<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 Section 240.14a-11(c) or Section 240.14a-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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
Astea International Inc.
455 Business Center Drive
Horsham, Pennsylvania 19044
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
----------------
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 13, 1999 at 10:00
a.m., local time, at the Company's headquarters at 455 Business Center Drive,
Horsham, Pennsylvania 19044, for the following purposes:
1. To elect five (5) Directors to serve until the next Annual Meeting of
Stockholders.
2. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending December 31, 1999.
3. 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 19, 1999, 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 9, 1999
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 9, 1999
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
13, 1999, at 10:00 a.m., local time, at the Company's headquarters at 455
Business Center Drive, Horsham, Pennsylvania 19044, or at any adjournments
thereof (the "Annual Meeting").
Only stockholders of record at the close of business on March 19, 1999 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of that date, 13,818,617 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 a proposal 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.
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
<PAGE>
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, 1998, 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 9, 1999.
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, Barry M. Goldsmith,
Henry H. Greer, Charles D. LaMotta and Bruce R. Rusch are the current
Directors. Messrs. Greer, Goldsmith and Rusch 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, Barry
M. Goldsmith, Henry H. Greer, Charles D. LaMotta and Bruce R. Rusch to be
elected to hold office until the 2000 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, if applicable; 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 1999
(1979)
Charles D. LaMotta ..... President, Chief Operating Officer and Director 1999
(1998)
Barry M. Goldsmith...... Director 1999
(1999)
Henry H. Greer ......... Director 1999
(1997)
Bruce R. Rusch ......... Director 1999
(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......... 53 Chairman of the Board and Chief Executive Officer
Charles D. LaMotta....... 56 President, Chief Operating Officer and Director
Barry M. Goldsmith....... 55 Director
Henry H. Greer(1)........ 61 Director
Bruce R. Rusch(1)........ 55 Director
John G. Phillips......... 39 Vice President, Chief Financial Officer and Treasurer
R. Scott Sander.......... 55 Vice President, Sales, North America
Robert G. Schwartz, Jr... 33 Vice President, General Counsel and Secretary
</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. Goldsmith joined the Company's Board of Directors in April 1999. He
currently serves as Managing Director of Updata Capital, Inc. He is also
Manager of Fallen Angel Capital, LLC, which is the general partner of Fallen
Angel Equity Fund, L.P., which currently beneficially owns more than 5% of the
shares of Common Stock of the Company. Mr. Goldsmith additionally serves on
the boards of directors of Compuware Corporation, Dendrite International, Inc.
and a private company.
Mr. Greer joined the Company's Board of Directors in June 1997. He currently
is a member of the Board of Directors of SEI Investments, an investment
management company. Between 1990 and March 1999, Mr. Greer was the President
and Chief Operating Officer of SEI Investments. Mr. Greer holds an AB in
Economics from Dartmouth 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.
3
<PAGE>
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. Sander joined the Company as its Vice President, Sales, North America,
in May 1998. Before joining the Company, Mr. Sander served as National Sales
Manager and later as Vice President, Business Development, at Assessment
Systems, Inc. since 1993. Mr. Sander studied marketing at Miami University
(Ohio).
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 an associate 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.
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.
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 times in person or by
telephone during the fiscal year ended December 31, 1998. During fiscal 1998,
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 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 met once during the fiscal
year ended December 31, 1998. The Board of Directors currently performs the
functions of a compensation committee and has no nominating committee.
4
<PAGE>
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; 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 49.1%
c/o Astea International Inc.
455 Business Center Drive
Horsham, Pennsylvania 19044
Fallen Angel Equity Fund, L.P.(4).................... 1,953,000 14.1
c/o Fallen Angel Capital, LLC
960 Holmdel Road
Holmdel, NJ 07733
Charles D. LaMotta(5)................................ 75,000 *
Barry M. Goldsmith(4)................................ 1,953,000(4) 14.1(4)
Henry H. Greer(6).................................... 16,778 *
Bruce R. Rusch(7).................................... 59,665 *
John G. Phillips(8).................................. 43,375 *
R. Scott Sander(9)................................... 25,000 *
Robert G. Schwartz, Jr.(10).......................... 23,750 *
All current Directors, nominees and executive 8,987,568 63.9
officers as a group (8 persons)(4)(11)..............
</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 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
13,818,617 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 1,734,964 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 Fallen Angel Equity Fund, L.P. under the Commission's
Schedule 13D and Form 4. Mr. Goldsmith is Manager of Fallen Angel
Capital, LLC, which is the general partner of Fallen Angel Equity Fund,
L.P. Mr. Goldsmith disclaims beneficial ownership of the shares of Common
Stock held by Fallen Angel Equity Fund, L.P.
(5) Includes 75,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
5
<PAGE>
(6) Includes 13,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(7) Includes 59,665 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(8) Includes 41,875 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(9) Includes 25,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(10) Includes 23,750 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(11) Includes 238,799 shares of Common Stock issuable pursuant to presently
exercisable stock options and 1,953,000 shares of Common Stock held by
Fallen Angel Equity Fund, L.P.
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, 1998, 1997, and 1996, of those persons who at December 31, 1998 were (i)
the Chief Executive Officer, (ii) each of the four other most highly
compensated executive officers of the Company in office who earned more than
$100,000 in salary and bonus in fiscal 1998 (collectively, the "Named
Executive Officers"), and (iii) a former executive officer of the Company who
was not employed by the Company on December 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------- ---------------------
Securities
Name and Underlying All Other
Principal Position Year Salary ($) Bonus ($) Options (# of shares) Compensation ($)
------------------ ---- ---------- --------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Zack B. Bergreen......... 1998 $300,000 -- -- $69,600(1)
Chairman of the Board 1997 300,000 -- -- 52,200(1)
and Chief Executive 1996 300,000 -- -- 63,800(1)
Officer
Charles D. LaMotta....... 1998 179,487 $75,000 600,000(2) --
President and Chief
Operating Officer
John G. Phillips......... 1998 134,375 10,000 122,500(3) --
Vice President and Chief 1997 111,979 5,000 97,500(4) --
Financial Officer 1996 78,032 15,000 22,500(5) --
R. Scott Sander.......... 1998 90,102 32,204 200,000(6) --
Vice President, Sales,
North America
Robert G. Schwartz, Jr... 1998 122,309 10,000 65,000(7) --
Vice President and 1997 95,019 -- 60,000(8) --
General Counsel 1996 20,419 -- 20,000(9) --
Vance F. Brown(10)....... 1998 100,000 37,971 50,000(11) 50,000(11)
President, Bendata, Inc. 1997 171,971 47,510 160,000(12) --
1996 105,917 74,331 100,000(13) 100,000(14)
</TABLE>
- --------
(1) Includes premiums for term, split-dollar life insurance paid by the
Company on behalf of the Named Executive Officer.
(2) Represents an option granted in 1998 to purchase 300,000 shares of Common
Stock, which was repriced later in 1998 (and therefore counted twice for
purposes of this table). 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."
(3) Includes an option granted in 1998 to purchase 25,000 shares of Common
Stock, and options to purchase an aggregate of 97,500 shares of Common
Stock that were repriced later in 1998. 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) Includes options granted in 1997 to purchase 50,000 shares of Common
Stock, and options to purchase an aggregate of 47,500 shares of Common
Stock that were repriced separately in 1997. The Commission's
7
<PAGE>
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) Represents options to purchase an aggregate of 22,500 shares of Common
Stock that were 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."
(6) Represents an option granted in 1998 to purchase 100,000 shares of Common
Stock, which was repriced later in 1998 (and therefore counted twice for
purposes of this table). 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 an option granted in 1998 to purchase 15,000 shares of Common
Stock, and options to purchase an aggregate of 50,000 shares of Common
Stock that were repriced later in 1998. 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."
(8) Includes an option granted in 1997 to purchase 25,000 shares of Common
Stock, and options to purchase an aggregate of 35,000 shares of Common
Stock that were repriced later 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."
(9) Includes an option granted in 1996 to purchase 10,000 shares of Common
Stock,, which was repriced later 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."
(10) The Company sold Bendata, Inc. in September 1998. Accordingly, Mr. Brown
is no longer an employee of the Company.
(11) Received as a change-in-control bonus in connection with the Company's
sale of Bendata, Inc. in September 1998.
(12) 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."
(13) 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."
(14) Received as a change-in-control bonus in connection with the Company's
acquisition of Bendata, Inc. in 1996.
8
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
year ended December 31, 1998 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
Individual Grants 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......... -- -- -- -- -- --
Charles D. LaMotta....... New Grant
300,000(3) 36% $1.88(4) 2/11/08 (5) (5)
Repricing
300,000(4) N.A. 1.69(4) 2/11/08 $ 318,850 $ 808,027
John G. Phillips......... New Grant
25,000(3) 3% 2.88(4) 5/14/08 (5) (5)
Repricings
22,500(4) N.A. 1.69(4) 10/5/05 15,480 36,075
25,000(4) 1.69(4) 2/24/07 23,294 57,373
25,000(4) 1.69(4) 12/31/07 23,294 57,373
25,000(4) 1.69(4) 5/14/08 26,571 67,336
R. Scott Sander.......... New Grant
100,000(3) 12% 2.88(4) 5/14/98 (5) (5)
Repricing
100,000(4) N.A. 1.69(4) 5/14/98 106,283 269,342
Robert G. Schwartz, Jr... New Grant
15,000(3) 2% 2.00(4) 2/11/08 (5) (5)
Repricings
10,000(4) N.A. 1.69(4) 9/13/06 8,070 19,327
25,000(4) 1.69(4) 2/24/07 23,294 57,373
15,000(4) 1.69(4) 2/11/08 15,942 40,401
Vance F. Brown........... New Grant
50,000(6) 6% 2.47 8/11/08 77,668 196,827
</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 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 September 11, 1998, 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 $1.69, the fair market value per share of
Common stock at the date of repricing. Although these options may not have
been granted in 1998, the Commission's regulations require that repriced
options be reported as new grants in the year of repricing.
9
<PAGE>
See "--Option Repricings" and "--Board Report on Executive Compensation."
(5) Since this option was repriced in 1998, its potential realizable value is
based on the new $1.69 exercise price and is included below in this
column.
(6) Options vest in two equal annual installments.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth, for each of the Named Executive Officers,
information with respect to the exercise of stock options during the year
ended December 31, 1998 and the year-end value of unexercised options:
<TABLE>
<CAPTION>
Value of Unexercised
Shares Numbers of Unexercised In-the-Money Options at
Acquired on Value Options at Year End Year End
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Zack B. Bergreen......... -- -- -- --
Charles D. LaMotta....... -- -- 0 / 300,000 $0 / $0
John G. Phillips......... -- -- 29,375 / 68,125 0 / 0
R. Scott Sander.......... -- -- 0 / 100,000 0 / 0
Robert G. Schwartz, Jr... -- -- 13,750 / 36,250 0 / 0
Vance F. Brown........... -- -- 210,000 / 0 0 / 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, 1998, the
fiscal year-end ($1.69 per share), multiplied by the number of shares
underlying the option.
Option Repricings
The following table sets forth, for each Executive Officer of the Company,
information with respect to the repricing of stock options during the past ten
years:
<TABLE>
<CAPTION>
Number of
Securities Market Price Length of Original
Underlying of Stock at Exercise Price Option Term
Options Time of at Time of New Exercise Remaining at Date
Name Date Repriced(#) Repricing($) Repricing($) Price($) of Repricing
---- -------- ----------- ------------ -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Charled D. LaMotta....... 9/11/98 300,000 $1.69 $1.88 $1.69 10 years
John G. Phillips......... 9/11/98 47,500 1.69 2.52 1.69 7 years
9/11/98 25,000 1.69 1.91 1.69 9 years
9/11/98 25,000 1.69 2.88 1.69 10 years
4/4/97(1) 22,500 2.52 5.50 2.52 8 years
4/4/97(1) 25,000 2.52 5.13 2.52 10 years
10/29/96(1) 22,500 5.50 17.25 5.50 9 years
R. Scott Sander.......... 9/11/98 100,000 1.69 2.88 1.69 10 years
Robert G. Schwartz, Jr... 9/11/98 50,000 1.69 2.52 1.69 9 years
4/4/97 25,000 2.52 5.13 2.52 10 years
4/4/97 10,000 2.52 5.50 2.52 9 years
10/29/96(1) 10,000 5.50 6.50 5.50 10 years
Per Edstrom(2)........... 9/11/98 55,000 1.69 2.52 1.69 8 years
4/4/97 55,000 2.52 5.50 2.52 9 years
10/29/96(1) 35,000 5.50 5.62 5.50 10 years
10/29/96(1) 20,000 5.50 5.62 5.50 10 years
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Number of
Securities Market Price Length of Original
Underlying of Stock at Exercise Price Option Term
Options Time of at Time of New Exercise Remaining at Date
Name Date Repriced(#) Repricing($) Repricing($) Price($) of Repricing
---- -------- ----------- ------------ -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Vance F. Brown(3)........ 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
Leonard W. von Vital(4).. 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
Kevin Roche(5)........... 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(6)...... 10/29/96 10,000 5.50 17.25 5.50 9 years
Avner Schneur(7)......... 10/29/96 5,000 5.50 17.25 5.50 9 years
Dianne Durkin(8)......... 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. Edstrom resigned from the Company in connection with the Sale of
Abalon AB on December 31, 1998.
(3) Mr. Brown is the President of Bendata, Inc., which the Company sold on
September 4, 1998.
(4) Mr. Von Vital resigned from the Company on May 6, 1998.
(5) Mr. Roche resigned from the Company on January 2, 1998.
(6) Mr. Belbel resigned from the Company in 1997.
(7) Mr. Schneur resigned from the Company in 1997.
(8) Ms. Durkin resigned from the Company in 1996.
Employment Agreements and Severance Arrangements with Executive Officers
The Company has not entered into employment agreements with any of its
current Executive Officers.
Board Report on Executive Compensation
This report is submitted by the Board of Directors of the Company (the
"Board"); the Company's Compensation Committee was not active in 1998. The
Board is 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, 1998 Stock Option Plan and 1995 Employee
Stock Purchase Plan.
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.
11
<PAGE>
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 with matching Company contributions, 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 1998 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 1998 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
according to predetermined standards and formulas. Additional bonuses may be
awarded during the fiscal year to reward an executive officer for superior
individual or business-unit performance. In 1998, because the Company was not
profitable, no cash bonuses were awarded based on Company performance.
However, with respect to fiscal 1998, certain Named Executive Officers
received bonuses for individual or business-unit performance. Specifically,
Mr. LaMotta received bonuses aggregating $75,000 for achievement of certain
personal objectives according to the terms of his employment offer letter;
Messrs. Phillips and Schwartz each received $10,000 for their efforts in
connection with the sale of the Company's Bendata, Inc. and Abalon AB
subsidiaries in 1998; and Mr. Sander, the Company's Vice President of Sales,
received cash commissions of $32,204 based on the achievement of Company sales
targets. In addition, Mr. Brown, President of the Company's former Bendata,
Inc. subsidiary, received cash bonuses of $37,971 based on financial
performance of his business unit during the first six months of 1998, and he
received an additional incentive bonus of $50,000 in connection with the sale
of Bendata, Inc.
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 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
12
<PAGE>
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, 1998, options to purchase an
aggregate of 485,000 shares of Common Stock were awarded to the Company's
executive officers. Options granted during and with respect to fiscal 1998
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 and
includes partially matching Company contributions. The Company also maintains
insurance and other benefit plans for its employees.
Compensation of Chief Executive Officer. In fiscal 1998, 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 1998.
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. After continued 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 $2.52 since 1997, would not serve their intended purpose of
motivating employees to work diligently for the long-term benefit of the
Company and its stockholders. Accordingly, on September 11, 1998, the Board of
Directors voted to reduce the exercise price of the stock options held by
employees to $1.69, the then-current market price of the Company's Common
Stock.
Respectfully submitted by the following Members of the Board of Directors.
Zack B. Bergreen
Charles D. LaMotta
Henry H. Greer
Bruce Rusch
13
<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. LaMotta, no person
who served as a member of the Board was, during the fiscal year ended December
31, 1998, simultaneously an officer, employee or consultant of the Company or
any of its subsidiaries. Messrs. Bergreen and LaMotta did not participate in
any Company 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 may elect to receive, in lieu of
the foregoing cash compensation, unrestricted shares of Common Stock of the
Company; shares of Common Stock in lieu of cash compensation are acquired at
the fair market value of the Common Stock on the last day of the calendar
quarter during which the cash compensation was earned and foregone. Non-
employee Directors are also eligible to receive annual stock option grants
under the Company's 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.
14
<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, 1998,
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.
Index Description 7/27/95 12/29/95 12/31/96 12/31/97 12/31/98
Astea International
Inc.(1) $100.00 $152.50 $37.93 $12.73 $11.27
Nasdaq Index $100.00 $102.74 $127.67 $156.17 $220.26
SIC Code 7372 Index $100.00 $106.67 $141.79 $180.47 $303.26
- ----------------
(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
Commission and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, 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.
15
<PAGE>
PROPOSAL 2
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, 1999. 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.
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, 1998 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, 1998,
except that Mr. Bergreen inadvertantly filed a Form 4 report approximately
four months late relating to a series of purchases and simultaneous gifts to
his emancipated children of an aggregate of 20,000 shares of Common Stock, and
a Form 4 report approximately one month late relating to a series of purchases
and simultaneous gifts to his emancipated children of an aggregate of 7,000
shares of Common Stock.
STOCKHOLDER PROPOSALS
Proposals of 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 11, 1999. 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.
16
<PAGE>
ASTEA INTERNATIONAL INC.
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING
OF STOCKHOLDERS AT 10:00 A.M., THURSDAY, MAY 13, 1999
455 BUSINESS CENTER DRIVE, HORSHAM, PENNSYLVANIA 19044
The undersigned stockholder of Astea International Inc. (the "Company")
hereby appoints Zack B. Bergreen and John G. Phillips, or either of them, as
proxies, each with full powers of substitution, to vote the shares of the
undersigned at the above-stated Annual Meeting and at any postponements or
adjournments thereof, on the following proposals:
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
your votes as
indicated in [X]
this example
FOR all nominees WITHHOLD AUTHORITY
(except as provided to vote for all
to the contrary below) nominees
Election of Zack B. Bergreen, [_] [_]
Barry M. Goldsmith, Henry H. Greer,
Charles D. LaMotta and Bruce R. Rusch
as Directors.
Instruction: to withhold authority to vote for any individual nominee, write
that nominee's name here):
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
(2) Ratification of the selection of Arthur
Andersen LLP as independent auditors for the [_] [_] [_]
fiscal year ending December 31, 1999.
In their discretion, the proxies are, and each of them is authorized to vote
upon such other business or matters as may properly come before the meeting or
any postponements or adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THIS AND THE REVERSE SIDE.
IF A CHOICE IS NOT INDICATED WITH RESPECT TO ITEMS (1) OR (2), THIS PROXY WILL
BE VOTED "FOR" SUCH ITEM. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO
ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
Receipt herewith of the Company's Annual Report and Notice of Meeting and
Proxy Statement, dated April 9, 1999 is hereby acknowledged.
PLEASE SIGN, DATE AND MAIL TODAY
(Signature(s) of Shareholder(s)) ___________________________ Dated _________1999
(joint owners must EACH sign, Please sign EXACTLY as your name(s) appears(s) on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
