SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted by Rule 14a- 6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
PAPERCLIP SOFTWARE, 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:
...............................................
<PAGE>
PAPERCLIP SOFTWARE, INC.
611 Route 46 West
Hasbrouck Heights, New Jersey 07604
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 5, 2000
---------------
To Shareholders:
The Annual Meeting of Shareholders of PaperClip Software, Inc.
(the "Company") will be held at the Company's offices at 611 Route 46 West,
Hasbrouck Heights, New Jersey 07604, on Monday, June 5, 2000 at 10:00 a.m., for
the following purposes:
1. To elect three directors to the Board of Directors of the Company
(the "Board of Directors");
2. To approve and ratify proposed amendments to the Company's
Certificate of Incorporation (the "Certificate of Incorporation") authorizing
the issuance of 10,000,000 shares of undesignated preferred stock;
3. To approve and ratify proposed amendments to the Company's Amended
and Restated 1995 Stock Option Plan (the "1995 Stock Option Plan"); and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
April 24, 2000 as the record date for the determination of the shareholders
entitled to notice of and to vote at the meeting and any adjournment thereof.
Your copy of the Annual Report of the Company for the year
ended December 31, 1999 on Form 10-KSB is enclosed. The 1999 Annual Report does
not form any part of the material for the solicitation of proxies.
Shareholders who do not expect to be present at the meeting
are urged to complete, date, sign and return the enclosed proxy. No postage is
required if the enclosed envelope is used and mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Michael Suleski
Michael Suleski, Secretary
Hasbrouck Heights, New Jersey
May 3, 2000
<PAGE>
THIS IS AN IMPORTANT MEETING, AND ALL SHAREHOLDERS ARE INVITED
TO ATTEND THE MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN
PERSON ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AT
THEIR EARLIEST CONVENIENCE. PROMPTNESS IN RETURNING THE EXECUTED PROXY CARD WILL
BE APPRECIATED. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND
THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
PAPERCLIP SOFTWARE, INC.
611 Route 46 West
Hasbrouck Heights, New Jersey 07604
-----------------
Proxy Statement for Annual Meeting of Shareholders
June 5, 2000
--------------------
Solicitation and Revocation of Proxies
This Proxy Statement and the form of proxy accompanied by the
Annual Report of the Company on Form 10-KSB for the year ended December 31,
1999, anticipated to be mailed on or about May 16, 2000, is solicited by and on
behalf of the Board of Directors of PaperClip Software, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Shareholders to be held
on Monday, June 5, 2000, at the offices of the Company, 611 Route 46 West,
Hasbrouck Heights, New Jersey 07604, at 10:00 a.m., including any adjournment
thereof, for the purposes set forth in the Notice of Annual Meeting and Proxy
Statement. The Company's telephone number is (201) 329-6300 and the Company's
facsimile number is (201) 329-6321.
If the enclosed form of proxy is executed and returned, it
will be voted as directed, but may be revoked at any time, either by a written
notice of the revocation received by the persons named therein, or by voting the
shares covered thereby in person or by another proxy dated subsequent to the
date thereof. In the absence of specific instructions by the shareholders,
proxies will be voted for (i) the election of directors, (ii) the approval of
amendments to the Certificate of Incorporation and (iii) the approval of
amendments to the 1995 Stock Option Plan. Abstentions and broker non-votes will
be counted for purposes of a quorum, but are not votes cast and therefore will
not be counted in determining voting results. The form of proxy vests in the
persons named therein as proxies discretionary authority to vote on any matter
that may properly come before the meeting not presently known to the Board of
Directors.
A plurality of votes cast, in person and by proxy, is
necessary to effectuate the election of directors. For the approval of the
amendments to the Certificate of Incorporation, affirmative votes of a majority
of the outstanding shares entitled to vote thereon, by proxy or in person, are
required. For the approval of the amendments to the 1995 Stock Option Plan,
affirmative votes of a majority of the shares present at the meeting entitled to
vote thereon, by proxy or in person, are required.
The cost of preparing and mailing the Notice of Annual Meeting
and Proxy material and soliciting proxies will be paid by the Company. In
addition to the use of the mails, officers, directors or employees of the
Company, who will receive no additional compensation therefor, may solicit
proxies by telephone or personal interview. The Company will request
<PAGE>
brokers, nominees, fiduciaries and custodians to forward proxy materials to
their beneficial owners, and will reimburse such persons for reasonable expenses
incurred by them in forwarding the proxy materials.
Record Date
The Board of Directors has fixed the close of business on
April 24, 2000, as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Annual Meeting and any
adjournment thereof. Only shareholders of record on that date are entitled to
vote at the meeting.
Voting Securities
As of April 24, 2000, 8,121,521 shares of common stock, $.01
par value per share, of the Company (the "Common Stock") were outstanding and
entitled to be voted at the Annual Meeting.
I.
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect three
members to the Board of Directors of the Company to serve for a one year term or
until their successors have been elected and qualified. The By-laws of the
Company provide that the Board of Directors shall not be less than three nor
more than seven in number. Since less than the maximum number of directors are
to be elected, which is permissible pursuant to the Company's By-laws, proxies
cannot be voted for a greater number of persons than the number of nominees
named. The By-laws further provide that the majority of directors, although less
than a quorum, have the right to appoint candidates to fill any vacancies on the
Board of Directors, whether through death, retirement or other termination of a
director, or through an increase in the Board of Directors. Upon such
appointment such director shall serve until the next election of directors.
The affirmative vote of a plurality of the shares of Common
Stock represented at the meeting is required to elect directors. Cumulative
voting is not permitted in the election of directors. Each shareholder is
entitled to one vote for each share of Common Stock held in such shareholder's
name. The persons named as proxies in the form of proxy solicited hereby intend
to vote all valid proxies received in favor of the election of the three
nominees as directors except where authority to so vote is withheld by the
shareholder. Each nominee has consented to be named herein and to serve on the
Board of Directors if elected. If any nominee is unable to serve as a director
(which presently is not anticipated), the proxies will be voted for such
substituted nominee who may be designated by the present Board of Directors.
William Weiss,
<PAGE>
Michael Suleski and D. Michael Bridges are now serving as directors of the
Company. Proxies will have full discretion to vote for another person designated
by the Board of Directors, or, if none is so designated, to vote for persons of
their own choice. Proxies may not be voted for the election of more than three
persons to the Board of Directors.
<TABLE>
<CAPTION>
Nominees For Election
<S> <C> <C> <C>
Served as Officer
Name Age Position with the Company and/or Director Since
William Weiss 56 Chief Executive Officer, Treasurer and Director 1991
Michael Suleski 38 Vice President, Engineering, Secretary and 1992
Director
D. Michael Bridges 45 President and Director 2000
</TABLE>
WILLIAM WEISS, a founder of the Company, has been Chief
Executive Officer and a director of the Company since its formation in October
1991. Since January 1980, Mr. Weiss has also been an executive officer (and
President since November 1988) and a director of Medical Registry Services,
Inc., a computer software company which sells and services a computerized system
for cancer record keeping in hospitals. Mr. Weiss devotes approximately 10-15
hours per week to the Company and approximately 40-50 hours per week to Medical
Registry Services, Inc. From April 1974 to December 1979, Mr. Weiss was
Executive Vice President of Numerax, Inc., a public company specializing in
computerized freight billing and payment. From December 1969 to March 1974, Mr.
Weiss served as an Executive Vice President of a division of Automatic Data
Processing, Inc., the purchaser of MSM, Inc., a company he founded which
provided a computer service for the investment advisory industry. Mr. Weiss
received a B.S. from the Wharton School of the University of Pennsylvania and a
J.D. from New York Law School.
MICHAEL SULESKI, a founder of the Company, has been Vice
President, Engineering of the Company since August 1992, and Director of
Research and Development of the Company from its inception in October 1991 to
August 1992. He has been a director of the Company since May 1995, and Secretary
of the Company since July 1995. From July 1991 through October 1991, Mr. Suleski
worked with a founder to develop the DOS Network Edition and helped found the
Company. From April 1989 through July 1991, he was a Senior Engineer with
Synercon Corp., a firm specializing in computer based solutions for the medical
profession. From April 1988 to March 1989, Mr. Suleski was a software engineer
with Henderson Industries, a developer and manufacturer of commercial industrial
control systems and military
<PAGE>
electronics. From July 1986 to March 1988, Mr. Suleski was employed as a
software engineer with Singer/Kerfott, a defense contractor for guidance and
navigation systems. He received a B.S. and a M.S. degree from Fairleigh
Dickenson University College of Science and Engineering.
D. MICHAEL BRIDGES joined the Company as President effective
as of January 1, 2000 after serving as a consultant to the Company from June
1998 until December 31, 1999. Mr. Bridges served as Vice President of Marketing
and Sales and a Director of Corporate Services of the Company from February 1995
through June 1998. Mr. Bridges was Executive Vice President and co-founder of
CMF Design System, a custom software and systems integration firm, from May 1988
to February 1995. From July 1983 to May 1988, Mr. Bridges was an integration
consultant to EBASCO. Mr. Bridges received a B.S. from Rowan University.
There is no family relationship between any officer or
director of the Company.
Since the Company's last Annual Meeting of Shareholders, there
have been 11 meetings of the Board of Directors, including actions by unanimous
written consent. All directors participated at all the meetings. There are no
committees of the Board of Directors.
In lieu of any cash compensation or per meeting fees, the
Company has provided directors who were also executive officers of the Company
("Employee Directors") and directors who were not executive officers of the
Company ("Non-Employee Directors") with options to purchase Common Stock of the
Company pursuant to the 1995 Stock Option Plan. The 1995 Stock Option Plan
currently provides for automatic annual grants of stock options to Employee
Directors and Non-Employee Directors (the "Automatic Grant Provision"). However,
the Board of Directors has approved certain amendments to the 1995 Stock Option
Plan, subject to shareholder approval, one of which is to remove the Automatic
Grant Provision and provide that the Committee (as defined herein) may grant
options to directors pursuant to the terms of the Plan. See "Proposal to Amend
the Company's 1995 Amended and Restated Stock Option Plan" for a further
discussion of the amendments to the 1995 Stock Option Plan. Under the Automatic
Grant Provision, each Employee Director who is a member of the Board of
Directors on December 31 of a year during the term of the 1995 Stock Option Plan
is eligible to receive a non-qualified stock option to purchase one percent (1%)
of the outstanding Common Stock of the Company on the date of grant which shall
be on the first business day of the following year. Each Non-Employee Director
who is a member of the Board of Directors on December 31 of a year during the
term of the 1995 Stock Option Plan shall be eligible to receive a non-qualified
stock option to purchase one-fourth of one percent (1/4%) of the outstanding
Common Stock of the Company on the date of grant which shall be on the first
business day of the following year. The exercise price of the shares of Common
Stock subject to options granted pursuant to the Automatic Grant Provision to
each such director is 100% of the fair market value of the shares of Common
Stock on the date of grant. Such options granted may only be exercised within
ten
<PAGE>
years of the date of grant and terminate (i) three months after termination of
the director's service as a director of the Company (or if the director is also
an employee or consultant of the Company, three months after termination of such
director's service in all such capacities) for any reason other than disability
(as such term is defined by Section 22(e)(3) of the Internal Revenue Code of
1986, as amended (the "Code")) or death, (ii) three months after the date the
director ceases to serve as a director of the Company due to disability or (iii)
(A) twelve months after the date the director ceases to serve as a director due
to the death of the director or (B) three months after the death of the director
if such death shall occur during the three month period following the date the
director ceased to serve as a director of the Company due to disability. Except
as discussed therein, options granted to Employee Directors and Non-Employee
Directors are on the same terms and conditions as all other options granted
pursuant to the 1995 Stock Option Plan. Notwithstanding the foregoing, the
Company reserves the right in the 1995 Stock Option Plan to grant options to
Employee Directors and Non-Employee Directors under the other provisions of the
1995 Stock Option Plan at such time as the Committee shall be composed of at
least two "outside directors" and to dispense, at that time, with the provision
for automatic annual grants of stock options to such directors. See "Executive
Compensation - Option/SAR Grants" and "Security Ownership of Certain Beneficial
Owners and Management."
The Company's officers are chosen by the Board of Directors
and serve at the pleasure of the Board of Directors, subject to employment
agreements. The loss of the services of any one of the directors could have a
material adverse effect on the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires certain persons, including the Company's
directors and executive officers, to file reports with the Securities and
Exchange Commission regarding beneficial ownership of equity securities of the
Company. Each of William Weiss and Michael Suleski filed a late report covering
the respective acquisitions of options in 1997, 1998 and 1999 by each of them.
Sol Rosenberg failed to file a report covering the acquisition of options by him
in 1997, 1998 and 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF THE NOMINEES FOR DIRECTORS SET FORTH ABOVE.
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth compensation
paid by the Company for the last three fiscal years ended December 31, 1999 for
services in all capacities for its Chief Executive Officer and each of its
principal executive officers whose total annual salary and bonus exceeded
$100,000: <TABLE> <CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
Other Restricted Securities All
Name and Annual Stock Underlying Other
Principal Bonus Compensation Award(s) Options/ Compensation
Position Year Salary ($) ($) ($) ($) SARs (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
William Weiss 1999 120,000 (1) 0 0 0 81,000 (2) N/A
Chief 1998 120,000 (1) 0 0 0 81,000 (2) N/A
Executive 1997 120,000 (1) 0 0 0 77,721 (2) N/A
Officer and
Treasurer
(3)
Sol 1998 50,000 (4) 0 0 0 20,250 (2) N/A
Rosenberg 1997 120,000 (4) 0 0 0 20,250 (2) N/A
President (4) 77,721 (2) N/A
Michael 1999 100,000 (1) 0 0 0 81,000 (2) N/A
Suleski 1998 100,000 (1) 0 0 0 81,000 (2) N/A
Vice 1997 100,000 (1) 0 0 0 77,721 (2) N/A
President
Engineering
</TABLE>
- -------------------
(1) The Company presently has no employment contract with William Weiss or
Michael Suleski.
(2) Granted pursuant to the Automatic Grant Provision in the 1995 Stock Option
Plan for services rendered as a member of the Board of Directors in the
prior year.
(3) As of February 29, 2000, $345,000 is owed to William Weiss for past salaries
accrued but not paid.
(4) Mr. Rosenberg's employment with the Company was terminated in April 1997.
Mr. Rosenberg resigned as a member of the Board of Directors in February
2000. The Company paid Mr. Rosenberg $120,000 as severance pay through 1998
and continued to pay on his behalf premiums on disability insurance for a
year after termination.
<PAGE>
Option/SAR Grants
Shown below is information regarding stock option grants
during the fiscal year ended December 31, 1999 to the Company's Chief Executive
Officer and each of its principal executive officers: <TABLE> <CAPTION>
Option/SAR Grants in Last Fiscal Year
Number of
Securities % of Total
Underlying Options/
Options/ SARs Granted
SARs to Employees Exercise Expiration
Name Granted (#) in 1999 Price Date
---- ----------- ------- ----- ----
<S> <C> <C> <C> <C>
William Weiss 81,000(1) 44.45% $0.03 3/1/2010
Chief Executive
Officer
Sol Rosenberg 20,250(1) 11.10% $0.03 3/1/2010
President (2)
Michael Suleski 81,000(1) 44.45% $0.03 3/1/2010
Vice President
Engineering
</TABLE>
----------------------
(1) Granted pursuant to the Automatic Grant Provision in the 1995 Stock
Option Plan.
(2) Mr. Rosenberg's employment with the Company was terminated in April
1997. Mr. Rosenberg resigned as a member of the Board of Directors in
February 2000.
<PAGE>
Stock Option and SAR Exercises
Shown below is information regarding options/SARs that were
exercised during fiscal year 1999 by the Company's Chief Executive Officer and
each of its principal executive officers and the value of unexercised
options/SARs:
Aggregated Option/SAR Exercises in
Fiscal Year 1999 and Fiscal Year End Option/SAR Values
Unexercised Options
Shares Acquired at Fiscal Year end
On Value Exercisable/
Name Exercise (#) Realized ($) Unexercisable (#)
---- ------------ -----------------
William Weiss 0 0 289,721/0
Sol Rosenberg (2) 0 0 168,221/0
Michael Suleski 0 0 279,129/0
- ----------------------
(1) The Company does not have a stock appreciation rights ("SAR") plan and
does not have any SARs outstanding.
(2) Mr. Rosenberg's employment with the Company was terminated in April 1997.
Mr. Rosenberg resigned as a member of the Board of Directors in February
2000.
The Company presently has no employment contracts with William Weiss or
Michael Suleski.
D. Michael Bridges, President of the Company, entered into an
employment agreement with the Company which became effective as of January 1,
2000 and terminates on December 31, 2003, subject to automatic renewal for
successive one year periods. Pursuant to the employment agreement, Mr. Bridges
is entitled to annual compensation equal to $107,800, which amount may be
increased by the Company from time to time. The employment agreement also
provides that (i) the Company will grant stock options to Mr. Bridges to
purchase 400,000 shares of Common Stock at an exercise price not to exceed $.09
per share; and (ii) Mr. Bridges may terminate the employment agreement upon 90
days prior written notice and if a transfer of control of the Company occurs
within 6 months of any termination by Mr. Bridges, he will be entitled to his
base salary, unused vacation and benefits for the remainder of the term of the
agreement plus the difference between the value of shares of Common Stock held
by him on the date of his termination and the value of such shares after
transfer of control.
<PAGE>
The agreement also provides for indemnification of Mr. Bridges for certain
liabilities in connection with his employment with the Company. In the event Mr.
Bridges' employment is terminated (i) without cause, he will entitled to a
severance payment equal to six months base salary at the then current rate or
(ii) as a result of a merger, consolidation, asset sale or other transaction
involving the sale or transfer of all or substantially all of the business or
the assets of the Company, he will be entitled to his base salary, unused
vacation and other benefits for the remainder of the term. The employment
agreement also contains provisions which restrict Mr. Bridges from competing
with the Company during the term of the employment agreement.
The Company does not have any pension, profit sharing, or
bonus plan except that it has established a 1993 Stock Option Plan and a 1995
Stock Option Plan, each of which is described below.
1993 Stock Option Plan
In March 1993, the Company adopted its 1993 Stock Option Plan
(the "1993 Option Plan") covering 68,912 shares of Common Stock, pursuant to
which employees (other than directors) of the Company were eligible to receive
stock options. The 1993 Option Plan, which expires on February 1, 2003, is
administered by the Board of Directors. The selection of participants, allotment
of shares, determination of price and other conditions of the purchase of the
options were determined by the Board of Directors. Stock options granted under
the 1993 Option Plan are exercisable for a period of up to ten years from the
date of the grant. As of December 31, 1999, all of the options under the 1993
Option Plan had been granted. As such date, 48,729 options had expired, 20,183
options were outstanding and none had been exercised.
Amended and Restated 1995 Stock Option Plan
In May 1995, the Company adopted its 1995 Stock Option Plan,
which was amended in 1996, covering 1,000,000 shares of Common Stock, pursuant
to which officers, directors and employees of the Company and certain other
persons conferring benefit upon the Company would be eligible to receive stock
options. The 1995 Stock Option Plan is described herein under the caption
"Proposal to Amend the Company's 1995 Stock Option Plan." As of December 31,
1999, options to acquire 1,273,022 shares of Common Stock had been granted under
the 1995 Stock Option Plan. At such date, 215,351 options had expired, 95,508
options had been exercised and 840,663 options were outstanding.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 24, 2000 (except
as otherwise set forth in the footnotes), the number of shares of Common Stock
beneficially owned by each director, by the directors and executive officers of
the Company as a group and by each holder of at least five percent (5%) of
Common Stock known to the Company and the respective percentage ownership of the
outstanding Common Stock held by each such holder and group:
Name and Address of Beneficial Owner Percent of
Number of Shares (1) Class (%)
William Weiss (2) (3) 644,304 7.58
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604
D. Michael Bridges (4) 410,500 4.81
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604
Michael Suleski (2) (5) 396,344 4.67
PaperClip Software, Inc.
611 Route 46 West
Hasbrouck Heights, NJ 07604
James W. Giddens, solely in his 347,800 4.16
capacity as trustee for the
liquidation of the business of A.R.
Baron & Co., Inc. (6)
All officers and directors as a group 1,278,248 18.90
(2 persons)
- --------------------------
(1) Unless otherwise indicated below, all shares are owned beneficially and of
record.
(2) William Weiss and Michael Suleski are founders of the Company. (3) Includes
(a) 924 shares of Common Stock issuable upon the exercise of 924
warrants obtained in a private placement, (b) 370,921 shares currently
exercisable pursuant to stock options issued under the 1995 Stock Option
Plan and (c) 9,000 shares issuable upon the exercise of 9,000 Class A Common
Stock Purchase Warrants of the Company.
(4) Includes 409,000 shares of Common Stock issuable upon exercise of stock
options issued pursuant to the 1995 Stock Option Plan.
<PAGE>
(5) Includes 15,408 shares of Common Stock issuable upon the exercise of
options currently exercisable pursuant to the 1993 Option Plan and
344,921 shares issuable upon exercise of options currently exercisable
pursuant to the 1995 Stock Option Plan.
(6) Includes 247,800 shares of Common Stock underlying currently exercisable
Class A Common Stock Purchase Warrants of the Company. The information
set forth in the table and the preceding sentence with respect to James
W. Giddens, as trustee, was obtained from Amendment No. 2 to a Statement
on Schedule 13D, dated April 6, 2000, filed with the Securities and
Exchange Commission.
II.
PROPOSED AMENDMENTS TO THE COMPANY'S CERTIFICATE
OF INCORPORATION AUTHORIZING THE ISSUANCE OF 10,000,000 SHARES
OF UNDESIGNATED PREFERRED STOCK
Article Fourth of the Company's Certificate of Incorporation
currently authorizes the Company to issue 30,000,000 shares of Common Stock. The
Board of Directors of the Company has unanimously adopted a resolution declaring
it advisable to amend the Company's Certificate of Incorporation, as amended, to
authorize the issuance of 10,000,000 shares of an undesignated preferred stock
(the "Preferred Stock"), subject to shareholder approval. The text of the
proposed amendment to the Certificate of Incorporation, as amended, shall read
as follows:
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 40,000,000 shares,
consisting of (i) 30,000,000 shares of common stock, $.01 par value per
share, and (ii) 10,000,000 shares of preferred stock, $.01 par value
per share.
FIFTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of Article FOURTH, to provide for
the issuance from time to time of the shares of Preferred Stock in one
or more series, and by filing a certificate pursuant to the applicable
law of the State of Delaware, to establish from time to time the number
of shares to be included in a series, and to fix the designation,
powers, preferences and rights of the shares of such series, which may
be different from the designations, powers, preferences and rights of
shares of any other series, and the qualifications, limitations or
restrictions thereof.
The authority of the Board of Directors with respect to such
series shall include, but not be limited to, determination of the
following:
a. The number of shares constituting such series and the
distinctive designation of such series;
<PAGE>
b. The dividend rate on the shares of such series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of such
series;
c. Whether such series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such voting
rights;
d. Whether such series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
e. Whether or not the shares of such series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or date upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
f. Whether such series shall have a sinking fund for the
redemption or purchase of shares of such series, and, if so, the terms and
amount of such sinking fund;
g. The rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of such series; and
h. Any other relative rights, preferences and limitations of
such series.
Dividends on outstanding shares of Preferred Stock shall be
paid or declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the shares of common stock with respect to
the same dividend period.
If upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the assets available for distribution to
holders of shares of Preferred Stock of all series shall be insufficient to pay
such holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
<PAGE>
Many publicly held companies have charters which provide for
undesignated preferred stock. The Board of Directors believes it advisable to
authorize such a class of preferred stock to have such shares available, among
other things, for issuance in connection with financing alternatives,
acquisitions and general corporate purposes, including public or private
offerings of shares for cash.
The Company is currently conducting preliminary discussions
with Access Solutions International, Inc. ("Access") regarding exchanging all
but $300,000 of the approximately $3.0 million owed to Access by the Company for
equity of the Company, which may be in the form of a new series of Preferred
Stock of the Company, and the resolution of other potential disputes between the
Company and Access. The above described transaction is subject to the
negotiation and execution of definitive documents between Access and the Company
and there can be no assurance that the Company will be successful in resolving
any potential disputes with Access.
Except as described above, the Board of Directors has made no
determination with respect to the issuance of any shares of Preferred Stock and
has no present commitment, arrangement or plan which would require the issuance
of such shares of Preferred Stock in connection with an equity offering, merger,
acquisition or otherwise.
The term "undesignated preferred stock" refers to stock for
which the board of directors of a corporation may fix or change the terms,
including without limitation: (i) the division of such shares into series; (ii)
the dividend or distribution rate; (iii) the dates of payment of dividends or
distributions and the dates from which they are cumulative; (iv) liquidation
price; (v) redemption rights and price; (vi) sinking fund requirements; (vii)
conversion rights; (viii) restrictions on the issuance of additional shares of
any class or series; (ix) preferences; (x) voting rights; and (xi) other
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof.
As a result, the Board of Directors will, in the event of the
approval of this proposal by the shareholders, be entitled to authorize the
creation and issuance of up to 10,000,000 shares of Preferred Stock in one or
more series with such terms, limitations and restrictions as may be determined
in the Board of Director's sole discretion, with no further authorization by the
Company's shareholders (except as may be required by applicable laws, regulatory
authorities or the rules of any stock exchange on which the Company's securities
are then listed).
The holders of shares of Preferred Stock will have only such
voting rights as are granted by law and authorized by the Board of Directors
with respect to any series thereof. The Board of Directors of the Company will
have the right to establish the relative rights of the Preferred Stock in
respect of dividends and other distributions and in the event of the voluntary
<PAGE>
or involuntary liquidation, dissolution or winding up of the affairs of the
Company as compared with such rights applicable to the Common Stock and any
other series of Preferred Stock.
It is not possible to state the effect of the authorization of
the Preferred Stock upon the rights of holders of Common Stock until the Board
of Directors determines the terms relating to one or more series of Preferred
Stock. However, such effects might include without limitation: (i) the reduction
of amounts otherwise available for payment of dividends on Common Stock, to the
extent dividends are payable on any issued shares of Preferred Stock, (ii)
restrictions on dividends on Common Stock if dividends on Preferred Stock are in
arrears, (iii) dilution of the voting power of the Common Stock and dilution of
net income and net tangible book value per share of Common Stock as a result of
any such issuance, depending on the number of shares issued and the purpose,
terms and conditions of the issuance, and (iv) the holders of Common Stock not
being entitled to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference granted to shares of Preferred Stock.
Although the Company has no present commitment, arrangement or
plan for issuance of the Preferred Stock except as described above, the
authorized but unissued shares of such Preferred Stock could be used to make a
takeover or change in control in the Company more difficult. Under certain
circumstances, rights granted upon issuance of shares of the Preferred Stock
could be used to create voting impediments or to discourage third parties
seeking to effect a takeover or otherwise gain control of the Company. The
issuance of Preferred Stock could have the effect of delaying, preventing or
influencing a change in control of the Company and could make more difficult the
removal of the present management. The issuance of Preferred Stock, depending on
the terms of such stock and the circumstances surrounding its issuance, could
have the effect of blocking a takeover of the Company and thereby depriving the
present shareholders of a premium price for their shares.
The affirmative vote of a majority of the outstanding shares
entitled to vote thereon, by proxy or in person, is required to approve the
amendments to the Certificate of Incorporation.
The Board of Directors believes that this type of stock is an
important tool that will enhance the Board of Directors' ability to act promptly
and efficiently in the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION AS SET FORTH ABOVE, AND YOUR
PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
<PAGE>
III.
PROPOSAL TO AMEND THE COMPANY'S
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
The 1995 Stock Option Plan, approved by shareholders of the
Company in May 1995 and amended and restated in August 1996, provides for
incentive and non-qualified stock options to purchase Common Stock to be issued
to key employees, directors, former directors, consultants and other persons who
have conferred substantial benefit upon the Company, in order to attract and
retain such key personnel and executives with the ability to achieve the
corporate objectives necessary to increase shareholder value. Such incentives
encourage the holder of stock options to manage the Company's business in the
best interests of shareholders by creating an identity of interest with the
shareholders.
The Board of Directors unanimously approved the following
amendments, subject to shareholders approval, to the 1995 Stock Option Plan: (i)
to increase the number of shares of Common Stock which may be granted under the
Plan from 1,000,000 to 4,000,000; (ii) to remove the Automatic Grant Provision
and permit the Committee to grant stock options to directors of the Company
pursuant to the terms of the 1995 Stock Option Plan; and (iii) to limit the
amount of shares of Common Stock underlying stock options that may be granted to
participants of the 1995 Stock Option Plan to 500,000 per year (collectively,
the "Proposed Plan Amendments"). The Board of Directors also unanimously
approved technical amendments to adopt certain amendments to Rule 16b-3 of the
Securities Act of 1933, as amended, and to permit the transfer of options
granted under the 1995 Stock Option Plan under certain circumstances (together
with the "Proposed Plan Amendments", the "Plan Amendments"). The summary of the
Plan Amendments and material terms of the 1995 Stock Option Plan, as amended,
which are set forth below, should be read in conjunction with, and are qualified
in their entirety by, reference to the complete text of the Amended and Restated
1995 Stock Option Plan, which is attached as Appendix A hereto.
Stock Options
Currently, the 1995 Stock Option Plan provides that the
aggregate number of shares of Common Stock for which options may be granted
thereunder is 1,000,000 shares. The Proposed Plan Amendments would increase the
number of shares which may be granted under the 1995 Stock Option Plan to
4,000,000 shares of Common Stock, and specify that the maximum number of shares
underlying stock options which may be granted to any person under the 1995 Stock
Option Plan is 500,000 shares per year.
<PAGE>
The increased number of shares of Common Stock would
constitute approximately 33% of the outstanding shares of Common Stock, on a
fully diluted basis. The Board of Directors believes that in light of the
limited number of shares of Common Stock which the Company has available for new
awards under the 1995 Stock Option Plan, the Plan Amendments will assist the
Company in attracting, retaining and motivating its key personnel and executives
by providing for the increased proprietary interest of such employees in the
Company.
Administration
The 1995 Stock Option Plan provides that it shall be
administered by a committee (the "Committee") consisting of either the full
Board of Directors or at least two directors, each of whom is an "outside
director" as that term is defined for purposes of Section 162(m) of the Code.
Until there are members of the Board of Directors who qualify as "outside
directors," the full Board of Directors will administer the 1995 Stock Option
Plan.
The Committee has the full power and authority, subject to the
provisions of the 1995 Stock Option Plan, to designate participants, grant
options and determine the terms of all options, other than options granted to
Employee Directors and Non-Employee Directors pursuant to the Automatic Grant
Provision. The Committee is also required to make adjustments with respect to
options granted under the 1995 Stock Option Plan in order to prevent unfair
dilution or enlargement of the rights of any holder. The 1995 Stock Option Plan
currently provides that members of the Board of Directors are not eligible to
receive options under the 1995 Stock Option Plan other than pursuant to the
Automatic Grant Provision for Employee Directors and Non-Employee Directors
described below. However, the Board of Directors has proposed that the Automatic
Grant Provision be removed and that the Committee may grant options to directors
of the Company pursuant to the other terms of the 1995 Stock Option Plan.
See"-Option Grants to Employee Directors and Non-Employee Directors."
Stock Options
The terms of specific options granted under the 1995 Stock
Option Plan are determined by the Committee, other than in the case of awards to
Employee Directors and Non-Employee Directors under the Automatic Grant
Provision. The per share exercise price of the Common Stock subject to an option
shall not be less than 100% of the fair market value of the Common Stock on the
date of grant, unless, with respect to an option which is not an incentive stock
option, the Board of Directors approves a lower percentage with respect to such
option. However, in the case of an incentive stock option granted to a holder of
shares representing at least 10% of the total combined voting power of all
classes of stock of the Company or the parent or a subsidiary thereof (a
"Substantial Shareholder"), the per share exercise price shall not be less than
110% of the fair market value of the Common Stock on the date of grant. The term
of each option shall be determined by the Committee, but no option shall be
exercisable after ten years have elapsed from
<PAGE>
the date upon which the option is granted. However, if an incentive stock option
is granted to a Substantial Shareholder, the term of such option shall not
exceed five years.
Upon the exercise of an option (including option grants to
Employee Directors and Non-Employee Directors under the Automatic Grant
Provision), the option holder shall pay the Company the exercise price plus the
amount of the required federal and state withholding taxes, if any. The 1995
Stock Option Plan allows an optionee, subject to approval of the Committee, to
pay the exercise price in shares of Common Stock, only if such shares of Common
Stock have been held by the optionee for the requisite period necessary to avoid
a charge to the Company's earnings for financial reporting purposes (and
otherwise meeting any other requirements to avoid such charge). The 1995 Stock
Option Plan also allows an optionee, subject to approval of the Committee, to
pay the exercise price pursuant to a broker-assisted cashless-exercise program
established by the Committee; provided in each case that such methods avoid
"short-swing" profits to the optionee under Section 16(b) of the Exchange Act.
Withholding taxes due upon such exercise may also be satisfied pursuant to such
broker-assisted cashless-exercise program. The 1995 Stock Option Plan limits the
availability of the alternative to pay the exercise price pursuant to a
broker-assisted cashless-exercise program so that such alternative is not
available with respect to incentive stock options outstanding as of the
Company's last Annual Meeting of Shareholders.
The Plan Amendments also include certain other technical
amendments to the 1995 Stock Option Plan, including, but not limited to
amendments to adopt certain amendments to Rule 16b-3 of the Securities Exchange
Act of 1934, as amended, and to permit limited transferability of stock options
primarily for estate planning purposes.
The market value of the Common Stock underlying options
granted, or to be granted, under the 1995 Stock Option Plan as of May 1, 2000
was $2,500,000.
Option Grants to Employee Directors and Non-Employee Directors
The Proposed Plan Amendments also remove from the 1995 Stock
Option Plan the Automatic Grant Provision and allow the Committee to grant stock
options to directors in their sole discretion pursuant to the other terms of the
1995 Stock Option Plan. The 1995 Stock Option Plan currently provides that each
(i) Employee Director who is a member of the Board of Directors on December 31
of a year during the term of the 1995 Stock Option Plan shall be eligible to
receive a non-qualified stock option to purchase one percent (1%) of the
outstanding Common Stock of the Company on the date of grant which shall be on
the first business day of the following year and (ii) Non-Employee Director who
is a member of the Board of Directors on December 31 of a year during the term
of the 1995 Stock Option Plan shall be eligible to receive a non-qualified stock
option to purchase one-fourth of one percent (1/4%) of the outstanding Common
Stock of the Company on the date of grant which shall be on the first business
day of the following year. The
<PAGE>
exercise price of the shares of Common Stock subject to options granted to each
such director shall be 100% of the fair market value of the shares of Common
Stock on the date of grant.
Federal Income Tax Consequences
Set forth below is a description of the federal income tax
consequences, under the Code, of the grant and exercise of the benefits awarded
under the 1995 Stock Option Plan, as amended by the Plan Amendments.
There will be no federal income tax consequences to employees,
directors, consultants or the Company on the grant of a non-qualified stock
option. On the exercise of a non-qualified stock option, the employee,
consultant or director generally will have taxable ordinary income equal to the
excess of the fair market value of the shares of Common Stock received on the
exercise date over the option price of such shares. The Company will be entitled
to a tax deduction in an amount equal to such excess, provided the Company
complies with applicable withholding and/or reporting requirements. Any ordinary
income realized by an employee, consultant or director upon exercise of a
non-qualified stock option will increase such person's tax basis in the Common
Stock thereby acquired. Upon the sale of Common Stock acquired by exercise of a
non-qualified stock option, employees, consultants and directors will realize
long-term or short-term capital gain or loss depending upon their holding period
for such stock. An employee, consultant or director who surrenders shares of
Common Stock in payment of the exercise price of a non-qualified stock option
will not recognize gain or loss on such person's surrender of such shares, but
will recognize ordinary income on the exercise of the non-qualified stock option
as described above. Of the shares received in such an exchange, that number of
shares equal to the number of shares surrendered will have the same tax basis
and capital gains holding period as the shares surrendered. The balance of the
shares received will have a tax basis equal to their fair market value on the
date of exercise, and the capital gains holding period will begin on the date of
exercise. If an optionee transfers a non-qualified stock option, the optionee
still will be subject to tax in the manner described above when the transferee
exercises the option.
With respect to incentive stock options, no compensation
income is recognized by a participant, and no deduction is available to the
Company upon either the grant or exercise of an incentive stock option. However,
the difference between the exercise price of an incentive stock option and the
market price of the Common Stock acquired on the exercise date will be included
in alternative minimum taxable income of a participant for the purposes of the
"alternative minimum tax." Generally, if an optionee holds the shares acquired
upon exercise of incentive stock options until the later of (i) two years from
the grant of the incentive stock options and (ii) one year from the date of
acquisition of the shares upon exercise of incentive stock options, any gain
recognized by the participant on a sale of such shares will be treated as
capital gain. The gain recognized upon the sale is the difference between the
option price and the sale price of the Common Stock. The net federal income tax
effect on the holder of incentive stock options is to
<PAGE>
defer (except for alternative minimum tax purposes), until the shares are sold,
taxation of any increase in the value of the Common Stock from the time of grant
to the time of exercise. If the optionee sells the shares prior to the
expiration of the holding period set forth above, the optionee will realize
ordinary compensation income generally in the amount equal to the difference
between the exercise price and the fair market value on the date of exercise.
The compensation income will be added to the optionee's basis for purposes of
determining the gain on the sale of the shares. Such gain will be capital gain
if the shares are held as capital assets. If the application of the
above-described rule would result in a loss to the optionee, the compensation
income required to be recognized thereby would be limited to the excess, if any,
of the amount realized on the sale over the basis of the shares sold. If an
optionee disposes of shares obtained upon exercise of an incentive stock option
prior to the expiration of the holding period described above, the Company will
be entitled to a deduction in the amount of the compensation income that the
optionee recognizes as a result of the disposition, provided that it satisfies
certain reporting obligations.
If the Company delivers cash, in lieu of fractional shares,
the employee will recognize ordinary income equal to the cash paid and the fair
market value of any shares issued as of the date of exercise. An amount equal to
any such ordinary income will be deductible by the Company, provided it complies
with applicable withholding requirements.
Section 162(m) of the Code generally limits the annual
deduction available to a publicly held corporation for applicable remuneration
paid to the Chief Executive Officer and certain other highly compensated
individuals to $1,000,000 per year. Regulations promulgated under Section 162(m)
of the Code provide that the compensation element of stock options issued with
an exercise price equal to the fair market value of Common Stock on the date of
grant pursuant to a stock option plan meeting certain requirements is not
subject to, or counted toward, the $1,000,000 limitation. Unless and until the
1995 Stock Option Plan is administered by a committee of the Board of Directors
comprised solely of two or more "outside directors," the compensation element of
stock options under the 1995 Stock Option Plan will not qualify for this
exception, and will be subject to the deduction limitations of Code Section
162(m). It is not anticipated that any employee will earn in excess of
$1,000,000 before such time. Accordingly, the options granted under the 1995
Stock Option Plan will be exempt from the provisions of Code Section 162(m) so
long as they are not "materially modified."
The 1995 Stock Option Plan is not subject to any provisions of
the Employee Retirement Income Security Act of 1974 and is not required to be
qualified under Section 401(a) of the Code.
The affirmative vote of a majority of the shares present at
the meeting entitled to vote thereon, by proxy or in person, is required to
approve the Proposed Plan Amendments.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND AND RATIFY THE COMPANY'S AMENDED AND RESTATED 1995 STOCK OPTION PLAN, AS
SET FORTH ABOVE, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
AUDITORS
Independent Accountant
On March 1, 2000, the Company dismissed Arthur Andersen LLP
("Andersen") as the Company's independent public accountants. The decision to
dismiss was approved by the Board of Directors. The Board of Directors appointed
Sobel & Co., LLC ("Sobel") as the Company's independent public accountant for
the current fiscal year.
Andersen's report on the financial statements of the Company
for each of the previously audited financial statements for December 31, 1996
and 1995 did not contain any adverse opinion or disclaimer of opinion, and was
not qualified or modified as to uncertainty, audit scope or accounting
principle.
In connection with the audits by Andersen of the Company's
financial statements for 1996 and 1995, there were no disagreements with
Andersen on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Andersen, would have caused Andersen to make
reference to the subject matter of the disagreements in connection with its
audit report with respect to financial statements of the Company for 1996 and
1995. The term "disagreement" is utilized in accordance with Instruction 4 to
Item 304 of Regulation S-B.
Appointment of New Independent Accountant
On March 1, 2000, the Company selected Sobel & Co., LLC as the
Company's independent public accountants. The decision to change auditors was
approved by the Board of Directors.
A representative of Sobel is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if he or she
desires to do so. The representative will also be available to respond to
appropriate questions from any shareholder present at the meeting.
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Company for
inclusion in the 2000 Proxy Statement must be received by the Company not later
than February 7, 2000. Any such proposal should be sent to the Secretary of the
Company, 611 Route 46 West, Hasbrouck Heights, New Jersey 07604. Any such
proposal should provide the reason for it, the complete text of any resolution
and other specified matters, and must comply with Rule 14a-8 of Regulation 14A
of the proxy rules of the Securities and Exchange Commission.
OTHER MATTERS
Management is not aware of any other matter to be presented
for action at the meeting other than the proposals to (i) elect directors, (ii)
to approve amendments to the Certificate of Incorporation and (iii) to approve
the Proposed Plan Amendments to the 1995 Stock Option Plan as set forth in the
accompanying Notice of Annual Meeting and in this Proxy Statement, and
management does not intend to bring any other matter before the meeting.
However, if any other matter should be presented at the meeting, it is the
intention of the persons named in the accompanying proxy to vote said proxy in
accordance with their best judgment and in the best interests of the Company.
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's Annual report on Form 10-KSB for the
year ended December 31, 1999 has been included in this Proxy Statement, but
exclusive of certain exhibits filed therewith. These exhibits are available
without charge to shareholders of record on April 24, 2000 upon request to
Michael Suleski, Secretary, 611 Route 46 West, Hasbrouck Heights, New Jersey
07604.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael Suleski
Michael Suleski, Secretary
Hasbrouck Heights, New Jersey
May 3, 2000
<PAGE>
Appendix A
PAPERCLIP SOFTWARE, INC.
AMENDED AND RESTATED 1995 OPTION PLAN
June 2000
PAPERCLIP SOFTWARE, INC. hereby adopts an amended and restated
stock option plan upon and subject to the terms and provisions set forth below
for the benefit of certain of its key employees, directors, former directors,
consultants, and other persons who have conferred substantial benefit upon the
Company.
1. Definitions. The following terms shall have the meanings set forth
below whenever used in this instrument:
(1) The word "Board" shall mean the Board of Directors of the Company.
(2) The word "Code" shall mean the United States Internal Revenue Code of
1986, as amended from time to time (Title 26 of the United States
Code).
(3) The word "Committee" shall mean the Compensation Committee designated
by the Board to administer the Plan and consisting of either the full
Board or at least two directors, each of whom is an "outside
director" as that term is defined for purposes of Section 162(m) of
the Code. Until there are members of the Board who
<PAGE>
qualify as "outside directors," the Committee shall consist of the full
Board.
(4) The words "Common Stock" shall mean the common stock, $.01 par value
per share, of the Company.
(5) The word "Company" shall mean PaperClip Software, Inc., a Delaware
Corporation, and any successor thereto which shall maintain this
Plan.
(6) The words "Fair Market Value" shall have the meaning set forth in
Section 7(a) hereof.
(7) The words "Incentive Stock Option" shall mean any option which
qualifies as an incentive stock option under terms of Section 422 of
the Code or any successor provision thereto.
(8) The words "Key Employee" shall mean any person whose performance as an
employee of the Company or a Subsidiary is, in the judgment of
the Committee, important to the successful operation of the Company
or a Subsidiary.
(9) The words "Non-Qualified Stock Option" shall mean an option granted
under Section 7 of the Plan that is not an Incentive Stock Option.
(10) The word "Optionee" shall mean any Key Employee, director, former
director, or consultant or other person (who has conferred
<PAGE>
substantial benefit upon the Company), to whom a stock option has
been granted pursuant to this Plan.
(11) The word "Parent" shall mean any corporation which owns, directly or
indirectly, stock of the Company possessing at least 50% of the total
combined voting power of all classes of stock of the Company.
(12) The word "Plan" shall mean the PaperClip Software, Inc. Amended and
Restated 1995 Stock Option Plan, as set forth in this document, and as
it may be amended hereafter.
(13) The word "Subsidiary" shall mean any corporation in which the Company
owns, directly or indirectly, stock possessing at least 50% of the total
combined voting power of all classes of stock of such corporation.
(14) The words "Substantial Shareholder" shall mean any Optionee who owns
more than 10% of the total combined voting power of all classes of stock
of either the Company or any Parent or Subsidiary. Ownership shall be
determined in accordance with Section 424(d) of the Code and
lawful applicable regulations thereof.
2. Purpose of the Plan. The purpose of the Plan is to provide Key Employees,
directors, former directors, consultants, and other persons who have conferred
substantial benefit upon the Company, with greater incentive to serve and
promote the interests of the Company and its shareholders and/or to reward such
persons for extraordinary services rendered to the Company or on its behalf or
substantial benefit conferred upon it. Accordingly, the Company will, from time
to time during the
<PAGE>
effective period of the Plan, grant to such Key Employees, directors, former
directors, consultants, and other persons who have conferred substantial benefit
upon the Company, as may be selected to participate in the Plan, options to
purchase Common Stock on the terms and subject to the conditions set forth in
the Plan.
3. Effective Date of the Plan. The Plan became effective as of May 1, 1995,
subject to approval by holders of a majority of the outstanding shares of voting
capital stock of the Company, which was obtained in May 1995.
4. Administration of the Plan.
(a) The Plan shall be administered by the Committee. A majority of
the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved in
writing by all of the members, shall be acts of the Committee.
(b) Subject to the terms and conditions of the Plan and applicable
law, and in addition to the other authorizations granted to the Committee under
the Plan, the Committee shall have full and final authority in its absolute
discretion:
(1) to select the Key Employees, directors, former directors,
consultants, and other persons who have conferred substantial benefit
upon the Company, to whom options will be granted;
(2) to determine the number of shares of Common Stock subject to any
option;
(3) to determine the time when options will be granted;
(4) to determine the terms and conditions of any option;
<PAGE>
(5) to determine the time when each option may be exercised;
(6) to determine at the time of grant of an option whether and to what
extent such option is an Incentive Stock Option;
(7) to prescribe the form of the option
agreements governing the options which are granted under the Plan and
to set the provisions of such option agreements as the Committee may deem
necessary or desirable, provided such provisions are not contrary to
the terms and conditions of either the Plan or, where the option is an
Incentive Stock Option, Section 422 of the Code;
(8) to adopt, amend, and rescind such rules and regulations as, in the
Committee's opinion, may be advisable in the administration of the
Plan; and
(9) to construe, interpret and administer the Plan, the rules and
regulations and the instruments evidencing options granted under the
Plan and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) any decision made or action taken by the Committee in
connection with the administration, interpretation, and implementation of the
Plan and of its rules and regulations, shall, to the extent permitted by law, be
conclusive and binding upon all Optionees under the Plan and upon any person
claiming under or through such an Optionee. The Committee may employ attorneys,
consultants, accountants or other persons and the Committee, the Company and its
officers and the Board shall be entitled to rely upon the advice, opinions or
valuations of any such
<PAGE>
persons. Neither the Committee nor any of its members shall be liable for any
act taken in good faith by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member. The Committee may
delegate to officers or managers of the Company or any Subsidiary or to
unaffiliated service providers the authority, subject to such terms as the
Committee shall determine, to perform administrative functions and to perform
such other functions as the Committee may determine, to the extent permitted
under Rule 16b-3, Section 422 of the Code (if applicable) and other applicable
law.
5. Persons Eligible for Options. Subject to the restrictions herein contained,
options may be granted from time to time in the discretion of the Committee only
to such Key Employees, directors, former directors, consultants and other
persons who have conferred substantial benefit upon the Company, as designated
by the Committee, whose initiative and efforts, in the Committee's judgment,
have contributed or may be expected to contribute to the continued growth and
future success of the Company and/or its Subsidiaries. No option shall be
granted to any Key Employee during any period of time when such Key Employee is
on leave of absence. The Committee may grant more than one option to the same
Optionee.
6. Shares Subject to the Plan.
(a) Subject to the provisions of paragraph (b) of this Section 6, the
aggregate number of shares of Common Stock for which options may be
granted under the Plan shall be 4,000,000 shares of Common Stock (as
adjusted for a 2 for 1 stock split effective as of May 31, 1996),
each of which may be the subject of an Incentive Stock Option as the
Committee may determine in its sole discretion. Either treasury or
authorized and unissued shares of Common Stock, or both, in such
amounts, within the
<PAGE>
maximum limit of the Plan, as the Committee shall from time
to time determine, may be so issued. All shares of Common Stock
which are the subject of any lapsed, expired or terminated options
may be made available for reoffering under the Plan to any Optionee.
If an option granted under this Plan is exercised, any Common Stock
which is the subject thereof shall not thereafter be available for
reoffering under the Plan.
(b) In the event that subsequent to the date of adoption of the Plan by
the Board, the outstanding shares of Common Stock are, as a result of a
stock split, stock dividend, combination or exchange of shares,exchange
for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization or other such change, including
without limitation any transaction described in Section 424(a) of the
Code, increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company,
then (i) there shall automatically be substituted for each share of
Common Stock subject to an unexercised option granted under the Plan and
each share of Common Stock available for additional grants of options
under the Plan the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock shall be exchanged,
(ii) the option price per share of Common Stock or unit of securities shall
be increased or decreased proportionately so that the aggregate purchase
price for the securities subject to the option shall remain the same as
immediately prior to such event, and (iii) the Committee shall make
such other adjustments to the securities subject to options, the provisions
of the Plan, and
<PAGE>
option agreement as may be appropriate, equitable and in compliance
with the provisions of Section 424(a) of the Code to the extent
applicable and any such adjustment shall be final, binding and
conclusive as to each Optionee; provided, however, in each case, that
(y) with respect to Incentive Stock Options, no such adjustment shall
be authorized to the extent that such adjustment would cause the Plan
to violate Section 422 of the Code or any successor provision
thereto; and (z) any such adjustment shall provide for the
elimination of fractional shares.
7. Option Provisions. The Committee is hereby authorized to grant options to Key
Employees, directors, former directors, consultants and other persons who have
conferred substantial benefit upon the Company, as designated by the Committee,
upon the following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of the Plan, as
the Committee shall determine:
(a) Option Price.
The option price per share of Common Stock which is the
subject of an Incentive Stock Option shall be determined by
the Committee at the time of grant but shall not be less
than one hundred percent (100%) of the Fair Market Value
of a share of Common Stock on the date the option is granted;
provided, however, that if a Key Employee to whom an
Incentive Stock Option is granted is, at the time of the
grant, a Substantial Shareholder, the option price per
share of Common Stock shall be determined by the Committee
but shall not be less than one hundred ten percent (110%) of
the Fair Market Value of a share of Common Stock on the date
the option is granted. The option price per share of Common
Stock under each option granted pursuant to the Plan which
is not an
<PAGE>
Incentive Stock Option shall be determined by the Committee at
the time of grant but shall not be less than one hundred
percent (100%) of the Fair Market Value of a share of Common
Stock on the date the option is granted, unless the Board
shall have approved a lower percentage with respect to such
option. Such Fair Market Value shall be determined in
accordance with procedures to be established by the Committee
(the "Fair Market Value"). The day on which the Committee
approves the granting of an option shall be deemed for all
purposes hereunder the date on which the option is granted.
(b) Term of Option. The Committee shall determine when each option
is to expire, but no option shall be exercisable after ten
(10) years have elapsed from the date upon which the option is
granted; provided, however, that no Incentive Stock Option
granted to a person who is a Substantial Shareholder at the
time of the grant of such option shall be exercisable after
five (5) years have elapsed from the date upon which the
option is granted.
(c) Limitation on Exercise and Transfer of Option.
Except as otherwise provided in
paragraph (e) of this Section 7, only the Optionee
(personally) may exercise an option; provided, however, that,
under applicable law (and in the case of Incentive Stock
Options, to the extent permitted by Section 422 of the Code)
with respect to any option that is not an Incentive Stock
Option, a guardian or other legal representative who has been
duly appointed for such Optionee may exercise such option on
behalf of the Optionee. Subject to Section 422 of the Code, no
option granted hereunder, and no right under any such option,
shall be assignable,
<PAGE>
alienable, saleable or transferable otherwise than by will or
by the laws of descent and distribution; provided, however,
that, if so determined by the Committee, an Optionee may, in
the manner established by the Committee, designate a
beneficiary or beneficiaries to exercise the rights of the
Optionee, and to receive any property distributable, with
respect to any option upon the death of the Optionee; provided
further, however, that transfer of options other than
Incentive Stock Options shall be permitted (x) to the spouse
or any lineal ancestor or descendant of the Optionee or to any
trust, the sole beneficiaries of which are any one or all of
such Optionee's spouse or any lineal ancestor or descendant of
such grantee and (y) in such other circumstances as the
Committee may approve. No option granted hereunder, and no
right under any such option, may be pledged or hypothecated,
nor shall any such option be subject to execution, attachment
or similar process and any purported pledge, hypothecation,
execution or attachment thereof shall be void and
unenforceable against the Company or any Parent or Subsidiary.
(d) Conditions Governing Exercise of Option.
The Committee may, in its absolute
discretion, either require that, prior to the exercise of any
option granted hereunder, the Optionee shall have been an
employee for a specified period of time after the date such
option was granted, or make any option granted hereunder
immediately exercisable. Each option shall be subject to such
additional restrictions or conditions with respect to the time
and method of exercise as shall be prescribed by the
Committee. Upon satisfaction of any such conditions, the
option may be exercised in whole or in part at any time during
the option period. Options shall be
<PAGE>
exercised by the Optionee giving written notice to the Company
of the Optionee's exercise of the option accompanied by full
payment of the purchase price either in cash or, with the
consent of the Committee, in whole or in part (i) in shares of
Common Stock held by the Optionee for the requisite period
necessary to avoid a charge to the Company's earnings for
financial reporting purposes (and otherwise meeting any other
requirements to avoid such charge) having a Fair Market Value
on the date the option is exercised equal to that portion of
the purchase price for which payment in cash is not made or
(ii) pursuant to a broker-assisted cashless-exercise program
established by the Committee; provided in each case that such
methods avoid "short-swing" profits to the Optionee under
Section 16(b) of the Exchange Act. Notwithstanding any of the
foregoing, the alternative referenced in (ii) shall not be
available with respect to Incentive Stock Options outstanding
as of the date of stockholder approval of the Plan. A
dissolution or liquidation of the Company or, unless the
surviving corporation assumes said options, a merger or
consolidation in which the Company is not the surviving
corporation, shall cause each outstanding option to terminate,
provided that during the option term each Optionee shall have
the right during the period prescribed in the option agreement
prior to such dissolution or liquidation, or merger or
consolidation in which the Company is not the surviving
corporation, to exercise such Optionee's option in whole or in
part.
(e) Termination of Employment, Etc.
If an Optionee who is a Key Employee ceases to be an employee
of the Company, and all Subsidiaries, his option shall,
<PAGE>
unless otherwise previously provided in the Plan or in the
option agreement between the Optionee and the Company,
terminate on the date which is three (3) months after such
date to exercise all or any part of the option. An Optionee's
employment shall not be deemed to have terminated while such
Optionee is on a military, sick or other bona fide approved
leave of absence from the Company or a Subsidiary as such a
leave of absence is described in Section 1.421-7(h) of the
Federal Income Tax Regulations or any lawful successor
regulations thereto. If the stock option is an Incentive Stock
Option, no option agreement shall:
(1) permit any Optionee to exercise any
Incentive Stock Option more than
three (3) months after the date the
Optionee ceased to be employed by
the Company or any Subsidiary if the
reason for the Optionee's cessation
of employment was other than his
death or his disability (as such
term is defined by Section 22(e)(3)
of the Code); or
(2) permit any Optionee to exercise any
Incentive Stock Option more than
twelve (l2) months after the date
the Optionee ceased to be employed
by the Company or any Subsidiary if
the reason for the Optionee's
cessation of employment was the
Optionee's disability (as such term
is defined by Section 22(e)(3) of
the Code); or
(3) permit any person to exercise any
Incentive Stock Option more than
twelve (l2) months after the date
the optionee ceased to be employed
by the Company or any Subsidiary if
either (A) the reason for the
<PAGE>
Optionee's cessation of employment
was his death or (B) the Optionee
died within three (3) months after
ceasing to be employed by the
Company or any Subsidiary.
If any option is, by the terms of the option
agreement related to such option, exercisable
following the Optionee's death, then such option
shall be exercisable by the Optionee's estate, or the
person designated in the Optionee's Last Will and
Testament, or the person to whom the option was
transferred by the applicable laws of descent and
distribution.
(f) Limitations on Grant of Incentive Stock Options.
Incentive Stock Options granted
pursuant to the Plan shall only be granted to employees of the
Company. During the calendar year in which any Incentive Stock
Option granted under this Plan, or any other plan of the
Company or a Parent or Subsidiary, first becomes exercisable,
the aggregate Fair Market Value of the shares of Common Stock
which are subject to such Incentive Stock Option (determined
as of the date the Incentive Stock Option was granted) shall
not exceed the sum of One Hundred Thousand dollars ($100,000).
Options which are not designated as Incentive Stock Options
shall not be subject to the limitations described in the
preceding sentence and shall not be counted when applying such
limitation.
(g) Prohibition of Alternative Options. It is intended that
Optionees who are Key Employees may be granted, simultaneously
or from time to time, Incentive Stock Options or other stock
options, but no Key Employees shall be granted alternative
rights in Incentive Stock Options and other stock options so
as to prevent
<PAGE>
options granted as Incentive Stock Options from qualifying as
such within the meaning of Section 422 of the Code.
(h) Annual Limitation of Options to Plan Participants. The maximum
amount of shares of Common Stock underlying options which may
be granted to any Plan participant in any calendar year shall
not exceed 500,000.
8. Amendments to the Plan.
(a) Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an option agreement or in the
Plan, the Committee is authorized to interpret the Plan and
from time to time adopt any rules and regulations for carrying
out the Plan that it may deem advisable. Subject to the
approval of the Board, the Committee may at any time amend,
modify, suspend or terminate the Plan. In no event, however,
without the approval of the Company's shareholders, shall any
action of the Committee or the Board result in:
(1) amending, modifying or altering the
eligibility requirements provided
in Section 5 hereof; or
(2) increasing or decreasing, except as
provided in Section 6 hereof, the
maximum number of shares of Common
Stock for which options may be
granted; or
(3) decreasing the minimum option
price per share of Common Stock
at which options may be granted
under the Plan, as provided in
Section 7(a) hereof; or
<PAGE>
(4) extending either the maximum term
during which an option is
exercisable as provided in Section
7(b) hereof or the date on which the
Plan shall be terminated as provided
in Section 13 hereof; or
(5) changing the requirements relating
to the Committee; or
(6) making any other change which
would cause any option granted
under the Plan as an Incentive
Stock Option not to qualify as an
Incentive Stock Option; or
(7) amending, modifying or altering
the plan to the extent that such
action would require approval of
the Company's shareholders under
Section 162(m) of the Code;
except as necessary to conform the Plan and the
option agreements to changes in the Code or other
governing law. However, no such amendment,
modification or alteration shall, without the consent
of the option holders, adversely affect their rights
and obligations under their outstanding options.
(b) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any option granted under the Plan in the manner and
to the extent it shall deem desirable to carry the Plan into effect.
9. Election to Have Shares Withheld. Except with respect to an option which at
the time of grant was intended to be an Incentive Stock Option, in combination
with or in substitution for cash withholding or any other legal method of
satisfying federal and state withholding tax liability, an Optionee may elect to
participate in a broker-assisted cashless-exercise program and have the
<PAGE>
proceeds of the shares of Common Stock held by the Optionee sold pursuant to
such broker-assisted cashless-exercise program withheld by the Company in order
to satisfy federal and state withholding tax liability (a "share withholding
election"); provided, (i) the Committee shall not have revoked its advance
approval of the option holder's share withholding election; and (ii) the
election to satisfy such tax liability through such broker-assisted
cashless-exercise program is made on or prior to the date on which the amount of
withholding tax liability is determined.
10. Investment Representation, Approvals and Listing. The Committee may
condition its grant of any option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:
"Optionee agrees that any shares of Common Stock of
PaperClip Software, Inc. (the "Company") which Optionee may
acquire by virtue of the exercise of this option shall be
acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this
restriction shall become inoperative in the event the
underlying shares of Common Stock of the Company which are
subject to this option shall be registered under the
Securities Act of 1933, as amended, or in the event there is
presented to the Company an opinion of counsel satisfactory to
counsel for the Company to the effect that the offer or sale
of the shares of Common Stock of the Company which are subject
to this option may lawfully be made without registration under
the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificates for shares of Common
Stock upon the exercise of an option granted under the Plan prior to (i)
obtaining any approval from any governmental agency which the Committee shall,
in its sole discretion, determine to be necessary or advisable, (ii) the
admission of such shares to listing on any national securities exchange on which
the shares of Common Stock may be listed, (iii) completion of any registration
or other
<PAGE>
qualification of the shares of Common Stock under any state or federal law or
ruling or regulations of any governmental body which the Committee shall, in its
sole discretion, determine to be necessary or advisable, or the determination by
the Committee, in its sole discretion, that any registration or other
qualification of the shares of Common Stock is not necessary or advisable, and
(iv) obtaining an investment representation from the Optionee in the form set
forth above or in such other form as the Committee, in its sole discretion,
shall determine to be adequate.
11. General Purposes.
(a) No Right to Awards or Equal Terms. No Key Employee,
consultant, former director or other person who has conferred
substantial benefit upon the Company shall have any claim to
be granted an option under the Plan. The form and substance of
option agreements, whether granted at the same or different
times, need not be identical.
(b) No Limit on Other Plans. Nothing contained in the Plan shall
prevent the Company or any Parent or Subsidiary from adopting
or continuing in effect other or additional compensation
arrangements and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) No Right to be Employed, Etc. Nothing in the Plan or in any
option agreement shall confer upon any Optionee any right to
continue in the employ of the Company or any Subsidiary, or to
serve as a member of the Board, or to be entitled to receive
any remuneration or benefits not set forth in the Plan or such
option agreement, or to interfere with or limit either the
right of the Company or any Subsidiary to terminate the
employment of such Optionee at any time or the right
<PAGE>
of the shareholders of the Company to remove him as a member
of the Board with or without cause.
(d) Optionee Does Not Have Rights of Shareholder. Nothing
contained in the Plan or in any option agreement shall be
construed as entitling any Optionee to any rights of a
shareholder as a result of the grant of an option until such
time as shares of Common Stock are actually issued to such
Optionee pursuant to the exercise of an option.
(e) Successors in Interest. The Plan shall be binding upon the
successors and assigns of the Company.
(f) No Liability Upon Distribution of Shares. The liability of the
Company under the Plan and any distribution of shares or
Common Stock made hereunder is limited to the obligations set
forth herein with respect to such distribution and no term or
provision of the Plan shall be construed to impose any
liability on the Company or the Committee in favor of any
person with respect to any loss, cost or expense which the
person may incur in connection with or arising out of any
transaction in connection with the Plan.
(g) Use of Proceeds. The cash proceeds received by the Company
from the issuance of shares of Common Stock pursuant to the
Plan will be used for general corporate purposes.
(h) Expenses. The expenses of administering the Plan shall be
borne by the Company.
<PAGE>
(i) Captions. The captions and section numbers appearing in the
Plan are inserted only as a matter of convenience. They do not
define, limit, construe or describe the scope or intent of the
provisions of the Plan.
(j) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases
as the context may require.
(k) Gender. The use of the feminine, masculine or neuter pronoun
shall not be restrictive as to gender and shall be interpreted
in all cases as the context may require.
(l) No Fractional Shares. No fractional shares of Common Stock
shall be issued or delivered pursuant to the Plan or any
option granted under the Plan, and the Committee shall
determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional shares
of Common Stock or whether such fractional shares of Common
Stock or any rights thereto shall be canceled, terminated, or
otherwise eliminated.
(m) Severability. If any provision of the Plan or any option
granted under the Plan is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction, or
would disqualify the Plan or any option granted under the Plan
under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee,
materially altering the intent of the Plan, such provision
shall be deemed void and stricken and the remainder of the
Plan and any such option shall remain in full force and
effect.
<PAGE>
12. Deductibility of Compensation under the Plan. Prior to the termination of
the "reliance period" set forth in Treasury Regulation Section 1.162-27(f)(2),
the Committee shall determine whether and what actions to take to ensure that
options granted under the Plan after the expiration of the "reliance period"
constitute "performance-based compensation" within the meaning of Section 162(m)
of the Code. After the expiration of the "reliance period," provided that the
Committee consists solely of "outside directors," the Company believes that
options under the Plan will be exempt from the limitations of Section 162(m) of
the Code as "performance-based" compensation.
13. Termination of the Plan. The Plan shall terminate upon the earlier of (i)
the date on which all shares of Common Stock available for issuance under the
Plan shall have been issued, (ii) the termination of the Plan by the Board, or
(iii) on March 1, 2005, and thereafter no options shall be granted under the
Plan. All options outstanding at the time of termination of the Plan shall
continue in full force and effect according to the terms of the option
agreements governing such options and the terms and conditions of the Plan, and
unless otherwise provided in the Plan or in the applicable option agreement, the
authority of the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such option or to waive any conditions or rights under any such
option, and the authority of the Board to amend the Plan, shall extend beyond
such date.
<PAGE>
Appendix B
PROXY
PAPERCLIP SOFTWARE, INC.
Proxy solicited on behalf of the Board of Directors
of PaperClip Software, Inc. for the Annual Meeting of Shareholders
June 5, 2000
The undersigned, whose signature appears on the reverse side, hereby appoints
William Weiss and Michael Suleski, jointly and severally, proxies with full
power of substitution to vote all shares of Common Stock the undersigned is
entitled to vote at the Annual Meeting of Shareholders of PAPERCLIP SOFTWARE,
INC. on Monday, June 5, 2000, or adjournments thereof, on Items 1 through 3 as
specified on the reverse side hereof (with discretionary authority under Item 1
to vote for a new nominee if any nominee has become unavailable) and on such
other matters as may properly come before the meeting.
Nominees for Director:
William Weiss, Michael Suleski and D. Michael Bridges
You are encouraged to specify your choices by marking the appropriate boxes,
[SEE REVERSE SIDE], but you need not mark any boxes if you wish to vote in
accordance with the Board of Director's recommendations.
<PAGE>
|X| Please mark your votes as in this example.
This proxy when properly executed will be voted as you specify below.
If you do not specify otherwise, the proxy will be voted FOR election of
directors and FOR Items 2 and 3.
The Board of Directors recommends a vote FOR Items 1-3.
The undersigned acknowledges receipt of the accompanying Proxy
Statement dated May 3, 2000.
1. Election of Directors (See Reverse) FOR [ ] WITHHELD [ ] For, except vote
withheld from the following nominee(s):
- -------------------------------------------------------------------------------
2. Proposal to approve and ratify the amendments to the Company's Certificate
of Incorporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3.Proposal to approve and ratify the amendments to the Company's Amended and
Restated 1995 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, such other business as may properly come before the
meeting.
Signature __________________________________________ DATE _______________, 2000
Signature __________________________________________ DATE _______________, 2000
(Please sign exactly as name appears on this Proxy. When signing as executor,
administrator, trustee or the like please give full title. If more than one
trustee, all should sign. Joint owners must sign.)
I will attend the meeting [ ]
