<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by 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
ASTEA INTERNATIONAL INC.
- -------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- -------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
[_]Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid: ________________________________________________
(2) Form, Schedule or Registration Statement no.: __________________________
(3) Filing Party: __________________________________________________________
(4) Date Filed: ____________________________________________________________
<PAGE>
ASTEA INTERNATIONAL INC.
455 BUSINESS CENTER DRIVE
HORSHAM, PENNSYLVANIA 19044
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1998
----------------
To the Stockholders of Astea International Inc.:
The Annual Meeting of Stockholders of Astea International Inc., a Delaware
corporation (the "Company"), will be held on Thursday, May 14, 1998 at 10:00
a.m., local time, at the Williamson Restaurant, Easton Road and Blair Mill
Road, Horsham, Pennsylvania 19044, for the following purposes:
1. To elect five (5) Directors to serve until the next Annual Meeting of
Stockholders.
2. To approve the Astea International Inc. 1998 Stock Option Plan.
3. To approve certain amendments to the Astea International Inc. 1995
Non-Employee Director Stock Option Plan.
4. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending December 31, 1998.
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 20, 1998, the
record date fixed by the Board of Directors, are entitled to notice of and to
vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. To
assure your representation at the meeting, however, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
By Order of the Board of Directors
/s Robert G. Schwartz, Jr.
Robert G. Schwartz, Jr.
Vice President, General Counsel and
Secretary
Horsham, Pennsylvania April 7, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
ASTEA INTERNATIONAL INC.
455 BUSINESS CENTER DRIVE
HORSHAM, PENNSYLVANIA 19044
----------------
PROXY STATEMENT
----------------
APRIL 7, 1998
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Astea International Inc., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held on May
14, 1998, at 10:00 a.m., local time, at the Williamson Restaurant, Easton Road
and Blair Mill Road, Horsham, Pennsylvania 19044, or at any adjournments
thereof (the "Annual Meeting").
Only stockholders of record at the close of business on March 20, 1998 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of that date, 13,386,325 shares of Common
Stock, $.01 par value per share (the "Common Stock"), of the Company were
issued and outstanding. The holders of Common Stock are entitled to one vote
per share on any proposal presented at the Annual Meeting. Stockholders may
vote in person or by proxy. Execution of a proxy will not in any way affect a
stockholder's right to attend the Annual Meeting and vote in person. Any
stockholder giving a proxy has the right to revoke it at any time before it is
exercised, by (1) filing with the Secretary of the Company, before the taking
of the vote at the Annual Meeting, a written notice of revocation bearing a
later date than the proxy, (2) duly executing a later-dated proxy relating to
the same shares and delivering it to the Secretary of the Company before the
taking of the vote at the Annual Meeting or (3) attending the Annual Meeting
and voting in person (although attendance at the Annual Meeting will not in
and of itself constitute a revocation of a proxy).
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee, abstentions and broker "non-votes" are counted as
present or represented for purposes of determining the presence or absence of
a quorum for the Annual Meeting. A "non-vote" occurs when a nominee holding
shares for a beneficial owner votes on one proposal, but does not vote on
another proposal because, in respect of such other proposal, the nominee does
not have discretionary voting power and has not received instructions from the
beneficial owner.
In the election of Directors, the nominees receiving the highest number of
affirmative votes of the shares present or represented and entitled to vote at
the Annual Meeting shall be elected as Directors. On all other matters being
submitted to stockholders, an affirmative vote of a majority of the shares
present or represented and voting on each such matter is required for
approval. An automated system administered by the Company's transfer agent
tabulates the votes. The vote on each matter submitted to stockholders is
tabulated separately. Abstentions are included in the number of shares present
or represented and voting on each matter. Broker "non-votes" are not so
included.
The persons named as attorneys in the proxies are officers of the Company.
All properly executed proxies returned in time to be counted at the Annual
Meeting will be voted. In addition to the election of Directors, the
stockholders will consider and vote upon proposals to approve the Astea
International Inc. 1998 Stock Option Plan (the "1998 Plan"), to amend the
Astea International Inc. 1995 Non-Employee Director Stock Option Plan (the
"Director Plan") and to ratify the selection of auditors, as further described
in this proxy statement. Where a choice has been specified on the proxy with
respect to the foregoing matters, the shares represented by the proxy will be
voted in accordance with the specifications and will be voted FOR those
proposals if no specification is indicated.
<PAGE>
The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting. If any other matter should be presented at
the Annual Meeting (or any adjournments thereof) upon which a vote properly
may be taken, shares represented by all proxies received by the Board of
Directors will be voted with respect thereto in accordance with the judgment
of the persons named as attorneys in the proxies.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 1997, is being mailed together with this proxy
statement to all stockholders entitled to vote. This proxy statement and the
form of proxy were first mailed to stockholders on or about April 7, 1998.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES
In accordance with the Company's By-Laws, the Company's Board of Directors
is currently fixed at five (5) members. Zack B. Bergreen, Henry H. Greer,
Joseph J. Kroger, Charles D. LaMotta and Bruce R. Rusch are the current
Directors, all of whom except for Mr. Bergreen and Mr. LaMotta are independent
Directors. The terms of the current Directors will expire at the Annual
Meeting. All Directors will hold office until their successors have been duly
elected and qualified or until their earlier resignation or removal.
The Board of Directors has nominated and recommended Zack B. Bergreen, Henry
H. Greer, Joseph J. Kroger, Charles D. LaMotta and Bruce R. Rusch, the current
members of the Board of Directors, to be elected to hold office until the 1999
annual meeting of stockholders. The Board of Directors knows of no reason why
the nominees should be unable or unwilling to serve, but if any nominee should
for any reason be unable or unwilling to serve, the proxies will be voted for
the election of such other person for the office of Director as the Board of
Directors may recommend in the place of such nominee. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
nominees named below.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE NOMINEES LISTED BELOW.
The following table sets forth the nominees to be elected at the Annual
Meeting and the year each such nominee was first elected a Director, the
positions currently held by the nominee with the Company, and the year the
nominee's term will expire:
<TABLE>
<CAPTION>
NOMINEE'S NAME
AND YEAR NOMINEE
FIRST BECAME POSITION(S) WITH YEAR CURRENT TERM
A DIRECTOR THE COMPANY WILL EXPIRE
---------------- ---------------- -----------------
<S> <C> <C>
Zack B. Bergreen........ Chairman of the Board and Chief Executive Officer 1998
(1979)
Charles D. LaMotta...... President, Chief Operating Officer and Director 1998
(1998)
Henry H. Greer.......... Director 1998
(1997)
Joseph J. Kroger........ Director 1998
(1994)
Bruce R. Rusch.......... Director 1998
(1994)
</TABLE>
2
<PAGE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the current Directors and Director nominees
to be elected at the Annual Meeting and the executive officers of the Company,
their ages, and the positions currently held by each such person with the
Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Zack B. Bergreen........ 52 Chairman of the Board and Chief Executive Officer
Charles D. LaMotta...... 55 President, Chief Operating Officer and Director
Leonard W. von Vital.... 47 Senior Vice President, Product Management
Vance F. Brown.......... 35 President, Bendata, Inc.
Per Edstrom............. 41 Managing Director, Europe
John G. Phillips........ 38 Vice President, Chief Financial Officer and Treasurer
Robert G. Schwartz, 32 Vice President, General Counsel and Secretary
Jr.....................
Henry H. Greer(1)....... 60 Director
Joseph J. Kroger(1)..... 63 Director
Bruce R. Rusch(1)....... 54 Director
</TABLE>
- --------
(1) Member of Audit Committee.
MR. BERGREEN founded the Company in November 1979. From November 1979 to
January 1998, he served as President, Treasurer and Director of the Company
and was elected Chief Executive Officer and Chairman of the Board of Directors
in April 1995. Since January 1998, when Mr. LaMotta was elected President and
Chief Operating Officer, Mr. Bergreen has served as Chairman of the Board and
Chief Executive Officer. Mr. Bergreen holds Bachelor of Science and Master of
Science degrees in Electrical Engineering from the University of Maryland.
MR. LAMOTTA was elected President and Chief Operating Officer of the Company
in January 1998 and was elected as a Director in February 1998. He previously
served as President and Chief Executive Officer of SkillsBank Corp., an
educational application software company, from September 1996 until January
1998, joining the Company after SkillsBank was acquired by The Learning
Company. Between July 1991 and August 1996, Mr. LaMotta served in various
senior management positions at Assessment Systems, Inc., most recently as
Senior Vice President. Mr. LaMotta holds a Bachelor of Arts degree in
Psychology from Lehigh University.
MR. VON VITAL joined the Company as Vice President and Chief Financial
Officer in November 1993 and became Senior Vice President, Product Management
in May 1997. From February 1993 to November 1993, Mr. von Vital was an
independent consultant. From June 1990 to February 1993, Mr. von Vital was
Vice President of Mergers and Acquisitions for Decision Data, Inc., a vendor
of computer peripheral equipment and related services. Mr. von Vital is a
certified public accountant and holds a Bachelor of Science degree in
Accounting from St. Francis College.
MR. BROWN joined the Company's Bendata, Inc. subsidiary in April 1995 as
Vice President of Customer Service and General Counsel. After the Company
acquired Bendata in February 1996, Mr. Brown was elected its President in June
1996. Prior to joining Bendata, Mr. Brown served as President and General
Counsel of UFAB, Inc., a financial management applications software company,
since 1989. Mr. Brown holds a Bachelor of Arts degree in Economics and
Computer Science from Wake Forest University and a Juris Doctor degree from
the University of North Carolina.
3
<PAGE>
MR. EDSTROM joined the Company in June 1996, when the Company acquired Astea
International AB (formerly Abalon AB), of which he was a founding stockholder
and officer. Mr. Edstrom was elected as the Company's Managing Director,
Europe, in December 1996. Between 1988 and June 1996, Mr. Edstrom served Astea
International AB as its President. Before founding Astea International AB, Mr.
Edstrom worked for various technology companies in Sweden, Germany and the
United States. He holds a Master of Science degree in Mechanical Engineering
from the Royal Institute of Technology in Stockholm, Sweden.
MR. PHILLIPS joined the Company as its Controller in March 1995 and was
elected Vice President and Chief Financial Officer in May 1997 and Treasurer
in January 1998. Before joining the Company, Mr. Phillips was the Vice
President and Chief Financial Officer of HomeCareUSA, a medical equipment
supplier, since September 1993. Mr. Phillips previously served in a number of
management capacities at Decision Data, Inc. from July 1982 until August 1993.
Mr. Phillips holds a Bachelor of Science degree in Accounting from St.
Joseph's University.
MR. SCHWARTZ joined the Company as Associate General Counsel in September
1996 and was elected Vice President, General Counsel and Secretary of the
Company in February 1997. From September 1992 through August 1996, Mr.
Schwartz was associated with the law firm of Goodwin, Procter & Hoar LLP. Mr.
Schwartz holds a Bachelor of Arts degree in Political Science from Amherst
College and a Juris Doctorate degree from Harvard Law School.
MR. GREER joined the Company's Board of Directors in June 1997. Since 1989,
Mr. Greer has been the President and Chief Operating Officer of SEI
Investments, an investment management company. Mr. Greer holds an AB in
Economics from Dartmouth College.
MR. KROGER joined the Company's Board of Directors in September 1994. Since
March 1993, Mr. Kroger has been an independent business consultant and, since
June 1995, has served on the Board of Directors of Wang Laboratories, Inc.
From January 1990 to March 1993, Mr. Kroger was President and Chief Executive
Officer of Decision Data, Inc., a vendor of computer peripheral equipment and
related services. Mr. Kroger has served as President and Chief Executive
Officer of BiiN, a joint venture of Intel Corp. and Siemens AG; Vice Chairman
of Unisys Company, a computer hardware manufacturer; and President and Chief
Operating Officer of Sperry Company, a computer hardware manufacturer. Mr.
Kroger holds a Bachelor of Arts degree in Economics from Loras College.
MR. RUSCH joined the Company's Board of Directors in February 1994. Since
January 1995, Mr. Rusch has been the President and Chief Operating Officer of
Analogic Corp., a manufacturer and vendor of medical equipment. From January
1993 to December 1994, Mr. Rusch was Corporate Group Vice President for
Analogic Corp. Mr. Rusch has served as President and Chief Executive Officer
of SKY Computers, Inc., a manufacturer and vendor of computer hardware. Mr.
Rusch serves on the boards of directors of Analogic Corp. and Beacon
Financial. Mr. Rusch holds a Bachelor of Science degree in Electrical
Engineering from Bradley University and a Master of Business Administration
degree from the University of Chicago.
The Company's By-Laws and Certificate of Incorporation provide for the
Company's Board of Directors to be comprised of as many Directors as are
designated from time to time by the Board of Directors. The Board is currently
comprised of five members. Each Director holds office until the next annual
meeting of stockholders and until his successor is duly elected and qualified,
or until his earlier death, resignation or removal.
Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve until their successors have been duly elected and
qualified. There are no family relationships among any of the executive
officers or Directors of the Company.
4
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The business and affairs of the Company are managed under the direction of
its Board of Directors. The Board of Directors met eight (8) times in person
or by telephone during the fiscal year ended December 31, 1997. During fiscal
1997, each of the Directors attended at least 75% of the meetings of the Board
of Directors and of all committees on which he served. The Board of Directors
established an Audit Committee in May 1995. The Audit Committee of the Board
of Directors, of which Messrs. Greer, Kroger and Rusch are currently members,
reviews with the Company's independent auditors the scope and timing of their
audit services and any other services they are asked to perform, the auditor's
report on the Company's financial statements following completion of their
audit and the Company's policies and procedures with respect to internal
accounting and financial controls. In addition, the Audit Committee makes
recommendations to the Board of Directors for the appointment of independent
auditors for the ensuing year. The Audit Committee did not meet during the
fiscal year ended December 31, 1997. Other than acting once by unanimous
written consent, the Compensation and Stock Option Committee of the Board was
inactive in 1997. The Board of Directors currently performs the functions of a
compensation committee.
MANAGEMENT AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of the Record Date: (i) the name of each
person who, to the knowledge of the Company, owned beneficially more than 5%
of the shares of Common Stock of the Company outstanding at such date; (ii)
the name of each Director or nominee; and (iii) the name of each executive
officer of the Company. The following table also sets forth as of the Record
Date the number of shares owned by each of such persons and the percentage of
the outstanding shares represented thereby, and also sets forth such
information for Directors, nominees and executive officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
------------------- ------------ ----------
<S> <C> <C>
Zack B. Bergreen(3)................................... 6,791,000 50.7%
c/o Astea International Inc.
455 Business Center Drive
Horsham, Pennsylvania 19044
Wellington Management Company, LLP(4)................. 1,313,500 9.8
75 State Street
Boston, Massachusetts 02109
Charles D. LaMotta(5)................................. 0 *
Leonard W. von Vital(6)............................... 80,205 *
Vance F. Brown(7)..................................... 53,000 *
Per Edstrom(8)........................................ 79,253 *
John G. Phillips(9)................................... 19,000 *
Robert G. Schwartz, Jr.(10)........................... 11,250 *
Henry H. Greer........................................ 0 *
Joseph J. Kroger(11).................................. 140,776 *
Bruce R. Rusch(12).................................... 51,164 *
All current Directors, nominees and executive officers 7,225,648 54.0%
as a group (10 persons)(13)..........................
</TABLE>
- --------
* Less than 1% of the outstanding shares of Common Stock.
(1) Except as noted in the footnotes to this table, each person or entity
named in the table has sole voting and investment power with respect to
all shares of Common Stock owned, based upon information provided to the
Company by Directors, officers and principal stockholders. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission (the "Commission") and includes
5
<PAGE>
voting and investment power with respect to shares of Common Stock subject
to options currently exercisable or exercisable within 60 days after the
Record Date ("presently exercisable stock options").
(2) Applicable percentage of ownership as of the Record Date is based upon
13,386,325 shares of Common Stock outstanding as of that date. Beneficial
ownership is determined in accordance with the rules of the Commission
and includes voting and investment power with respect to shares.
Presently exercisable stock options are deemed outstanding for computing
the percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(3) Includes 3,800,000 shares of Common Stock held by trusts of which Mr.
Bergreen and his wife are the only trustees, and 1,200,000 shares of
Common Stock held by a family limited partnership of which Mr. Bergreen
is the sole general partner.
(4) As reported by stockholder under the Commission's Schedule 13G. Includes
1,313,500 shares as to which the stockholder claims shared dispositive
and voting power, of which 726,500 shares are held nominally by
Wellington Trust Company, N.A.
(5) Does not reflect an option granted on February 11, 1998 to purchase
300,000 shares of Common Stock at an exercise price of $1.88 per share,
vesting in four equal annual installments commencing on
February 11, 1999.
(6) Includes 80,205 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(7) Includes 53,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(8) Includes 13,750 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(9) Includes 17,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(10) Includes 11,250 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(11) Includes 133,076 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(12) Includes 51,164 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(13) Includes 342,445 shares of Common Stock issuable pursuant to presently
exercisable stock options.
6
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION SUMMARY
The following table sets forth information concerning the compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1997, 1996, and 1995, of those persons who at December 31, 1997 were (i)
the Chief Executive Officer and (ii) each of the other four most highly
compensated executive officers of the Company in office who earned more than
$100,000 in salary and bonus in fiscal 1997 (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ---------------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (# OF SHARES) COMPENSATION
------------------ ---- -------- ------ --------------------- ------------
<S> <C> <C> <C> <C> <C>
Zack B. Bergreen........ 1997 $300,000 -- -- $52,200(1)
Chairman of the Board 1996 300,000 -- -- 63,800(1)
and Chief
Executive Officer 1995 300,000 -- -- 82,000(2)
Leonard W. von Vital.... 1997 147,083 7,500 70,000(3) --
Senior Vice President, 1996 121,048 -- 20,000(4) --
Product Management 1995 107,000 20,000 20,000 2,000(5)
Vance F. Brown.......... 1997 171,971 47,510 160,000(6) --
President, Bendata, 1996 105,917 74,331 100,000(7) 100,000(8)
Inc.
Per Edstrom............. 1997 114,415 -- 55,000(9) --
Managing Director, 1996 70,228 -- 110,000(10) --
Europe
Kevin Roche(11)......... 1997 147,083 -- 50,000(12) --
Former Senior Vice 1996 108,334 -- 10,000(13) --
President,
U.S. Service Automation 1995 87,224 -- 10,000 --
</TABLE>
- --------
(1) Includes premiums for term, split-dollar life insurance paid by the
Company on behalf of the Named Executive Officer.
(2) Includes premiums for term life insurance paid by the Company on behalf
of the Named Executive Officer and Company contributions to Profit
Sharing Plan.
(3) Includes a newly granted option to purchase 25,000 shares of Common Stock
and options for 45,000 shares of Common Stock that were repriced in 1997.
The Commission's regulations require that repriced options be reported as
new grants in the year of repricing. See "--Option Grants in Last Fiscal
Year" and "--Option Repricings."
(4) Represents an option for 20,000 shares of Common Stock that was not
granted in 1996 but was repriced in 1996. The Commission's regulations
require that repriced options be reported as new grants in the year of
repricing. See "--Option Grants in Last Fiscal Year" and "--Option
Repricings."
(5) Constitutes Company contributions to Profit Sharing Plan.
(6) Includes newly granted options to purchase 110,000 shares of Common Stock
and options for 50,000 shares of Common Stock that were repriced in 1997.
The Commission's regulations require that repriced options be reported as
new grants in the year of repricing. See "--Option Grants in Last Fiscal
Year" and "--Option Repricings."
(7) Includes newly granted options to purchase 50,000 shares of Common Stock
and the repricing of those same options for 50,000 shares of Common Stock
in 1996. The Commission's regulations require that repriced options be
reported as new grants in the year of repricing. See "--Option Grants in
Last Fiscal Year" and "--Option Repricings."
7
<PAGE>
(8) Received as a change-in-control bonus in connection with the Company's
acquisition of Bendata, Inc.
(9) Represents options for 55,000 shares of Common Stock that were not
granted in 1997 but were repriced in 1997. The Commission's regulations
require that repriced options be reported as new grants in the year of
repricing. See "--Option Grants in Last Fiscal Year" and "--Option
Repricings."
(10) Includes newly granted options to purchase 55,000 shares of Common Stock
and the repricing of those same options for 55,000 shares of Common Stock
in 1996. The Commission's regulations require that repriced options be
reported as new grants in the year of repricing. See "--Option Grants in
Last Fiscal Year" and "--Option Repricings."
(11) Mr. Roche resigned from the Company effective January 2, 1998.
(12) Includes newly granted options to purchase 20,000 shares of Common Stock
and options for 30,000 shares of Common Stock that were repriced in 1997.
The Commission's regulations require that repriced options be reported as
new grants in the year of repricing. See "--Option Grants in Last Fiscal
Year" and "--Option Repricings."
(13) Represents an option for 10,000 shares of Common Stock that was not
granted in 1996 but was repriced in 1996. The Commission's regulations
require that repriced options be reported as new grants in the year of
repricing. See "--Option Grants in Last Fiscal Year" and "--Option
Repricings."
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made with respect
to the year ended December 31, 1997 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE VALUE
--------------------------------------------------- AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERMS(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE)(1) DATE 5%($) 10%($)
- ---- ----------- ------------ ------------ ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Zack B. Bergreen........ -- -- -- -- -- --
Leonard W. von Vital.... New Grant
25,000(3) 2.4 % $5.13(4) 2/19/07 (5) (5)
Repricings
25,000(4) N.A. 2.52(4) 2/19/07 $ 39,620 $ 100,406
20,000(4) N.A. 2.52(4) 10/5/05 31,696 80,325
Vance F. Brown.......... New Grants
75,000(6) 7.1 % 2.50 4/24/07 117,918 298,827
35,000(6) 3.3 % 2.25 11/14/07 49,525 125,507
Repricings
12,000(4) N.A. 2.52(4) 4/9/06 19,018 48,195
38,000(4) N.A. 2.52(4) 7/26/06 60,223 152,617
Per Edstrom............. Repricings
35,000(4) N.A. 2.52(4) 6/19/06 55,469 140,568
20,000(4) N.A. 2.52(4) 10/28/06 31,696 80,325
Kevin Roche............. New Grant
20,000(3) 1.9 % 5.13(4) 2/24/07 (5) (5)
Repricings
10,000(4) N.A. 2.52(4) 10/05/05 15,848 40,162
20,000(4) N.A. 2.52(4) 2/24/07 31,696 80,325
</TABLE>
- --------
(1) The exercise price per share of each option was determined by the Board of
Directors to be equal to the fair market value per share of Common stock
at the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the market value of the Company's Common Stock on the date of option
grant over the term of the options. These numbers are calculated based on
rules promulgated by the Commission and do not reflect the Company's
estimate of future stock price growth. Actual gains, if any, on stock
option
8
<PAGE>
exercises and Common Stock holdings are dependent on the timing of such
exercise and the future performance of the Company's Common Stock. There
can be no assurance that the rates of appreciation assumed in this table
can be achieved or that the amounts reflected will be received by the
individuals.
(3) Options vest in four equal annual installments.
(4) On April 4, 1997, the Board of the Directors elected to reprice the
exercise price per share of each outstanding stock option held by
employees of the Company to $2.52, the fair market value per share of
Common stock at the date of repricing. Although these options may not have
been granted in 1997, the Commission's regulations require that repriced
options be reported as new grants in the year of repricing. See
"Compensation and Other Information Concerning Directors and Officers--
Option Repricings" and "--Board Report on Executive Compensation."
(5) Since this option was repriced in 1997, its potential realizable value is
based on the new $2.52 exercise price and is included below in this
column.
(6) Options vest in two equal annual installments.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table sets forth, for each of the Named Executive Officers,
information with respect to the exercise of stock options during the year
ended December 31, 1997 and the year-end value of unexercised options:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBERS OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT YEAR END YEAR END
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Zack B. Bergreen........ -- -- -- --
Leonard W. von Vital.... -- -- 80,205 / 9,000 $117,649 / $0
Vance F. Brown.......... -- -- 12,500 / 147,500 0 / 0
Per Edstrom............. -- -- 13,750 / 41,250 0 / 0
Kevin Roche............. -- -- 25,725 / 24,500 30,135 / 0
</TABLE>
- --------
(1) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock at December 31, 1997, the
fiscal year-end ($1.91 per share), multiplied by the number of shares
underlying the option.
OPTION REPRICINGS
The following table sets forth, for each Executive Officer of the Company,
information with respect to the repricing of stock options during the past ten
years:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE LENGTH OF ORIGINAL
UNDERLYING OF STOCK AT EXERCISE PRICE OPTION TERM
OPTIONS TIME OF AT TIME OF NEW EXERCISE REMAINING AT DATE
NAME DATE REPRICED(#) REPRICING($) REPRICING($) PRICE($) OF REPRICING
---- -------- ----------- ------------ -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Leonard W. von Vital.... 4/4/97 20,000 $2.52 $5.50 $2.52 8 years
4/4/97 25,000 2.52 5.13 2.52 10 years
10/29/96 20,000 5.50 17.25 5.50 9 years
Vance F. Brown.......... 4/4/97 50,000 2.52 5.50 2.52 9 years
10/29/96(1) 12,000 5.50 7.75 5.50 9 years
10/29/96(1) 38,000 5.50 7.75 5.50 10 years
Per Edstrom............. 4/4/97 55,000 2.52 5.50 2.52 9 years
10/29/96(1) 35,000 5.50 5.62 5.50 10 years
10/29/96(1) 20,000 5.50 5.62 5.50 10 years
John G. Phillips........ 4/4/97(1) 22,500 2.52 5.50 2.52 8 years
4/4/97(1) 25,000 2.52 5.13 2.52 10 years
10/29/96(1) 22,500 5.50 17.25 5.50 9 years
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE LENGTH OF ORIGINAL
UNDERLYING OF STOCK AT EXERCISE PRICE OPTION TERM
OPTIONS TIME OF AT TIME OF NEW EXERCISE REMAINING AT DATE
NAME DATE REPRICED(#) REPRICING($) REPRICING($) PRICE($) OF REPRICING
---- -------- ----------- ------------ -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Schwartz, Jr. 4/4/97 25,000 2.52 5.13 2.52 10 years
4/4/97 10,000 2.52 5.50 2.52 9 years
10/29/96(1) 10,000 5.50 6.50 5.50 10 years
Kevin Roche(2) 4/4/97 10,000 2.52 5.50 2.52 8 years
4/4/97 20,000 2.52 5.13 2.52 10 years
10/29/96(1) 10,000 5.50 17.25 5.50 9 years
Caesar J. Belbel(3) 10/29/96 10,000 5.50 17.25 5.50 9 years
Avner Schneur(4) 10/29/96 5,000 5.50 17.25 5.50 9 years
Dianne Durkin(5) 10/29/96 50,000 5.50 27.50 5.50 9 years
</TABLE>
- --------
(1) Repricing occurred when the officer was not yet an Executive Officer.
(2) Mr. Roche resigned from the Company on January 2, 1998.
(3) Mr. Belbel resigned from the Company in 1997.
(4) Mr. Schneur resigned from the Company in 1997.
(5)Ms. Durkin resigned from the Company in 1996.
EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into employment agreements with two of its Executive
Officers, Messrs. Brown and Edstrom. Pursuant to Mr. Brown's employment
agreement, dated November 14, 1997, Mr. Brown will serve as President of
Bendata, Inc. for an initial two-year term, unless terminated earlier for
cause, and for successive one-year terms by mutual agreement. Mr. Brown's
initial salary is $200,000, which increases to $225,000 in the second year.
Mr. Brown is eligible for a bonus determined by a formula that measures
Bendata's financial performance, and he is entitled to an option to acquire
50,000 shares of the Company's common stock, to be granted on each anniversary
date of the agreement. If Bendata or the Company terminates Mr. Brown's
employment other than for cause before November 14, 1999, then Mr. Brown shall
receive severance payments equal to his then-current salary and benefits for
12 months. Mr. Brown is obligated not to compete against the Company or
Bendata, Inc. for a period of two years after termination of his employment
with Bendata, Inc.
Under Mr. Edstrom's employment and noncompetition agreement, dated June 28,
1996, Mr. Edstrom will serve as Managing Director of the Company's European
operations until June 30, 1999, unless terminated earlier upon six months
notice. Mr. Edstrom currently receives a salary of 1,003,145 Swedish Krona
(approximately $126,000, converted at the December 31, 1997 exchange rate) per
year and other fringe benefits. Mr. Edstrom is eligible for a bonus determined
by a formula that measures the financial performance of the Company's European
operations. If the Company terminates Mr. Edstrom's employment other than for
cause before June 30, 1999, then Mr. Edstrom shall receive severance payments
equal to his salary and benefits for 6 months, in addition to salary and
benefits during the notice period. Mr. Edstrom is obligated not to compete
against the Company for a period ending on the later of June 28, 2000 or two
years after termination of his employment.
In addition, under a written commitment to Mr. von Vital, if the Company
terminates Mr. von Vital's employment without cause, then he shall receive
severance payments equal to his salary and benefits for six months.
BOARD REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Board of Directors of the Company (the
"Board"); the Company's Compensation Committee has not been active since
January 1997. The Board is currently responsible for developing the
compensation programs that relate to the Company's executive officers, senior
management and other key employees and for establishing the specific short-
and long-term compensation elements thereunder. The Board also oversees the
general compensation structure for all of the Company's employees. In
addition, the Board currently administers the Company's 1991 Amended Non-
Qualified Stock Option Plan, 1994 Amended Stock Option Plan, 1997 Stock Option
Plan and 1995 Employee Stock Purchase Plan.
10
<PAGE>
The principal objective of the Company's executive compensation program is
to enhance the Company's short-term and long-term financial results for the
benefit of the Company's stockholders. To achieve this objective, the
Company's executive compensation program is designed to provide levels of
compensation that assist the Company in attracting, motivating and retaining
qualified executive officers and aligning their financial interests with those
of the Company's stockholders by providing a competitive compensation package
based on corporate and individual performance. In addition, the Company
performs periodic reviews of its executive compensation program to confirm the
competitiveness of its overall executive compensation package as compared with
companies which compete with the Company for prospective employees possessing
skills necessary for developing, manufacturing and marketing successful high
technology products and associated services.
Compensation under the Company's executive compensation program consists of
three principal elements: (i) cash compensation in the form of base salary,
(ii) annual incentive compensation in the form of cash bonuses, and (iii)
long-term incentive awards in the form of stock option grants. In addition,
the compensation program is comprised of various benefits, including medical
and insurance plans, and the Company's 1995 Employee Stock Purchase Plan and
401(k) profit sharing plan, which are generally available to all employees of
the Company.
BASE SALARY. Compensation levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within the
range of salaries that the Board believes are paid to executive officers with
comparable qualifications, experience and responsibilities at similar
companies. In setting compensation levels, the Board seeks to align total
executive compensation levels with corporate performance. Accordingly, base
salary levels are set at what the Board believes are at the low-end of base
salaries paid to executive officers with comparable qualifications, experience
and responsibilities at similar companies, while endeavoring to provide
relatively higher incentive award opportunities. In addition, the Board
generally takes into account such factors as (i) the Company's past financial
performance and future expectations, (ii) business unit performance and future
expectations, (iii) individual performance and experience and (iv) past salary
levels. The Board does not assign relative weights or rankings to these
factors, but instead makes an informed, but ultimately subjective,
determination based upon the consideration of all of these factors as well as
the progress made with respect to the Company's long-term goals and
strategies. Generally, salary decisions for the Company's executive officers
other than the Chief Executive Officer are made by the Board near the
beginning of each calendar year based on recommendations of the Chief
Executive Officer.
Fiscal 1997 base salaries were determined after considering the base salary
level of the executive officers in prior years, and taking into account for
each executive officer the amount of base salary as a component of total
compensation. Base salary, while reviewed annually, is only adjusted as deemed
necessary by the Board in determining total compensation to each executive
officer. Base salary levels for each of the Company's executive officers,
other than the Chief Executive Officer, were also based strongly upon
evaluations and recommendations made by the Chief Executive Officer. The Board
of Directors believes that fiscal 1997 base salary levels for each of the
Named Executive Officers named in the Summary Compensation Table were slightly
below the median salary levels for the comparable position with respect to
each such executive officer at comparable companies.
INCENTIVE COMPENSATION. Each executive officer is eligible to receive a cash
bonus at the end of the fiscal year based upon the Company's performance, as
well as business unit performance according to predetermined standards.
Additional bonuses may be awarded during the fiscal year to reward an
executive officer for superior performance. The Company awarded no cash
bonuses to any employees for fiscal 1997 except to Vance Brown and Leonard von
Vital, which the Board believes is appropriate in light of the Company's
operating loss during the year. Mr. Brown received a bonus pursuant to a
contractual guarantee, based on the financial performance of the Company's
Bendata, Inc. subsidiary. Mr. von Vital received a bonus for the successful
commercial release of the Company's ServiceAlliance product in August 1997.
STOCK OPTIONS. Stock options are the principal vehicle used by the Company
for the payment of long-term compensation, to provide a stock-based incentive
to improve the Company's financial performance, and to assist in the
recruitment, motivation and retention of key professional and managerial
personnel. Long-term incentive
11
<PAGE>
compensation in the form of stock options enables officers to share in the
appreciation of the value of the Company's Common Stock. The Board of
Directors believes that such long-term stock option participation more closely
aligns the interests of the executive officers with those of the stockholders
by encouraging executive officers to enhance the value of the Company. In
addition, the Board of Directors believes that equity ownership by executive
officers helps to balance the short-term focus of annual incentive
compensation with a longer-term view that may support the retention of key
executive officers.
The Company's stock option plans have been administered by the Board since
January 1997. The Board periodically grants new options to provide continuing
incentives for future performance. When establishing stock option grant
levels, the Board considers existing levels of stock ownership, previous
grants of stock options, vesting schedules of outstanding options and the
current price of the Company's Common Stock.
During the fiscal year ended December 31, 1997, options to purchase an
aggregate of 230,000 shares of Common Stock were awarded to the Company's
executive officers. Options granted during and with respect to fiscal 1997
were granted at an exercise price per share equal to the fair market value of
the Common Stock. For additional information regarding the grant of options,
see the table under the heading "Option Grants in Last Fiscal Year."
OTHER BENEFITS. The Company also has various broad-based employee benefit
plans. Executive officers participate in these plans on the same terms as
eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans. The
Company offers an employee stock purchase plan, under which employees may
purchase Common Stock at a discount, and a 401(k) profit sharing plan, which
permits employees to invest in a variety of funds on a pre-tax basis. The
Company also maintains insurance and other benefit plans for its employees.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. In fiscal 1997, the Company's
President and Chief Executive Officer, Zack B. Bergreen, received total salary
of $300,000. Mr. Bergreen's base compensation, which has not increased since
1994, was based on an assessment of salaries believed by the Board to be paid
to chief executive officers at comparable companies, as well as an assessment
of Mr. Bergreen's qualifications, performance and expected contributions to
the Company's future growth. Mr. Bergreen received no cash bonus or stock
option awards during or with respect to fiscal 1997.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Code
limits the tax deduction to $1 million for compensation paid to any of the
executive officers, unless certain requirements are met. The Board has
considered these requirements and the related regulations. It is the present
intention of the Board that, so long as it is consistent with its overall
compensation objectives, substantially all executive compensation shall be
deductible for federal income tax purposes.
OPTION REPRICING. The Company announced a restructuring and first quarter
loss in late March 1997, which was followed by a decline of the market price
of the Company's Common Stock from approximately $4.50 per share to
approximately $2.50 per share. After this decline in the Common Stock's market
value, the Company's Board of Directors determined that outstanding stock
options held by the Company's employees, most of which carried an exercise
price of $5.50, would no longer serve their intended purpose of motivating
employees to work diligently for the long-term benefit of the Company and its
stockholders. Accordingly, on April 4, 1997, the Board of Directors voted to
reduce the exercise price of the stock options held by employees to $2.52, the
then-current market price of the Company's Common Stock.
Respectfully submitted by the Members of the Board of Directors in office on
December 31, 1997.
Zack B. Bergreen
Henry H. Greer
Joseph J. Kroger
Bruce Rusch
12
<PAGE>
BOARD INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company served as a member of the compensation
committee of another entity (or other committee of the Board of Directors
performing equivalent functions or, in the absence of any such committee, the
entire Board of Directors), one of whose executive officers served as a
Director of the Company. Other than Mr. Bergreen and Mr. Kroger, no person who
served as a member of the Board was, during the fiscal year ended December 31,
1997, simultaneously an officer, employee or consultant of the Company or any
of its subsidiaries, was formerly an officer of the Company or any of its
subsidiaries, or had any relationship requiring disclosure herein. Messrs.
Bergreen and Kroger did not participate in any determination of their own
personal compensation matters.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a fee of $1,000 for
attendance at each regular and special meeting of the Board of Directors, and
are also reimbursed for their reasonable out-of-pocket expenses incurred in
attending meetings. Non-employee Directors are also eligible to receive stock
options under the Company's 1995 Non-Employee Director Stock Option Plan. This
proxy statement describes certain amendments to the Director Plan that would
result in changes to compensation of Directors, for which the Company seeks
stockholder approval. See "Proposal 3--Approval of Certain Amendments to the
Astea International Inc. 1995 Non-Employee Director Stock Option Plan."
Directors who are employees are not compensated for their service on the Board
of Directors or any committee thereof.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock during the period from the
Company's initial public offering on July 27, 1995 through December 31, 1997,
with the cumulative total return on (i) an SIC Index that includes all
organizations in the Company's Standard Industrial Classification (SIC) Code
7372-Prepackaged Software and (ii) the Nasdaq Market Index. The comparison
assumes that $100 was invested on July 27, 1995 in the Company's Common Stock
at the initial public offering price and in each of the foregoing indices, and
assumes reinvestment of dividends, if any.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1995 1995 1996 1997
- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
ASTEA INTERNATIONAL INC $100.00 $152.50 $ 37.93 $ 12.73
INDUSTRY INDEX $100.00 $106.67 $141.79 $180.47
BROAD MARKET $100.00 $102.74 $127.67 $156.17
</TABLE>
- --------
(1) Prior to July 27, 1995, the Company's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933,
as amended (the "Securities Act") or the Securities Exchange Act of 1934,
as amended (the "Exchange Act") whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing. The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on the graph was
obtained from Media General Financial Services, Richmond, Virginia, a
source believed to be reliable, but the Company is not responsible for any
errors or omissions in such information.
14
<PAGE>
PROPOSAL 2
APPROVAL OF ASTEA INTERNATIONAL INC. 1998 STOCK OPTION PLAN
The Board of Directors has approved the Astea International Inc. 1998 Stock
Option Plan and submitted the 1998 Plan for stockholder approval at the Annual
Meeting. Because only approximately 600,000 shares of Common Stock are
available for issuance to employees under existing stock option plans, the
Board of Directors believes that the 1998 Plan is necessary in order to
fulfill the Company's needs of attracting new managerial and technical talent
and retaining existing talent.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1998 PLAN.
EXISTING STOCK PLANS
Excluding the 1998 Plan, the Company currently has five stock ownership
plans: the 1991 Amended Non-Qualified Stock Option Plan (the "1991 Plan"), the
1994 Amended Stock Option Plan (the "1994 Plan"), the 1995 Employee Stock
Purchase Plan (the "1995 Purchase Plan"), the 1997 Stock Option Plan (the
"1997 Plan"), and the 1995 Non-Employee Director Stock Option Plan (the
"Director Plan").
1991 AMENDED NON-QUALIFIED STOCK OPTION PLAN. The 1991 Plan was adopted by
the Board of Directors of the Company as of November 27, 1991 and was approved
by the sole stockholder of the Company on November 27, 1991. The 1991 Plan
provides for the issuance of a maximum of 850,000 shares of Common Stock
pursuant to the exercise of non-qualified stock options to employees,
consultants and Directors of the Company. As of December 31, 1997, options to
purchase a total of approximately 309,000 shares of Common Stock were
outstanding under the 1991 Plan, of which approximately 204,000 shares were
then exercisable.
1994 AMENDED STOCK OPTION PLAN. The 1994 Plan was adopted by the Board of
Directors of the Company on January 31, 1994 and approved by the sole
stockholder on January 31, 1994. The 1994 Plan provides for the issuance of a
maximum of 1,500,000 shares of Common Stock pursuant to the exercise of
incentive and non-qualified stock options to employees, consultants and
Directors of the Company. As of December 31, 1997, options to purchase
approximately 953,000 shares of Common Stock were outstanding under the 1994
Plan, of which approximately 387,000 shares were then exercisable.
1997 STOCK OPTION PLAN. The 1997 Plan was adopted by the Board of Directors
of the Company on February 18, 1997 and approved by the stockholders of the
Company on May 15, 1997. The 1997 Plan provides for the issuance of a maximum
of 500,000 shares of Common Stock pursuant to the exercise of incentive and
non-qualified stock options to employees, consultants and Directors of the
Company. As of December 31, 1997, options to purchase approximately 172,000
shares of Common Stock were outstanding under the 1997 Plan, of which
approximately 38,000 shares were then exercisable.
1995 EMPLOYEE STOCK PURCHASE PLAN. The 1995 Purchase Plan was adopted by the
Board of Directors of the Company and approved by the sole stockholder of the
Company on May 23, 1995. The 1995 Purchase Plan provides for the issuance of a
maximum of 250,000 shares of Common Stock pursuant to the exercise of
nontransferable options granted to participating employees. As of January 1,
1998, approximately 410 employees were eligible to participate in the 1995
Purchase Plan. Unless terminated sooner, the 1995 Purchase Plan shall
terminate on June 30, 2005.
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. This proxy statement describes
certain amendments to the Director Plan, for which the Company seeks
stockholder approval. For a description of the Director Plan and the proposed
amendments, see "Proposal 3--Approval of Certain Amendments to the Astea
International Inc. 1995 Non-Employee Director Stock Option Plan." These
amendments were approved by the Board of Directors on March 20, 1998.
15
<PAGE>
THE ASTEA INTERNATIONAL INC. 1998 STOCK OPTION PLAN
PLAN DESCRIPTION. The 1998 Plan was adopted by the Board of Directors of the
Company on February 11, 1998 and has been submitted to the Company's
stockholders for approval at the Annual Meeting.
The 1998 Plan provides for the grant of incentive stock options to officers
and other employees and the grant of non-qualified stock options, stock awards
and authorizations to make purchases of Common Stock to employees,
consultants, Directors and officers of the Company.
The 1998 Plan is intended to provide incentives to the officers and other
employees of the Company by providing them with opportunities to purchase
stock in the Company pursuant to options granted thereunder which qualify as
"incentive stock options" ("ISO" or "ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"); to Directors,
officers, employees and consultants of the Company by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs ("Non-Qualified Option" or "Non-
Qualified Options"); to Directors, officers, employees and consultants of the
Company by providing them with awards of stock in the Company; and to
Directors, officers, employees and consultants of the Company by providing
them with opportunities to make direct purchases of stock in the Company. Both
ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." Any person who owns more than fifteen
percent (15%) of the outstanding shares of the Common Stock of the Company and
(i) is not an employee of the Company or (ii) is an officer of the Company, is
ineligible to participate in the 1998 Plan.
The 1998 Plan is administered by the Compensation and Stock Option Committee
(the "Committee"), a function that is currently exercised by the full Board of
Directors. Subject to the provisions of the 1998 Plan, the Committee has the
authority to determine the terms of such options, including (i) the number of
shares subject to each Option, (ii) the exercise price of the Options, (iii)
the duration of the Options, (iv) the times when the Options become
exercisable and (v) the time, manner and form of payment upon the exercise of
an Option.
The 1998 Plan currently authorizes the issuance of a maximum of 500,000
shares of Common Stock of the Company. Any shares subject to an Option which
expires or terminates may again be available for grant under the 1998 Plan. As
of the Record Date, approximately 570 employees were eligible for awards under
the 1998 Plan.
Options may be granted under the 1998 Plan at any time prior to February 11,
2008. The exercise price per share of ISOs granted under the 1998 Plan cannot
be less than the fair market value of the Common Stock on the date of grant
(or, in the case of ISOs granted to employees holding more than 10% of the
total combined voting power of all classes of stock of the Company, 110% of
the fair market value per share of the Common Stock on the date of the grant).
No eligible employee may be granted ISOs that become exercisable for the first
time by such employee during any calendar year which would entitle the
employee to purchase more than $100,000 in fair market value (determined at
the time the ISOs were granted) of Common Stock in that year. Any Options
granted to an employee in excess of that amount will be granted as Non-
Qualified Options. The exercise price per share of all Non-Qualified Options
cannot be less than the minimum legal consideration required under the laws of
any jurisdiction in which the Company or its successors in interest may be
organized.
The 1998 Plan provides that each Option shall expire on the date specified
in the option agreement, but not more than (i) ten years and one day from its
date of grant with respect to Non-Qualified Options, (ii) ten years from its
date of grant with respect to ISOs generally, and (iii) five years in the case
of ISOs granted to an employee holding more than 10% of the voting stock of
the Company.
Options granted under the 1998 Plan shall not be exercisable until they
become vested. Options typically vest over a four-year period. Upon a change
in control of the Company, as defined in the 1998 Plan, all outstanding,
unvested Options would vest immediately. An Option is exercisable in whole or
in part by giving written notice to the Company, stating the number of shares
with respect to which the Option is being exercised, and making payment in
full for such shares. An Option is not transferable by the optionholder except
(a) to members of the optionholder's immediate family, (b) by will or by the
laws of descent and distribution or (c) in the case of Non-Qualified Options
only, pursuant to a valid domestic relations order. Generally, ISOs may not
16
<PAGE>
be exercised more than 90 days following termination of employment. However,
in the event that termination is due to death or permanent disability, the ISO
is exercisable for a longer period after such termination.
As of the Record Date, no options to purchase shares of Common Stock were
outstanding under the 1998 Plan. On the Record Date, the fair market value of
the Company's Common Stock was $3.25, the last reported sale price of the
Company's Common Stock quoted on the Nasdaq National Market on such date. The
approval of the 1998 Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or represented by
proxy and entitled to vote on such proposal at the Annual Meeting.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
THE ISSUANCE AND EXERCISE OF OPTIONS GRANTED UNDER THE 1998 PLAN, AND AWARDS
AND PURCHASES GRANTED UNDER SUCH PLAN IS BASED UPON THE PROVISIONS OF THE CODE
AS IN EFFECT ON THE DATE OF THIS PROXY STATEMENT, CURRENT REGULATIONS, AND
EXISTING ADMINISTRATIVE RULINGS OF THE INTERNAL REVENUE SERVICE. IT IS NOT
INTENDED TO BE A COMPLETE DISCUSSION OF ALL OF THE FEDERAL INCOME TAX
CONSEQUENCES OF THE 1998 PLAN OR OF THE REQUIREMENTS THAT MUST BE MET IN ORDER
TO QUALIFY FOR THE DESCRIBED TAX TREATMENT.
A. Incentive Stock Options. The following rules are generally applicable
under current United States federal income tax law to ISOs:
1. In general, no taxable income results to the optionholder upon the
grant of an ISO or upon the issuance of shares to him or her upon the
exercise of the ISO, and no federal income tax deduction is allowed to the
Company upon either the grant or exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of within
(i) two years following the date the ISO was granted or (ii) 18 months
following the date the shares are issued to the optionholder pursuant to
the ISO exercise (the "Holding Periods"), the difference between the amount
realized on any subsequent disposition of the shares and the exercise price
will generally be treated as capital gain or loss to the optionholder.
3. If shares acquired upon exercise of an ISO are disposed of on or
before the expiration of one or both of the requisite Holding Periods (a
"Disqualifying Disposition"), then in most cases the lesser of (i) any
excess of the fair market value of the shares at the time of exercise of
the ISO over the exercise price or (ii) the actual gain on disposition,
will be treated as compensation to the optionholder and will be taxed as
ordinary income in the year of such disposition.
4. In any year that an optionholder recognizes compensation income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the
Company generally should be entitled to a corresponding deduction for
federal income tax purposes.
5. Any excess of the amount realized by the optionholder as the result of
a Disqualifying Disposition over the sum of (i) the exercise price and (ii)
the amount of ordinary income recognized under the above rules will be
treated as capital gain.
6. Capital gain or loss recognized on a disposition of shares will be
long-term capital gain or loss if the optionholder's holding period for the
shares exceeds one year.
7. An optionholder may be entitled to exercise an ISO by delivering
shares of the Company's Common Stock to the Company in payment of the
exercise price, if the optionholder's ISO agreement so provides. If an
optionholder exercises an ISO in such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise of
ISOs may result in a further "alternate minimum tax" under the Code. The
Code provides that an "alternative minimum tax" (at a maximum rate of 28%)
will be applied against a taxable base which is equal to "alternative
minimum taxable income," reduced by a statutory exemption. In general, the
amount by which the value of the Common Stock received upon exercise of the
ISO exceeds the exercise price is included in the optionholder's
alternative minimum taxable income. A taxpayer is required to pay the
higher of his regular
17
<PAGE>
tax liability or the alternative minimum tax. A taxpayer who pays
alternative minimum tax attributable to the exercise of an ISO may be
entitled to a tax credit against his or her regular tax liability in later
years.
9. Special rules apply if the Common Stock acquired through the exercise
of an ISO is subject to vesting, or is subject to certain restrictions on
resale under federal securities laws applicable to Directors, officers or
10% stockholders.
B. Non-Qualified Stock Options. The following rules are generally applicable
under current federal income tax law to options that do not qualify as
incentive stock options (individually, a "NQSO," and collectively, "NQSOs"):
1. The optionholder generally does not recognize any taxable income upon
the grant of a NQSO, and the Company is not allowed a federal income tax
deduction by reason of such grant.
2. The optionholder generally will recognize ordinary compensation income
at the time of exercise of the NQSO in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise over
the exercise price. The Company may be required to withhold income tax on
this amount.
3. When the optionholder sells the shares acquired through the exercise
of a NQSO, he or she generally will recognize a capital gain or loss in an
amount equal to the difference between the amount realized upon the sale of
the shares and his or her basis in the stock (generally, the exercise price
plus the amount taxed to the optionholder as compensation income). If the
optionholder's holding period for the shares exceeds one year, such gain or
loss will be a long-term capital gain or loss.
4. The Company generally should be entitled to a federal income tax
deduction when compensation income is recognized by the optionholder.
5. An optionholder may be entitled to exercise a NQSO by delivering
shares of the Company's Common Stock to the Company in payment of the
exercise price. If an optionholder exercises a NQSO in such fashion,
special rules will apply.
6. Special rules apply if the Common Stock acquired through the exercise
of a NQSO is subject to vesting or is subject to certain restrictions on
resale under federal securities laws applicable to Directors, officers or
10% stockholders.
C. Stock Awards and Purchases. The following rules are generally applicable
under current federal income tax law to Awards and Purchases under the 1998
Plan:
Under current federal income tax law, persons receiving Common Stock under
the 1998 Plan pursuant to an award of Common Stock or a grant of an
opportunity to purchase Common Stock generally recognize ordinary compensation
income equal to the fair market value of the shares received, reduced by any
purchase price paid. The Company generally should be entitled to a
corresponding federal income tax deduction. When such stock is sold, the
seller generally will recognize capital gain or loss. Special rules apply if
the stock acquired is subject to vesting or is subject to certain restrictions
on resale under federal securities laws applicable to Directors, officers or
10% stockholders.
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<PAGE>
OPTION INFORMATION
As of December 31, 1997, the Company had approximately 221 employees with
outstanding option grants under the 1991 Plan, the 1994 Plan or the 1997 Plan
or outside of any existing plan. The following table sets forth as of December
31, 1997, options granted under the 1991 Plan, the 1994 Plan, the 1997 Plan
and the Director Plan to (i) each of the Named Executive Officers, (ii) each
nominee for election as a Director, (iii) all current executive officers of
the Company as a group, (iv) all current Directors of the Company who are not
executive officers as a group and (v) all employees, including all current
officers who are not executive officers, as a group. This table does not
reflect the exercise of options previously granted and, accordingly, does not
accurately reflect current holdings.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS GRANTED
--------------------------------------
DIRECTOR
NAME TITLE 1991 PLAN 1994 PLAN 1997 PLAN PLAN
- ---- --------------------------------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Zack B. Bergreen....... Chairman of the Board and Chief -- -- -- --
Executive Officer
Leonard W. von Vital... Senior Vice President, Product 98,800 20,000 -- --
Management
Vance Brown............ President, Bendata, Inc. 75,000 85,000 -- --
Per Edstrom............ Managing Director, Europe 35,000 -- -- --
John G. Phillips....... Vice President and Chief -- 75,000 -- --
Financial Officer
Robert G. Schwartz, Vice President and General -- 35,000 -- --
Jr.................... Counsel
Henry H. Greer......... Director -- 20,000 -- 30,000
Joseph J. Kroger....... Director 30,800 90,275 -- 30,000
Bruce R. Rusch......... Director -- 46,075 -- 30,000
All executive officers as a group (6 persons)............. 208,800 215,000 -- --
All Directors who are not executive officers, as a group 30,800 156,350 -- 90,000
(3 persons)..............................................
All employees who are not executive officers, as a group.. 604,600 1,796,560 382,617 --
</TABLE>
PROPOSAL 3
APPROVAL OF CERTAIN AMENDMENTS TO THE
ASTEA INTERNATIONAL INC. 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors has approved certain amendments to the Astea
International Inc. 1995 Non-Employee Director Stock Option Plan and submitted
these amendments for stockholder approval at the Annual Meeting. The Board of
Directors believes that the amendments to the Director Plan are necessary in
order to fulfill the Company's needs of attracting and retaining talented non-
employee directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENTS TO
THE DIRECTOR PLAN.
THE ASTEA INTERNATIONAL INC. 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
CURRENT PLAN DESCRIPTION. The Director Plan was adopted by the Board of
Directors of the Company and approved by the sole stockholder of the Company
on May 23, 1995. The Director Plan provides for the grant of options to
purchase a maximum of 200,000 shares of Common Stock of the Company to non-
employee Directors of the Company. Under the Director Plan, each non-employee
Director who is either (i) a Director of the Company on July 26, 1995 or (ii)
first elected as a Director after July 26, 1995 is automatically granted on
19
<PAGE>
July 26, 1995, or the date such person first becomes a Director, as the case
may be, an option to purchase 30,000 shares of Common Stock on such date
(provided that no Director shall receive, under the Director Plan, more than
one option for 30,000 shares). The exercise price per share for all options
granted under the Director Plan will be equal to one hundred percent (100%) of
the fair market value per share of the Common Stock as of the date of the
grant. As of the Record Date, options to purchase an aggregate of 90,000
shares of Common Stock have been granted to non-employee Directors under the
Director Plan at an exercise price of $15.00 per share, and one option to
purchase an aggregate of 30,000 shares of Common Stock has been granted to a
non-employee Director under the Director Plan at an exercise price of $3.50
per share.
PROPOSED AMENDMENTS. On March 20, 1998, the Board of Directors adopted
certain amendments to the Director Plan for the purposes of (a) creating
annual, automatic grants of a stock option to purchase 5,000 shares of the
Company's Common Stock to each non-employee director of the Company and (b)
permitting non-employee directors of the Company to elect to receive shares of
Common Stock in lieu of cash compensation. These proposed features require
changes to Sections 1, 4 and 7 of the Director Plan and the addition of a new
Section 12 to the Director Plan. These amendments must be approved by
stockholders of the Company. The number of shares of Common Stock available
under the Director Plan, and the termination date of the Director Plan, will
not change. If stockholders of the Company approve this proposal, Sections 1,
4, 7 and 12 of the Director Plan would read as follows:
1. PURPOSE. This Non-Qualified Stock Option Plan, to be known as the
Astea International Inc. Amended and Restated 1995 Non-Employee Director
Stock Option Plan (hereinafter, this "Plan"), is intended to promote the
interests of Astea International Inc. (hereinafter, the "Company") by
providing an inducement to obtain and retain the services of qualified
persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board"). Additionally, this Plan is
intended to provide directors of the Company who are not employees or
officers with opportunities to make direct acquisitions of stock in the
Company in lieu of cash compensation for their services as directors
("Purchases").
* * *
4. AUTOMATIC GRANT OF OPTIONS. Subject to the availability of shares
under this Plan,
(a) each person who becomes a member of the Board and who is not an
employee or officer of the Company (a "Non-Employee Director"), shall
automatically be granted, on the date such person is first elected to the
Board, without further action by the Board, an option to purchase 30,000
shares of Common Stock, and
(b) each Non-Employee Director immediately after the annual meeting of
stockholders of each year (other than the year in which an initial stock
option is granted under subparagraph 4(a) above) shall be automatically
granted on such date, without further action by the Board, an option to
purchase 5,000 shares of Common Stock.
Options to be granted under this paragraph 4 shall be the only options
ever to be granted at any time to any person under this Plan. The number of
shares covered by options granted under this paragraph 4 shall be subject
to adjustment in accordance with the provisions of paragraph 10 of this
Plan. Notwithstanding anything to the contrary set forth herein, if this
Plan is not approved by a majority of the Company's stockholders present,
or represented, and voting on such matter at the 1998 meeting of
Stockholders of the Company, then the amendments to the Plan contained
herein shall terminate and become void.
* * *
7.(a) VESTING OF SHARES AND NON-TRANSFERABILITY OF OPTIONS. Options
granted under this Plan shall not be exercisable until they become vested.
Options granted under this Plan shall vest in the optionee and
20
<PAGE>
thus become exercisable, in accordance with the following schedule,
provided that the optionee has continuously served as a member of the Board
through such vesting date:
For initial options granted pursuant to subparagraph 4(a) above:
<TABLE>
<CAPTION>
PERCENTAGE OF OPTION
SHARES FOR WHICH
OPTION WILL BE EXERCISABLE DATE OF VESTING
-------------------------- -----------------------------------------
<S> <C>
0%............................... Less than one year from the date of grant
20%.............................. One year from the date of grant
40%.............................. Two years from the date of grant
60%.............................. Three years from the date of grant
80%.............................. Four years from the date of grant
100%............................. Five years from the date of grant
</TABLE>
For annual options granted pursuant to subparagraph 4(b) above:
<TABLE>
<CAPTION>
PERCENTAGE OF OPTION
SHARES FOR WHICH
OPTION WILL BE EXERCISABLE DATE OF VESTING
-------------------------- -----------------------------------------
<S> <C>
0%............................... Less than one year from the date of grant
50%.............................. One year from the date of grant
100%............................. Two years from the date of grant
</TABLE>
The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any
shares it shall continue to be exercisable as to said shares, until
expiration or termination of the option as provided in this Plan.
* * *
12. PURCHASES. Each non-employee Director may elect in writing to receive
all or a portion of his cash compensation for Board service and other cash
compensation in shares of Common Stock, which will be issued quarterly.
Such election shall be irrevocable and shall be made at least three months
in advance of the date the non-employee Director receives the cash payment.
Only whole numbers of shares will be issued and any fractional shares shall
be paid in cash. For purposes of computing the number of shares earned and
their taxable value each quarter, the value of each share shall be equal to
the fair market value of the Common Stock on the last business day of the
quarter. If a Director dies prior to payment of all shares earned, the
balance due shall be payable in full to the Director's estate, in cash.
Members of the Board who either are eligible for Purchases pursuant to the
Plan or have made Purchases may vote on any matters affecting the
administration of the Plan or the approval of any Purchase pursuant to the
Plan.
Upon a change in control of the Company, as defined in the Director Plan,
all outstanding, unvested Options would vest immediately.
The foregoing amendments to the Director Plan require the approval by a
majority of the votes cast at the Annual Meeting. The Board of Directors
believes the proposed changes to the Director Plan are necessary to attract,
retain and motivate qualified candidates to serve on your Board.
FEDERAL INCOME TAX CONSEQUENCES
Stock Options granted to Non-Employee Directors under the amended and
restated Director Plan will be Non-Qualified Options. The federal income tax
treatment of NQSOs is described above under "Proposal 2--Approval of the Astea
International Inc. 1998 Stock Option Plan--Federal Income Tax Consequences--
Non-Qualified Stock Options." Elections to receive shares of Common Stock in
lieu of cash compensation would be treated as stock awards for federal income
tax purposes. The federal income tax treatment of stock awards is described
above under "Proposal 2--Approval of the Astea International Inc. 1998 Stock
Option Plan--Federal Income Tax Consequences--Stock Awards and Purchases."
21
<PAGE>
PROPOSAL 4
RATIFICATION AND SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1998. Arthur Andersen LLP has served as the Company's
accountants since March 1995. It is expected that a member of Arthur Andersen
LLP will be present at the Annual Meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THIS
SELECTION.
OTHER INFORMATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to September 1997, the Company had leased an office facility in
Chalfont, Pennsylvania from Zack B. Bergreen and his wife, Ms. Bar-Nir,
pursuant to a lease that was originally set to expire on December 31, 2009, at
a monthly rent of approximately $33,250 (the "Lease"). The Company believes
that these rental terms were at least as favorable to the Company as could be
obtained from an unaffiliated third party. In addition, the Company had
provided a Guaranty and Surety Agreement dated November 30, 1994 (the
"Guarantee") guaranteeing the payment by the Bucks County Industrial
Development Company ("BCIDC") of a promissory note in the principal amount of
$244,000 payable to Pennsylvania Industrial Development Company (the "PIDA
Loan"). The PIDA Loan, which has been borrowed by BCIDC to expand and improve
certain portions of the Chalfont, Pennsylvania facility (the "Improvements"),
was secured by a second mortgage given by Mr. Bergreen and his wife on such
portions of the Chalfont, Pennsylvania facility of the Company pursuant to an
Amendment to Installment Sale Agreement dated November 30, 1994 (the
"Installment Sale Agreement"). Under the Installment Sale Agreement, Mr.
Bergreen and his wife were entitled to acquire the Improvements when the PIDA
Loan was fully amortized.
On September 17, 1997, in connection with the sale of this office facility
by Mr. Bergreen and Ms. Bar-Nir to an unaffiliated third party, the Company,
Mr. Bergreen and Ms. Bar-Nir mutually agreed to terminate the Lease and the
Guarantee. In exchange for the release of all of the Company's further
obligations under the Lease and the Guarantee, the Company agreed to pay Mr.
Bergreen and Ms. Bar-Nir $115,830 plus three equal payments of $155,595 each
on October 31, 1997, November 30, 1997 and January 2, 1998. The terms of this
agreement were reviewed and approved by the Company's Board of Directors, with
Mr. Bergreen abstaining. Aside from the foregoing termination payments, the
total rent expense paid by the Company to Mr. Bergreen and Ms. Bar-Nir during
the fiscal year ended December 31, 1997 was approximately $283,000.
During the first six months of fiscal 1997, Mr. Joseph Kroger, a Director of
the Company, served as a paid consultant to the Company. In exchange for
certain full and part-time advisory services, Mr. Kroger received cash
compensation of $108,460 in addition to his fees for serving as a Director.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock of
the Company. Such persons are required by regulations of the Commission to
furnish the Company with copies of all such filings. Based on its review of
the copies of such filings received by it with respect to the fiscal year
ended December 31, 1997 and written representations from certain Reporting
Persons, the Company believes that all Reporting Persons complied with all
Section 16(a) filing requirements in the fiscal year ended December 31, 1997,
22
<PAGE>
except that Mr. Brown inadvertantly filed a Form 4 report relating to a grant
of stock options approximately 60 days late.
STOCKHOLDER PROPOSALS
Proposals of the stockholders intended for inclusion in the proxy statement
to be furnished to all stockholders entitled to vote at the next annual
meeting of stockholders of the Company must be received by the Company's
Secretary not later than December 8, 1998. Any such proposal must comply with
the rules and regulations of the Commission. In order to curtail controversy
as to the date on which a proposal was received by the Company, it is
suggested that proponents submit their proposals by Certified Mail, Return
Receipt requested to Astea International Inc., 455 Business Center Drive,
Horsham, Pennsylvania 19044, Attention: Secretary.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting the stockholders by mail through its regular employees,
the Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Company may
also be made of some stockholders in person or by mail, telephone or telegraph
following the original solicitation.
23
<PAGE>
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ASTEA INTERNATIONAL INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1998
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Astea International Inc., a Delaware
corporation (the "Corporation"), hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and accompanying Proxy
Statement, each dated April 7, 1998 and hereby appoints Zack B. Bergreen
and John G. Phillips, and each of them alone, proxies and attorneys-in-
fact, with full power of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held at the Williamson Restaurant,
Easton Road and Blair Mill Road, Horsham, Pennsylvania 19044, on May 14,
1998 at 10:00 a.m. local time, and at any adjournment or adjournments
thereof, and to vote all shares of Common Stock which the undersigned
would be entitled to vote if then and there personally present, on all
matters set forth in the Notice of Annual Meeting of Stockholders and
accompanying Proxy Statement, and in their discretion upon any other
business that may properly come before the meeting or any adjournment or
adjournments thereof:
1. To elect five(5) Directors to serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified.
[_] FOR all nominees listed below [_] WITHHOLD
(except as indicated below)
If you wish to withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below.
Nominees: Zack B. Bergreen, Henry H. Greer, Charles D. LaMotta, Bruce R.
Rusch and Joseph J. Kroger.
2. To approve the Astea International Inc. 1998 Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve certain amendments to the Astea International Inc. 1995
Non-Employee Director Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To ratify the selection of the firm of Arthur Andersen LLP as
independent auditors for the fiscal year ending December 31, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
5. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED
FOR THE ELECTION OF DIRECTORS, FOR APPROVAL OF THE 1998 STOCK OPTION PLAN, FOR
CERTAIN AMENDMENTS TO THE 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND FOR
THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS MAY VOTE IN
PERSON EVEN THOUGH THEY HAVE PREVIOUSLY MAILED THIS PROXY.
Dated: ___________________ , 1998
---------------------------------
(Signature)
---------------------------------
(Signature)
(This Proxy should be marked,
dated and signed by the
stockholder(s) exactly as his or
her name appears hereon, and
returned promptly in the
enclosed envelope. Persons
signing in a fiduciary capacity
should so indicate. If shares
are held by joint tenants or as
community property, both should
sign.)
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