audit and
other services provided by the Company's independent accountants and recommends
the appointment of independent accountants to the Board of Directors. See
"Ratification of Appointment of Independent Accountants." The Audit Committee
met one time during Fiscal 1999.
As of June 30, 1999 and as of the date of this Proxy Statement, the Compensation
Committee is comprised of Messrs. Hickey and Miller. The Compensation Committee
makes recommendations regarding the compensation arrangements for top management
and key employees of the Company. The Compensation Committee met one time during
Fiscal 1999.
Directors who are employees of the Company receive no compensation for serving
as directors. Those directors who are not employees of the Company ("Outside
Directors") receive a $500 fee for each meeting of the Board of Directors
attended, whether attendance is in person or telephonic, and they are reimbursed
for out-of-pocket expenses incurred in connection with attending meetings. In
addition, each Outside Director participates in the Eagle Point Software
Corporation Stock Option Plan (the "Current Stock Option Plan"), which will be
replaced by the Eagle Point Software Corporation 1999 Stock Option Plan (the
"1999 Stock Option Plan") if stockholders approve the 1999 Stock Option Plan at
the Annual Meeting. The terms of the two plans, insofar as they provide for the
automatic grant of stock options to Outside Directors, are the same.
Any new Outside Director will receive, on the day he or she commences services
as a director, an option to purchase 2,000 shares of Common Stock with a per
share exercise price equal to the average of the high
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<PAGE>
and low sales prices of a share of Common Stock as reported on The Nasdaq Stock
Market on that day. In addition, on the date of each annual meeting of
stockholders of the Company, each person who is an Outside Director immediately
after the meeting will receive an option to purchase 4,000 shares of Common
Stock with a per share exercise price equal to the average of the high and low
sales prices of a share of Common Stock as reported on The Nasdaq Stock Market
on that day. Each of these stock options will be exercisable in full when
granted.
The Board of Directors has no nominating committee. Selection of nominees for
the Board is made by the entire Board of Directors. The names of potential
nominees for the Company's Board should be directed to the Company's Secretary,
Dennis J. George, at 4131 Westmark Drive, Dubuque, Iowa 52002-2627.
EXECUTIVE OFFICER COMPENSATION
The following table (the "Compensation Table") sets forth the aggregate
compensation for the past three fiscal years of the individual who served as
Chief Executive Officer during Fiscal 1999 and the other most highly compensated
executive officers for Fiscal 1999 (collectively, the "Named Executive
Officers").
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Fiscal Underlying All other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation(1)
--------------------------- ---- ---------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Rodney L. Blum 1999 $185,000 $34,447 10,000 -
Chairman, President and Chief 1998 140,000 16,920 35,000 -
Executive Officer 1997 140,000 1,579 - -
John F. Biver 1999 129,500 897 7,500 -
Vice President - Civil Division 1998 107,000 1,330 25,000 -
1997 107,000 1,004 - -
Dennis J. George 1999 116,550 22,007 7,500 718
Vice President, Chief Financial 1998 99,000 11,039 25,000 574
Officer, Treasurer and Secretary 1997 99,000 1,020 - 513
Edward T. Graham 1999 70,000 43,055 - 565
Vice President - Building Design 1998 50,000 11,327 50,000 -
and Services Division 1997 50,000 23,833 8,475 -
</TABLE>
(1)These amounts represent Company matching contributions to the Eagle Point
Software Corporation 401(k) plan and trust.
4
<PAGE>
Option Grants
The following table sets forth information with respect to individual grants of
options that were made during Fiscal 1999 to each of the Named Executive
Officers and the potential realizable value of these options assuming five
percent and ten percent rates(1) of compound appreciation in the market value of
the Common Stock over the term of the option grants. The Company has never
granted stock appreciation rights.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------
Individual Grants (2) Potential Realizable Value at
--------------------- Assumed Annual Rates of Stock
Price Appreciation for Option Term
----------------------------------
Number of Percent of Exercise Expiration 5% ($)(1) 10% ($)(1)
Name Securities Total Price Date --------- ----------
---- Underlying Options ($/Sh) ----
Options Granted to ------
Granted (#) Employees
------------- in Fiscal
Year
----
<S> <C> <C> <C> <C> <C> <C>
Rodney L. Blum 10,000 6.8% $8.0938 8/3/08 $50,901(3) $128,994(3)
John F. Biver 7,500 5.1% $8.0938 8/3/08 $38,176(3) $ 96,745(3)
Dennis J. George 7,500 5.1% $8.0938 8/3/08 $38,176(3) $ 96,745(3)
</TABLE>
- ------------------
(1) Amounts reflect assumed rates of appreciation set forth in the Securities
and Exchange Commission's executive compensation disclosure rules. Actual
gains, if any, on stock option exercises depend on future performance of the
Company's Common Stock and overall stock market conditions. No assurance
can be given that the amounts reflected in these columns will be achieved.
(2) Upon a sale of substantially all of the business and assets of the Company,
each outstanding option will become exercisable in full.
(3) The future hypothetical value of one share of Common Stock based on a fair
market value of $8.0938 on August 3, 1998, and assumed rates of appreciation
of five percent and ten percent through August 3, 2008, would be $13.184 and
$20.993, respectively.
5
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
---------------------------------
Number of Unexercised Value of Unexercised
Options at In-The-Money Options
Fiscal Year-End (#) at Fiscal Year-End ($)(1)
--------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rodney L. Blum 11,433 $73,421 117 33,450 $ 356 $71,449
John F. Biver - - 8,250 24,250 $25,137 $51,035
Dennis J. George 8,099 $52,011 151 24,250 $ 460 $51,035
Edward T. Graham 10,004 $47,887 8,396 40,075 $15,367 $97,557
</TABLE>
______________________
(1) Value is calculated by subtracting the exercise price from the fair market
value of the shares underlying the option on the exercise date (in the case of
options exercised) or at June 30, 1999 ( in the case of unexercised "in-the-
money" options) and multiplying the result by the number of shares for which the
option was exercised or is in-the -money, as the case may be. Fair market value
at June 30, 1999 was calculated based upon the average of the high and low sales
prices of a share as reported by The Nasdaq Stock Market for that date ($6.50).
There is no assurance that if and when any such in-the-money option is
exercised, the option will have this value.
Employment Agreements
The Company has entered into employment agreements ("Executive Employment
Agreements") with each of Rodney L. Blum, John F. Biver and Dennis J. George to
serve as its President and Chief Executive Officer, Vice President-Civil
Division and Vice President, Chief Financial Officer, Secretary and Treasurer,
respectively. Mr. Blum, Mr. Biver and Mr. George (each an "Executive Employee")
received annual salaries of $185,000, $129,500 and $116,550, respectively, in
Fiscal 1999, and each are entitled to participate in the Company's bonus program
for executive officers. Each Executive Employee's salary is subject to change
as determined by the Compensation Committee of the Board of Directors. None of
the Executive Employment Agreements contain a specified expiration date,
although the Company may terminate each such agreement at any time upon thirty
days' written notice to the Executive Employee, and each Executive Employee may
terminate his respective agreement at any time upon thirty days' written notice
to the Company.
If an Executive Employment Agreement is terminated by virtue of an Executive
Employee's disability, such Executive Employee will be entitled to receive a
lump sum payment equal to one and one-half times the cumulative compensation
payable to him for the twelve months immediately proceeding the effective date
of termination. If an Executive Employment Agreement is terminated by virtue of
an Executive Employee's death, such Executive Employee will be entitled to
receive a lump sum payment equal to two times the cumulative compensation
payable to him for the twelve month period immediately preceding his death. If
an Executive Employment Agreement is terminated for any other reason, other than
for any act of theft, embezzlement, or other documented proof of material
dishonesty, such Executive Employee will be entitled to receive a lump sum
payment equal to two times the cumulative compensation payable to him for the
twelve month period immediately preceding such termination.
6
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Eagle Point's Compensation Philosophy
The Company recognizes that the success of its business is based on the
performance of its employees, and that its employees are the Company's primary
asset. With that understanding, the Compensation Committee of the Board of
Directors applies the following operating principles in its duties as
administrator of the compensation of the Company's management and key employees:
1. Be competitive in all aspects of compensation and consistently
demonstrate a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
2. Award stock options to executives in order to align management's and
stockholders' interests.
3. Provide variable compensation opportunities based on the financial
performance of the Company -- when objectives are met or exceeded, the
incentive awards can be attractive.
4. Adhere to a compensation strategy that effectively balances short- and
long-term goals of the Company.
Compensation Policies for Executive Officers
The Compensation Committee of the Board, presently comprised of two Outside
Directors, makes executive compensation decisions. In making these decisions,
the Committee considers recommendations made by the Company's senior management
team. Key components of the Company's executive compensation decisions include:
1. Base salary -- designed to comprise approximately 60% to 70% of
potential compensation.
2. Cash bonus/stock option awards -- designed to help provide a direct
link between executive compensation and the individual's role in
helping the Company attain quarterly and annual performance measures.
The Committee believes this type of executive compensation structure effectively
serves the interests of both the Company and its stockholders. The Committee
also believes the program allows the Company to attract and retain outstanding
executives and motivate these executives to perform at the highest levels.
CEO Compensation
Mr. Rodney L. Blum has served as the Company's CEO since January 1990. In
Fiscal 1999 Mr. Blum received a salary of $185,000. Mr. Blum's compensation is
substantially related to the Company's
7
<PAGE>
performance pursuant to the Company's bonus program for its executive officers -
Mr. Blum is eligible to receive a bonus payment if certain financial objectives
(primarily relating to revenues and profitability) for the Company are met. Mr.
Blum's compensation during Fiscal 1999 reflects the strategic importance of Mr.
Blum to the Company and his anticipated future contributions toward achievement
of the Company's growth objectives.
The foregoing report has been furnished by the Committee.
The Compensation Committee of the Board of Directors
James P. Hickey
Thomas O. Miller
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS
AND PRINCIPAL STOCKHOLDERS
The following table sets forth information as of November 1, 1999 concerning the
beneficial ownership of Common Stock for each Director, the Named Executive
Officers, all Directors and Executive Officers as a group, and each holder of 5%
or more of the Company's Common Stock. Unless otherwise noted, the listed
persons have sole voting and investment power with respect to the shares held in
their names, subject to community property laws if applicable. The table does
not include options which are not exercisable within 60 days.
<TABLE>
<CAPTION>
Name of Number % of total
Beneficial Holder of Shares(1) Outstanding Shares
- ----------------- ------------ -------------------
<S> <C> <C>
John F. Biver (8) 1,248,066 (2) 25.71%
Rodney L. Blum (8) 953,704 (3) 19.68
Dennis J. George (8) 381,631 (4) 7.87
J. Carlo Cannell
d/b/a Cannell Capital Management (9) 352,400 7.27
Dimensional Fund Advisors (10) 338,500 6.98
James P. Hickey 14,000 (5) --
Thomas O. Miller 13,500 (5) --
Edward T. Graham (8) 9,896 (6) --
All Directors and Executive
Officers as a group (9 persons) 2,647,609 (7) 54.07
</TABLE>
(1) Based on the number of shares outstanding at, or acquirable within, 60 days
of November 1, 1999.
(2) Includes 8,250 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
November 1, 1999.
(3) Includes 117 shares which may be acquired under options which are currently
exercisable or which will be exercisable within 60 days of November 1, 1999.
(4) Includes 151 shares which may be acquired under options which are currently
exercisable or which will be exercisable within 60 days of November 1, 1999.
8
<PAGE>
(5) Includes 12,000 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
November 1, 1999.
(6) Includes 9,896 shares which may be acquired under options which are
currently exercisable or which will be exercisable within 60 days of
November 1, 1999.
(7) Includes 50,301 shares which executive officers and directors have the
right to acquire under options which are currently exercisable or which
will be exercisable within 60 days of November 1, 1999.
(8) The address of such beneficial holder is c/o Eagle Point Software
Corporation, 4131 Westmark Drive, Dubuque, Iowa 52002-2627.
(9) Based upon the most recent report on Schedule 13G as filed with the
Securities and Exchange Commission, J. Carlo Cannell D/B/A Cannell Capital
Management is deemed to have beneficial ownership of 352,400 shares of
Eagle Point Software stock as of December 31, 1999, all of which shares are
owned by advisory clients of J. Carlo Cannell D/B/A Cannell Capital
Management or partnerships of which J. Carlo Cannell D/B/A Cannell Capital
is a general partner, no one of which, to the knowledge of J. Carlo Cannell
D/B/A Cannell Capital Management, owns more than 5% of the class. J. Carlo
Cannell D/B/A Cannell Capital Management's address is 600 California
Street, Floor 14, San Francisco, CA 94108.
(10) Based upon the most recent report on Schedule 13G as filed with the
Securities and Exchange Commission, Dimensional Fund Advisors Inc., a
registered investment advisor, is deemed to have beneficial ownership of
338,500 shares of Eagle Point Software stock as of December 31, 1999, all
of which shares are owned by advisory clients of Dimensional Fund Advisors
Inc., no one of which, to the knowledge of Dimensional Fund Advisors Inc.,
owns more than 5% of the class. Dimensional Fund Advisors Inc. disclaims
beneficial ownership of all such shares. The Dimensional Fund Advisors Inc.
address is 1299 Ocean Avenue, 11th floor, Santa Monica, CA 90401.
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder return
since the Common Stock became publicly traded on June 16, 1995 with the Nasdaq
Computer & Data Processing Index (the "Computer Index") and with The Nasdaq
Stock Market -- U.S. Index (the "Nasdaq Index"). The comparison is based on the
assumption that $100.00 was invested on June 16, 1995 in each of the Company's
Common Stock, the Computer Index and the Nasdaq Index. On November 5, 1999 the
closing price of a share of Common Stock as reported by The Nasdaq Stock Market
was $5.125.
Note: The stock price performance shown below is not necessarily indicative of
future price performance.
COMPARISON OF 48 MONTH CUMULATIVE TOTAL
RETURN*
AMONG EAGLE POINT SOFTWARE CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
[PERFORMANCE GRAPH APPEARS HERE]
* $100 INVESTED ON 6/16/95 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
<TABLE>
<CAPTION>
Cumulative Total Return
<S> <C> <C> <C> <C> <C> <C>
6/16/95 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99
Eagle Point Software Corporation 100 131 54 35 63 52
NASDAQ STOCK MARKET -- US 100 103 132 160 212 302
NASDAQ COMPUTER & DATA PROCESSING 100 104 138 174 263 400
</TABLE>
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James P. Hickey, an Outside Director of the Company since August 1995, is a
Principal of William Blair & Company, L.L.C., an investment banking firm
("William Blair"). William Blair was one of the managing underwriters of the
Company's initial public offering of Common Stock in June 1995. The Company
currently maintains a no-fee money market account with William Blair.
EAGLE POINT SOFTWARE CORPORATION 1999 STOCK OPTION PLAN
General
The Board of Directors has adopted, subject to stockholder approval, the 1999
Stock Option Plan. If stockholders approve the 1999 Option Plan, the Company's
current stock option plan, the Current Stock Option Plan will be terminated and
future stock option awards will be made pursuant to the 1999 Option Plan. The
termination of the Current Stock Option Plan will not affect the rights of the
holders of options granted under it.
The purposes of the 1999 Option Plan are to align the interests of the
stockholders of the Company and the recipients of stock options granted under
the 1999 Option Plan by increasing the proprietary interest of those recipients
in the Company's growth and success and to advance the interests of the Company
by attracting and retaining officers and other key employees and well-qualified
persons who are not officers or employees of the Company for service as
directors of the Company.
The 1999 Option Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, and is not intended to be and does not qualify as a
pension, profit sharing or other "qualified" plan under Section 401 (a) of the
Internal Revenue Code of 1986, as amended (the "Code").
Approval of the 1999 Stock Option Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the Annual
Meeting, in person or by proxy, and entitled to vote thereon. Abstentions will
have the same effect as votes cast against the proposal. Non-voted shares will
not be considered in attendance for the vote on this proposal.
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the Eagle Point Software Corporation 1999 Stock Option Plan
(Proposal 2).
Amendment; Termination
The Board may amend the 1999 Option Plan at any time, subject to any requirement
of stockholder approval required by applicable law, rule or regulation including
Section 162(m) of the Code and Section 422 of the Code. Nonetheless, the Board
may not increase the number of shares available under the 1999 Option Plan,
effect any change inconsistent with 422 of the Code, or extend the term of the
1999 Option Plan, without stockholder approval. No amendment may impair the
rights of a holder of an outstanding stock option granted under the 1999 Option
Plan without the holder's consent.
The 1999 Option Plan will terminate on the tenth anniversary of the Annual
Meeting, but may be
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terminated earlier by the Board. Termination of the 1999 Option Plan will not
affect the terms or conditions of any stock option granted under the 1999 Option
Plan prior to the termination date. No stock options may be granted under the
1999 Option Plan after it has been terminated.
Administration
The 1999 Option Plan will be administered by the Board, or a committee of the
Board, whose members will be appointed and may be removed by the Board and which
must consist of at least two directors. We will, in this summary of the 1999
Option Plan, refer to the body that administers the 1999 Option Plan as the
"Plan Committee." Initially, the Board will serve as the Plan Committee.
The Plan Committee is authorized to interpret the 1999 Option Plan and its
application, and, subject to the terms of the 1999 Option Plan, to establish
rules and regulations as it deems necessary or desirable for the administration
of the 1999 Option Plan and it may impose, incidental to the grant of a stock
option thereunder, conditions with respect to that grant, such as limiting
competitive employment or other activities. All such interpretations, rules,
regulations and conditions are final, binding and conclusive.
The Plan Committee is authorized to select eligible persons for participation in
the 1999 Option Plan and, subject to the terms of the 1999 Option Plan, to
determine the terms and conditions of each stock option granted under the 1999
Option Plan.
Securities Offered
The maximum number of shares of Common Stock available under the 1999 Option
Plan is 350,000 plus such number of shares subject to options originally granted
under the Current Stock Option Plan that become available for issuance under the
1999 Option Plan as described below, subject to appropriate adjustment by the
Plan Committee in the event of a stock split, stock dividend or other similar
change in capitalization.
Shares of Common Stock delivered upon the exercise of a stock option granted
under the 1999 Option Plan may be treasury shares, authorized and unissued
shares, or a combination thereof. If shares of Common Stock subject to an
option granted under the 1999 Option Plan or the Current Stock Option Plan are
not issued by reason of the expiration, termination, cancellation or forfeiture
of that option, those shares will be available for issuance of new options under
the 1999 Option Plan. As of date hereof, 630,753 shares are subject to
outstanding options granted under the Current Stock Option Plan and 76,524
shares remain available for the grant of new options under the Current Stock
Option Plan.
No person will have any right as a stockholder of the Company with respect to
any shares of Common Stock which are subject to a stock option granted under the
1999 Option Plan until he or she becomes a stockholder of record with respect to
those shares.
Stock options granted under the 1999 Option Plan may be either ISOs or non-
qualified stock options. An ISO is a stock option granted in accordance with
Section 422 of the Code and which is intended by the Plan Committee to
constitute an incentive stock option. A non-qualified stock option is a stock
option which is not an ISO.
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Eligibility to Participate
Participation in the 1999 Option Plan is limited to the directors (including
Outside Directors), officers and other key employees of the Company as the Plan
Committee selects from time to time. In addition, Outside Directors are
entitled to non-discretionary awards as described below.
No officer or employee of the Company has any right to participate in the 1999
Option Plan. Neither the 1999 Option Plan nor any stock option granted under it
confers upon any person any right to continued employment by the Company or
affects in any manner the right of the Company to terminate the employment of
any person at any time.
Discretionary Options
The Plan Committee will determine which eligible persons will receive grants of
stock options under the 1999 Option Plan and, subject to the limitations
described below, will determine the number of shares of Common Stock subject to
each stock option, the related purchase price per share of Common Stock, the
period during which the stock option may be exercised, whether the stock option
will become exercisable in cumulative or non-cumulative installments and in part
or in full at any time and whether the stock option is intended to constitute an
ISO. The Plan Committee may also establish performance measures or other
criteria which need to be satisfied as conditions to the grant of an option or
to the exercisability of all or a portion of an option. We will refer to
options granted automatically under the 1999 Option Plan to Outside Directors as
"non-discretionary" options and all other options granted under the 1999 Option
Plan as "discretionary options."
Purchase Price. The purchase price per share of Common Stock subject to a
stock option granted under the 1999 Option Plan may not be less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant. If an ISO is
granted to a person who, at the time of the grant, owns more than ten percent of
the Company's Common Stock, then the per share purchase price may not be less
than 110% of the Fair Market Value of a share of Common Stock on the date of
grant. The "Fair Market Value" of a share of Common Stock on a given date is
the average of the high and low transaction prices of a share of Common Stock as
reported on The Nasdaq Stock Market on that date.
Limitations on Number of Shares Subject to Stock Options. To the extent
necessary for an award to be qualified performance-based compensation under
Section 162(m) of the Code, and the rules and regulations thereunder, the
maximum number of shares of Common Stock with respect to which stock options may
be granted under the 1999 Option Plan during any fiscal year of the Company to
any person is 250,000.
Limitations on Period of Exercisability of ISOs. An ISO may not be
exercisable later than ten years after its date of grant. If an ISO is granted
to a person who, at the time of the grant, owns more than ten percent of the
Company's Common Stock, then that ISO may not be exercised later than five years
after its date of grant. The Plan Committee may, for any reason at any time,
subject to the requirements of Section 162(m) of the Code and regulations
thereunder in the case of an option intended to be qualified performance-based
compensation, take action to cause any or all outstanding options granted under
the 1999 Stock Option Plan to become exercisable in part or in full.
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Exercise of a Stock Option Following Termination Employment or Service.
Unless otherwise provided in the agreement relating to a discretionary stock
option granted under the 1999 Option Plan, the following rules apply in the case
of an optionee's termination of employment with, or service to, the Company.
. If an optionee's employment with, or service to, the Company terminates by
reason of the disability of the optionee, each discretionary stock option
granted under the 1999 Option Plan to the optionee will become fully
exercisable and may thereafter be exercised for a period of no more than one
year after the date of the termination of employment or service.
. If an optionee retires on or after age 65 and after the completion of five
years of employment with, or service to, the Company, each discretionary non-
qualified stock option granted under the 1999 Option Plan to the optionee
will become fully exercisable and may thereafter be exercised for a period of
no more than one year after the date of retirement. Each ISO granted under
the 1999 Option Plan to the optionee will be exercisable only to the extent
exercisable on the date of retirement and may thereafter be exercised for a
period of no more than three months after that date.
. If an optionee's employment with, or service to, the Company is terminated
because of the death of the optionee, each discretionary stock option granted
under the 1999 Option Plan to the optionee will become fully exercisable and
may thereafter be exercised for a period of no more than one year after the
date of death.
. If an optionee's employment with, or service to, the Company terminates for
any other reason, each discretionary stock option granted under the 1999
Option Plan to the optionee will be exercisable only to the extent
exercisable on the date of termination of employment or service and may
thereafter be exercised for a period of no more than three months after that
date; provided, that if the optionee's employment with, or service to, the
Company is terminated for Cause, all stock options granted under the 1999
Option Plan and held by the optionee (including non-discretionary awards
described below) will terminate automatically on the effective date of the
optionee's termination of employment or service. For purposes of the 1999
Option Plan, "Cause" means any act of dishonesty, commission of a felony,
significant activities harmful to the reputation of the Company, refusal to
perform or substantial disregard of duties properly assigned or significant
violation of any statutory or common law duty of loyalty to the Company.
If an optionee dies during the one-year or three-month periods following
termination of employment or service described above, each stock option granted
under the 1999 Option Plan to the optionee will be exercisable only to the
extent exercisable on the date of death and may thereafter be exercised for a
period of no more than one year after the date of death.
Notwithstanding the foregoing, an option granted under the 1999 Option Plan may
not be exercised after its expiration date.
Non-Discretionary Grants of Stock Options to Outside Directors
The 1999 Option Plan provides that each new Outside Director will receive, on
the date he or she commences service as an Outside Director, an option to
purchase 2,000 shares of Common Stock. This grant will not be made to a person
who becomes an Outside Director by reason of a termination of
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employment with the Company. On the date of each annual meeting of stockholders
of the Company, each person who is an Outside Director immediately after the
meeting will also be granted an option to purchase 4,000 shares of Common Stock.
These non-discretionary options are non-qualified stock options, have a per
share purchase price equal to the Fair Market Value of a share Common Stock on
the date of grant, are fully exercisable upon grant and expire ten years
thereafter.
Subject to the next sentence, a non-discretionary option will remain exercisable
until the earlier of one year after its holder ceases to be a member of the
Board or the expiration of the option. If a former director dies during that
one year period, each non-discretionary option held by him or her at the time of
death will remain exercisable until the earlier of one year after the date of
death or the expiration of the option.
Change of Control
Upon a Change of Control (as defined in the 1999 Option Plan) in which the
Company's stockholders receive shares of Common Stock that are publicly traded,
all outstanding options granted under the 1999 Option Plan will immediately
become fully exercisable and there will be substituted for each share of Common
Stock available under the 1999 Option Plan, whether or not then subject to an
outstanding option, the number and class of shares into which each outstanding
share of Common Stock shall be converted pursuant to the Change in Control. In
the event of any such substitution, the purchase price per share of each option
will be appropriately adjusted by the Plan Committee, without an increase in the
aggregate purchase price.
Upon a Change of Control in which the Company's stockholders receive
consideration other than shares of Common Stock that are publicly traded, each
outstanding option granted under the 1999 Option Plan will be surrendered to the
Company by the holder thereof, and each such option will immediately be
cancelled by the Company, and the holder will receive, within ten days of the
occurrence of a Change in Control, a cash payment from the Company in an amount
equal to the number of shares of Common Stock then subject to the option,
multiplied by the excess, if any, of (i) the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction whereby
the Change in Control takes place or (B) the Fair Market Value of a share of
Common Stock on the date of occurrence of the Change in Control over (ii) the
purchase price per share of Common Stock subject to the option.
Exercise of Stock Options; Non-transferability; Designation of Beneficiaries
An exercisable stock option granted under the 1999 Option Plan, or portion
thereof, may be exercised only with respect to a whole number of shares of
Common Stock. Unless otherwise specified in the agreement relating to a non-
qualified stock option, no stock option granted under the 1999 Option Plan may
be transferred other than by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company. Except
to the extent permitted by the foregoing sentence, each stock option may be
exercised during an optionee's lifetime only by the optionee or the optionee's
legal representative or similar person. Each optionee may file with the Plan
Committee a written designation of one or more persons as such optionee's
beneficiary or beneficiaries (both primary and contingent) in the event of such
optionee's death.
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Federal Income Tax Consequences
The following is a brief overview of the United States federal income tax
consequences of participation in the 1999 Option Plan and should not be relied
upon as being a complete statement. It does not address the state or local tax
aspects of participation in the 1999 Option Plan.
Grant of Option. An optionee will not recognize taxable income upon the
grant of a stock option under the 1999 Option Plan.
Exercise of Non-Qualified Options. An optionee will recognize compensation
taxable as ordinary income, and the Company generally will be allowed a
corresponding deduction for federal income tax purposes, in an amount equal to
the excess of the fair market value, on the date of exercise of a non-qualified
option, of the shares of Common Stock acquired over the purchase price therefor.
Exercise of Incentive Stock Options. An optionee will not recognize any
taxable income by reason of exercise of an ISO, and the Company will not be
allowed any deduction with respect to the exercise at that time. However, the
excess, if any, of the fair market value, at the time of exercise, of the Common
Stock acquired upon the exercise over the purchase price therefor will be
included in alternative minimum taxable income subject to the alternative
minimum tax.
Qualifying Disposition of ISO Shares. If an optionee disposes of Common
Stock acquired pursuant to the exercise of an ISO two years or more after the
date of grant of the ISO or one year after the date of transfer of Common Stock
to the optionee, whichever is later, the amount, if any, realized in excess of
the purchase price for such Common Stock will be treated as long-term capital
gain or the amount, if any, by which the purchase price exceeds the amount
realized upon the disposition will be treated as a long-term capital loss. The
Company will not be entitled to any deduction with respect to a disposition of
Common Stock occurring under the circumstances described in this paragraph.
Disqualifying Disposition of ISO Shares. If an optionee disposes of Common
Stock acquired pursuant to the exercise of an ISO within two years after the
date of grant of the ISO or one year after the date of transfer of Common Stock
to the optionee, whichever is later, the optionee will recognize ordinary
income, and the Company will be entitled to a corresponding deduction, in an
amount equal to the amount, if any, realized in excess of the purchase price for
the Common Stock, but only considering the amount realized to the extent it does
not exceed the fair market value of the Common Stock on the date of exercise.
Any amount realized upon disposition in excess of the fair market value of the
Common Stock on the date of exercise will be treated as long-term capital gain
if the Common Stock has been held for more than 12 months or as a short-term
capital gain if the Common Stock has been held for a shorter period. If the
amount realized upon disposition is less than the purchase price for the shares,
the excess of the purchase price over the amount realized will be treated as a
long-term or short-term capital loss, depending on the holding period of the
Common Stock. The Company will not be entitled to any deduction with respect to
the amount recognized by the employee as capital gain.
Income Tax Withholding. The taxable compensation recognized by the
optionee upon the exercise of a stock option will be subject to withholding of
tax by the Company.
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AMENDMENTS TO THE EAGLE POINT SOFTWARE CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
General
In connection with the Company's initial public offering of Common Stock in June
1995, the Board of Directors adopted, and the Company's stockholders approved,
the Eagle Point Software Corporation 1995 Employee Stock Purchase Plan. The
stock purchase plan has been amended and restated (as amended and restated, the
"Stock Purchase Plan"), subject to stockholder approval, to (a) increase the
maximum number of shares of Common Stock that can be purchased thereunder from
100,000 to 150,000 and (b) remove certain provisions that were originally
included in light of SEC rules promulgated under Section 16 of the Securities
Exchange Act of 1934 which are no longer in effect. As of date hereof, 77,692
shares have been purchased under the Stock Purchase Plan.
The purpose of the Stock Purchase Plan is to provide employees of the Company
with added incentive to remain employed with the Company and to encourage
increased effort to promote the best interest of the Company by permitting such
employees to purchase shares of Common Stock at below market prices. The Stock
Purchase Plan is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Code.
The Stock Purchase Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, and is not intended to be
and does not qualify as a pension, profit sharing or other "qualified" plan
under Section 401(a) of the Code.
Approval of the Amended and Restated Eagle Point Software Corporation 1995
Employee Stock Purchase Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock represented at the Annual Meeting, in
person or by proxy, and entitled to vote thereon. Abstentions will have the
same effect as votes cast against the proposal. Non-voted shares will not be
considered in attendance for the vote on this proposal.
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the Amended and Restated Eagle Point Software Corporation 1995
Employee Stock Purchase Plan (Proposal 3).
Administration
The Stock Purchase Plan is administered by the Board of Directors. The Board of
Directors, however, may otherwise appoint a committee consisting of two or more
members of the Board, to administer the Stock Purchase Plan. We will, in this
summary of the Stock Purchase Plan, refer to the body that administers the Stock
Purchase Plan as the "Plan Committee." The Plan Committee has full power and
authority to interpret and administer the Stock Purchase Plan, to establish
rules and regulations, to appoint agents in connection therewith and to take any
other action that the Plan Committee deems necessary or desirable to administer
the Stock Purchase Plan. The Plan Committee is required to administer the Stock
Purchase Plan so that all participants have the same rights and privileges as
required by Section 423(b)(5) of the Code.
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Purchases of Common Stock Under the Stock Purchase Plan
The maximum number of shares of Common Stock that may be purchased under the
Stock Purchase Plan is 150,000 subject to appropriate adjustment in the event of
a stock dividend, stock split or other similar change in capitalization. Shares
of Common Stock purchased under the Stock Purchase Plan may be treasury shares,
authorized and unissued shares, shares purchased in the open market (on an
exchange or in negotiated transactions), or a combination thereof.
Eligible Employees
Eligibility to participate in the Stock Purchase Plan is extended to each
employee of the Company who has been continuously employed by the Company for at
least 12 months, whose customary employment by the Company is greater than 20
hours per week and more than 5 months in any calendar year (each such employee
is referred to herein as an "Eligible Employee"). A person must be an Eligible
Employee on the first day of a Purchase Period (as defined below) in order to
participate in the Stock Purchase Plan during that Purchase Period.
Material Terms of the Stock Purchase Plan
An Eligible Employee may purchase Common Stock under the Stock Purchase Plan
only if he or she is an Eligible Employee on the first day of a "Purchase
Period." A Purchase Period is a 12-month period beginning on the first business
day on or after July 1 and ending on the last business day in June of the next
succeeding calendar year.
An Eligible Employee may purchase shares of Common Stock through payroll
deductions. The amount of payroll deduction will be a whole percentage amount
or a whole dollar amount, as determined by the Plan Committee, in either case
not to exceed 15%, or a lesser percentage as may be determined by the Plan
Committee, of the Eligible Employee's then current regular wage or salary
(before withholding or other deductions) paid to the Eligible Employee by the
Company.
No employee can purchase more than 1,500 shares of Common Stock during any
Purchase Period. No employee can acquire rights to purchase Common Stock under
the Stock Purchase Plan at a rate which exceeds $25,000 of the fair market value
of Common Stock during a calendar year, to be determined in the manner provided
by Section 423(b)(8) of the Code. In addition, no employee can purchase Common
Stock under the Stock Purchase Plan if, after that purchase, the employee would
own 5% or more of the total combined voting power or value of all classes of
stock of the Company, to be determined in the manner provided by Section 424(d)
of the Code.
To participate in the Stock Purchase Plan, an Eligible Employee is required to
execute and deliver a payroll deduction authorization to the Company or its
designated agent in the time and manner specified by the Plan Committee. The
authorization will become effective on the first day of the Purchase Period
commencing after its execution and delivery. A participant may change the
amount of his or her payroll deduction by executing and delivering a new payroll
deduction authorization, which will become effective on the first day of the
Purchase Period next succeeding its execution and delivery.
Payroll deduction will be credited to a purchase account established on the
books of the Company on
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behalf of each participant (a "Purchase Account"). At the end of each Purchase
Period, the amount in each participant's Purchase Account will be applied to
purchase the number of shares of Common Stock determined by dividing the amount
by the Purchase Price (as defined below) for the Purchase Period.
The Purchase Price for a Purchase Period is 85% of the lesser of (i) the fair
market value of one share of the Common Stock on the first day of the Purchase
Period and (ii) the fair market value of one share of the Common Stock on the
last day of the Purchase Period, unless the Plan Committee determines otherwise
in accordance with the terms of the Stock Purchase Plan. The fair market value
of a share of Common Stock on a given day is the average of the high and low
transaction prices for a share of Common Stock as reported by The Nasdaq Stock
Market on that day or, if there are no reported transactions on that day, on the
next preceding date for which transactions were reported.
The Plan Committee may in its discretion, establish additional procedures
whereby Eligible Employees may participate in the Stock Purchase Plan by means
other than payroll deduction, including, but not limited to, delivery of funds
by participants in a lump sum or automatic charges to participants' bank
accounts. These other methods of participating will be subject to rules and
conditions as the Plan Committee may establish. Rights to purchase Common Stock
under the Stock Purchase Plan are not transferable.
Common Stock purchased under the Stock Purchase Plan will be considered to be
issued and outstanding to the participant's credit as of the close of business
on the last day of each Purchase Period. No interest will accrue at any time
for any amount credited to a Purchase Account. After the close of each Purchase
Period, a report will be sent to each participant stating the entries made to
his or her Purchase Account, the number of shares of Common Stock purchased and
the applicable Purchase Price. A participant will be issued a certificate for
his or her shares when his or her participation in the Stock Purchase Plan is
terminated, the Stock Purchase Plan is terminated or upon request, but in the
last case only in denominations of at lease 25 shares.
A participant may elect at any time to terminate participation in the Stock
Purchase Plan, provided the termination is received by the Company in writing
prior to the last business day of the Purchase Period for which the termination
is to be effective. In addition, a participant's participation in the Stock
Purchase Plan will automatically terminate upon the participant's death or
termination of employment with the Company or when the participant otherwise
ceases to be an Eligible Employee. Upon any termination, the Company will
deliver to the participant or his or her legal representative, as the case may
be, cash in an amount equal to the balance in his or her Purchase Account on the
date of termination, one or more certificates for the number of whole shares of
Common Stock held for his or her benefit, and the cash equivalent for any
fractional share so held.
In the event of a Change in Control of the Company (as defined in the Stock
Purchase Plan), the then current Purchase Period will end, and all participants'
Purchase Accounts will be applied to purchase shares of Common Stock, and the
Plan will immediately thereafter terminate.
Termination and Amendment
The Board or the Plan Committee may terminate the Stock Purchase Plan at any
time. The Stock Purchase Plan will terminate when the maximum number of shares
of Common Stock available for purchase thereunder has been purchased.
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The Board or the Plan Committee may amend the Stock Purchase Plan for any
reason; provided, however, that no such amendment may (i) materially adversely
affect any purchase rights outstanding under the Stock Purchase Plan during the
Purchase Period in which the amendment is to be effected, (ii) unless approved
by the stockholders of the Company, increase the number of shares of Common
Stock which may be purchased under the Stock Purchase Plan, (iii) decrease the
Purchase Price for shares of Common Stock thereunder for any period below 85% of
the lesser of (a) the fair market value of the Common Stock on the first day of
the Purchase Period and (b) the fair market value of the Common Stock of the
last day of the Purchase Period, (iv) unless approved by the stockholders of the
Company, change the class of employees eligible to participate in the Stock
Purchase Plan or (v) adversely affect the qualification of the Stock Purchase
Plan under Section 423 of the Code.
Federal Income Tax Consequences
The following is a brief overview of the United States income tax consequences
of participation in the Stock Purchase Plan and should not be relied upon as
being a complete statement. It does not address the state or local tax aspects
of participation in the Stock Purchase Plan.
Purchase of Stock. An Eligible Employee who elects to participate in the
Stock Purchase Plan will not recognize any taxable income at the time Common
Stock is purchased for him or her under the Stock Purchase Plan.
Qualifying Disposition of Shares. If an employee disposes of Common Stock
purchased under the Stock Purchase Plan two years or more after the first day of
the Purchase Period or one year or more after the date the Common Stock is
transferred to the employee, whichever is later, the employee will recognize
ordinary income in an amount equal to the lesser of: (a) the excess of the fair
market value of the Common Stock at the time of disposition over the purchase
price under the Stock Purchase Plan and (b) 15% of the fair market value of the
Common Stock on the first day of the Purchase Period. The portion of the gain
that is in excess of the amount recognized as ordinary income, if any, will be
taxed as long-term capital gain. If the Common Stock is disposed of at a price
below the purchase price under the Stock Purchase Plan, the loss will be treated
as long-term capital loss. The Company will not be entitled to any deduction
with respect to a disposition of Common Stock occurring under the circumstances
described in this paragraph.
Disqualifying Disposition of Shares. If an employee disposes of Common
Stock purchased under the Stock Purchase Plan within two years after the first
day of the Purchase Period, or within one year after the date the Common Stock
is transferred to the employee, whichever is later, the employee will recognize
ordinary income, and the Company will be entitled to a corresponding deduction,
in an amount equal to the excess of the fair market value of the Common Stock on
the last day of the Purchase Period over the purchase price of the Common Stock
under the Stock Purchase Plan. The employee's cost basis of the Common Stock
will be increased by the amount of the ordinary income recognized by the
employee. In addition, on the disposition of the Common Stock, an employee will
recognize capital gain or loss equal to the difference between the price at
which the Common Stock is disposed of and the cost basis in the Common Stock, as
so increased. The Company will not be entitled to any deduction with respect to
the amount recognized by the employee as capital gain.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP as independent
accountants of the Company for the fiscal year ending June 30, 2000. If a
majority of the stockholders in attendance at the Annual Meeting, in person or
by proxy, fail to ratify the appointment, the appointment of other independent
accountants will be considered by the Board of Directors. Abstentions will have
the same effect as votes against the proposal. Non-voted shares will not be
considered in attendance for the vote on this proposal. Deloitte & Touche LLP
has audited the Company's financial statements since the fiscal year ended June
30, 1992. Representatives of Deloitte & Touche LLP are expected to be at the
Annual Meeting and will be available to respond to appropriate questions.
Deloitte & Touche LLP will also have the opportunity to make a statement at the
Annual Meeting if they desire to do so.
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the proposal to ratify the appointment of Deloitte & Touche LLP as
independent accountants for the Company for the fiscal year ending June 30, 2000
(Proposal 4).
STOCKHOLDER PROPOSALS
Pursuant to applicable rules under the Securities Exchange Act of 1934,
stockholder proposals intended to be presented at the 2000 Annual Meeting of
Stockholders and to be included in the Company's proxy statement and form of
proxy for that meeting must be received by the Company at its principal
executive offices not later than July 15, 2000. In addition, the By-Laws of the
Company contain requirements relating to the timing and content of the advance
notice which stockholders must provide to the Secretary of the Company for any
matter or any director nomination to be properly presented at a stockholders
meeting. To be timely, a notice from a stockholder for the 2000 Annual Meeting
of Stockholders must be received by the Secretary of the Company no earlier than
September 7, 2000, and no later than October 2, 2000. A copy of the By-Laws may
be obtained upon written request to the Secretary of the Company.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's officers and directors, and persons who own more
than 10 percent of a registered class of the Company's equity securities
("Reporting Persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Reporting Persons are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the
Form 3, 4, and 5 filings received from such Reporting Persons since the
beginning of Fiscal 1999, the Company is not aware of any failure to file on a
timely basis any Form 3, 4, or 5 during Fiscal 1999 except as set forth in this
paragraph. Mr. Randy K. Ambrosy filed one late report on Form 5 disclosing one
exempt acquisition in 1998. Mr. John F. Biver filed one late report on Form 5
disclosing one exempt acquisition in each of 1997 and 1998. Mr. Rodney L. Blum
filed one late report on Form 5 disclosing one exempt acquisition in each of
1997 and 1998. Mr. Dennis J. George filed one late report on Form 5 disclosing
one exempt acquisition in each of 1997 and 1998. Mr. Edward T. Graham filed one
late report on Form 5 disclosing one non-exempt acquisition in 1996, three
exempt acquisitions in each of 1996 and 1997 and one exempt acquisition in 1998.
Mr. James P. Hickey filed one
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late report on Form 5 disclosing two exempt acquisitions in 1995 and one exempt
acquisition in each of 1996, 1997 and 1998. Mr. Willliam P. LeMay filed one late
report on Form 5 disclosing four exempt acquisitions in each of 1996 and 1997
and one exempt acquisition in 1998. Mr. Thomas O. Miller filed one late report
on Form 5 disclosing one non-exempt acquisition in 1998, two exempt acquisitions
in 1995 and one exempt acquisition in each of 1996, 1997 and 1998. Mr. Brent A.
Straka filed one late report on Form 5 disclosing one exempt acquisition in each
of 1996 and 1998 and three exempt acquisitions in 1997.
ANNUAL REPORT TO STOCKHOLDERS
The Company's 1999 Annual Report for Fiscal 1999 accompanies this Proxy
Statement.
A copy of the Company's Annual Report on Form 10-K, as amended by its Report on
Form 10-K/A for Fiscal 1999 filed with the Securities and Exchange Commission,
without exhibits, will be provided without charge to any stockholder submitting
a request therefor to:
Dennis J. George
Vice President, Chief Financial Officer, Treasurer and Secretary
Eagle Point Software Corporation
4131 Westmark Drive
Dubuque, Iowa 52002-2627
Telephone: (319) 556-8392
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the Annual
Meeting, but if any other matters should properly come before the Annual
Meeting, it is intended that the persons named in the accompanying proxy card
will vote on such matters in accordance with their best judgment.
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This document is being filed with the Securities and Exchange Commission in
accordance with instruction 3 of item 10 of Schedule 14A under the Securities
Exchange Act of 1934, as amended. It will not be distributed to stockholders
with the proxy materials included in this Edgar submission.
Eagle Point Software Corporation
1999 Stock Option Plan
I. Introduction
1.1 Purposes. The purposes of the Stock Option Plan (the "Plan") of Eagle
Point Software Corporation, a Delaware corporation (the "Company") and its
subsidiaries from time to time (individually a "Subsidiary" and collectively the
"Subsidiaries") are to align the interests of the Company's stockholders and the
recipients of options under this Plan by increasing the proprietary interest of
such recipients in the Company's growth and success and to advance the interests
of the Company by attracting and retaining officers and other key employees and
well-qualified persons who are not officers or employees of the Company for
service as directors of the Company. For purposes of this Plan, references to
employment by the Company shall also mean employment by a Subsidiary.
1.2 Administration. This Plan shall be administered by the Board of
Directors of the Company (the "Board") or a committee designated by the Board
consisting of two or more members of the Board (the Board, in its capacity as
the administrator of the Plan, or such committee, the "Committee").
The Committee shall, subject to the terms of this Plan, select eligible
persons for participation in this Plan and shall determine the number of shares
of Common Stock subject to each option granted hereunder, the exercise price of
such option, the time and conditions of exercise of such option and all other
terms and conditions of such option, including, without limitation, the form of
the option agreement. The Committee may, in its sole discretion and for any
reason at any time, subject to the requirements of Section 162(m) of the Code
and regulations thereunder in the case of an option intended to be qualified
performance-based compensation, take action such that any or all outstanding
options shall become exercisable in part or in full. The Committee shall,
subject to the terms of this Plan, interpret this Plan and the application
thereof, establish rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant of an
option, conditions with respect to the grant, such as limiting competitive
employment or other activities. All such interpretations, rules, regulations
and conditions shall be final, binding and conclusive. Each option shall be
evidenced by a written agreement (an "Agreement") between the Company and the
optionee setting forth the terms and conditions of such option.
The Committee may delegate some or all of its power and authority hereunder
to the Board or the President and Chief Executive Officer or other executive
officer of the Company as the Committee deems appropriate; provided, however,
that (i) the Committee may not delegate its power and authority to the Board or
the President and Chief Executive Officer or other executive officer of the
Company with regard to the grant of an award to any person who is a "covered
employee" within the meaning of Section 162(m) of the Code or who, in the
Committee's judgment, is likely to be a covered employee at any time during the
period an award hereunder to such employee would be outstanding and (ii) the
Committee may not delegate its power and authority to the President and Chief
Executive Officer or other executive officer of the Company with regard to the
selection for participation in this Plan of an officer or other person subject
to Section 16 of the Exchange Act or decisions concerning the timing, pricing or
amount of an award to such an officer or other person.
No member of the Board of Directors or Committee, and neither the President
and Chief Executive Officer nor other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and the members of the Board of Directors and the
Committee and the President and Chief Executive Officer or other executive
officer shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law and under any directors'
and officers' liability insurance that may be in effect from time to time,
except as otherwise may be provided in the Company's Certificate of
Incorporation and/or By-Laws, and under any directors' and officers' liability
insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
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1.3 Eligibility. Participants in this Plan shall consist of such
directors (including Independent Directors), officers and other key employees of
the Company and its Subsidiaries as the Committee in its sole discretion may
select from time to time. The Committee's selection of a person to participate
in this Plan at any time shall not require the Committee to select such person
to participate in this Plan at any other time. Independent Directors of the
Company shall also be eligible to participate in this Plan in accordance with
Section III.
1.4 Shares Available. Subject to adjustment as provided in Section 4.7,
350,000 shares of the common stock, $.01 par value, of the Company ("Common
Stock"), shall be available for grants of options under this Plan, reduced by
the sum of the aggregate number of shares of Common Stock which become subject
to outstanding options. To the extent that shares of Common Stock subject to an
outstanding option granted hereunder or under the Eagle Point Software
Corporation Stock Option Plan are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such option (other than
by reason of the delivery or withholding of shares of Common Stock to pay all or
a portion of the exercise price of such option, or to satisfy all or a portion
of the tax withholding obligations relating to such option), then such shares of
Common Stock shall be available for new options granted under this Plan.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
To the extent necessary for an award to be qualified performance-based
compensation under Section 162(m) of the Code and the regulations thereunder,
the maximum number of shares of Common Stock with respect to which options may
be granted during any fiscal year of the Company to any person shall be 250,000,
subject to adjustment as provided in Section 4.7.
II. Stock Options
2.1 Grants of Stock Options. The Committee may, in its discretion, grant
options to purchase shares of Common Stock to such eligible persons as may be
selected by the Committee. Each option, or portion thereof, that is not an
incentive stock option, shall be a non-qualified stock option. An incentive
stock option shall mean an option to purchase shares of Common Stock that meets
the requirements of Section 422 of the Code, or any successor provision, which
is intended by the Committee to constitute an incentive stock option. Each
incentive stock option shall be granted within ten years of the effective date
of this Plan. To the extent that the aggregate Fair Market Value (determined as
of the date of grant) of shares of Common Stock with respect to which options
designated as incentive stock options are exercisable for the first time by a
participant during any calendar year (under this Plan or any other plan of the
Company, or any parent or Subsidiary) exceeds the amount (currently $100,000)
established by the Code, such options shall constitute non-qualified stock
options. "Fair Market Value" shall mean the average of the high and low
transaction prices of a share of Common Stock as reported on The Nasdaq Stock
Market on the date as of which such value is being determined or, if there shall
be no reported transactions on such date, on the next preceding date for which
transactions were reported; provided that if Fair Market Value for any date
cannot be determined as above provided, Fair Market Value shall be determined by
the Committee by whatever means or method as the Committee, in the good faith
exercise of its discretion, shall at such time deem appropriate.
2.2 Terms of Stock Options. Options shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock purchasable
upon exercise of a non-qualified stock option or an incentive stock option shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option; provided further, that if an incentive stock
option shall be granted to any person who, at the time such option is granted,
owns capital stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Company (or of any parent or
Subsidiary) (a
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"Ten Percent Holder"), the purchase price per share of Common Stock shall be the
price (currently 110% of Fair Market Value) required by the Code in order to
constitute an incentive stock option.
(b) Option Period and Exercisability. The period during which an option
may be exercisable shall be determined by the Committee; provided, however, that
no incentive stock option shall be exercisable later than ten years after its
date of grant; provided further, that if an incentive stock option shall be
granted to a Ten Percent Holder, such option shall not be exercised later than
five years after its date of grant. The Committee may, in its discretion,
establish performance measures or other criteria which shall be satisfied or met
as a condition to the grant of an option or to the exercisability of all or a
portion of an option. The Committee shall determine whether an option shall
become exercisable in cumulative or non-cumulative installments and in part or
in full at any time. An exercisable option, or portion thereof, may be
exercised only with respect to whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (A) in cash, (B) by
delivery (either actual delivery or by attestation procedures established by the
Company) of previously owned whole shares of Common Stock (which the optionee
has held for at least six months prior to the delivery of such shares or which
the optionee purchased on the open market and in each case for which the
optionee has good title, free and clear of all liens and encumbrances) having an
aggregate Fair Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (C) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (D) a combination of (A) and (B), in each case
to the extent set forth in the Agreement relating to the option and (ii) by
executing such documents as the Company may reasonably request. The Company
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(D). Any fraction of a share of Common Stock which would be
required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the optionee. No certificate representing
Common Stock shall be delivered until the full purchase price therefor has been
paid (or arrangement made for such payment to the Company's satisfaction).
2.3 Termination of Employment or Service.
(a) Disability. Subject to paragraph (f) below and Section 4.8 and
unless otherwise specified in the Agreement relating to an option, if an
optionee's employment with or service to the Company terminates by reason of
Disability, each option held by such optionee shall become fully exercisable and
may thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is one year (or such other period as set forth in the
Agreement relating to such option) after the effective date of such optionee's
termination of employment or service and (ii) the expiration date of the term of
such option. For purposes of this Plan, "Disability" shall mean the inability
of an optionee substantially to perform such optionee's duties and
responsibilities for a continuous period of at least six months.
(b) Retirement. Subject to paragraph (f) below and Section 4.8 and unless
otherwise specified in the Agreement relating to an option, if an optionee's
employment with or service to the Company terminates by reason of retirement on
or after age 65 and after the optionee has completed at least five years of
employment with or service to the Company, each option held by such optionee
shall become fully exercisable and may thereafter be exercised by such optionee
(or such optionee's legal representative or similar person) until and including
the earliest to occur of (i) the date which is one year (or such other period as
set forth in the Agreement relating to such option) after the effective date of
such optionee's termination of employment or service and (ii) the expiration
date of the term of such option.
(c) Death. Subject to paragraph (f) below and Section 4.8 and unless
otherwise specified in the Agreement relating to an option, if an optionee's
employment with or service to the Company terminates by reason of death, each
option held by such optionee shall become fully exercisable and may thereafter
be exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is one year (or such other period as set
forth in the Agreement relating to such option) after the date of death and (ii)
the expiration date of the term of such option.
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(d) Other Termination. Subject to paragraph (f) below, Section 3.2(c) and
Section 4.8 and unless otherwise specified in the Agreement relating to an
option, if an optionee's employment with or service to the Company terminates
for any reason other than Disability, retirement on or after age 65 after
completion of at least five years of employment with or service to the Company
or death, each option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the effective date of such optionee's
termination of employment or service and may thereafter be exercised by such
optionee (or such optionee's legal representative or similar person) until and
including the earliest to occur of (i) the date which is three months (or such
other period as set forth in the Agreement relating to such option) after the
effective date of such optionee's termination of employment or service and (ii)
the expiration date of the term of such option; provided that if such optionee's
employment or service is terminated for Cause, all options held by such optionee
shall terminate automatically on the effective date of such optionee's
termination of employment or service. For purposes of this Plan, "Cause" shall
mean any act of dishonesty, commission of a felony, significant activities
harmful to the reputation of the Company or any of its Subsidiaries, refusal to
perform or substantial disregard of duties properly assigned or significant
violation of any statutory or common law duty of loyalty to the Company or any
of its Subsidiaries.
(e) Death Following Termination of Employment or Service. Subject to
paragraph (f) below and Section 4.8 and unless otherwise specified in the
Agreement relating to an option, if an optionee dies during the one year period
following termination of employment or service by reason of Disability, or if an
optionee dies during the one year period following termination of employment or
service by reason of retirement on or after age 65 after completion of at least
five years of employment with or service to the Company, or if an optionee dies
during the three month period following termination of employment or service for
any other reason other than Disability or retirement on or after age 65 after
completion of at least five years of employment with or service to the Company
(or, in each case, such other period as the Committee may specify in the
Agreement relating to an option), each option held by such optionee shall be
exercisable only to the extent that such option is exercisable on the date of
such optionee's death and may thereafter be exercised by such optionee's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be, until and including the earliest to occur of (i) the date which
is one year (or such other period as set forth in the Agreement relating to such
option) after the date of death and (ii) the expiration date of the term of such
option.
(f) Termination of Employment - Incentive Stock Options. Subject to
Section 4.8 and unless otherwise specified in the Agreement relating to the
option, if the employment with the Company of a holder of an incentive stock
option terminates by reason of Permanent and Total Disability (as defined in
Section 22(e)(3) of the Code), each incentive stock option held by such optionee
shall become fully exercisable and may thereafter be exercised by such optionee
(or such optionee's legal representative or similar person) until and including
the earliest to occur of (i) the date which is one year (or such shorter period
as set forth in the Agreement relating to such option) after the effective date
of such optionee's termination of employment by reason of Permanent and Total
Disability and (ii) the expiration date of the term of such option.
Subject to Section 4.8 and unless otherwise specified in the Agreement
relating to the option, if the employment with the Company of a holder of an
incentive stock option terminates by reason of death, each incentive stock
option held by such optionee shall become fully exercisable and may thereafter
be exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of (i)
the date which is one year (or such shorter period as set forth in the Agreement
relating to such option) after the date of death and (ii) the expiration date of
the term of such option.
Subject to Section 4.8 and unless otherwise specified in the Agreement
relating to the option, if the employment with the Company of a holder of an
incentive stock option terminates for any reason other than Permanent and Total
Disability or death, each incentive stock option held by such optionee shall be
exercisable only to the extent such option is exercisable on the effective date
of such optionee's termination of employment, and may thereafter be exercised by
such holder (or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is three months after the
effective date of such optionee's termination of employment and (ii) the
expiration date of the term of such option; provided that if such optionee's
employment is terminated for Cause, all incentive stock options held by such
optionee shall terminate automatically on the effective date of such optionee's
termination of employment.
Subject to Section 4.8 and unless otherwise specified in the Agreement
relating to the option, if the holder of an incentive stock option dies during
the one-year period following termination of employment by reason of
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Permanent and Total Disability (or such shorter period as set forth in the
Agreement relating to such option), or if the holder of an incentive stock
option dies during the three-month period following termination of employment
for any reason other than Permanent and Total Disability or death, each
incentive stock option held by such optionee shall be exercisable only to the
extent such option is exercisable on the date of the optionee's death and may
thereafter be exercised by the optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.
III. Provisions Relating to Independent Directors
3.1 Eligibility. Each member of the Board of Directors of the Company
who is not an employee, either full-time or part-time, of the Company or a
Subsidiary (an "Independent Director") shall be granted options to purchase
shares of Common Stock in accordance with this Section III.
3.2 Grants of Stock Options. Each Independent Director shall be granted
non-qualified stock options as follows:
(a) Time of Grant. Each person who commences service as an Independent
Director after the date hereof shall be granted an option to purchase 2,000
shares of Common Stock on the date such service commences at a purchase price
per share equal to the Fair Market Value of the Common Stock on the date of
grant of such option, provided, however, that such grant shall not be made to a
person who becomes an Independent Director by reason of termination of
employment with the Company or any Subsidiary. On the date of each annual
meeting of stockholders of the Company, each person who is an Independent
Director immediately after such meeting of stockholders shall be granted an
option to purchase 4,000 shares of Common Stock at a purchase price per share
equal to the Fair Market Value of the Common Stock on the date of grant of such
option.
(b) Option Period and Exercisability. Each option granted under this
Article III shall be fully exercisable on and after its date of grant. Each
option granted under this Article III shall expire ten years after its date of
grant. An exercisable option, or portion thereof, may be exercised in whole or
in part only with respect to whole shares of Common Stock. Options granted
under this Article III shall be exercisable in accordance with Section 2.2(c).
(c) Termination of Directorship. If the holder of an option granted under
this Article III shall cease to be a member of the Board of Directors of the
Company for any reason, each such option held by such optionee may thereafter be
exercised by such optionee (or such optionee's legal representative or similar
person) until and including the earliest to occur of (i) the date which is one
year after the date such optionee ceased to be a member of the Board of
Directors of the Company and (ii) the expiration date of the term of such
option.
(d) Death Following Termination of Directorship. If the holder of an
option granted under this Article V dies during the one year period following
the date on which such optionee ceased to be a member of the Board of Directors
of the Company, each such option may thereafter be exercised by the optionee's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be, until and including the earliest to occur of (i) the date which
is one year after the date of death and (ii) the expiration date of the term of
such option.
IV. General
4.1 Effective Date and Term of Plan. This Plan shall be submitted to the
stockholders of the Company for approval and, if approved by the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy at the 1999 annual meeting of stockholders, shall become
effective on the date of such approval. No option may be exercised prior to the
date of such stockholder approval. This Plan shall terminate on the tenth
anniversary of its effective date, unless terminated earlier by the Board.
Termination of this Plan shall not affect the terms or conditions of any option
granted prior to termination. In the event that this Plan is not approved by
the stockholders of the Company at the 1999 annual meeting of stockholders, this
Plan and any options granted hereunder shall be null and void.
4.2 Amendments. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) and Section 422 of
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the Code; provided, however, that no amendment shall be made without stockholder
approval if such amendment would (a) increase the maximum number of shares of
Common Stock available under this Plan (subject to Section 4.7), (b) effect any
change inconsistent with Section 422 of the Code or (c) extend the term of this
Plan. No amendment may impair the rights of a holder of an outstanding option
without the consent of such holder.
4.3 Agreement. No option shall be valid until an Agreement is executed by
the Company and the optionee and, upon execution by the Company and the optionee
and delivery of the Agreement to the Company, such option shall be effective as
of the effective date set forth in the Agreement.
4.4 Non-Transferability. Unless otherwise specified in the Agreement
relating to a non-qualified stock option, no option hereunder shall be
transferable other than by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company. Except
to the extent permitted by the foregoing sentence, each option may be exercised
during the optionee's lifetime only by the optionee or the optionee's legal
representative or similar person. Except as permitted by the second preceding
sentence, no option hereunder shall be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Upon
any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option hereunder, such option and all rights thereunder
shall immediately become null and void.
4.5 Tax Withholding. The Company shall have the right to require, prior
to the issuance or delivery of any shares of Common Stock, payment by the
optionee of any Federal, state, local or other taxes which may be required to be
withheld or paid in connection with an option hereunder. An Agreement may
provide that (i) the Company shall withhold whole shares of Common Stock which
would otherwise be delivered upon exercise of the option having an aggregate
Fair Market Value determined as of the date the obligation to withhold or pay
taxes arises in connection with the option (the "Tax Date") in the amount
necessary to satisfy any such obligation or (ii) the optionee may satisfy any
such obligation by any of the following means: (A) a cash payment to the
Company, (B) delivery (either actual delivery or by attestation procedures
established by the Company) to the Company of previously owned whole shares of
Common Stock (which the optionee has held for at least six months prior to the
delivery of such shares or which the optionee purchased on the open market and
in each case for which the optionee has good title, free and clear of all liens
and encumbrances) having an aggregate Fair Market Value determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (C)
authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered upon exercise of the option having an aggregate Fair
Market Value determined as of the Tax Date, equal to the amount necessary to
satisfy any such obligation, (D) a cash payment by a broker-dealer acceptable to
the Company to whom the optionee has submitted an irrevocable notice of exercise
or (E) any combination of (A), (B) and (C), in each case to the extent set forth
in the Agreement relating to the option; provided, however, that the Company
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(E). Shares of Common Stock to be delivered or withheld may not
have an aggregate Fair Market Value in excess of the amount determined by
applying the minimum statutory withholding rate. Any fraction of a share of
Common Stock which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the optionee.
4.6 Restrictions on Shares. Each option hereunder shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise of such option
or the delivery of shares thereunder, such option shall not be exercised and
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company may
require that certificates evidencing shares of Common Stock delivered pursuant
to any option hereunder bear a legend indicating that the sale, transfer or
other disposition thereof by the holder is prohibited except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
4.7 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option, the
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purchase price per security, and the number and class of securities subject to
each option to be granted to Independent Directors pursuant to Article III shall
be appropriately adjusted by the Committee, such adjustments to be made in the
case of outstanding options without an increase in the aggregate purchase price.
The decision of the Committee regarding any such adjustment shall be final,
binding and conclusive. If any adjustment would result in a fractional security
being (a) available under this Plan, such fractional security shall be
disregarded, or (b) subject to an option under this Plan, the Company shall pay
the optionee, in connection with the first exercise of the option in whole or in
part occurring after such adjustment, an amount in cash determined by
multiplying (A) the fraction of such security (rounded to the nearest hundredth)
by (B) the excess, if any, of (x) the Fair Market Value on the exercise date
over (y) the exercise price of the option.
4.8 Change in Control. (a) (1) Notwithstanding any provision in this
Plan or any Agreement, in the event of a Change in Control pursuant to Section
(b)(3) or (4) below in connection with which the holders of Common Stock receive
shares of common stock that are registered under Section 12 of the Exchange Act,
all outstanding options shall immediately become exercisable in full and there
shall be substituted for each share of Common Stock available under this Plan,
whether or not then subject to an outstanding option, the number and class of
shares into which each outstanding share of Common Stock shall be converted
pursuant to such Change in Control. In the event of any such substitution, the
purchase price per share of each option shall be appropriately adjusted by the
Committee (whose determination shall be final, binding and conclusive), such
adjustments to be made without an increase in the aggregate purchase price or
base price.
(2) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control pursuant to Section (b)(1) or (2) below, or in the
event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive consideration other
than shares of common stock that are registered under Section 12 of the Exchange
Act, each outstanding option shall be surrendered to the Company by the holder
thereof, and each such option shall immediately be cancelled by the Company, and
the holder shall receive, within ten days of the occurrence of a Change in
Control, a cash payment from the Company in an amount equal to the number of
shares of Common Stock then subject to such option, multiplied by the excess, if
any, of (i) the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place or (B) the Fair Market Value of a share of Common Stock on the date
of occurrence of the Change in Control over (ii) the purchase price per share of
Common Stock subject to the option. The Company may, but is not required to,
cooperate with any person who is subject to Section 16 of the Exchange Act to
assure that any cash payment in accordance with the foregoing to such person is
made in compliance with Section 16 and the rules and regulations thereunder.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act, of beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act, of 35% or more of either (i) the
then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities");
excluding, however, the following: (A) any acquisition directly from the
Company (excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the Company),
(B) any acquisition by the Company, (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (3) of this Section 4.8(b); provided further, that
for purposes of clause (B), if any Person (other than the Company or any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall become the
beneficial owner of 35% or more of the Outstanding Company Common Stock or
35% or more of the Outstanding Company Voting Securities by reason of an
acquisition by the Company, and such Person shall, after such acquisition
by the Company, become the beneficial owner of any additional shares of the
Outstanding Company Common Stock or any additional Outstanding Company
Voting Securities
7
<PAGE>
(other than pursuant to a dividend or distribution paid or made by the
Company on the Outstanding Company Common Stock or the Outstanding Company
Voting Securities or pursuant to a split or subdivision of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities) and such
beneficial ownership is publicly announced, such additional beneficial
ownership shall constitute a Change in Control;
(2) individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided that any individual who becomes a
director of the Company subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by the
vote of at least a majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall not be
deemed a member of the Incumbent Board;
(3) consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction"); excluding, however, a Corporate
Transaction pursuant to which (i) all or substantially all of the
individuals or entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of, respectively,
the outstanding shares of common stock, and the combined voting power of
the outstanding securities of such corporation entitled to vote generally
in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or indirectly)
in substantially the same proportions relative to each other as their
ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than: the Company;
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; the corporation
resulting from such Corporate Transaction; and any Person which
beneficially owned, immediately prior to such Corporate Transaction,
directly or indirectly, 35% or more of the Outstanding Company Common Stock
or the Outstanding Company Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 35% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the election
of directors and (iii) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(4) consummation of a plan of complete liquidation or dissolution of
the Company.
4.9 No Right of Participation or Employment. No person shall have any
right to participate in this Plan. Neither this Plan nor any option granted
hereunder shall confer upon any person any right to continued employment by the
Company, any Subsidiary or any affiliate of the Company or affect in any manner
the right of the Company, any Subsidiary or any affiliate of the Company to
terminate the employment of any person at any time without liability hereunder.
4.10 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock which are
subject to an option hereunder until such person becomes a stockholder of record
with respect to such shares of Common Stock.
4.11 Designation of Beneficiary. Each optionee may file with the
Committee a written designation of one or more persons as such optionee's
beneficiary or beneficiaries (both primary and contingent) in the event of the
8
<PAGE>
optionee's death. To the extent an outstanding option granted hereunder is
exercisable, such beneficiary or beneficiaries shall be entitled to exercise
such option.
Each beneficiary designation shall become effective only when filed in
writing with the Committee during the optionee's lifetime on a form prescribed
by the Committee. The spouse of a married optionee domiciled in a community
property jurisdiction shall join in any designation of a beneficiary other than
such spouse. The filing with the Committee of a new beneficiary designation
shall cancel all previously filed beneficiary designations.
If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
option hereunder held by such optionee, to the extent exercisable, may be
exercised by such optionee's executor, administrator, legal representative or
similar person.
4.12 Governing Law. This Plan, each option hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
9
<PAGE>
This document is being filed with the Securities and Exchange Commission in
accordance with instruction 3 of item 10 of Schedule 14A under the Securities
Exchange Act of 1934, as amended. it will not be distributed to stockholders
with the proxy materials included in this Edgar submission.
AMENDED AND RESTATED
Eagle Point Software Corporation 1995 Employee Stock Purchase Plan
1. Purpose. The purpose of the Amended and Restated Eagle Point Software
Corporation 1995 Employee Stock Purchase Plan (the "Plan") is to provide
employees of Eagle Point Software Corporation, a Delaware corporation (the
"Company"), and its Subsidiary Companies (as defined in Section 13) added
incentive to remain employed by such companies and to encourage increased
efforts to promote the best interests of such companies by permitting eligible
employees to purchase shares of the common stock, par value $.01, of the Company
("Common Stock") at below-market prices. The Plan is intended to qualify as an
"employee stock purchase plan" under section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The Company and its Subsidiary Companies are
sometimes hereinafter called collectively the "Participating Companies."
2. Eligibility. Participation in the Plan shall be open to each employee
of the Participating Companies (a) who has been continuously employed by the
Participating Companies for at least twelve months, (b) whose customary
employment by the Participating Companies is greater than 20 hours per week; and
(c) whose customary employment by the Participating Companies is more than 5
months in any calendar year (each an "Eligible Employee"). In determining
whether an employee has been continuously employed for at least twelve months,
employment with the following entities shall be included: (i) any corporation a
majority of whose stock is acquired by one or more Participating Companies; (ii)
any trade or business that is acquired by one or more Participating Companies;
and (iii) any trade or business substantially all of whose assets are acquired
by one or more Participating Companies.
No right to purchase Common Stock hereunder shall accrue under the Plan in
favor of any person who is not an Eligible Employee as of the first day of a
Purchase Period (as defined in Section 3). Notwithstanding anything contained in
the Plan to the contrary, no Eligible Employee shall acquire a right to purchase
Common Stock hereunder (i) if, immediately after receiving such right, such
employee would own 5% or more of the total combined voting power or value of all
classes of stock of the Company or any Subsidiary Company (including any stock
attributable to such employee under section 424(d) of the Code), or (ii) if for
a given calendar year such right would permit such employee's aggregate rights
to purchase stock under all employee stock purchase plans of the Company and its
Subsidiary Companies exercisable during such calendar year to accrue at a rate
which exceeds $25,000 of fair market value of such stock for such calendar year,
all determined in the manner provided by section 423(b)(8) of the Code and the
rules and regulations thereunder. In addition, the number of shares of Common
Stock which may be purchased by any Eligible Employee during any Purchase Period
shall not exceed 1500.
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<PAGE>
3. Effective Date of Plan; Purchase Periods. The Plan shall become
effective on July 1, 1995 or on such later date (the "Effective Date") as may be
specified by the Board of Directors (the "Board") of the Company or the
Committee (as defined in Section 11). The Plan shall cease to be effective
unless, within 12 months before or after the date of its adoption by the Board,
it has been approved by the stockholders of the Company in accordance with the
General Corporation Law of the State of Delaware.
The first "Purchase Period" shall begin on the first business day on or
after the later of July 1, 1995 or the Effective Date and shall end on June 28,
1996. Thereafter, a Purchase Period shall begin on the first business day on or
after July 1 of each calendar year and shall end on the last business day in
June of the next succeeding calendar year.
4. Basis of Participation. (a) Payroll Deduction. Each Eligible
Employee shall be entitled to enroll in the Plan as of the first day of any
Purchase Period which begins on or after such employee becomes an Eligible
Employee.
To enroll in the Plan, an Eligible Employee shall execute and deliver a
payroll deduction authorization (the "Authorization") to the Company or its
designated agent in the time and manner specified by the Committee. The
Authorization shall become effective on the first day of the Purchase Period
commencing after the execution and delivery of such Authorization provided, that
an Authorization which is executed and delivered during the six-month period
commencing with the Effective Date shall become effective on the first day of
the payroll period commencing after the execution and delivery of such
Authorization. Each Authorization shall direct that payroll deductions be made
by the employee's employer for each payroll period during which the employee is
a participant in the Plan. The amount of each payroll deduction specified in an
Authorization for each such payroll period shall be a whole percentage amount or
a whole dollar amount, as determined by the Committee, in either case not to
exceed 15%, or such lesser percentage as may be determined by the Committee, of
the participant's current regular wage or salary (before withholding or other
deductions) paid to him by any of the Participating Companies.
Payroll deductions (and any other amount paid under the Plan) shall be
made for each participant in accordance with his Authorization until his
participation in the Plan terminates or the Plan terminates, all as hereinafter
provided.
A participant may change the amount of his payroll deduction by filing a
new Authorization with the Company or its designated agent, such Authorization
shall become effective on the first day of the Purchase Period commencing after
the execution and delivery of such Authorization. No other changes shall be
permitted, except that a participant may elect to terminate his participation in
the Plan as provided in Section 7.
Payroll deductions shall be credited to a purchase account established on
the books of the Company on behalf of each participant (a "Purchase Account").
At the end of each Purchase Period, the amount in each participant's Purchase
Account will be applied to the purchase from the Company of the number of shares
of Common Stock determined by dividing such amount by the Purchase Price (as
defined in Section 5) for such Purchase Period.
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<PAGE>
(b) Other Methods of Participation. The Committee may, in its discretion,
establish additional procedures whereby Eligible Employees may participate in
the Plan by means other than payroll deduction, including, but not limited to,
delivery of funds by participants in a lump sum or automatic charges to
participants' bank accounts. Such other methods of participating shall be
subject to such rules and conditions as the Committee may establish. The
Committee may at any time amend, suspend to terminate any participation
procedures established pursuant to this paragraph without prior notice to any
participant or Eligible Employee.
5. Purchase Price. The purchase price (the "Purchase Price") per share of
Common Stock hereunder for any Purchase Period shall be 85% of the lesser of (i)
the fair market value of a share of Common Stock on the first day of such
Purchase Period and (ii) the fair market value of a share of Common Stock on the
last day of such Purchase Period, unless, prior to the beginning of such
Purchase Period, the Committee shall determine otherwise (subject to the
limitations contained in clause (c) of the third paragraph of Section 8). If
such determination results in a fraction of one cent, the Purchase Price shall
be increased to the next higher full cent. The fair market value of a share of
Common Stock on a given day shall be the average of the high and low transaction
prices of a share of Common Stock as reported on The Nasdaq Stock Market on the
date as of which such value is being determined or, if there shall be no
reported transactions on such date, on the next preceding date for which
transactions were reported. In no event, however, shall the Purchase Price be
less than the par value of the Common Stock.
6. Issuance of Shares. The Common Stock purchased by each participant
shall be considered to be issued and outstanding to his credit as of the close
of business on the last day of each Purchase Period. The total number of shares
of Common Stock purchased by all participants during each Purchase Period shall
be issued, as of the last day in such Purchase Period, to a nominee or agent for
the benefit of the participants. A participant will be issued a certificate for
his shares when his participation in the Plan is terminated, the Plan is
terminated or upon request, but in the last case only in denominations of at
least 25 shares.
No interest shall accrue at any time for any amount credited to a Purchase
Account of a participant. After the close of each Purchase Period, a report will
be sent to each participant stating the entries made to his Purchase Account,
the number of shares of Common Stock purchased and the applicable Purchase
Price.
7. Termination of Participation. A participant may elect at any time to
terminate his participation in the Plan, provided such termination is received
by the participant's employer in writing prior to the last business day of the
Purchase Period for which such termination is to be effective. Upon any such
termination, the participant's employer shall promptly deliver to such
participant cash in an amount equal to the balance to his credit in his Purchase
Account on the date of such termination, one or more certificates for the number
of whole shares of Common Stock held for his benefit, and the cash equivalent
for any fractional share so held. Such cash equivalent shall be determined by
multiplying the fractional share by the fair market value of a share of Common
Stock on the last day of the Purchase Period immediately preceding such
termination, determined as provided in Section 5.
3
<PAGE>
If the participant dies, terminates his employment with the Participating
Companies for any reason, or otherwise ceases to be an Eligible Employee, his
participation in the Plan shall immediately terminate. Upon such terminating
event, the participant's employer shall promptly deliver to such participant or
his legal representative, as the case may be, cash in an amount equal to the
balance to his credit in his Purchase Account on the date of such termination,
one or more certificates for the number of whole shares of Common Stock held for
his benefit, and the cash equivalent of any fractional share so held, determined
as provided above in this Section 7.
8. Termination or Amendment of the Plan. The Company, by action of the
Board or the Committee, may terminate the Plan at any time. Notice of
termination shall be given to all participants, but any failure to give such
notice shall not impair the effectiveness of the termination.
Without any action being required, the Plan will terminate in any event
when the maximum number of shares of Common Stock to be sold under the Plan (as
provided in Section 12) has been purchased. Such termination shall not impair
any rights which under the Plan shall have vested on or prior to the date of
such termination. If at any time the number of shares remaining available for
purchase under the Plan are not sufficient to satisfy all then-outstanding
purchase rights, the Board may determine an equitable basis of apportioning
available shares among all participants consistent with Section 423 of the Code.
The Board or the Committee may amend the Plan from time to time in any
respect for any reason; provided, however, no such amendment shall (a)
materially adversely affect any purchase rights outstanding under the Plan
during the Purchase Period in which such amendment is to be effected, (b) unless
approved by the stockholders of the Company, increase the maximum number of
shares of Common Stock which may be purchased under the Plan, (c) decrease the
Purchase Price of the shares of Common Stock for any Purchase Period below the
lesser of 85% of the fair market value thereof on the first day of such Purchase
Period and 85% of the fair market value thereof on the last day of such Purchase
Period, (d) unless approved by the stockholders of the Company, change the class
of employees eligible to participate in the Plan or (e) adversely affect the
qualification of the Plan under section 423 of the Code.
Upon termination of the Plan, the respective cash balance, if any, to the
credit of each participant in his Purchase Account, one or more certificates for
the number of whole shares of Common Stock held for his benefit, and the cash
equivalent of any fractional share so held, determined as provided in Section 7,
shall be promptly distributed to such participant.
9. Non-Transferability. Rights acquired under the Plan are not
transferable and may be exercised only by a participant.
10. Stockholder's Rights. No Eligible Employee or participant shall by
reason of the Plan have any rights of a stockholder of the Company until and to
the extent he shall acquire shares of Common Stock as herein provided.
11. Administration of the Plan. The Plan shall be administered by the
Compensation Committee of the Board (the "Committee"), provided that the Board
may otherwise appoint (A) the Board or (B) a committee consisting of two or more
members of the Board, to act as the
4
<PAGE>
Committee. In addition to the power to amend or terminate the Plan pursuant to
Section 8, the Committee shall have full power and authority to: (i) interpret
and administer the Plan and any instrument or agreement entered into under the
Plan; (ii) establish such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (iii) make
any other determination and take any other action that the Committee deems
necessary or desirable for administration of the Plan. Decisions of the
Committee shall be final, conclusive and binding upon all persons, including the
Company, any participant and any other employee of the Company. A majority of
the members of the Committee may determine its actions and fix the time and
place of its meetings.
The Plan shall be administered so as to ensure all participants have the
same rights and privileges as required by section 423(b)(5) of the Code.
12. Maximum Number of Shares. The maximum number of shares of Common
Stock which may be purchased under the Plan is 150,000 subject, however, to
adjustment as hereinafter set forth. Shares of Common Stock sold hereunder may
be treasury shares, authorized and unissued shares, shares purchased in the open
market (on an exchange or in negotiated transactions), or any combination of
treasury shares, authorized and unissued shares or shares purchased in the open
market. If the Company shall, at any time after the Effective Date, change its
issued Common Stock into an increased number of shares, through a stock dividend
or a split-up of shares, or into a decreased number of shares, through a
combination of shares, then, effective with the record date for such change, the
maximum number of shares of Common Stock which thereafter may be purchased under
the Plan shall be the maximum number of shares which, immediately prior to such
record date, remained available for purchase under the Plan proportionately
increased, in case of such stock dividend or split-up, or proportionately
decreased in case of such combination of shares.
13. Miscellaneous. (a) Except as otherwise expressly provided herein, any
Authorization, election, notice or document under the Plan from an Eligible
Employee or participant shall be delivered to his employer corporation or its
designated agent and, subject to any limitations specified in the Plan, shall be
effective when so delivered.
(b) The term "business day" shall mean any day other than Saturday, Sunday
or a legal holiday in Iowa.
(c) The term "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(d) The term "Subsidiary Companies" shall mean all corporations which are,
or become after the Effective Date, subsidiary corporations (within the meaning
of Section 424(f) of the Code) and of which the Company is the common parent.
(e) The Plan, and the Company's obligation to sell and deliver Common Stock
hereunder, shall be subject to all applicable federal, state and foreign laws,
rules and regulations, and to such approval by any regulatory or governmental
agency as may, in the opinion of counsel for the Company, be required.
5
<PAGE>
14. Change in Control. (a) In order to maintain the participants' rights
in the event of any Change in Control of the Company, as hereinafter defined,
upon such Change in Control the then current Purchase Period shall thereupon
end, and all participants' Purchase Accounts shall be applied to purchase shares
pursuant to Section 5, and the Plan shall immediately thereafter terminate.
(b) "Change in Control" for the purposes hereof means the occurrence of any
of the following events:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 35% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); excluding, however, the
following: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (B) any acquisition by the Company, (C)
any acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 14(b); provided
further, that for purposes of clause (B), if any Person (other than the Company
or any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall become the
beneficial owner of 35% or more of the Outstanding Company Common Stock or 35%
or more of the Outstanding Company Voting Securities by reason of an acquisition
by the Company, and such Person shall, after such acquisition by the Company,
become the beneficial owner of any additional shares of the Outstanding Company
Common Stock or any additional Outstanding Company Voting Securities (other than
pursuant to a dividend or distribution paid or made by the Company on the
Outstanding Company Common Stock or the Outstanding Company Voting Securities or
pursuant to a split or subdivision of the Outstanding Company Common Stock or
the Outstanding Company Voting Securities) and such beneficial ownership is
publicly announced, such additional beneficial ownership shall constitute a
Change in Control;
(2) individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided that any individual who becomes a director of
the Company subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board shall not be deemed a member of the Incumbent Board;
6
<PAGE>
(3) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction"); excluding, however, a Corporate Transaction pursuant
to which (i) all or substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding securities of such corporation entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or indirectly) in
substantially the same proportions relative to each other as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(ii) no Person (other than: the Company; any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company; the corporation resulting from such Corporate Transaction; and any
Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 35% or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, as the case may be)
will beneficially own, directly or indirectly, 35% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding securities
of such corporation entitled to vote generally in the election of directors and
(iii) individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of the corporation
resulting from such Corporate Transaction; or
(4) consummation of a plan of complete liquidation or dissolution of the
Company.
7
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PROXY
EAGLE POINT SOFTWARE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 16, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Eagle Point Software Corporation (the
"Company") does hereby acknowledge receipt of Notice of said Annual Meeting and
the accompanying Proxy Statement and does hereby constitute and appoint Rodney
L. Blum and Dennis J. George, or either of them, with full power of
substitution, to vote all shares of stock of the Company that the undersigned is
entitled to vote, as fully as the undersigned could do if personally present, at
the Annual Meeting of Stockholders of the Company to be held on Thursday,
December 16, 1999 at 3:00 p.m. (local time) at Eagle Point Software
Headquarters, 4131 Westmark Drive, Dubuque, IA 52002 and at any adjournment
thereof, as follows:
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this Proxy will be voted for
the nominees listed in Proposal 1, for Proposal 2 to approve the 1999 Stock
Option Plan, for Proposal 3 to approve amendments to the 1995 Employee Stock
Purchase Plan and for Proposal 4 to approve Deloitte & Touche LLP as the
independent public accountants of the Company.
(Please date and sign on reverse side)
<PAGE>
A [x] Please mark your votes as in this example
<TABLE>
<CAPTION>
WITHHOLD
For all nominees AUTHORITY
listed at right for all nominees listed Nominees: John F. Biver
James P. Hickey
<S> <C> <C> <C>
1. Election [_] [_]
of Class II
Directors
</TABLE>
(Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
______________________________________________
FOR AGAINST ABSTAIN
2. Proposal to approve the Eagle Point [_] [_] [_]
Software Corporation 1999 Stock
Option Plan.
FOR AGAINST ABSTAIN
3. Proposal to approve amendments to the [_] [_] [_]
Eagle Point Software Corporation 1995
Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
4. Proposal to approve the appointment [_] [_] [_]
of Deloitte & Touche, LLP as the
independent public accountants of the
Company.
5. As such proxies may in their discretion determine upon such other matters as
may properly come before the meeting.
THIS PROXY SHALL BE VOTED IN ACCORDNCE WITH THE INSTRUCTIONS GIVEN AND, IN THE
ABSENCE OF SUCH INSTRUCTIONS SHALL BE VOTED FOR THE NOMINEES LISTED ABOVE AND IN
FAVOR OF PROPOSALS 2, 3 AND 4. IF OTHER BUSINESS IS PRESENTED AT SAID METING,
THIS PROXY SHALL BE VOTED ON THOSE MATTERS IN ACCORDANCE WITH THE BEST JUDGMENT
OF THE NAMED PROXIES.
You are urged to mark, sign, date and return your proxy card without delay in
the return envelope provided for that purpose which requires no postage if
mailed in the United States.
Signature: _____________________ ___________________________ Date:______, 1999
(SIGNATURE IF HELD JOINTLY)
NOTE: When signing the proxy, please take care to have the signature conform to
the stockholder's name as it appears on this side of the proxy. If shares
are registered in the names of two or more persons, each person should
sign. Executors, administrators, trustees and guardians should so indicate
when signing. Corporations and partnerships should sign in their full
corporate or partnership names by a duly authorized person.
