<PAGE> 1
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:
<TABLE>
<S> <C>
/x/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HARBINGER CORPORATION
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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> 2
[HARBINGER LOGO]
HARBINGER CORPORATION
1055 Lenox Park Boulevard
Atlanta, Georgia 30319
(404) 841-4334
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 8, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Harbinger Corporation (the "Company") will be held at: The Swissotel, 3391
Peachtree Road, Atlanta, Georgia 30326, at 9:00 a.m., eastern daylight savings
time, on Wednesday, May 8, 1996 (the "Meeting"), to consider and act upon:
1. the election of seven persons to serve as members of the Company's
Board of Directors;
2. a proposal to approve the Company's 1996 Stock Option Plan;
3. a proposal to approve the Amended and Restated Harbinger
Corporation Employee Stock Purchase Plan;
4. a proposal to approve modification to the Company's Amended and
Restated 1993 Stock Option Plan for Nonemployee Directors;
5. a proposal to ratify the selection of independent public
accountants for the Company's current fiscal year; and
6. such other business as may properly come before the Annual Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 29, 1996,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting.
By Order of the Board of Directors:
Joel G. Katz,
Secretary
April 8, 1996
Atlanta, Georgia
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN PROVIDED.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. IN THE EVENT YOU ARE
ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE> 3
HARBINGER CORPORATION
1055 LENOX PARK BOULEVARD
ATLANTA, GEORGIA 30319
--------------------
PROXY STATEMENT
---------------------
MAY 8, 1996
------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
SHAREHOLDERS MEETING
This Proxy Statement and the enclosed proxy are furnished on behalf of the
Board of Directors of Harbinger Corporation, a Georgia corporation (the
"Company"), for use at the Annual Meeting of Shareholders to be held on May 8,
1996 at 9:00 o'clock a.m. eastern daylight savings time (the "Annual Meeting"),
or at any adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting. The Annual Meeting
will be held at The Swissotel, 3391 Peachtree Road, Atlanta, Georgia 30326.
The Company intends to mail this Proxy Statement and the accompanying Proxy
card on or about April 8, 1996, to all shareholders entitled to vote at the
Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of Common Stock at the close of business on March
29, 1996 will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on March 29, 1996, the Company had outstanding and
entitled to vote _________ shares of Common Stock. Each holder of record of
Common Stock on such date will be entitled to one vote for each share held on
all matters to be voted upon at the Annual Meeting. Any shareholder who signs
and returns a Proxy has the power to revoke it at any time before it is
exercised by providing written notice of revocation to the Secretary of the
Company or by filing with the Secretary of the Company a Proxy bearing a later
date. The holders of a majority of the total shares of Common Stock
outstanding on the record date, whether present at the Annual Meeting in person
or represented by Proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The shares held by each shareholder who signs
and returns the enclosed form of Proxy will be counted for the purposes of
determining the presence of a quorum at the meeting, whether or not the
shareholder abstains on all or any matter to be acted on at the meeting.
Abstentions and broker non-votes both will be counted toward fulfillment of
quorum requirements. A broker non-vote occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that proposal
and has not received instructions from the beneficial owner.
COUNTING OF VOTES
The purpose of the Annual Meeting is to consider and act upon the matters
which are listed in the accompanying Notice of Annual Meeting and set forth in
this Proxy Statement. The enclosed form of Proxy provides a means for a
shareholder to vote for all of the matters listed in the accompanying Notice of
Annual Meeting and described in the Proxy Statement. The enclosed form of
Proxy also provides a means for a shareholder to vote for all of the nominees
for Director listed thereon or to withhold authority to vote for one or more of
such nominees. The Company's Bylaws provide that Directors are elected by a
plurality of the votes cast. (Plurality means that more votes must be cast in
favor of the election of a Director than those cast against election of such
-2-
<PAGE> 4
Director). Accordingly, the withholding of authority by a shareholder
(including broker non-votes) will not be counted in computing a plurality and
thus will have no effect on the results of the election of such nominees.
The accompanying form of Proxy also provides a means for a shareholder to
vote for, against or abstain from voting on each of the other matters to be
acted upon at the Annual Meeting. Each Proxy will be voted in accordance with
the shareholder's directions. The affirmative vote of a majority of the shares
of Common Stock present in person or represented by a Proxy and entitled to
vote on proposals two through six set forth in the accompanying Notice of
Annual Meeting is required for the approval of such proposal. Approval of any
other matters as may properly come before the meeting also will require the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by a Proxy and entitled to vote at the meeting. Abstentions
with respect to proposals two through six will have the same effect as a vote
against these proposals. With respect to broker non-votes, the shares will not
be considered present at the meeting for the proposal to which authority was
withheld. Consequently, broker non-votes will not be counted with regard to
the proposal, but they will have the effect of reducing the number of
affirmative votes required to approve the proposal, because they reduce the
number of shares present or represented from which a majority is calculated.
PROXIES
When the enclosed Proxy is properly signed and returned, the shares which
it represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instructions, the shares
represented by a signed Proxy will be voted in favor of the nominees for
election to the Board of Directors, and in favor of the approval of proposals
two through six.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of Common
Stock which, as of March 21, 1996, are deemed under the rules of the Securities
and Exchange Commission (the "Commission") to be "beneficially owned" by each
member of the Board of Directors of the Company, by each nominee to become a
member of the Board of Directors, by each Executive Officer of the Company, by
all Directors, Nominees and Executive Officers of the Company as a group, and
by any person or "group" (as that term is used in the Securities Act of 1934,
as amended) known to the Company as of that date to be a "beneficial owner" of
more than 5% of the outstanding shares of Common Stock of the Company:
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED(1)
------------------------------------------
NUMBER OF SHARES OF PERCENTAGE OF
DIRECTORS AND EXECUTIVE OFFICERS COMMON STOCK CLASS
- - - -------------------------------- -------------------- -----------------
<S> <C> <C>
C. Tycho Howle(2)............................... 927,731 8.9%
David T. Leach(3)............................... 301,195 2.9
James C. Davis(4)............................... 216,961 2.1
George S. Hart(5)............................... 80,485 *
Donald L. House(6).............................. 90,000 *
Joel G. Katz(7)................................. 28,174 *
William B. King(8).............................. 33,044 *
Stuart L. Bell(9)............................... 18,750 *
William D. Savoy(10)............................ 1,564,959 14.9
David A. Meeker(11)............................. 11,750 *
James M. Travers(12)............................ 15,600 *
Roger E. Covey.................................. -0- *
Henk P.M. Kivits................................ 2,666 *
All executive officers and directors as a group
(13 persons)(13).............................. 3,291,315 31.4
</TABLE>
-3-
<PAGE> 5
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OF -------------
OTHER SHAREHOLDERS COMMON STOCK CLASS
- - - ------------------ -------------------- -------------
<S> <C> <C>
Paul G. Allen (14)............................. 1,534,959 14.7
Vulcan Ventures, Inc.(15)...................... 1,534,959 14.7
System Software Associates, Inc.(16)........... 1,000,000 9.5
AXA Equity & Law Assurance Society Plc(17)..... 832,757 7.9
Orbis Pension Trustees Ltd.(18)................ 774,913 7.4
</TABLE>
- - - ------------------------
* Less than 1% of the outstanding Common Stock.
(1) Under rules promulgated by the Commission, "beneficial ownership"
includes having or sharing with others the power to vote or direct the
investment of securities. Accordingly, a person having or sharing the
power to vote or direct the investment of securities is deemed to
"beneficially own" the securities even if he has no right to receive any
part of the dividends on or the proceeds from the sale of these
securities. Also, because "beneficial ownership" extends to persons, such
as the principal shareholders of a corporate shareholder, who share power
to vote or control the disposition of the securities, the very same
securities may be deemed to be "beneficially owned" by two or more persons
shown in the table. Information with respect to "beneficial ownership"
shown in the table above is based on information supplied by the
directors, executive officers of the Company's and filings made with the
Commission or furnished to the Company by other shareholders.
(2) Includes 717,993 shares held of record by Mr. Howle, 54,044 shares held
of record by Marie Howle, the wife of Mr. Howle, an aggregate 10,094
shares held by or for the benefit of Mr. Howle's children, 145,000 shares
held in a family limited partnership for the benefit of Mr. Howle's
siblings and their families; and 600 shares held in a foundation created
by Mr. Howle. Mr. Howle disclaims beneficial ownership of all such
shares, other than the shares held of record by Mr. Howle. Mr. Howle's
address is in care of Harbinger Corporation, 1055 Lenox Park Boulevard,
Atlanta, GA 30319.
(3) Includes 208,878 shares held of record by Mr. Leach, 2,317 shares held of
record by Lynn J. Leach, the wife of Mr. Leach, and 90,000 shares subject
to options exercisable immediately.
(4) Includes 110 shares held of record by Mr. Davis, 206,851 held jointly by
Mr. Davis and his wife and 10,000 shares subject to options exercisable
immediately.
(5) Includes 52,500 shares subject to options exercisable immediately.
(6) Includes 40,000 shares subject to options exercisable immediately.
(7) Includes 25,625 shares subject to options exercisable immediately.
(8) Includes 20,000 shares subject to options exercisable immediately.
(9) Includes 3,750 shares subject to an option exercisable immediately.
(10) Includes 16,250 shares subject to options exercisable immediately. Also
includes 1,548,709 shares beneficially owned by Vulcan Ventures, Inc.
("Vulcan"), as to which Mr. Savoy disclaims beneficial ownership. The
address of Mr. Savoy is 110 110th Avenue, N.E., Suite 550, Bellevue, WA
99004.
(11) Includes 11,250 shares subject to an option exercisable immediately.
(12) Includes 12,500 shares subject to an option exercisable immediately.
(13) Includes 281,875 shares subject to options exercisable immediately. Also
includes 1,548,709 shares beneficially owned by Vulcan and 1,000,000
shares of Common Stock beneficially owned by SSA. Excludes shares of
Common Stock, if any, that may be issued upon the redemption of shares of
the Company's Zero Coupon Preferred Stock held by SSA.
(14) The address of Paul G. Allen is 110 110th Avenue, NE, Suite 550,
Bellevue, WA 99004.
(15) The address of Vulcan is 110 110th Avenue, N.E., Suite 550, Bellevue, WA
99004.
(16) Excludes shares of Common Stock, if any, that may be issued upon the
redemption of shares of the Company's Zero Coupon Preferred Stock. The
address of SSA is 500 West Madison, Chicago, Illinois, 60661.
(17) The address of AXA Equity & Law Assurance Society Plc is 20 Lincoln's Inn
Field, London, England WC2A 3ES.
(18) The address of Orbis Pension Trustees Ltd. is 1 Conaught Place, London,
England W2 2DY.
-4-
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
INTRODUCTION
At the Annual Meeting, seven directors are to be elected for the terms
described below. In accordance with Section 5.2 of the Company's Articles of
Amendment and Restatement, beginning with the 1996 Annual Meeting of
Shareholders, the Board of Directors of the Company will be divided into three
classes, Class I, Class II and Class III, with each class to be equal or nearly
equal in number to each other class. The three classes shall have terms
expiring at the 1997, 1998 and 1999 Annual Meetings, respectively. The three
classes and the nominees assigned to each class by the Board are set out below.
At each Annual Meeting following the 1996 Annual Meeting, the successors of
the class of Directors whose term expires shall be elected to hold office for a
term expiring at the Annual Meeting held in the third year following the year
of election. The Board of Directors has adopted a policy statement that
provides as follows: "It is the policy of Harbinger Corporation, in order to
ensure full representation of the Company's shareholders on the Board of
Directors and to enhance the Company's access to talented managerial advisors,
that no nonemployee director of the Company shall serve as a director for more
than eight consecutive years and that each nonemployee director when first
elected to the Board of Directors (including after a period of non-service)
shall serve for only a one year term unless renominated by the Board of
Directors at that time, in which case he or she shall be included in the
Company's staggered board in a manner determined by the Board of Directors."
Shares represented by executed proxies will be voted, if authority to do
so is not withheld, for the election of the seven nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as the Board of Directors may select. Each person nominated
for election has agreed to serve if elected, and management has no reason to
believe that any nominee will be unable to serve.
The Board of Directors recommends a vote FOR each named nominee.
NOMINEES
The name and age, principal occupation or employment, and other data
regarding each nominee, based on information received from the respective
nominees, are set forth below:
NOMINEES TO SERVE UNTIL THE 1999 ANNUAL MEETING (CLASS III)
C. TYCHO HOWLE
Mr. Howle, age 46, has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company and its predecessors since 1983. From
1981 to 1983 Mr. Howle was a consultant with McKinsey & Company, Inc., a
management consulting firm. From 1979 to 1981, Mr. Howle was a Product Line
Manager with the Hewlett-Packard Company. From 1973 to 1977, he was a project
manager with Booz, Allen & Hamilton's Applied Research Unit.
WILLIAM D. SAVOY
Mr. Savoy, age 31, has been a director of the Company since May 1993.
Under the Company's policy statement regarding term limits for nonemployee
directors, Mr. Savoy will be eligible to serve as a director through the date
of the Company's Annual Meeting to be held in 2001. Mr. Savoy has served as
President of Vulcan Northwest, Inc. since 1988. Mr. Savoy is also a director
of Telescan, Inc.
NOMINEES TO SERVE UNTIL THE 1998 ANNUAL MEETING (CLASS II)
-5-
<PAGE> 7
DAVID T. LEACH
Mr. Leach, age 45, has served as President and a director of the Company
since February 1994. From June 1992 until February 1994, he was Group Executive
Vice President, Sales and Operations of the Company. He served as Senior Vice
President of Harbinger Computer Services, Inc. ("HCS") from 1988 until 1990
and was President of HCS from 1990 until its reorganization into Harbinger
Corporation in 1992. Prior to joining HCS, Mr. Leach was a consultant with
McKinsey & Company, Inc., a management consulting firm.
ROGER E. COVEY
Roger E. Covey, age 40, has been a director of the Company since July
1995. Under the Company's policy statement regarding term limits for
nonemployee directors, Mr. Covey will be eligible to serve as a director
through the date of the Company's Annual Meeting to be held in 2003. Mr. Covey
currently serves as Chief Executive Officer and Chairman of the Board of SSA,
positions which he also held from its inception in October 1981 until August
1991, at which time he was elected as SSA's Vice-Chairman of the Board. From
August 15 until October 31, 1994, he served as SSA's Vice President--Research
and Development.
NOMINEES TO SERVE UNTIL THE 1997 ANNUAL MEETING (CLASS I)
WILLIAM B. KING
Mr. King, age 51, has been a director of the Company since January 1993.
Under the Company's policy statement regarding term limits for nonemployee
directors, Mr. King will be eligible to serve as a director through the
Company's Annual Meeting to be held in 2001. Mr. King has served as Chairman
of Private Business, Inc., a banking software provider, since 1991. From 1986
until February 1995, Mr. King served as Chairman of FISI-Madison Financial
Corporation, Chairman of CUC Europe, and served on the Board of Directors of
CUC International.
STUART L. BELL
Mr. Bell, age 42, has been a director of the Company since April 1995.
Under the Company's policy statement regarding term limits for nonemployee
directors, Mr. Bell will be eligible to serve as a director through the date of
the Company's Annual Meeting to be held in 2003. Mr. Bell served as Executive
Vice President and Chief Financial Officer of CUC International from 1983 to
January 1995, and has served as Assistant to the Chief Executive Officer of CUC
International since February 1995.
HENK P.M. KIVITS
Mr. Kivits, age 42, has been Supervisory Director of Harbinger NV since
February 1995. Under the Company's policy statement regarding term limits for
nonemployee directors, Mr. Kivits will be eligible to serve as a director
through the date of Company's Annual Meeting to be held 2004. Mr. Kivits is
the founder and served as President of Intercai Holding B.V., from January 1980
until January 1995. From January 1995 until the present he has served as Chief
Executive Officer of KPN Multimedia.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1995, the Board of Directors held eleven meetings. All of the
directors attended at least 75% of the aggregate total number of meetings of
the Board of Directors and meetings of committees of the Board of Directors on
which they served.
The Company's Board of Directors has established an Audit Committee and
Compensation Committee. The following persons presently serve on the Audit
Committee: William B. King and Stuart L. Bell. The Audit Committee met two
times in 1995. The primary functions of the Audit Committee are to review the
scope and timing of the audit and non-audit services to be rendered by the
Company's independent accountants to review audit
-6-
<PAGE> 8
plans of the independent accountants and internal auditors and to review the
reports upon completion of their audits, to review the appropriateness of the
Company's accounting policies, the adequacy of its financial controls and the
reliability of the financial information reported to the public, and to report
to the Board of Directors on its activities. The following directors presently
serve on the Compensation Committee: William D. Savoy, William B. King and
Stuart L. Bell. The Compensation Committee met one time in 1995. The primary
functions of the Compensation Committee are to review and approve, subject to
ratification of the Board of Directors, the Chief Executive Officer's
compensation, to consult with the Chief Executive Officer and approve
compensation for executive officers and other key employees, to administer the
Company's stock option plans and employee stock purchase plans, including
approval of all awards thereunder, to approve management incentive bonuses, and
to report to the Board of Directors on these activities.
As compensation for serving on the Board of Directors, directors who are
not also employees of the Company ("Nonemployee Directors") receive $900 for
each meeting of the full Board and $250 for teleconference Board meetings of 90
minutes or less in which they participate. In the Company's discretion,
Nonemployee Directors may also be reimbursed for reasonable expenses incurred
by them in connection with their attendance at Board Meetings. Nonemployee
Directors are also eligible to receive options under the Company's Amended and
Restated 1993 Stock Option Plan for Nonemployee Directors. See "Proposal 4,
Approval of Modifications to the 1993 Stock Option Plan for Nonemployee
Directors."
During the term of the Alliance Agreement between the Company and SSA, SSA
has the right to designate one member to stand for election to the Company's
Board of Directors. SSA's designee is Roger E. Covey.
EXECUTIVE OFFICERS
In addition to the individuals nominated for director above who are also
executive officers of the Company, the following individuals presently serve as
executive officers of the Company:
JAMES C. DAVIS
Mr. Davis, age 43, has served as President of Harbinger Group Operations
since January 1995. In this capacity Mr. Davis has responsibility for
international operations and corporate mergers and acquisitions. He served as
President of the Company from January 1989 until December 1993, when he
resigned as an officer and director of the Company. He was Vice President and
Senior Vice President of HCS from May 1984 until December 1988.
JAMES M. TRAVERS
Mr. Travers, age 44, has served as President of Harbinger Enterprise
Solutions since January 1995. In this capacity, Mr. Travers manages the
business operations acquired in the TI Acquisition. From 1978 through 1994, Mr.
Travers served in various managerial positions with TI, including the position
as Director of Business Development for TI's Worldwide Applications Software
Business and General Manager of TI's EDI business unit from June 1992 through
December of 1994.
GEORGE S. HART
Mr. Hart, age 54, has served as Senior Vice President, Licensee
Relationships of Harbinger since April 1984. He served as Senior Vice
President, Business Development and Sales of the Company from the
Reorganization in May 1992 until April 1994. From April 1984 to May 1992, Mr.
Hart served as Senior Vice President, Business Development and Sales of HCS.
DAVID A. MEEKER
Mr. Meeker, age 53, has served as Vice President, Sales since January,
1995. From September 1992 through December 1994, Mr. Meeker served as Vice
President, Sales for National Data Corp., a credit card processing company.
From January 1992 through August 1992 Mr. Meeker served as Vice President,
Sales and
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<PAGE> 9
Marketing for Software Alternatives, a computer software and systems vendor.
From January 1990 to January 1992, Mr. Meeker served as Manager, U.S. Channel
Operations for IBM.
JOEL G. KATZ
Mr. Katz, age 32, has served as Vice President, Finance and Secretary of
Harbinger since January 1995. He served as Senior Director of Finance of the
Company from February 1994 to January 1995, and he was elected Secretary in
February 1994. He joined Harbinger in 1990 as Controller and became Director of
Finance in December 1991. From 1985 to 1990, he was a certified public
accountant in the audit division of Arthur Andersen LLP.
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation earned for services rendered to the Company by the Company's Chief
Executive Officer and each of the other four most highly compensated executive
officers of the Company during 1995 (collectively the "Named Executive
Officers") for the fiscal years ended December 31, 1995, 1994, and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
----------------- ------------
Securities All
Underlying Other
Name and Principal Position Salary Bonus Options (#) Compensation
- - - --------------------------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
C. Tycho Howle 1995 $157,134 $65,920 - $ 800
Chairman, Chief Executive 1994 149,375 23,721 - 662
Officer and Director 1993 129,868 57,664 - -
David T. Leach 1995 $127,634 $52,602 - $ 800
President, Chief Operating 1994 116,125 28,028 30,000 495
Officer and Director 1993 96,000 48,485 12,500 -
James C. Davis 1995 $106,727 $29,094 40,000 $ 800
President, Harbinger 1994 77,239 - - -
Group Operations 1993 127,825 53,313 12,500 -
James M. Travers 1995 $106,673 $89,200 50,000 $4,238
President, Harbinger 1994 - - - -
Enterprise Solutions 1993 - - - -
David A. Meeker 1995 $ 95,740 $50,000 45,000 $ 500
Vice President, Sales 1994 - - - -
1993 - - - -
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted during
the year ended December 31, 1995 to the Named Executive Officers:
-8-
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities Exercise Price Appreciation for
Underlying % of Total Options or Base Option Term (2)
Options Granted to Employees Price Expiration --------------------------
Granted (1) Fiscal Year ($/Sh) Date 5% 10%
----------- ---------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
C. Tycho Howle - - - - - -
David T. Leach - - - - - -
James C. Davis 40,000 8.51% $6.38 01/25/02 $160,494 $406,723
James M. Travers 50,000 10.63% $6.38 01/25/02 $200,617 $508,404
David A. Meeker 45,000 9.57% $6.38 01/25/02 $180,556 $457,563
</TABLE>
- - - --------------------
(1) The options granted to the named executive officers were awarded under
the Company's Amended and Restated 1989 Stock Option Plan (the "1989
Plan"). The options granted under the 1989 Plan are exercisable for a
period not to exceed seven years from the date of grant. Options granted
before July 1994 vest at the rate of 33-1/3% after each year of
continuous employment with the Company. Options granted on or after July
1994 vest generally at the rate of 25% after each year of continuous
employment with the Company. The exercise price of each option granted
was not less than 100% of the fair market value of a share of Common Stock
on the date of grant.
(2) Amounts represent the hypothetical gains that could be achieved for the
respective options at the end of the seven year option term. The assumed
5% and 10% rates of stock appreciation are mandated by the rules of the
Securities and Exchange Commission and may not accurately reflect the
appreciation of the price of the Common Stock from the grant date until
the expiration of the option term. These assumptions are not intended to
represent a forecast of future stock appreciation of the Company's Common
Stock. No assurance can be given that the Company's Common Stock will
appreciate at all.
OPTIONS EXERCISED AND YEAR-END VALUES OF AN EXERCISED OPTION
The following table sets forth information, as of December 31, 1995,
regarding the number of shares received and the value realized upon exercise of
the stock options, and the number and value of exercisable and unexercisable
options to purchase Common Stock of the Company held by the Company's Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN 1995 AND 1995 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares
Underlying Value of Unexercised In-the-
Unexercised Options at Money Options
Shares December 31, 1995 at December 31, 1995 (2)
Acquired On Value ------------------------------- ------------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- - - ---- ----------- ------------ ----------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
C. Tycho Howle None N/A - - - -
David T. Leach None N/A 65,834 56,666 $1,257,996 $951,704
James C. Davis None N/A - 40,000 - $664,800
James M. Travers None N/A - 50,000 - $831,000
David A. Meeker None N/A - 45,000 - $747,900
</TABLE>
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<PAGE> 11
(1) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price of the Common Stock as reported
by The Nasdaq Stock Market on the date of exercise and the exercise price
of the options.
(2) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price for the Common Stock of $23.00
as reported by The Nasdaq Stock Market on December 31, 1995 and the
exercise price of the options.
AGREEMENTS WITH EMPLOYEES
Employees of the Company, including executive officers, are required to
sign an agreement with the Company defining the employee's responsibilities,
restricting the ability of the employee to compete with the Company during his
or her employment and for a designated period thereafter, restricting
solicitation of customers and employees following employment with the Company,
and providing for ownership and assignment of intellectual property rights to
the Company. The agreements have an indefinite term, but the employee may
terminate employment with the Company at any time.
401(K) PROFIT SHARING PLAN
The Company maintains a 401(k) Profit Sharing Plan (the "401(k) Plan")
which is intended to be a tax-qualified defined contribution plan under Section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"). In
general, all employees of the Company who have completed one year of service
and have attained age 21 are eligible to participate. The 401(k) Plan includes
a salary deferral arrangement pursuant to which participants may contribute,
subject to certain Code limitations, a minimum of 3% and a maximum of 15% of
their salary on a pre-tax basis. Subject to certain Code limitations, the
Company may make a matching contribution of up to $300 of the salary deferral
contributions of participants at a rate determined by the Board of Directors of
the Company each year. The Company may also make an additional contribution to
the 401(k) Plan each year at the discretion of the Board of Directors. The
Board of Directors approved the contribution by the Company of $27,000 to the
401(k) Plan for 1995. A separate account is maintained for each participant in
the 401(k) Plan. The portion of a participant's account attributable to his or
her own contributions is always 100% vested. The portion of the account
attributable to Company contributions (including matching contributions) vests
at a rate of 20% per year commencing after the first year of service.
Distributions from the 401(k) Plan may be made in the form of a lump-sum cash
payment or in installment payments.
STOCK OPTION PLANS
Employee Stock Option Plan. The Company's Amended and Restated 1989
Stock Option Plan (the "1989 Stock Option Plan") became effective on July 26,
1989. The purpose of the 1989 Stock Option Plan is to provide incentives for
officers, directors, consultants and key employees to promote the success of
the Company, and to enhance the Company's ability to attract and retain the
services of such persons. As amended, the aggregate number of shares of Common
Stock reserved for issuance under the 1989 Stock Option Plan is 1.5 million
shares. Options granted under the 1989 Stock Option Plan may be either (i)
options intended to qualify as "incentive stock options" under Section 422 of
the Code, or (ii) non-qualified stock options. The 1989 Stock Option Plan
permits the grant of stock appreciation rights in connection with the grant of
stock options. Stock options may be granted under the 1989 Stock Option Plan
for all employees and consultants of the Company, or of any present or future
subsidiary or parent of the Company, who are considered "key employees" or
"key consultants." The 1989 Stock Option Plan is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee
has the authority to determine exercise prices applicable to the options, the
eligible officers, directors, consultants or employees to whom options may be
granted, the number of shares of the Company's Common Stock subject to each
option, and the extent to which options may be exercisable. The Compensation
Committee is empowered to interpret the 1989 Stock Option Plan and to
prescribe, amend and rescind the rules and regulations pertaining to the 1989
Stock Option Plan. Options granted under the 1989 Stock Option Plan generally
vest over three or four years. No option is transferable by the optionee other
than by will or the laws of descent and distribution, and each option is
exercisable, during the lifetime of the optionee, only by such optionee.
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<PAGE> 12
Any incentive stock option that is granted under the 1989 Stock Option
Plan may not be granted at a price less than the fair market value of the
Company's Common Stock on the date of grant (or less than 110% of fair market
value in the case of holders of 10% or more of the total combined voting power
of all classes of stock of the Company or a subsidiary or parent of the
Company). Non-qualified stock options may be granted at the exercise price
established by the Compensation Committee, which may be less than the fair
market value of the Company's Common Stock on the date of grant.
Each option granted under the 1989 Stock Option Plan is exercisable for a
period not to exceed ten years from the date of grant (or five years in the
case of a holder of more than 10% of the total combined power of all classes of
stock of the Company or of a subsidiary or parent of the Company) and shall
lapse upon expiration of such period, or earlier upon termination of the
recipient's employment with the Company, or as determined by the Compensation
Committee.
As of March 21, 1996, options to purchase 983,477 shares of Common Stock
were outstanding under the 1989 Stock Option Plan and 504,794 shares of Common
Stock had been issued upon exercise of options granted under the plan.
Nonemployee Directors Stock Option Plan. The Amended and Restated 1993
Stock Option Plan for Nonemployee Directors (the "Nonemployee Directors
Plan") became effective on April 30, 1993. A total of 150,000 shares of the
Company's Common Stock have been reserved for issuance under the Nonemployee
Directors Plan.
The terms of the options granted under the Nonemployee Directors Plan,
including the exercise price, dates and number of shares subject to the options
are specified in the Nonemployee Directors Plan. The Nonemployee Directors Plan
provides for the automatic granting of non-qualified stock options to
Nonemployee Directors. Each Nonemployee Director receives an option to purchase
5,000 shares of Common Stock (4,000 shares if Proposal 4 is adopted) on the
date of, and at a time immediately following every, annual meeting of the
shareholders ("Annual Grant"). Each Nonemployee Director who is first
appointed or elected to the Board and attends a regular quarterly meeting of
the Board which occurs at any time other than at an annual meeting of the
shareholders is granted an option to purchase a number of shares of Common
Stock equal to the product of (i) 5,000 (4,000 if Proposal 4 is adopted)
multiplied by (ii) a fraction, the numerator of which is the number of regular
quarterly directors meetings expected by the Chief Executive Officer of the
Company to occur between the date that such Nonemployee Director is appointed
or elected to the Board and the first annual meeting of shareholders following
such appointment or election, and the denominator of which is four (the
"Interim Grant"). Annual Grants and Interim Grants vest during the year based
on the attendance by the Nonemployee Director at the regular quarterly meetings
of the Board. No option is transferable by the optionee other than by will or
laws of descent and distribution, and each option is exercisable, during the
lifetime of the optionee, only by such optionee. The exercise price of all
options must be at least equal to the fair market value of the shares on the
date of grant, and the term of each option may not exceed seven years. The
Nonemployee Directors Plan will continue in effect for a period of ten years
unless sooner terminated by the Board of Directors.
As of March 21, 1996, options to purchase an aggregate of 60,000 shares of
Common Stock were outstanding under the Nonemployee Directors Plan and
approximately 11,250 shares had been issued pursuant to the exercise of options
granted under the plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Company's Board of Directors has
furnished the following report on Executive Compensation in accordance with the
rules and regulations of the Securities and Exchange Commission. This report
outlines the duties of the Committee with respect to executive compensation,
the various components of the Company's compensation program for executive
officers and other key employees, and the basis on which the 1995 compensation
was determined for the executive officers of the Company, with particular
detail given to the 1995 compensation for the Company's Chief Executive
Officer.
-11-
<PAGE> 13
During 1995, the Compensation Committee was comprised of William D. Savoy
and William B. King.
Duties of the Committee include establishing and approving compensation of
the Chief Executive Officer, consulting with the Chief Executive Officer for
the purpose of reviewing and approving compensation for executive officers and
other key employees, administering the Company's stock option plans for
employees, and approving management incentive bonuses. In performing the
duties described above, the Compensation Committee seeks to achieve the
following:
(i) to provide compensation opportunities that are based on the
performance of the Company,
(ii) to provide competitive compensation programs that enable the
Company to attract and retain highly qualified executive managers
who are focused on enhancing shareholder value, and
(iii) to coordinate compensation programs and practices so that
they promote the Company's annual and long-term business
objectives and strategies.
The Compensation Committee in all instances seeks to link compensation to
the value and level of the performance of the executive. The Compensation
Committee seeks to achieve this objective by implementing, as the principal
components of compensation, a program of base salary, incentive compensation
and equity-based incentives. The compensation decisions of the Committee
relative to the Company's executive officers and key employees are described
below as to each of the foregoing components.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
Salary. The salary levels of the Company's executive officers and other
key employees are reviewed by the Committee annually. In determining
appropriate base-salary levels, the Committee considers such factors as duties
and responsibilities inherent in the position held, initiative, performance,
tenure and pay practices for other companies of similar size in the electronics
industry, as well as business conditions generally prevailing in the software
and technology industries on whole.
The Company refers to external information to determine base salaries paid
by other companies for comparable positions. For example, the Company refers
to a survey by organizations such as the American Electronics Association and
the ITAA for both executives and non-executives to determine market salaries
for comparable positions paid by other software and electronic companies of
similar size, and awards salary increases based on the number of years
experience and performance, giving consideration to the market salaries
reflected by these surveys.
Cash Bonuses. Annual cash bonuses are determined and paid to executives
and key employees pursuant to the Company's compensation plan for executive
officers and other key employees. For each executive and key employee, the
cash bonus is based upon the attainment of financial objectives, either for the
Company as a whole, or for the employees area of responsibility. For 1994,
these objectives were weighted 70% to the attainment of targeted operating
income and 30% to the attainment of targeted revenue. For 1995, these
objectives were weighted to 60% to the attainment of targeted operating income
and 40% to the attainment of targeted revenue. The Compensation Committee
believes that the change toward a larger percentage of compensation being
weighted toward the attainment of targeted revenue emphasizes the Company's
perception of the importance of increasing the Company's market share in the
rapidly growing market for electronic commerce software and services. Cash
bonuses for executive officers and other key employees are targeted at ranges
from 25% of base salary to 50% of base salary. The amount of the bonus payable
to any executive officer or other key employee ranges from zero percent of
targeted bonus to a maximum 225% of targeted bonus depending on the level of
financial performance goals achieved. Since bonus payments are based on the
degree in which the company achieves its overall operating income and revenue
goals, the compensation of executive officers and key employees is higher
during years in which the Company meets or exceeds its specified financial
performance goals. Operating income and revenues for the year ended December
31, 1995 were $3.1 million and $23.1 million, respectively, as compared to an
operating loss and revenues of $2.7 million and $13.7 million, respectively,
for the year ended December 31, 1994. Total
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<PAGE> 14
cash bonuses of $460,000 were paid to 16 members of senior management
participating in the incentive plan during 1995. In addition, total cash
bonuses of approximately $206,000 were paid to 13 members of senior management
participating in the plan during 1994.
Equity-based Incentives. The Company maintains stock option plans to
provide executive officers and other key employees and consultants with
additional incentive to promote the financial success of the Company which, in
turn, is intended to positively impact the value of the Company's Common Stock.
Options granted under the Company's 1989 Stock Option Plan have generally been
long-term (seven years) and options granted since July 1994 generally vest at
the rate of 25% per year during the four years following the date of grant.
All such options are exercisable at fair market value on the date of grant.
With such features, the Company considers stock options as a way of aligning
the interest of management with the interest of the Company's shareholders in
inducing executive officers and other key employees to remain with the Company
on a long-term basis. The Compensation Committee believes that the Company's
long-term goals will best be achieved by maintaining in place the core
management team of executive officers and other key employees. During 1995,
options to purchase 135,000 shares of the Company's Common Stock were awarded
to executive officers in connection with joining the Company. As of December
31, 1995, options to purchase an aggregate 1,010,574 shares of the Company's
Common Stock were held by 147 employees under the Company's 1989 Stock Option
Plan. Included in this amount as of December 31, 1995 are options to purchase
257,500 shares of the Company's Common Stock at an average exercise price of
$5.71 held by executive officers named in the Summary Compensation Table. The
Compensation Committee is recommending, and the Board of Directors have
recommended the adoption of the Company's proposed 1996 Stock Option Plan to
supersede and replace the 1989 Stock Option Plan. The Compensation Committee
also administers the Company's 1996 Employee Stock Purchase Plan, which is
submitted to the Shareholders for approval at the 1996 Annual Meeting.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing cash bonus compensation for Mr. Howle, the Company
observed similar guidelines as set forth for executive officers generally. The
Company does not assign specific weighting to the various guidelines, or
factors, other than the weighting that is applied to the achievement of
operating income goals and the achievement of revenue goals. During 1995, Mr.
Howle's base salary was increased to $160,000, effective April 1, 1995, as
compared to $155,000 for the immediately preceding year. The Compensation
Committee approved a bonus of $65,920 to Mr. Howle for 1995, reflecting the
fact that the Company met its targeted goals for operating income and revenue
for 1995. Mr. Howle's bonus is targeted at 50% of base salary if the Company
and Harbinger NV each achieved, targeted operating income and revenue goals.
In 1994, Mr. Howle received a bonus of $20,708. The Compensation Committee has
not awarded stock options to Mr. Howle.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deduction allowable to the Company for compensation paid to the Chief
Executive Officer and each of the four other most highly compensated executive
officers to $1.0 million. Qualified performance-based compensation is excluded
from this limitation if certain requirements are met. The Company's policy is
generally to preserve the federal income tax deductibility of compensation
paid, to the extent feasible. The Committee believes that awards under the
Company's management incentive plan and its award of options made under stock
option plans for employees will qualify as performance-based compensation and
thereby be excluded from the $1.0 million limitation. Notwithstanding the
Company's policy to preserve the federal income tax deductibility of
compensation payments, under certain circumstances, the Compensation Committee,
in its discretion, may authorize payment, such as salary, bonuses or otherwise,
that may cause an executive officer's income to exceed the deductible limits.
Compensation Committee
William D. Savoy
William B. King
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<PAGE> 15
STOCK PERFORMANCE GRAPH
The following line-graph provides a comparison of the cumulative total
shareholder return on the Company's Common Stock for the period from the date
of the Company's initial public offering on August 22, 1995 through December
31, 1995, against the cumulative shareholder return during such period achieved
by the Nasdaq Stock Market (U.S. Companies) and the Index for Nasdaq Computer
and Data Processing Stocks (the "Nasdaq Computer Index"). All amounts have
been calculated as if all dividends were reinvested.
<TABLE>
<CAPTION>
8/22/95 8/31/95 9/30/95 10/31/95 11/30/95 12/31/95
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harbinger 100 95.868 90.909 92.562 166.116 152.066
Nasdaq Stock Market 100 99.494 101.782 101.148 103.527 102.993
Nasdaq Computer Index 100 95.519 98.601 103.63 104.459 103.195
</TABLE>
[GRAPH]
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Pursuant to its License Agreement with SSA, the Company has agreed to
nominate a designee of SSA to the Board of Directors. SSA's designee is Roger
E. Covey. The Company has designated, and proposes that the shareholders vote
in favor of, the election of Mr. Covey to the Company's Board of Directors.
CERTAIN TRANSACTIONS
HARBINGER NV
In November 1993, the Company assisted in the founding of Harbinger NV, a
Dutch corporation which markets electronic commerce products and services in
the European market. The initial capitalization of Harbinger NV consisted of
an investment of $500,000 from the Company and $2,000,000 from other investors,
including
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<PAGE> 16
executive officers and other shareholders of the Company. In 1995, the Company
and certain of these investors contributed an additional $150,000 and
$600,000, respectively, to Harbinger NV. The Company is a party to several
agreements with Harbinger NV which govern the terms and conditions of the
performance of services, the licensing of technologies, and the sharing of
resources and personnel between the Company and Harbinger NV. Harbinger NV has
a license to use the Company's network and PC technology and will pay the
Company royalty fees based on a percentage of software and network revenues
earned.
In connection with the Company's Alliance Agreement with SSA, Harbinger NV
employed twelve former SSA software engineers, and assumed the leases for three
items of computer equipment and a leasehold facility in the Netherlands.
Harbinger NV will utilize these personnel to provide software engineering
services primarily for the Company. Services performed by Harbinger NV for the
Company will be paid for by the Company at Harbinger NV's cost.
In addition to the Company's ownership interest of approximately 20% of
the common stock of Harbinger NV, approximately 60% of the common stock is
owned by Vulcan Ventures and approximately 20% is owned by AXA Equity & Law
Life Assurance Society Plc ("Equity & Law"). Both Equity & Law and Vulcan
Ventures beneficially own more than 5% of the Company's voting securities.
Messrs. Howle, Davis and Savoy serve as members of the Supervisory Board of
Harbinger NV. Mr. Howle is an executive officer and director, and Mr. Davis is
an executive officer of the Company, and Mr. Savoy is a director of the
Company and a President of Vulcan Northwest, Inc. Members of the Supervisory
Board of Harbinger NV, including Messrs. Howle and Savoy, are entitled to
compensation for attendance at Board meetings of $700 per meeting attended and
an annual grant of stock options to purchase 5,000 shares of the common shares
of Harbinger NV at the fair market value on the day of the annual general
shareholders meeting. During the three year period ended December 31, 1995,
Harbinger NV paid approximately $656,000 to the Company for services rendered.
Additionally, the Company paid expenses of $95,000, $95,000 and $39,000, for
the years ended December 31, 1995, 1994 and 1993, respectively, that were
reimbursed by Harbinger NV.
The Company has agreed to loan Harbinger NV up to $1.0 million, under a
revolving credit agreement bearing interest at the prime rate plus 1.125% per
annum, secured by certain assets of Harbinger NV. The loan agreement has a
one-year term, and is automatically renewable thereafter for consecutive
one-year terms unless terminated by either party. Advances on this loan may be
funded on a monthly basis as determined by the Company. The Company will have
the right at any time to discontinue advances under this loan agreement;
provided, however, that a request to fund the expenses of closing down
Harbinger NV's operations must be met to the extent of the funds required to
satisfy Harbinger NV's commitments. As additional consideration for the loan
facility, the Company received a warrant to purchase for $1.00 per share a
number of common shares of Harbinger NV (not to exceed 100,000 shares) equal to
10% of the maximum indebtedness outstanding at any time during the loan term.
Under a Shareholders Agreement dated November 5, 1993 among the
shareholders of Harbinger NV, during the period commencing November 5, 1994 and
ending November 4, 1997 the Company has an option (the "Call Option") to
purchase from the other shareholders of Harbinger NV all of their shares of
Harbinger NV at a purchase price, which shall be one of the following two
choices (with each Harbinger NV shareholder entitled to an independent
selection of the purchase price choice): (i) one share of the Common Stock of
the Company for each seven shares of common shares of Harbinger NV held by the
shareholder at the time the Company exercises the Call Option, or (ii) the
total amount contributed to the capital of Harbinger NV by the respective
shareholder plus 30% compounded annual interest calculated as of the date of
the original capital contribution. The Shareholders Agreement includes
restrictions on transfer of the securities of Harbinger NV and a put-call
option which may be exercised at any time on and after November 5, 1994 by any
shareholder holding nine percent or more of the outstanding common shares of
Harbinger NV. The Shareholders Agreement is effective until the earlier of
December 31, 1999 or termination by written agreement of Harbinger NV and
shareholders holding at least 80% of the aggregate issued shares.
-15-
<PAGE> 17
HARBINGER NET SERVICES, LLC
The Company organized Harbinger NET Services, LLC ("HNS") in December 1994
to address opportunities to use the Internet to perform electronic commerce
transactions and related services. In March 1995, the Company invested
approximately $360,000, and other individuals (including existing Harbinger
shareholders, officers and directors) invested approximately $300,000 to
provide initial funding. In June 1995, the Company purchased additional HNS
common shares, for an aggregate consideration of $8.0 million, of which $2.0
million was paid in June 1995 and $6.0 million was paid in September 1995 from
the proceeds of the Company's initial public offering. Also in June 1995,
BellSouth invested $3.0 million in HNS in exchange for the BellSouth Debenture,
which is a five year subordinated convertible debenture bearing interest at 6%
per annum. The BellSouth Debenture will convert automatically into common
shares of HNS at such time, if ever, as BellSouth under the terms of a consent
decree applicable to BellSouth is permitted to make equity investments in
companies such as HNS. No assurance can be given that such modification will be
approved during the term of the BellSouth Debenture by the federal court having
jurisdiction over the consent decree. Assuming immediate conversion of the
BellSouth Debenture and exercise of outstanding HNS options, BellSouth would
acquire 2.2 million HNS common shares, and the Company and BellSouth would own
70% and 24%, and Harbinger shareholders, officers and directors would own 6%,
respectively, of the HNS common shares outstanding following such conversion.
The Company and HNS have entered into several agreements effective May
1995 for the Company to receive certain rights and provide products and
services to HNS. Under a Software License Agreement, HNS has granted the
Company the non-exclusive right to license and distribute HNS products, if any,
which may be derived from the Company's products, for a royalty to be
determined by the Company and HNS in connection with such software products
released by HNS. Also under the Software License Agreement, the Company
provides HNS a right to license and distribute certain Company software
programs and HNS pays the Company a royalty based on HNS's software revenues
derived from Company products. Under a Management Agreement and a Development
Agreement, the Company provides various management and development services to
HNS in connection with its general management, the planning and execution of
marketing and sales activities, and the development of software products in
exchange for payment by HNS of specified costs of the Company's personnel
performing such services and reimbursement of associated expenses. In
accordance with a System Operation Agreement, the Company's value-added network
("VAN") is available to HNS under certain conditions at a flat monthly fee and
a monthly royalty based on a percentage of network fees generated by HNS
customers.
The rights of HNS shareholders and the terms governing the management and
operation of HNS are set forth in the Operating Agreement effective as of June
20, 1995, as amended, between HNS and the holders of its shares. Under the
Operating Agreement, the shareholders of HNS have delegated to the Board of
Managers of HNS the power and authority to operate and manage the business and
affairs of HNS without any approval or vote on the part of the shareholders.
The powers delegated to the Board of Managers include among others the power,
without any HNS shareholder consent or approval to (i) approve the sale of all
or substantially all of HNS's assets, (ii) approve the merger of HNS with or
into another entity, (iii) amend the Operating Agreement of HNS, and (iv)
approve the creation or issuance of additional or new classes of HNS shares
which may be superior in economic or voting rights to existing shares. The
Board of Managers consists of seven persons. Currently, two of such persons are
designated by the Company, two are designated by BellSouth, two are jointly
designated by the Company and BellSouth, and a final member is to be elected by
majority vote of the HNS shareholders other than the Company. If either the
Company or BellSouth holds only between five and ten percent of HNS's
outstanding shares, then the number of Board designees for the respective party
reduces to one, and if the share holdings fall below five percent, that party
loses its Board designation rights. After December 31, 1996 the members of the
Board of Managers are elected by simple majority vote of all HNS shareholders
voting as a single class, except that BellSouth always maintains its Board
designation rights for so long as BellSouth holds the BellSouth Debenture or
owns at least five percent of the HNS common shares. Members of the Board of
Managers of HNS have a fiduciary duty to perform in a manner they deem in the
best interest of HNS while acting in that capacity.
The sole rights of the HNS common shareholders as set forth in the
Operating Agreement are to vote upon the election of the Board of Managers, to
approve transfers of interest and to dissolve HNS or continue the business in
the event of its dissolution. A common shareholder's shares are not freely
transferable and are subject to
-16-
<PAGE> 18
restrictions in the Operating Agreement, and the Company is subject to certain
additional restrictions under a June 1995 agreement among HNS, the Company and
BellSouth ("Investment Agreement"). Under the Investment Agreement, the
Company and BellSouth have a right of first refusal with respect to the future
sale by HNS of certain securities and BellSouth has the right to require a
purchaser of the Company's HNS shares to buy a portion of BellSouth's HNS
shares. Shares of HNS represent the common shareholder's ratable interest in
the net profits, net losses, distributions, assets and voting rights.
Under the Operating Agreement an HNS common shareholder's shares are
subject to repurchase at fair market value in the event of the death of the
shareholder, and HNS shares held by shareholders owning less than 10% of the
common shares are subject to a call option in favor of the Company at the fair
market value of such shares exercisable at any time commencing July 1, 1996.
Fair market value is to be determined in good faith by the Board of Managers
based on the amount which would be paid in cash for HNS, as a going concern, by
an unaffiliated third party financial buyer and taking into consideration
additional factors which may include the absence of a trading market for the
shares. Certain designated shareholders, including the Company and BellSouth,
have the right after December 1, 1996 under certain circumstances to offer to
sell to certain other designated shareholders of HNS all HNS shares of the
offering shareholder or to purchase all of the shares owned by other designated
HNS shareholders. Under this arrangement, the Company could be required to make
a decision whether to sell its HNS shares or to purchase the HNS shares held by
other designated shareholders at a point in time when the Company has
insufficient funds or is unwilling to purchase such HNS shares. Except for the
right of first refusal granted under the Investment Agreement, HNS common
shareholders have no preemptive rights to acquire common shares or any new
securities issued by HNS.
HNS's Operating Agreement may be amended in writing at any time by
approval of five out of seven of the Members of the Board of Managers, provided
transactions involving the Company or BellSouth require special approval by the
disinterested Managers. Shareholders are not required to consent to or
participate in any decisions to amend the Operating Agreement. Amendments that
materially and adversely affect the interests of the shareholders do not
require, nor are they subject to, consent or approval by the shareholders of
HNS. For federal income tax purposes, it is anticipated that HNS will be
treated as a partnership. Each of the HNS shareholders, including the Company,
will report on such shareholder's federal income tax return the shareholder's
distributive share of the income, gains, losses, deductions and credits of HNS,
irrespective of whether any actual distribution of cash or property is made to
such shareholder during the taxable year. Any losses from the activities of HNS
may be used to offset income of shareholders from other activities, subject to
limitations of the Internal Revenue Code and applicable law.
Amounts charged to HNS by the Company for services provided during the
period ending December 31, 1995 were $324,000. Additionally, the Company paid
expenses of $413,000 during such period on behalf of HNS. This amount
subsequently was reimbursed by HNS. At December 31, 1995, the Company had an
amount due from HNS of approximately $97,000 for services provided and expenses
incurred by the Company, and for certain direct expenses incurred by the
Company on behalf of HNS.
The following executive officers, directors and owners of 5% or more of
the voting securities of the Company also own the number of HNS common shares
opposite their names: Mr. Howle (50,000 shares), Mr. Leach (35,714 shares), Mr.
Davis (35,714 shares), Mr. Hart (8,349 shares), Mr. Katz (2,500 shares), Mr.
House (4,285 shares), Mr. King (4,286 shares), and Vulcan Ventures, Inc.
("Vulcan Ventures") (76,429 shares).
SSA ALLIANCE
In July 1995, the Company entered into an Alliance Agreement to form a
strategic alliance relationship with SSA (the "SSA Alliance") pursuant to which
the Company acquired from SSA computer software that performs EDI functions on
IBM AS/400 workstations (the "AS/400 Software") and related computing
equipment and licensed to SSA the AS/400 Software, the Company's UNIX and
PC-based EDI software products, and related tools and utilities (the
"Licensed Software"). SSA agreed to exercise its best efforts to market the
Licensed Software to clients who use SSA's BPCS software and to pay the Company
royalties based upon net fees earned by SSA from the sale of the Licensed
Software. Royalties are payable when net fees are collected. Net fees include
software
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license fees, software maintenance and support fees and platform migration fees
earned by SSA, net of taxes and net of commissions payable to SSA's
subsidiaries and affiliated distributors. SSA also agreed to pay minimum
royalties of $1.4 million in 1995 and $5.7 million in 1996. Payments in excess
of the royalties actually earned to satisfy minimum royalties will serve as a
credit against SSA's royalty obligations after 1996 for a period of 12 months
only. The Company will pay SSA a 15% referral fee for revenue derived from the
sale of Licensed Software by the Company to non-BPCS customers referred by SSA
during the period from January 1, 1997 through December 31, 2000.
As consideration for these agreements, Harbinger issued to SSA (i) 550,000
shares of Common Stock, and agreed to repurchase this common stock for $9.00
per share on January 31, 1997 if the Harbinger Common Stock does not have a
fair market value of at least $9.00 per share on that date, and (ii) 4.0
million shares of Harbinger's Zero Coupon Preferred Stock. Holders of shares of
the Zero Coupon Preferred Stock have no voting rights, are not entitled to
dividends and holders of vested shares of Zero Coupon Preferred Stock have
preference over holders of shares of Common Stock upon the Company's
dissolution. The Company and SSA have defined targeted royalties for 1997,
1998, 1999 and 2000 (each a "Vesting Year"). Following each Vesting Year, (i)
up to 1,000,000 shares of Zero Coupon Preferred Stock will be eligible to vest;
(ii) the number of shares that actually vest will be an amount (not to exceed
1,000,000) determined by multiplying 1,000,000 times a fraction, (1) the
numerator of which shall be the amount determined by subtracting 80% from the
percentage (up to 100%) of targeted royalties actually earned, and (2) the
denominator of which shall be 20%; (iii) the Company will redeem the vested
shares; and (iv) the eligible shares that do not vest will be forfeited. The
redemption price, at SSA's discretion, either will be cash in the amount of
$1.00 per share for each vested share of Zero Coupon Preferred Stock redeemed,
or issuance to SSA of a number of shares of Harbinger's Common Stock equal to
the Zero Coupon Preferred Stock issue price of $1.00 per share for all vested
shares, divided by the then current fair market value of Harbinger's Common
Stock (determined as the closing bid price for shares of Common Stock at the
close of business on December 31 of such Vesting Year).
The Alliance Agreement will continue through December 31, 2000 and
thereafter on an annual basis until either party terminates the agreement. The
Alliance Agreement also will continue for one year following expiration of its
term without renewal for the purpose of giving the parties adequate time to
transfer then existing license and support arrangements. During the term of the
Alliance Agreement, Harbinger has agreed that, at its option, it will provide
SSA with future product modifications and upgrades, architect the Licensed
Software to facilitate foreign language translations, provide training and
telephone support to SSA personnel, revise the Licensed Software in the manner
requested by SSA to maintain product competitiveness (or allow SSA to make such
revisions), and modify the products to interface with specified database
programs, perform designated client/server functions, offer enhanced graphical
user interfaces, and conform to specified industry data communication
standards.
During the term of the Alliance Agreement, SSA will have registration
rights with respect to the 550,000 shares of Common Stock acquired by it and
any shares of Common Stock issuable upon redemption of the Zero Coupon
Preferred Stock. SSA also will have the right during the term of the Alliance
Agreement to designate one member of Harbinger's Board of Directors.
OTHER TRANSACTIONS
In July 1995, the Company entered into agreements with holders of its
Series C Preferred Stock, Vulcan Ventures and Equity & Law, pursuant to which
such holders agreed that on March 1, 1996, the shares of Series C Preferred
Stock held by them will automatically convert into shares of the Company's
Common Stock. Effective March 1, 1996, Vulcan was issued 112,554 shares of
Common Stock and Equity & Law was issued 28,138 shares of Common Stock. The
number of shares of Common Stock issued to each holder upon conversion was
determined by dividing (i) the issue price of $10.00 multiplied times the
number of shares of the Series C Preferred Stock owned by such holder by (ii)
the "average trading price" of the Common Stock, defined as 95% of the
average closing bid price of the Common Stock during the period from January
15, 1996 through February 29, 1996.
The Company has purchased insurance on the lives of Messrs. Howle and
Leach and one other officer. A portion of the proceeds payable on the death of
Messrs. Howle and Leach will be used, at the discretion of the deceased's
estate, to purchase shares of Common Stock owned by the deceased at the time of
his death.
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PROPOSAL 2
ADOPTION OF THE HARBINGER CORPORATION 1996 STOCK OPTION PLAN
GENERAL DESCRIPTION
Effective as of January 24, 1996, the Board of Directors adopted the
Harbinger Corporation 1996 Stock Option Plan (the "1996 Stock Option Plan") to
replace the Company's Amended and Restated 1989 Stock Option Plan (the "1989
Stock Option Plan"). Upon approval of the 1996 Stock Option Plan, no further
stock options will be granted under the 1989 Stock Option Plan. The 1989 Stock
Option Plan will continue in effect only with respect to outstanding stock
options which were granted under the 1989 Stock Option Plan and will terminate
and cease to exist as of the date on which all outstanding stock options which
were granted under the 1989 Stock Option Plan are exercised in full, expired or
canceled. As of March 4, 1996, options to purchase 983,477 shares of Common
Stock were outstanding under the 1989 Stock Option Plan and 504,794 shares of
Common Stock had been issued upon exercise of options granted under the 1989
Stock Option Plan. The Compensation Committee has not yet granted any options
under the 1996 Stock Option Plan.
The following is a summary of the principal features of the 1996 Stock
Option Plan. The following summary is qualified in its entirety by reference
to the complete text of the 1996 Stock Option Plan set forth as EXHIBIT A.
Shareholders are urged to read the actual text of the 1996 Stock Option Plan.
The purpose of the 1996 Stock Option Plan is to provide incentives for
officers, directors, consultants and key employees to promote the success of
the Company, and to enhance the Company's ability to attract and retain the
services of such persons. The aggregate number of shares of Common Stock
reserved for issuance under the 1996 Stock Option Plan is 1.75 million shares
plus a number of additional shares of Common Stock (not to exceed 995,206
shares) equal to the number of shares reserved for issuance under the 1989
Stock Option Plan but which are either not subject to options granted under the
1989 Stock Option Plan or were subject to options granted thereunder that
expire without exercise. Options granted under the 1996 Stock Option Plan may
be either (i) options intended to qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) non-qualified stock options. The 1996 Stock Option Plan permits the grant
of stock appreciation rights in connection with the grant of stock options.
Stock options may be granted under the 1996 Stock Option Plan for all employees
and consultants of the Company, or of any present or future subsidiary of
parent of the Company, including Harbinger NET Services, LLC, who are
considered "key employees" or "key consultants." The 1996 Stock Option Plan is
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee has the authority to determine exercise prices
applicable to the options, the eligible officers, directors, consultants or
employees to whom options may be granted, the number of shares of the Company's
Common Stock subject to each option, and the extent to which options may be
exercisable. The Compensation Committee is empowered to interpret the 1996
Stock Option Plan and to prescribe, amend and rescind the rules and regulations
pertaining to the 1996 Stock Option Plan. Options granted under the 1996 Stock
Option Plan generally will vest over four years at the rate of 25% per year.
No option is transferable by the optionee other than by will or the laws of
descent and distribution, and each option is exercisable, during the lifetime
of the option, only by such optionee.
Any incentive stock option that is granted under the 1996 Stock Option
Plan may not be granted at a price less than the fair market value of the
Company's Common Stock on the date of grant (or less than 110% of fair market
value in the case of holders of 10% or more of the total combined voting power
of all classes of stock of the Company or a subsidiary or parent of the
Company). Non-qualified stock options may be granted at the exercise price
established by the Compensation Committee, which may be less than the fair
market value of the Company's Common Stock on the date of grant.
Each option granted under the 1996 Stock Option Plan is exercisable for a
period not to exceed ten years from the date of grant (or five years in the
case of holders of 10% or more of the total combined voting power of all
classes of stock of the Company or of a subsidiary or parent of the Company)
and shall lapse upon expiration of
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such period, or earlier upon termination of the recipient's employment with the
Company, or as determined by the Compensation Committee.
DESCRIPTION OF MATERIAL PLAN CHANGES
The material difference between the 1989 Stock Option Plan and the 1996
Stock Option Plan is in the manner of exercise permitted by the 1996 Stock
Option Plan. Under the 1996 Stock Option Plan, payment of the purchase price
for shares of Common Stock purchased upon exercise of an option may be made in
any of the following forms:
(i) In cash; (ii) By delivery to the Company of a number of shares of
Common Stock which have been owned by the optionee for at least six months
prior to the date of exercise of the option having an aggregate fair market
value on the date of delivery of not less than the total purchase price for the
shares being purchased upon exercise of the option; (iii) By delivery of a
promissory note executed by the optionee to the Company which shall include
such terms and conditions as approved by the Board of Directors, including
without limitation, that: (a) The balance equal to the aggregate purchase price
for the shares being purchased shall be payable in equal installments over such
period as approved by the Board of Directors; (b) Interest shall accrue at a
per annum rate equal to the prime rate as announced from time to time by the
Company's principal bank or, if the Company has no principal bank, that rate
announced by the Wall Street Journal as the prevailing "prime rate" of interest
per annum; and (c) The optionee shall be personally liable for the repayment of
the unpaid principal balance of the loan and any and all accrued but unpaid
interest on the loan; (iv) By surrender of a number of shares of Common Stock
otherwise issuable upon exercise of the option having an aggregate fair market
value on the date of exercise of not less than the total purchase price for all
shares being purchased upon exercise of the option, including the shares being
surrendered; and (v) In any combination of the forms described above as
approved by the Board of Directors.
The Board of Directors recommends a vote FOR approval of the 1996 Stock
Option Plan.
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PROPOSAL 3
ADOPTION OF THE AMENDED AND RESTATED HARBINGER CORPORATION EMPLOYEE STOCK
PURCHASE PLAN
On October 25, 1995, the Board of Directors of the Company adopted the
Harbinger Corporation Employee Stock Purchase Plan to be effective January 1,
1996, and directed that the plan be submitted to the Shareholders of the
Company for consideration and approval at the Meeting. On January 24, 1996, in
order to incorporate certain changes concerning the participation of HNS
employees, the Board of Directors of the Company approved the Amended and
Restated Harbinger Corporation Employee Stock Purchase Plan (the "Stock
Purchase Plan"), to be effective January 1, 1996. No shares of the Company's
Common Stock will be purchased on behalf of participants under the Stock
Purchase Plan until the Plan is approved by the Shareholders at the Meeting.
If so approved, the Plan will be administered beginning effective January 1,
1996, and shares of the Company's Common Stock will be purchased on behalf of
participants pursuant to the Stock Purchase Plan's terms beginning January 1,
1996 and thereafter.
The following is a summary of the principal features of the Stock Purchase
Plan. The summary is qualified in its entirety by reference to the complete
text of the Stock Purchase Plan set forth as EXHIBIT B to this Proxy Statement.
Shareholders are urged to read the actual text of the Stock Purchase Plan.
PURPOSE
The purpose of the Stock Purchase Plan is to encourage and enable
employees of the Company and its subsidiaries to acquire a proprietary interest
in the Company through ownership of shares of the Company's Common Stock.
Eligible employees of the Company and its subsidiaries will purchase shares of
Common Stock at fair market value and the Company and its subsidiaries will
partially subsidize such purchases under the Stock Purchase Plan as set forth
below and will pay the expenses of its administration. The Company believes
that employees who elect to participate in the plan will have a closer
identification with the Company and greater motivation to work for the
Company's success by reason of their ability as shareholders to participate in
the Company's growth and earnings.
GENERAL
The Stock Purchase Plan authorizes the issuance of up to 150,000 shares of
the Company's Common Stock (subject to adjustment for capital changes) pursuant
to the exercise of non-transferable options granted to participating employees.
If at any time shares of Common Stock reserved for the purpose of the Stock
Purchase Plan are not available in sufficient number to satisfy all of then
unfulfilled purchase requirements, the available shares will be apportioned pro
rata among participants, and all payroll deductions not used to purchase Common
Stock will be refunded to participants. Participants are protected against
dilution or enlargement of their rights in the event of a change in the
Company's outstanding Common Stock by reason of any stock dividend, stock
split, combination of shares, exchange of shares or other change in the Common
Stock of the Company effected without the Company's receipt of consideration.
PARTICIPATION IN THE STOCK PURCHASE PLAN
An employee electing to participate in the Stock Purchase Plan must
authorize a stated dollar amount of the employee's regular pay to be deducted
by the Company from the employee's pay during each of four quarterly payroll
deduction periods (each a "Purchase Period"). The minimum deduction for a
participant is $10.00 per pay period. Purchase Periods begin on January 1,
April 1, July 1, and October 1 of each calendar year during which the Stock
Purchase Plan is in effect. On the last day of each Purchase Period, the
Company is deemed to have granted a purchase right to each participant as of
the first day of the Purchase Period to purchase as many full and fractional
shares of Common Stock as can be purchased with the participant's payroll
deductions. On the last day of the Purchase Period, the participant will be
deemed to have exercised this option, at the option price, to the extent of
such participant's accumulated payroll deductions. In no event, however, may
the participant purchase Common
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Stock having a fair market value (measured on the first business day of the
Purchase Period) of greater than $3,750 during a Purchase Period. The option
price under the Stock Purchase Plan is equal to 85% of the fair market value of
the Common Stock on either the first business day or the last business day of
the applicable Purchase Period, whichever is lower. No interest will be paid
on amounts deducted from an employee's pay and used to purchase Common Stock
under the Stock Purchase Plan.
An employee may elect to have amounts deducted from his or her pay, as
described above, by delivering to the Company a participation form authorizing
the stated dollar amount to be deducted each pay period for the entire Purchase
Period. If an employee does not file a participation form at least 15 days
before the start of a Purchase Period, the employee's election or payroll
deductions for the preceding Purchase Period will remain in effect.
An employee's rights under the Stock Purchase Plan may not be assigned,
transferred, pledged or otherwise disposed of, except by will or the laws of
descent and distribution.
ELIGIBILITY
Employees of the Company who have completed six full months of service
with the Company and whose customary employment is more than 20 hours per week
and five or more months per calendar year are eligible to participate in the
Stock Purchase Plan. An employee may not be granted an option under the Stock
Purchase Plan if after the granting of the option such employee would be deemed
to own 5% or more of the combined voting power of value of all classes of stock
of the Company. As of March 4, 1996, approximately 160 employees are eligible
to participate in the Stock Purchase Plan.
Employees of HNS will be eligible to participate in the Stock Purchase
Plan upon the same terms and conditions as employees of the Company. See
"Certain Transactions" for a description of the Company's relationship with
HNS. By agreement between HNS and the Company, HNS will provide the full
purchase price (100% of the fair market value of the Common Stock to be
purchased during the Purchase Period) to the Company as soon as
administratively possible following the last day of a Purchase Period in order
to effect the purchase of shares of Common Stock for participating employees of
HNS.
WITHDRAWAL FROM THE STOCK PURCHASE PLAN
An employee's rights under the Stock Purchase Plan terminate upon
termination of his or her employment for any reason, including retirement.
Upon such termination, the Company will refund the employee's payroll
deductions made during the Purchase Period.
A participant may withdraw from the Stock Purchase Plan at any time prior
to the last business day of any Purchase Period by delivering to the Company a
participation withdrawal form. The participant may elect on the withdrawal
form to receive all of the accumulated payroll deductions as a refund or to
exercise the participant's outstanding purchase rights to purchase Common Stock
in the amount of payroll deductions withheld during the Purchase Period.
A participant who withdraws from the Stock Purchase Plan will not be
eligible to rejoin the Plan until the second Purchase Period following the
Purchase Period of withdrawal. In the event a participant who is a section
16(b) insider under the Securities Act ceases participation in the Plan, such
insider may not re-enroll in the Plan until the Purchase Period beginning
coincident with or immediately following the expiration of a six-month period
beginning upon the effective date of such insider's withdrawal from the Plan.
DISPOSITION OF STOCK
An employee may not sell shares of Common Stock purchased under the Stock
Purchase Plan for at least one Purchase Period following the Purchase Period in
which the option for such shares was granted.
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<PAGE> 24
ADMINISTRATION
The Plan is administered by the Compensation Committee. No member of the
Board of Directors will be eligible to participate in the Plan during the
period he or she serves as a member of the Compensation Committee.
The Compensation Committee may terminate or amend the Stock Purchase Plan
at any time. However, any termination or amendment may not affect or change
purchase rights previously granted under the Stock Purchase Plan without the
consent of the affected participants. Also, any amendment that materially
increases the benefits or number of shares under the Stock Purchase Plan
(except for adjustments due to changes in the Company's capital structure) or
that materially modifies the eligibility requirements of the Stock Purchase
Plan will be subject to shareholder approval. If not sooner terminated by the
Compensation Committee, the Stock Purchase Plan will terminate at the time that
all authorized shares of Common Stock reserved for grant under the Stock
Purchase Plan have been purchased.
USE OF FUNDS
The proceeds received by the Company from the sale of Common Stock
pursuant to the Stock Purchase Plan will be used for general corporate
purchases.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain tax considerations for
employees participating in the Stock Purchase Plan and certain tax effects to
the Company. However, the summary does not address every situation that may
result in taxation. For example, it does not discuss state taxes or the tax
implications arising from a participant's death. The Stock Purchase Plan is
not subject to the provisions of the Employee Retirement Income Security Act of
1974, and the provisions of Section 401(a) of the Code are not applicable to
the Stock Purchase Plan.
1. Amounts deducted from any employee's pay under the Stock Purchase
Plan are included in the employee's compensation subject to federal
income and social security taxes. The Company will withhold taxes on
these amounts. An employee of the Company will not recognize any
additional income at the time he or she elects to participate in the
Stock Purchase Plan, or purchases Common Stock under the Stock Purchase
Plan. Employees of HNS will recognize additional compensation income at
the time shares of Common Stock are purchased for them under the Stock
Purchase Plan. The amount of income will be treated as compensation and
will be equal to the spread (difference) between the amounts withheld
from the employee's pay to purchase the shares and the fair market value
on the date of purchase. This income may be subject to withholding
taxes, including social security taxes.
2. If an employee of the Company disposes of Common Stock purchased
pursuant to the Stock Purchase Plan within two years after the first
business day of the Purchase Period in which such stock was purchased,
the employee will recognize ordinary compensation income at the time of
disposition in an amount equal to the excess of the fair market value of
the stock on the day the stock was purchased over the purchase price the
employee paid for the stock. This amount may be subject to withholding
taxes, including social security taxes. In addition, the employee
generally will recognize a capital gain or loss in an amount equal to the
difference between the amount realized upon the sale of the stock and his
or her basis in the stock (that is, his or her purchase price plus the
amount taxed as compensation income). If the shares have been held for
more than one year, such gain or loss will be long-term capital gain or
loss.
3. If an employee of the Company disposes of Common Stock purchased
pursuant to the Stock Purchase Plan more than two years after the first
business day of the Purchase Period in which such stock was purchased,
the employee will recognize as ordinary compensation income at the time
of such disposition an amount equal to the lesser of (a) the excess of
the fair market value of the stock measured at the time of such
disposition over the amount paid for the stock, or (b) 15% of the fair
market value of the stock measured as of the first business day of the
Offering in which the stock was purchased. This amount,
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however, is not subject to social security taxes or withholding. In
addition, the employee generally will recognize a long-term capital gain
or loss in an amount equal to the difference between the amount realized
upon the disposition of the stock and his or her basis in the stock (that
is, his or her purchase price plus the amount, if any, taxed as
compensation income).
4. If an employee of HNS disposes of shares of Common Stock at any
time, the employee will recognize as capital gain or loss at the time of
such disposition the excess of the fair market value of the shares over
his or her basis in the stock (that is, his or her purchase price plus
the amount taxed to him or her as compensation income at the time of
purchase). Treatment of the employee's gain or loss upon the sale as
long term or short term capital gain or loss will depend upon the period
of time the employee has held the shares of Common Stock. Generally, a
holding period of one year from the date of purchase of the shares is
required for long term capital gain or loss treatment.
5. Although the amounts deducted from the pay of an employee of the
Company under the Stock Purchase Plan generally are tax-deductible
business expenses of the Company, the Company generally will not be
allowed any additional deduction by reason of such Company employee's
purchase of Common Stock under the Stock Purchase Plan. However, if a
Company employee disposes of stock purchased pursuant to the Stock
Purchase Plan within two years after the first business day of the
offering period in which such stock was purchased, the Company should be
entitled to a deduction in an amount equal to the compensation income
recognized by the employee. If a Company employee disposes of stock
purchased under the Stock Purchase Plan more than two years after the
first business day of the Offering in which such stock was purchased, the
Company will not receive any deduction for federal income tax purposes
with respect to such stock. Except when a Company employee disposes of
Common Stock after the two-year period described above, the Company may
be required to withhold taxes upon, and to pay employment taxes with
respect to, compensation income recognized by its employees in connection
with the Stock Purchase Plan.
6. Amounts deducted from the pay of an employee of HNS under the
Stock Purchase Plan are generally tax-deductible business expenses of
HNS. Also, the additional compensation income recognized by an employee
of HNS upon purchase of shares of Common Stock will generally be a
tax-deductible business expense of HNS. If an employee of HNS disposes
of shares of Common Stock purchased under the Stock Purchase Plan, HNS
will not receive any additional deduction for federal income tax purposes
with respect to such stock.
Approval of the Stock Purchase Plan will require the affirmative vote of a
majority of the shares of the Common Stock of the Company present or
represented and entitled to vote at the Annual Meeting.
The Board of Directors recommends a vote FOR the approval of the Stock
Purchase Plan.
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PROPOSAL 4
APPROVAL OF MODIFICATIONS TO THE COMPANY'S AMENDED AND RESTATED 1993 STOCK
OPTION PLAN FOR NONEMPLOYEE DIRECTORS
The Board of Directors has proposed amendments to the Amended and Restated
1993 Stock Option Plan for Nonemployee Directors (the "Directors Stock Option
Plan") which will REDUCE the number of shares of Common Stock subject to annual
option grants to the directors, to be effective on approval by the
shareholders. Currently, each nonemployee director receives an option to
purchase 5,000 shares of Common Stock on the date of, and at the time
immediately following, every Annual Meeting of Shareholders ("Annual Grant").
The Board of Directors has approved, subject to shareholder approval,
modification of the Directors Plan so that the Annual Grant will be reduced
from 5,000 to 4,000 shares, commencing with grants made at the time immediately
following the 1996 Annual Meeting of Shareholders.
The Directors Stock Option Plan originally provided for Annual Grants of
options to acquire 7,500 shares of Common Stock. By amendment to the Directors
Stock Option Plan in 1995, the number of shares subject to Annual Grants was
reduced from 7,500 to 5,000. The Board of Directors now proposes that the
number of shares subject to Annual Grants be again reduced from 5,000 to 4,000.
The Directors have concluded that the potential gain that may be realized from
Annual Grants of options to acquire 4,000 shares is appropriate to compensate
the Directors for service as members of the Company's Board of Directors.
The Board of Directors recommends a vote FOR the approval of modifications
to the Directors Stock Option Plan to reduce the number of shares issuable upon
exercise of Annual Grants from 5,000 to 4,000.
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PROPOSAL 5
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
In January 1996, the Board of Directors selected the accounting firm of
KPMG Peat Marwick LLP to serve as its independent auditor. A proposal to
ratify that appointment will be presented at the Meeting. Representatives of
KPMG Peat Marwick LLP are expected to be present at the meeting. They will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
Arthur Andersen LLP was removed as the Company's principal auditor as of
December 26, 1995. During the fiscal year ended December 31, 1994, and during
the interim period until their dismissal, there were no disagreements between
the Company and Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of Arthur Andersen LLP, would have caused
Arthur Andersen LLP to make reference to the subject matter of the disagreement
in connection with its report and there occurred no "reportable event" within
the meaning of Item 304(A)(1)(v) of SEC Regulation S-K. Arthur Andersen LLP
has confirmed that it concurs with the statements made by the Company herein.
The Board of Directors engaged KPMG Peat Marwick LLP, effective January 2,
1996. Prior thereto, the Company did not consult KPMG Peat Marwick LLP on any
matter that was the subject of a disagreement with the Company's former
accountants or a reportable event (as such terms are defined by Item
302(A)(1)(v) of Regulation S-K).
The Board of Directors recommends that the shareholders vote FOR
ratification of selection of independent auditors.
SECTION 16(a) REPORTING
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10%
of the Company's Common Stock, to file with the SEC initial reports of
ownership and reports of changes in ownership of the Common Stock and all other
equity securities of the Company beneficially owned by them. Directors,
executive officers and greater than 10% shareholders are required by regulation
to furnish the Company the copies of all Section 16(a) reports they file. To
the Company's knowledge, based solely on review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 1995, all Section 16(a)
filing requirements applicable to the directors, executive officers and greater
than 10% beneficial owners were complied with by such persons, except late
filings by C. Tycho Howle and James Davis of amended Form 3's to modify the
report of their beneficial ownership made at the time of the Company's initial
public offering, by Donald L. House and James C. Davis of Form 4's to report
sales of shares in the Company's initial public offering, by Roger E. Covey of
a Form 3 upon becoming a member of the Board of Directors report his initial
ownership of no Company shares, and by David Meeker of a Form 4 to report his
acquisition of 500 shares of Common Stock.
SHAREHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any proposal
by a shareholder of the Company for consideration at the 1997 Annual Meeting of
Shareholders must be received by the Company no later than December 10, 1996,
if any such proposal is to be eligible for inclusion in the Company's proxy
materials for its 1997 Annual Meeting. Under such rules, the Company is not
required to include shareholder proposals in its proxy materials unless certain
other conditions specified in such rules are met.
In order for a shareholder to bring any business or nominations before the
1996 Annual Meeting of Shareholders, certain conditions set forth in Sections
16 and 17 of the Company's Bylaws must be complied with, including, but not
limited to, delivery of notice to the Company not less than 30 days prior to
the meeting as originally scheduled; provided, however, that in the event that
less than 30 days' notice of the date of the meeting is
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given or made to the shareholders, notice by the shareholders to be timely must
be received not later than the close of business on the 10th day following the
date on which such notice of the date of meeting was mailed.
OTHER MATTERS
Management of the Company is not aware of any other matter to be presented
for action at the Annual Meeting other than those mentioned in the Notice of
Annual Meeting of Shareholders and referred to in this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS,
C. Tycho Howle,
Chairman and Chief Executive Officer
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<PAGE> 29
EXHIBIT A
TO HARBINGER CORPORATION PROXY STATEMENT
FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
HARBINGER CORPORATION 1996 STOCK OPTION PLAN
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<PAGE> 30
HARBINGER CORPORATION
1996 STOCK OPTION PLAN
Section 1.
Purpose
The purpose of this stock option plan is to (i) promote the interests of
the Company and its stockholders by attracting and retaining the services of
experienced and knowledgeable Directors, Key Employees and Consultants who have
rendered valuable services to the Company, (ii) provide additional incentives
to Key Employees to increase the value of the Company's Shares, and (iii)
provide the Key Employees, Consultants and Directors with a stake in the future
of the Company which corresponds to the stake of each of the Company's
shareholders.
Section 2.
Definitions
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular, and reference to one gender shall include the other gender.
2.1 BOARD means the Board of Directors of the Company.
2.2 CODE means the Internal Revenue Code of 1986, as amended.
2.3 COMMITTEE means the committee of the Board appointed pursuant to
Section 5.
2.4 COMMON STOCK means the common stock, $.0001 par value per share, of
the Company, and shall also mean any other stock or securities (including any
other share or securities of an entity other than the Company) for or into
which the outstanding shares of such stock are hereafter exchanged or changed.
2.5 COMPANY means Harbinger Corporation, a Georgia corporation, and any
successor to such organization.
2.6 CONSULTANT means a consultant of the Company who has rendered valuable
service to the Company and who is not a Key Employee.
2.7 DIRECTOR means a Member of the Board, or a Member of the Board of
Directors of a Parent or Subsidiary, who is not a Key Employee.
2.8 EXERCISE PRICE means the price which, under the terms of an Option
Agreement, is required to be paid to purchase one (1) Share upon the exercise
of an Option granted under this Plan.
2.9 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.10 FAIR MARKET VALUE of each Share on any date shall mean the price
determined below on the last business day immediately preceding the date of
valuation:
(a) The closing sales price per Share, regular way, or in the absence
thereof, the mean of the last reported bid and asked quotations, on such date
on the exchange having the greatest volume of trading in the Shares during the
thirty-day period preceding such date (or, if such exchange was not open for
trading on such date, the next preceding date on which it was open); or
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(b) If there is no price as specified in (a), the final reported sales
price per Share, or if not reported, the mean of the closing high bid and low
asked prices, in the over-the-counter market for the Shares as reported by the
National Association of Securities Dealers Automatic Quotation System, or if
not so reported, then as reported by the National Quotation Bureau
Incorporated, or if such organization is not in existence, by an organization
providing similar services, on such date (or, if such date is not a date for
which such system or organization generally provides reports, then on the next
preceding date for which it does so); or
(c) If there also is no price as specified in (b), the price per Share
determined by the Committee by reference to bid-and-asked quotations for the
Shares provided by members of an association of brokers and dealers registered
pursuant to Subsection 15(b) of the Exchange Act, which members make a market
in the Shares, for such recent dates as the Committee shall determine to be
appropriate for fairly determining current market value; or
(d) If there also is no price as specified in (c), an amount per Share
determined in good faith by the Committee based on such relevant facts, which
may include opinions of independent experts, as may be available to the
Committee.
2.11 ISO means an option granted under this Plan to purchase Shares which
is intended by the Company to satisfy the requirements of Code Section 422 as
an incentive stock option.
2.12 KEY EMPLOYEE means any person, including officers and directors, in
the regular employment of the Company, or a Subsidiary or a Parent, who is
designated a Key Employee by the Committee and is, or is expected to be,
primarily responsible for the management, growth, or supervision of some part
or all of the business of the Company, a Subsidiary or a Parent. The power to
determine who is a Key Employee is reserved solely for the Committee.
2.13 NQSO means an option granted under this Plan to purchase Shares which
is not intended by the Company to be an incentive stock option satisfying the
requirements of Code Section 422.
2.14 OPTION means an ISO or a NQSO.
2.15 OPTION AGREEMENT means the written agreement or instrument which sets
forth the terms of an Option granted to a Consultant, Director or Key Employee
under this Plan.
2.16 OPTIONEE means the grantee of an Option.
2.17 PARENT means any corporation (other than the Company), partnership or
other entity in an unbroken chain of corporations, partnerships or other
entities ending with the Company if, at the relevant time, each of the
corporations (other than the Company), partnerships or other entities owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations, partnership or other
entities in such chain.
2.18 PLAN means the Harbinger Corporation 1996 Stock Option Plan, as
amended from time to time.
2.19 PRIOR PLAN means the Harbinger Corporation Amended and Restated 1989
Stock Option Plan.
2.20 PRIOR PLAN SHARES means the number of Shares reserved under the Prior
Plan for issuance upon the exercise of options granted under the Prior Plan,
minus (a) the number of Shares actually issued upon exercise of such options,
and (b) the number of Shares subject to outstanding options granted under the
Prior Plan. The number of Prior Plan Shares shall be increased by the number
of Shares subject to options granted under the Prior Plan which terminate,
expire or are canceled. Notwithstanding the above, the number of Prior Plan
Shares shall not exceed 995,206.
2.21 SHARE means one (1) share of Common Stock.
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2.22 STOCK APPRECIATION RIGHT means a stock appreciation right as
described in Section 9.
2.23 SUBSIDIARY means any corporation (other than the Company),
partnership or other entity in an unbroken chain of corporations, partnerships
or other entities beginning with the Company if, at the relevant time, each of
the corporations, partnerships or other entities, other than the last
corporation in the unbroken chain, owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations, partnerships or other entities in such chain. The term
"Subsidiary" shall include Harbinger NET Services, LLC for all purposes under
this Plan.
2.24 SURRENDERED SHARES means the Shares described in Section 8 which (in
lieu of being purchased) are surrendered for cash or Shares, or for a
combination of cash and Shares, in accordance with Section 8.
2.25 TEN PERCENT SHAREHOLDER means a person who owns (after taking into
account the attribution rules of Code Section 424(d)) more than ten percent
(10%) of the total combined voting power of all classes of shares of either the
Company, a Subsidiary or a Parent.
Section 3.
Shares Subject to Options
3.1 SHARES RESERVED FOR ISSUANCE. Subject to any antidilution adjustment
pursuant to Section 3.2, the maximum number of Shares that may be subject to
Options granted hereunder shall not exceed 1,500,000, plus the number of Prior
Plan Shares. Shares issued pursuant to the exercise of an Option may be either
authorized and unissued Shares or Shares issued and subsequently acquired by
the Company. The Shares covered by any unexercised portion of an Option that
has terminated for any reason (except as may be adjusted under Section 3.2
below) may again be optioned or awarded under the Plan, and such Shares shall
not be considered as having been optioned or issued in computing the number of
Shares remaining available to be subject to Options granted hereunder.
3.2 ANTIDILUTION.
(a) In the event that the outstanding Shares are changed into or
exchanged for a different number or kind or shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, stock split or stock
dividend, or in the event that any spin-off, spin-out or other distribution of
assets materially affects the price of the Company's stock:
(i) The aggregate number and kind of Shares for which Options
may be granted hereunder shall be adjusted proportionately by the Committee;
(ii) The number of Shares subject to each outstanding Option, and
the Exercise Price of each such outstanding Option, shall be adjusted
proportionately by the Committee; and
(iii) The number and kind of Stock Appreciation Rights shall be
adjusted as the Committee deems appropriate in the circumstances.
(b) If the Company shall be a party to any reorganization in which it
does not survive, involving a merger, consolidation, or acquisition of the
stock or substantially all of the assets of the Company, the Committee, in its
discretion, may:
(i) Notwithstanding other provisions hereof, declare that all
Options and Stock Appreciation Rights granted under the Plan shall become
exercisable immediately notwithstanding the provisions of the respective
Option Agreements or Stock Appreciation Rights agreements regarding
exercisability, and that all such Options shall terminate a specified period of
time after the Committee gives written notice of the immediate right to
exercise all such Options and of the decision to terminate all Options not
exercised within such period; and/or
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(ii) Notify all Grantees that all Options and Stock Appreciation
Rights granted under the Plan shall be assumed by the successor corporation or
substituted on an equitable basis with options or restricted stock issued by
the successor corporation.
(c) If the Company is to be liquidated or dissolved in connection
with a reorganization described in Section 3.2(b), the provisions of such
Section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding any other
provisions hereof, cause all then remaining unvested Shares subject to Options
and all remaining Stock Appreciation Rights under the Plan to vest, and shall
cause every outstanding Option and Stock Appreciation Right under the Plan to
terminate to the extent not exercised prior to the adoption of the plan of
dissolution or liquidation by the stockholders, provided that, notwithstanding
other provisions hereof, the Committee may declare all Options granted under
the Plan to be exercisable at any time on or before the fifth business day
following such adoption, notwithstanding the provisions of the respective Option
Agreements or Stock Appreciation Rights agreements regarding exercisability.
(d) The adjustments described in Subsections (a) through (c) of this
Section 3.2, and the manner of their application, shall be determined solely by
the Committee, and any such adjustment may provide for the elimination or
redemption of fractional share interests. The adjustments required under this
Section 3 shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring such
adjustments.
Section 4.
Effective Date and Duration of Plan
The effective date of this Plan shall be the date it is adopted by the
Board, provided the shareholders of the Company approve this Plan within twelve
(12) months after such effective date. If such effective date comes before
such shareholder approval, any Options granted under this Plan before the date
of such approval shall automatically be granted subject to such approval. The
Plan shall continue in effect until it is terminated by action of the Board or
the Company's shareholders, but such termination shall not affect the terms of
any outstanding Options.
Section 5.
Committee
This Plan shall be administered by the Committee, which shall consist of
three (3) or more directors appointed by the Board, each of whom is not while a
member of the Committee, or was not during the one (1) year prior to serving as
a member of the Committee, eligible to receive equity securities of the
Company, or any affiliate of the Company, pursuant to this Plan, the Prior
Plan, or any other plan of the Company or any affiliate of the Company, except
as may be permitted under Section 16(b)(3) of the Exchange Act. The Committee
acting in its absolute discretion shall exercise such powers and take such
action as expressly called for under this Plan and, further, the Committee
shall have the power to interpret this Plan and (subject to Section 11) to take
such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be
binding on the Company, on each affected Consultant, Director or Key Employee
and on each other person directly or indirectly affected by such action.
Notwithstanding anything else to the contrary herein, the Board shall have the
authority to assume the powers and responsibilities outlined above with respect
to the Committee, in whole or in part.
Section 6.
Eligibility
Except as provided below, only Consultants, Directors and Key Employees
shall be eligible for the grant of Options under this Plan, but no Consultant,
Director or Key Employee shall have the right to be granted an Option under
this Plan merely as a result of his or her status as a Consultant, Director or
Key Employee. Key Employees shall be eligible for the grant of ISO's under
this Plan. Consultants and Directors shall not be eligible for the grant of
ISO's under this Plan.
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Section 7.
Terms and Conditions of Options
7.1 GRANTS OF OPTIONS.
(a) AWARDS. In accord with the procedure established by the Board, the
Committee in its absolute discretion shall grant Options under this Plan from
time to time to purchase Shares and, further, shall have the right to grant new
Options in exchange for outstanding Options. Such Options shall be granted to
Consultants, Directors or Key Employees selected by the Committee acting in its
discretion as set forth above, and the Committee shall not be under any
obligation whatsoever to grant Options to all Consultants, Directors or Key
Employees or to grant all Options subject to the same terms and conditions.
Each grant of an Option shall be evidenced by an Option Agreement, and each
Option Agreement shall:
(i) specify whether the Option is an ISO or NQSO; and
(ii) incorporate such other terms and conditions as the Committee
acting in its absolute discretion deems consistent with the terms of this Plan,
including (without limitation) a restriction on the number of Shares subject to
the Option which first become exercisable or subject to surrender during any
calendar year.
(b) SELECTION OF GRANTEES. In determining the Consultants, Directors
or Key Employees to whom Options shall be granted and the number of Shares to be
covered by such Options, the Committee may take into account the
recommendations of the President of the Company and its other officers, the
duties of the Consultants, Directors or Key Employees, the present and
potential contributions of the Consultants, Directors or Key Employees to the
success of the Company, the anticipated number of years of service remaining
before the attainment by the Key Employees of retirement age, and other factors
deemed relevant by the Committee, in its sole discretion, in connection with
accomplishing the purpose of this Plan. A Consultant, Director or Key Employee
who has been granted an Option to purchase Shares of the Company, whether under
this Plan or otherwise, may be granted one (1) or more additional Options.
(c) DUAL GRANTS. If the Committee grants an ISO and a NQSO to a Key
Employee on the same date, the right of the Key Employee to exercise or
surrender one such Option shall not be conditioned on his or her failure to
exercise or surrender the other such Option.
7.2 EXERCISE PRICE.
(a) ISO. If an Option is an ISO, the Exercise Price for each Share
subject to such Option shall be no less than the Fair Market Value of a Share
on the date such Option is granted or, if such Option is granted to a Ten
Percent Shareholder, the Exercise Price for each Share subject to such Option
shall be no less than one hundred ten percent (110%) of the Fair Market Value
of a Share on the date such Option is granted.
(b) NQSO. If an Option is a NQSO, the Exercise Price for each Share
shall be no less than the minimum price required by applicable state law or by
the Company's governing instrument, or $0.01, whichever price is greater.
7.3 VESTING OF OPTIONS. Each Option granted under the Plan shall be
exercisable at such time or times, or upon the occurrence of such event or
events, and in such amounts, as the Committee shall specify in the Option
Agreement; provided, however, that subsequent to the grant of an Option, the
Committee may, at any time before complete termination of such Option,
accelerate the time or times at which such Option may be exercised in whole or
in part.
7.4 TERM OF OPTION. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Agreement, but no Option Agreement shall:
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(a) make an Option exercisable before the date such Option is granted
or;
(b) make an Option exercisable after the earlier of the:
(i) the date such Option is exercised in full, or
(ii) the date which is the tenth (10th) anniversary of the date
such Option is granted, if such Option is a NQSO or an ISO granted to a non-Ten
Percent Shareholder, or the date which is the fifth (5th) anniversary of the
date such Option is granted, if such Option is an ISO granted to a Ten Percent
Shareholder.
An Option Agreement may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever,
including death or disability.
7.5 TIME AND MANNER OF OPTION EXERCISE. Any vested and exercisable Option
is exercisable in whole or in part (in whole Shares and in lots of not less
than one hundred (100) Shares) at any time or from time to time prior to the
expiration of an Option by giving written notice, signed by the person
exercising the Option, to the Company stating the number of Shares with respect
to which the Option is being exercised, accompanied by payment in full of the
Exercise Price for the number of Shares to be purchased. The date upon which
the Company's Secretary or Treasurer shall have received both such notice and
payment shall be the date of exercise of the Option as to the number of Shares
described by the Optionee. No Option may be exercised at any time with respect
to a fractional share. Any Option of a deceased Optionee may be exercised, to
the extent vested on such Optionee's death, by the estate of such Optionee or
by a person or persons whom the Optionee has designated in writing filed with
the Company, or, if no such designation has been made, by the person or persons
to whom the Optionee's rights have passed by will or the laws of descent and
distribution.
7.6 PAYMENT OF OPTION PRICE. Payment for all Shares purchased pursuant to
the exercise of an Option shall be made in cash or, if the Option Agreement
provides, by delivery to the Company of a number of Shares which have been
owned by the Optionee for at least six (6) months prior to the date of exercise
having an aggregate Fair Market Value on the date of delivery of not less than
the product of the Option Price multiplied by the number of Shares the Optionee
intends to purchase upon exercise of the Option. In addition, the Option
Agreement may provide for cashless exercise through a brokerage transaction
following registration of the Company's equity securities under Section 12 of
the Securities Exchange Act of 1934. Further, in the sole discretion of the
Board, an Option may be exercised as to a portion or all (as determined by the
Board) of the number of Shares specified in the Option Agreement by delivery to
the Company of a promissory note. Such promissory note shall be executed by
the Optionee and shall include, with such other terms and conditions as the
Board shall approve, provisions in a form approved by the Board under which:
(a) the balance of the aggregate purchase price shall be payable in equal
installments over such period as the Board shall approve, and shall bear
interest at a per annum rate equal to the prime rate as announced from time to
time by the Company's principal bank or, if the Company has no principal bank,
that rate announced by the Wall Street Journal as the prevailing "prime rate"
of interest per annum, and (b) the Optionee shall be personally liable for
payment of the unpaid principal balance and all accrued but unpaid interest.
Except as otherwise provided herein, payment shall be made at the time that the
Option or any part thereof is exercised, and no Shares shall be issued or
delivered upon exercise of an Option until full payment has been made by the
Optionee. No Optionee, as such, shall have any of the rights of a shareholder.
7.7 TRANSFERABILITY. The right of any Optionee to exercise an Option
granted under the Plan shall, during the lifetime of such Optionee, be
exercisable only by such Optionee or by a person who obtained such Option
pursuant to a qualified domestic relations order as defined by the Code, or
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or the rules thereunder (a "QDRO") and shall not be assignable or
transferable by such Optionee other than by will or by the laws of descent and
distribution or by a QDRO.
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7.8 LIMITATION OF RIGHTS.
(a) LIMITATION AS TO SHARES. Neither the recipient of an Option
under the Plan nor an Optionee's successor or successors in interest shall
have any rights as a stockholder of the Company with respect to any Shares
subject to an Option granted to such person until the date of issuance of a
stock certificate for such Shares.
(b) LIMITATION AS TO EMPLOYMENT. Neither the Plan, nor the granting
of an Option, nor any other action taken pursuant to the Plan shall constitute
or be evidence of any agreement or understanding, express or implied, that a
Consultant, Director or Key Employee has a right to continue as an employee of
the Company or in the relationship of a consultant or director with the
Company, respectively, for any period of time or at any particular rate of
compensation.
(c) REGULATORY APPROVAL AND COMPLIANCE. The Company shall not be
required to issue any certificate or certificates for Shares upon the exercise
of an Option granted under the Plan or to record as a holder of record of
Shares the name of the individual exercising an Option under the Plan, without
obtaining to the complete satisfaction of the Board the approval of all
regulatory bodies deemed necessary by the Board and without complying, to the
Board's complete satisfaction, with all rules and regulations under federal,
state, or local law deemed applicable by the Board. In addition, with respect
to persons subject to Section 16 of the Exchange Act, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the Exchange Act. To the extent any provision of the
Plan or action by the Committee fail to comply, it shall deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
Section 8.
Surrender of Options
8.1 GENERAL RULE. The Committee acting in its absolute discretion may
incorporate a provision in an Option Agreement to allow an Optionee to
surrender his or her Option in whole or in part in lieu of the exercise in
whole or in part of that Option on any date that:
(a) the Fair Market Value of the Shares subject to such Option
exceeds the Exercise Price for such Shares, and
(b) the Option to purchase such Shares is otherwise exercisable.
8.2 PROCEDURE. The surrender of an Option in whole or in part shall be
effected by the delivery of the Option Agreement to the Committee (or to its
delegate) together with a statement signed by the Optionee which specifies the
number of Shares ("Surrendered Shares") as to which the Optionee surrenders his
or her Option and how he or she desires payment be made for such Surrendered
Shares.
8.3 PAYMENT. An Optionee in exchange for his or her Surrendered Shares
shall receive a payment in cash or in Shares, or in a combination of cash and
Shares, equal in amount on the date such surrender is effected to the excess of
the Fair Market Value of the Surrendered Shares on such date over the Exercise
Price for the Surrendered Shares. The Committee acting in its absolute
discretion can approve or disapprove an Optionee's request for payment in whole
or in part in cash and can make that payment in cash or in such combination of
cash and Shares as the Committee deems appropriate. A request for payment only
in Shares shall be approved and made in Shares to the extent payment can be
made in whole shares of Shares and (at the Committee's discretion) in cash in
lieu of any fractional Shares.
8.4 RESTRICTIONS. Any Option Agreement which incorporates a provision to
allow an Optionee to surrender his or her Option in whole or in part also shall
incorporate such additional restrictions on the exercise or surrender of such
Option as the Committee deems necessary to satisfy the conditions to the
exemption under Rule 16b-3 (or any successor exemption) to Section 16(b) of the
Exchange Act.
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Section 9.
Stock Appreciation Rights
9.1 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be, but are not required to be, granted by the Committee in
connection with grant of an Option. All Stock Appreciation Rights shall be in
such form as the Committee may from time to time determine and shall be subject
to the following terms and conditions:
(a) TERM AND EXERCISE. A Stock Appreciation Right shall be exercisable
only: (i) with the approval of the Committee, (ii) during the Term of the
Option to which it relates, (iii) at such times as the Option to which it
relates is exercisable, and (iv) if the Fair Market Value of the Shares subject
to the Option surrendered (on the date surrendered) minus the aggregate Option
Price of the Shares subject to the Option surrendered is a positive amount.
(b) PAYMENT. In the event the Committee agrees to permit exercise of
the Stock Appreciation Rights, the Optionee shall surrender to the Company the
right to exercise the Option with respect to a specified number of Shares as to
which the Option is then exercisable. In return, the Optionee shall receive
from the Company no more than an amount payable in cash and/or in Shares (as
determined by the Committee after considering the request of the Optionee)
equal to the difference between the aggregate Fair Market Value of the Shares
as to which the Optionee has surrendered the Option and the Option Price with
respect thereto. In the event the Committee determines to tender Shares in
full or partial payment of the Stock Appreciation Right, the number of Shares
to be issued to the Optionee shall be based on the Fair Market Value of the
Shares as of the date of exercise of the Stock Appreciation Right. No
fractional Shares shall be issued to Optionees upon exercise of a Stock
Appreciation Right. Instead, the Company shall pay the Optionee the value of
such fractional Share based upon the Fair Market Value of a Share on the date
the Stock Appreciation Right is exercised.
(c) NONTRANSFERABILITY. A Stock Appreciation Right granted under the
Plan shall be transferable only when the Option to which it relates is
transferable.
9.2 OTHER TERMS AND CONDITIONS. Option Agreements reflecting Stock
Appreciation Rights which are granted under the Plan may contain such other
terms and as are conditions not inconsistent with the provisions of the Plan as
the Committee may deem appropriate from time to time.
9.3 NOTIFICATION OF REQUEST TO EXERCISE.
(a) The Optionee shall request the Committee's approval to exercise a
Stock Appreciation Right by written notice to the Secretary of the Company at
the principal executive offices of the Company. Such written notice shall
state the number of Shares subject to the Option for which approval of the
exercise of the Stock Appreciation Right is requested and the Optionee's
preferred form of payment of the Stock Appreciation Right, as hereinafter
provided. The Optionee may indicate his or her preference to receive payment
of the Stock Appreciation Right in cash or in a combination thereof.
Notwithstanding anything to the contrary contained herein, the Committee shall
have absolute discretion in determining whether the request for approval of the
exercise of the Stock Appreciation Right shall be approved and, if such
approval is given, whether payment shall be made in cash or in a combination
thereof.
(b) Within thirty (30) days after the delivery to the Secretary of the
Optionee's request to exercise the Stock Appreciation Right as provided above,
the Committee shall inform the Optionee in writing of its determination to the
Optionee. The Optionee must act on any approved exercise of a Stock
Appreciation Right within thirty (30) days after the date of such determination
by the Committee (or such longer period as may be permitted by the Committee)
and in accordance with the terms approved by the Committee. Exercise shall be
by written notice actually delivered, or mailed by certified or registered
mail, return receipt requested, to the Secretary of the Company at the
principal executive office of the Company.
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9.4 EFFECT OF EXERCISE. Upon exercise of a Stock Appreciation Right, the
Option to which it relates shall lapse with respect to the Shares as to which
the Stock Appreciation Right is exercised and such Shares shall not be
available for further grant of Options.
Section 10.
Securities Registration
Each Option Agreement may provide that, upon the receipt of Shares as a
result of the surrender or exercise of an Option, the Consultant, Director or
Key Employee shall, if so requested by the Company, hold such Shares for
investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement
satisfactory to the Company to that effect. Each Option Agreement also may
provide that, if so requested by the Company, the Consultant, Director or Key
Employee shall make a written representation to the Company that he or she will
not sell or offer to sell any of such Shares unless a registration statement
shall be in effect with respect to such Shares under the Securities Act of
1933, as amended ("1933 Act") and any applicable state securities law or unless
he or she shall have furnished to the Company an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required. Certificates representing the Shares
transferred upon the exercise or surrender of an Option granted under this Plan
may at the discretion of the Company bear a legend to the effect that such
Shares have not been registered under the 1933 Act or any applicable state
securities law and that such Shares may not be sold or offered for sale in the
absence of an effective registration statement as to such Shares under the 1933
Act and any applicable state securities law or an opinion, in form and
substance satisfactory to the Company, of legal counsel acceptable to the
Company, that such registration is not required.
Section 11.
Sale or Merger of the Company
If the Company agrees to sell substantially all of its assets for cash or
property or for a combination of cash and property or agrees to any merger,
consolidation, reorganization, division or other transaction in which Shares
are converted into another security or into the right to receive securities or
property and such agreement does not provide for the assumption or substitution
of the Options granted under this Plan, each Option at the direction and
discretion of the Board, or as is otherwise provided in the Option Agreements,
may be cancelled unilaterally by the Company in exchange for the whole Shares
(or, subject to satisfying the conditions to the exemption under Rule 16b-3 or
any successor exemption to Section 16(b) of the Exchange Act, for the whole
Shares and the cash in lieu of a fractional Share) which each Optionee
otherwise would receive if he or she had the right to surrender his or her
outstanding Option in full under Section 11 of this Plan and he or she
exercised that right exclusively for Shares on a date fixed by the Board which
comes before such sale or other corporate transaction.
Section 12.
Termination and Amendment of Plan
The Board may amend, terminate or suspend the Plan at any time, in its
sole and absolute discretion; provided, however, that if required to qualify
the Plan under Rule 16b-3 promulgated under Section 16 of the Exchange Act, no
amendment shall be made more than once every six months that would change the
amount, price or timing of the Annual Grants and Interim Grants, other than to
comport with changes in the Code, or the rules and regulations promulgated
thereunder; and provided, further, that if required to qualify the Plan under
Rule 16b-3, no amendment shall be made without the approval of the Company's
stockholders that would (a) materially increase the number of Shares that may
be issued under the Plan; (b) materially modify the requirements as to
eligibility for participation in the Plan; or (c) otherwise materially increase
the benefits accruing to participants under the Plan.
Section 13.
Amendment or Termination of Plan
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of the
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<PAGE> 39
Company (1) to increase the number of Shares reserved under Section 3 except as
set forth in Section 3.2, (2) to extend the maximum life of the Plan or the
maximum exercise period under Section 7.4, (3) to decrease the minimum Exercise
Price under Section 7.2, or (4) to change the designation of Consultants,
Directors or Key Employees eligible for Options under Section 7.1. The Board
also may suspend the granting of Options under this Plan at any time and may
terminate this Plan at any time; provided, however, the Company shall not have
the right to modify, amend or cancel any Option granted before such suspension
or termination unless (1) the Optionee consents in writing to such
modification, amendment or cancellation or (2) there is a dissolution or
liquidation of the Company or a transaction described in Section 3.2 or Section
11 of this Plan.
Section 14.
Miscellaneous
14.1 SHAREHOLDER RIGHTS. No Consultant, Director or Key Employee shall
have any rights as a shareholder of the Company as a result of the grant of an
Option to him or to her under this Plan or his or her exercise or surrender of
such Option pending the actual delivery of Shares subject to such Option to
such Consultant, Director or Key Employee.
14.2 NO CONTRACT OF EMPLOYMENT. The grant of an Option to a Key Employee
under this Plan shall not constitute a contract of employment and shall not
confer on a Key Employee any rights upon his or her termination of employment
in addition to those rights, if any, expressly set forth in the Option
Agreement which evidences his or her Option.
14.3 WITHHOLDING. The exercise or surrender of any Option granted under
this Plan shall constitute the Optionee's full and complete consent to whatever
action the Committee directs to satisfy the federal and state tax withholding
requirements, if any, which the Committee in its discretion deems applicable to
such exercise or surrender. In addition to and at the time of payment of the
Exercise Price, the Optionee shall pay to the Company in cash the full amount
of any federal, state and local income, employment or other taxes required to
be withheld from the income of such Optionee as a result of such exercise;
provided, however, that in the discretion of the Committee any Option Agreement
may provide that all or any portion of such tax obligations, together with
additional taxes not exceeding the actual additional taxes to be owed by the
Optionee as a result of such exercise, may, upon the irrevocable election of
the Optionee, be paid by tendering to the Company whole Shares of Common Stock
duly endorsed for transfer and owned by the Optionee, or by authorizing the
Company to withhold Shares of Common Stock otherwise issuable upon exercise of
the Option, in either case in that number of Shares having a Fair Market Value
on the date of exercise equal to the amount of such taxes thereby being paid,
in all cases subject to such restrictions as the Committee may from time to
time determine, including any such restrictions as may be necessary or
appropriate to satisfy the conditions of the exemption set forth in Rule 16b-3
under the Exchange Act.
14.4 TRANSFER. The transfer of a Key Employee between or among the
Company, a Subsidiary or a Parent shall not be treated as a termination of his
or her employment under this Plan.
14.5 CONSTRUCTION. This Plan shall be construed under the laws of the
State of Georgia.
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<PAGE> 40
EXHIBIT B
TO HARBINGER CORPORATION PROXY STATEMENT
FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
AMENDED AND RESTATED HARBINGER CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
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<PAGE> 41
AMENDED AND RESTATED
HARBINGER CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The Amended and Restated Harbinger Corporation Employee Stock Purchase
Plan (the "Plan") is intended to encourage employee stock ownership by offering
employees of Harbinger Corporation and its subsidiaries Purchase Rights (as
such term is defined in Section 2) to purchase shares of Common Stock. The Plan
is intended to operate as a bifurcated plan, providing benefits as an "employee
stock purchase plan" as defined in Section 423 of the Internal Revenue Code of
1986, as amended ("Code"), to those employees eligible to participate in and
receive benefits under such a plan, and providing similar benefits through an
employee stock purchase plan not intended to satisfy Code Section 423 to
eligible employees who may not benefit under a plan satisfying Code Section
423. The provisions of the Plan shall, accordingly, be construed so as to
comply with the requirements of Section 423 of the Code, whenever possible.
2. Definitions.
"BASE PAY" means regular straight-time and overtime earnings received from
the Company, excluding payments for incentive compensation, bonuses and other
special payments.
"BOARD" mean the Board of Directors of the Harbinger Corporation.
"COMMITTEE" means the Compensation Committee of the Board.
"COMMON STOCK" or "STOCK" means the Common Stock, par value $.001 per
share, of Harbinger Corporation, and any other stock or securities (including
any other share or securities of an entity other than Harbinger Corporation)
for or into which the outstanding shares of such stock are hereinafter
exchanged or changed.
"COMPANY" means Harbinger Corporation.
"CUSTODIAN" means Smith Barney, Inc., whose address is 388 Greenwich
Street, 28th Floor, New York, New York 10013, or such other person as the
Committee shall designate from time to time.
"EFFECTIVE DATE" means the date set by the Board for the Plan to become
effective, which date shall be the first day of a Purchase Period, and which
shall be at least one hundred and eighty (180) days after the effective date of
the initial public offering for Harbinger Corporation, or such earlier date as
is approved by the underwriter of such initial offering. The Effective Date
shall be subject to shareholder approval pursuant to Section 17.
"EXERCISE DATE" means the last day of a Purchase Period (as such term is
defined in Section 4(b) hereof), on which date all Participants' outstanding
Purchase Rights will automatically be exercised.
"FAIR MARKET VALUE" means the closing "asked" price of the shares of Stock
in the over-the-counter market on the day on which such value is to be
determined or, if such "asked" price is not available, the last sales price on
such day or, if no shares were traded on such day, on the next preceding day on
which the shares were traded, as reported by the National Association of
Securities Dealers Automatic Quotation System (NASDAQ) or other national
quotation service. If the shares are listed on a National Securities Exchange,
"fair market value" means the closing price of the shares on such National
Securities Exchange on the day of which such value is to be determined or, if
no shares were traded on such day, on the next preceding day on which shares
were traded, as reported by National Quotation Bureau, Inc. or other national
quotation service. If at any time shares of Common Stock are not traded on an
exchange or in the over-the-counter market, Fair Market Value shall be the
value
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<PAGE> 42
determined by the Board of Directors or Committee administering the Plan,
taking into consideration those factors affecting or reflecting value which
they deem appropriate.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"PARTICIPANT" means an employee of the Company or of a parent or
subsidiary of the Company who has enrolled in the Plan by completing a
Participation Form (as such term is defined in Section 5 hereof) with the Plan
Administrator. For purposes of the Plan, a parent means a company which owns a
majority interest in the Company and effectively controls the Company, and a
subsidiary means a company in which the Company owns a majority interest and
which the Company effectively controls. For purposes of employees
participating in the portion of the Plan satisfying Code Section 423, the terms
parent and subsidiary have the meanings set forth in Code Sections 424(e) and
(f), respectively.
"PLAN ADMINISTRATOR" means the Director of Human Resources of the Company,
or any such other person so designated by the Committee.
"PURCHASE PERIOD" means a calendar quarter period as defined in Section
4(b) hereof.
"PURCHASE RIGHT" means a Participant's option to purchase shares of Common
Stock that is deemed to be granted to a Participant during a Purchase Period
pursuant to Section 7.
"SECTION 16(B) INSIDER" means those persons subject to the requirements of
Section 16(b) of the Securities Exchange Act of 1934, as amended.
"TRADING DAY" refers to a day during which the NASDAQ National Market
System is available for trading shares of Common Stock.
3. Eligibility.
(a) Participation in the Plan is voluntary. All full-time employees of the
Company, including officers and directors who are full-time employees but who
are not members of the Committee, who have completed at least six (6) months of
continuous service with the Company are eligible to participate in the Plan.
The employee's entry date in the Plan shall be the first day of the Purchase
Period immediately following the date the employee has satisfied the
eligibility provisions. Full-time employees mean those employees who work at
least twenty (20) hours per week and for more than five (5) months in any
calendar year.
(b) Notwithstanding any provision of the Plan to the contrary, no employee
may participate in that part of the Plan which is intended to satisfy Code
Section 423 if prior to the grant of Purchase Rights or if following a grant of
Purchase Rights under the Plan, the employee would own, directly or by
attribution, stock, Purchase Rights or other stock options to purchase stock
representing five percent (5%) or more of the total combined voting power or
value of all classes of the Company's stock as defined in Code Section
423(b)(3).
4. Securities Subject to the Plan and Purchase Periods.
(a) The maximum number of shares which may be granted and purchased under
the Plan may not exceed One Hundred and Fifty Thousand (150,000) shares of
Common Stock (subject to adjustment as provided in Section 15), which may be
authorized but unissued shares, re-acquired shares or shares bought on the open
market. If any Purchase Right granted shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares of Common Stock
shall again become available for purposes of the Plan, unless the Plan has been
terminated.
(b) Purchase Period means each three month calendar quarter period,
beginning on January 1, April 1, July 1, and October 1, with the first such
Purchase Period beginning concurrently with the Effective Date of the Plan.
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<PAGE> 43
5. Participation.
Eligible employees become Participants in the Plan by authorizing payroll
deductions for the purpose through a "Participation Form" filed with the Plan
Administrator no later than fifteen (15) days prior to the start date of a
Purchase Period.
6. Payroll Deductions.
(a) In order to purchase Common Stock each Participant must elect and
indicate on the Participation Form the amount he/she wishes to authorize the
Company to deduct at regular payroll intervals during the Purchase period,
expressed either as (1) an integral percentage amount ranging from one percent
(1%) to fifteen percent (15%) of such Participant's Base Pay for the applicable
payroll period, with a minimum deduction of $10.00 per payday during the
Purchase Period, or (2) a dollar amount to be deducted pro rata at regular
payroll intervals during the Purchase Period, with a minimum deduction of $10
per payday and a maximum dollar amount per payday to be set by the Committee.
The Committee shall determine from time to time whether method (1) or (2), or
both, shall be utilized. The Participation Form will include authorization for
the Company to make payroll deductions from the Participant's Base Pay.
(b) A Participant may not be granted Purchase Rights under the Plan with
respect to more than Fifteen Thousand Dollars ($15,000.00) worth of Common
Stock for any calendar year such Purchase Rights to purchase Common Stock are
outstanding pursuant to the terms of the Plan. The Fifteen Thousand Dollar
($15,000.00) limit is determined according to the Fair Market Value of the
Common Stock on the first day (the grant date) of the Purchase Period.
Participants will be notified if these limitations become applicable to them.
(c) The amounts deducted from the Participant's Base Pay shall be credited
to a bookkeeping account established in the Participant's name under the Plan,
but no actual separate account will be established by the Company to hold such
amounts. There shall be no interest paid on the balance credited to a
Participant's account. Amounts deducted from the participant's Base Pay may be
commingled with the general assets of the Company and may be used for its
general corporate purposes prior to the purchase of Common Stock for a Purchase
Period.
(d) Payroll deductions shall begin on the first payday of each Purchase
Period, and shall end on the last payday of each Purchase Period. Eligible
employees may participate in the Plan and purchase shares only through payroll
deductions. Notwithstanding the above, a Participant on an approved leave of
absence may continue participating in the Plan by making cash payments to the
Company within a normal pay period equal to the amount of the normal payroll
deduction had a leave of absence not occurred. The right of a Participant on an
approved leave of absence to continue participating in the Plan shall terminate
upon the expiration of twelve (12) weeks of leave, unless the Participant's
right to re-employment by the Company after a longer leave is guaranteed by
statute or contract, in which case termination of the right to participate will
occur upon the expiration of such extended period.
(e) So long as a Participant remains an employee of the Company, payroll
deductions will continue in effect from Purchase Period to Purchase Period,
unless at least fifteen (15) calendar days prior to the first day of the next
succeeding Purchase Period the Participant:
(i) elects a different rate by filing a new Participation Form with
the Plan Administrator; or
(ii) withdraws from the Plan in accordance with Section 9 hereof.
(f) Unless a Participant files with the Plan Administrator a new
Participation Form electing to withdraw prior to fifteen (15) calendar days
before the beginning of the next Purchase Period as permitted under the Plan,
such Participant's payroll deductions will continue throughout the next
Purchase Period and his or her Purchase Right to purchase Common Stock will be
deemed to be fully and automatically exercised on the last day of such Purchase
Period with respect to payroll deductions made during that Purchase Period.
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<PAGE> 44
7. Grant of Purchase Right.
(a) Subject to the effective date provisions of Section 17, at 5:01 p.m.
Eastern Standard Time, on the last day of each Purchase Period (the Exercise
Date), each Participant who has not withdrawn from the Plan pursuant to Section
9 shall be deemed to have been granted a Purchase Right as of the first day of
the Purchase Period to purchase as many full shares of Common Stock as can be
purchased with the balance credited to such Participant's account as of the
Exercise Date.
(b) The price at which each Purchase Right to purchase Common Stock shall
be exercised is the lower of:
(i) 85% of the Fair Market Value of the Common Stock on the NASDAQ
National Market System on the first Trading Day of a Purchase Period; or
(ii) 85% of the Fair Market Value of the Common Stock on the NASDAQ
National Market System on the last Trading Day of such Purchase Period.
(c) The number of shares purchasable by each Participant per Purchase
Period will be the number of whole and fractional shares obtained by dividing
the amount credited to the Participant's Account as of the Exercise Date in the
Purchase Period by the purchase price in effect for the Purchase Period.
(d) A Participant may not purchase shares of Stock with a Fair Market
Value exceeding Three Thousand, Seven Hundred and Fifty Dollars ($3,750) for
any particular Purchase Period. The Committee has the power, exercisable at any
time prior to the start of a Purchase Period, to increase or decrease the
dollar value maximum for that Purchase Period, subject to the limitations in
Section 6(b). The maximum, as thus adjusted, will continue in effect from
Purchase Period to Purchase Period until the Committee once exercises its power
to adjust the maximum.
8. Exercise of Purchase Right.
(a) Subject to the effective date provisions of Section 17, each
outstanding Purchase Right shall be deemed automatically exercised as of 5:01
p.m. of the Exercise Date (the last day of the Purchase Period). The exercise
of the Purchase Right is accomplished by applying the balance credited to each
Participant's account as of the Exercise Date to the purchase on the Exercise
Date of whole and fractional shares of Common Stock at the purchase price in
effect for the Purchase Period.
(b) If a Participant purchases the maximum share amount set forth in
Section 7(d), any amount not applied to the purchase of Common Stock for that
Purchase Period will be held for the purchase of Stock in the next Purchase
Period.
(c) If the number of Shares for which Purchase Rights are exercised
exceeds the number of Shares available in any Purchase Period under the Plan,
the Shares available for exercise will be allocated by the Plan Administrator
pro rata among the Participants in such Purchase Period in proportion to the
relative amounts credited to their accounts. Any amounts not thereby applied to
the purchase of Common Stock under the Plan will be refunded to the
Participants after the end of the Purchase Period.
9. Withdrawal and Termination of Purchase Rights.
(a) A Participant may withdraw from the Plan during a Purchase Period by
providing written notice to the Plan Administrator on or before 5:00 p.m. of
the last business day of such Purchase Period. Such withdrawal will become
effective upon receipt by the Plan Administrator of such notice, and payroll
deductions will cease as soon as is administratively feasible from the date of
such notice, and no additional payroll deductions will be made on behalf of
such Participant during the Purchase Period. Such notice shall be on a form
(the "Withdrawal Form") provided by the Plan Administrator for that purpose.
The Withdrawal Form will permit such a Participant to elect to
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<PAGE> 45
receive all accumulated payroll deductions as a refund without penalty or to
exercise such Participant's outstanding Purchase Rights to purchase Stock on
the following Exercise Date in the amount of all payroll deductions withheld
during the Purchase Period prior to the Participant's withdrawal.
(b) Any Participant (other than a Section 16(b) Insider) who withdraws
from the Plan pursuant to Section 9(a) will not be eligible to rejoin the Plan
until the second (2nd) Purchase Period following the Purchase Period of
withdrawal. A Participant wishing to resume participation may re-enroll in the
Plan by completing and filing a new Participation Form for a subsequent
Purchase Period by following the applicable enrollment procedures.
(c) In the event a Participant who is a Section 16(b) Insider ceases
participation in the Plan, whether as a result of withdrawal during a Purchase
Period or of such Participant's decision to discontinue his or her enrollment
for subsequent Purchase Periods, such insider may not re-enroll in the Plan
until the Purchase Period beginning coincident with or immediately following
the expiration of a six (6) month period beginning upon the effective date of
such Section 16(b) Insider's withdrawal from the Plan.
(d) If a Participant ceases to be an employee of the Company for any
reason during a Purchase Period, his or her outstanding Purchase Right will
immediately terminate, and all sums previously collected from such Participant
during such Purchase Period under the terminated Purchase Right will be
refunded to the Participant.
10. Rights as Shareholder.
(a) A Participant is not a shareholder in shares to be purchased during a
Purchase Period until the Purchase Right is exercised on the Exercise Date.
Thus, a Participant will not have a right to any dividend or distribution made
prior to the Exercise Date on shares of Common Stock purchased during the
Purchase Period.
(b) Upon a written request made to the Custodian, the Participant will be
entitled to receive, as soon as practicable after the Exercise Date, a stock
certificate for the number of purchased shares The Custodian may impose upon,
or pass through to, the Participant a reasonable fee for the transfer of shares
of Common Stock in the form of stock certificates from the Custodian to the
Participant. It is the responsibility of each Participant to keep his or her
address current with the Company through the Plan Administrator and with the
Custodian.
11. Sale of Common Stock Acquired Under the Plan.
(a) Participants may sell the shares of Common Stock they acquire under
the Plan only in compliance with the restrictions set forth below.
(i) Section 16(b) Insiders may be subject to certain restrictions in
connection with their transactions under the Plan and with respect to the sale
of shares of Stock obtained under the Plan, including, but not limited to, the
Company's Insider Trading Policy.
(ii) Sales of Stock obtained under the Plan by a Participant must
comply with the Company's Insider Trading Policy, as the same may exist from
time to time.
(iii) No Participant purchasing shares of Common Stock under the Plan
shall be entitled to sell such shares of Stock until the first day of the
second (2nd) Purchase Period immediately following the Purchase Period in which
the shares of Stock were obtained. For purposes of this restriction, the
Company may, at its option, include the following legend on any certificates
representing the Stock so purchased:
"The shares represented by this Certificate are subject to certain
restrictions on sale and disposition contained in the Amended and
Restated Harbinger Corporation Employee Stock Purchase Plan, a
copy of which is on file with the Corporation."
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<PAGE> 46
(b) The Participant understands and agrees that, in order to insure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) A Participant shall immediately inform the Plan Administrator in
writing if the Participant transfers any shares purchased through the Plan
within two (2) years from the date of grant of the related Purchase Right. Such
transfer shall include disposition by sale, gift or other manner. The
Participant may be requested to disclose the manner of the transfer, the date
of the transfer, the number of shares involved and the transfer price. By
executing the Participation Form, each Participant obligates himself or herself
to provide such information to the Plan Administrator.
(d) The Company is authorized to withhold from any payment to be made to a
Participant, including any payroll and other payments not related to the Plan,
amounts of withholding and other taxes due in connection with any transaction
under the Plan, and a Participant's enrollment in the Plan will be deemed to
constitute his or her consent to such withholding.
12. Plan Administration.
(a) The Plan shall be administered by the Committee. No member of the
Board will be eligible to participate in the Plan during his or her period of
Committee service.
(b) The Committee shall have the plenary power, subject to and within the
limited of the express provisions of the Plan:
(i) to determine the commencement and termination date of the
offering of Common Stock under the Plan; and
(ii) to interpret the terms of the Plan, established and revoke
rules for the administration of the Plan and correct or reconcile any defect or
inconsistency in the Plan.
(c) The Committee may delegate all or part of its authority to administer
the Plan to the Plan Administrator, who may in turn delegate the day-to-day
operations of the Plan to the Custodian. The Custodian will establish and
maintain, as agent for the Participants, accounts for the purpose of holding
shares of Common Stock and/or cash contributions as may be necessary or
desirable for the administration of the Plan.
(d) The Board may waive or modify any requirement that a notice or
election be made or filed under the Plan a specified period in advance in an
individual case or by adoption of a rule or regulation under the Plan, without
the necessity of an amendment to the Plan.
13. Transferability.
(a) Any account maintained by the Custodian for the benefit of a
Participant with respect to shares acquired pursuant to the Plan may only be in
the name of the Participant; provided, however, that the Participant may elect
to maintain such account with right of joint ownership with such Participant's
spouse. Such election may only be made on a form (the "Joint Account Form")
provided by the Company.
(b) Neither payroll deductions credited to a Participant's account nor any
Purchase Rights or other rights to acquire Common Stock under the Plan may be
assigned, transferred, pledged or otherwise disposed of by Participants other
than by will or the laws of descent and distribution and, during the lifetime
of a Participant, Purchase Rights may be exercised only by the Participant.
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<PAGE> 47
14. Merger or Liquidation of the Company.
In the event the Company merges with another corporation and the Company
is not the surviving entity, or in the event all or substantially all of the
stock or assets of the Company is acquired by another company, or in the event
of certain other similar transactions, the Committee may, in its sole
discretion and in connection with such transaction, cancel each outstanding
Purchase Right and refund all sums previously collected from Participants under
the canceled outstanding Purchase Rights, or, in its discretion, cause each
Participant with outstanding Purchase Rights to have his or her outstanding
Purchase Right exercised immediately prior to such transaction and thereby have
the balance of his or her account applied to the purchase of whole and
fractional shares of Common Stock (subject to the maximum dollar limitation of
Section 7(d)) at the purchase price in effect for the Purchase Period, which
would be treated as ending with the effective date of such transaction. The
balance of the account not so applied with be refunded to the Participant. In
the event of a merger in which the Company is the surviving entity, each
Participant is entitled to receive, for each share as to which such
Participant's Outstanding Purchase Rights are exercised as nearly as reasonably
may be determined by the Committee, in its sole discretion, the securities or
property that a holder of one share of Common Stock was entitled to receive
upon the merger.
15. Adjustment for Changes in Capitalization.
To prevent dilution or enlargement of the rights of Participants under the
Plan, appropriate adjustments may be made in the event any change is made to
the Company's outstanding Common Stock by reason of any stock dividend, stock
split, combination of shares, exchange of shares or other change in the Common
Stock effected without the Company's receipt of consideration. Adjustments may
be made to the maximum number and class of securities issuable under the Plan,
the maximum number and class of securities purchasable per outstanding Purchase
Right and the number and class of securities and price per share in effect
under each outstanding Purchase Right. Any such adjustments may be made
retroactively effective to the beginning of the Purchase Period in which the
change in capitalization occurs, and any such adjustment will be made by the
Committee in its sole discretion.
16. Amendment and Termination.
The Committee may terminate or amend the Plan at any time, subject to the
following restrictions. First, the provisions of Sections 4, 5, 6, 7 and 8
which govern the formula for the automatic grant of Purchase Rights under the
Plan may not be amended more than once in any six (6) month period. Second,
any termination or amendment made to the Plan may not affect or change Purchase
Rights previously granted under the Plan without the consent of the affected
Participant, and any amendment that materially increases the benefits or number
of shares under the Plan (except for certain allowable adjustments in the event
of changes to the Company's capital structure or for changes authorized by the
Plan to be made by the Committee or the Plan Administrator) or materially
modifies the eligibility requirements of the Plan shall be subject to
shareholder approval. If not sooner terminated by the Committee, the Plan
shall terminate at the time Purchase Rights have been exercised with respect to
all shares of Common Stock reserved for grant under the Plan.
17. Shareholder Approval and Effective Date.
The Plan is subject to the approval of shareholders of the Company holding
a majority of the shares of the Common Stock.
The Plan (as amended and restated) shall be deemed to have been adopted as
of the Effective Date (January 1, 1996) upon the date of its approval by the
shareholders of the Company. Until the Plan is approved by the shareholders,
no Purchase Rights shall be deemed granted or exercised under Sections 7 and 8.
Upon approval of the Plan by the Company's shareholders, Purchase Rights shall
be deemed granted and exercised as of the appropriate dates in the Plan as of
the Effective Date, and shares of Stock purchased shall be deemed purchased as
of the applicable Exercise Date. In the event the Plan is not approved by the
shareholders on or before June 30, 1996, the Plan shall be deemed not to have
been adopted, and all payroll deduction amounts withheld on behalf of
Participants pursuant to Section 6 shall be refunded to such Participants.
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<PAGE> 48
18. No Employment Rights.
Participation in the Plan will not impose any obligations upon the Company
to continue the employment of the Participant for any specific period and will
not affect the right of the Company to terminate such person's employment at
any time, with or without cause.
19. Costs.
Except as set forth in Section 10(b), costs and expenses incurred in the
administration of the Plan and the maintenance of accounts with the Custodian
may be shared by the Participant and the Company, to the extent provided in
this Section 19. Any brokerage fees and commissions for the purchase of Common
Stock under the Plan (including shares of Common Stock purchased upon
reinvestment of dividends and distributions) will be shared equally by the
Participant and the Company, but any brokerage fees and commission for the sale
of shares of Common Stock under the Plan by a Participant will be borne by such
Participant.
20. Reports.
After the close of each Purchase Period, each Participant in the Plan will
receive a report from the Custodian indicating the amount of the Participant's
contributions to the Plan during the Purchase Period, the amount of the
contributions applied to the purchase of Common Stock for the Purchase Period,
the purchase price per share in effect for the Purchase Period and the amount
of the contributions (if any) carried over to the next Purchase Period.
21. Governing Law.
The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan will be determined in accordance with laws of
the State of Georgia, without giving effect to principles of conflicts of laws,
and applicable Federal law.
22. Compliance with Legal and Other Requirements.
The Plan, the granting and exercising of Purchase Rights hereunder, and
the other obligations of the Company, the Plan Administrator and the Custodian
under the Plan will be subject to all applicable federal and state laws, rules,
and regulations, and to such approvals by any regulatory or governmental agency
as may be required. The Company may, in its discretion, postpone the issuance
or delivery of shares of Common Stock upon exercise of Purchase Rights until
completion of such registration or qualification of such shares of Common Stock
or other required action under any federal or state law, rule, or regulation,
listing or other require action with respect to any automated quotation system
or stock exchange upon which the shares of Common Stock or other Company
securities are designated or listed, or compliance with any other contractual
obligation of the Company, as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
deliver of shares of Common Stock in compliance with applicable laws, rules,
and regulations, designation or listing requirements, or other contractual
obligations.
23. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be binding
upon and inure to the benefit of, all successors of each employee participating
in the Plan, including, without limitation, such employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
employee.
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APPENDIX A
[FRONT OF PROXY CARD]
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "FOR" all nominees in Proposal 1 and "FOR"
Proposals 2, 3, 4 and 5.
I PLAN TO ATTEND
MEETING
/ /
<TABLE>
<CAPTION>
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN PROPOSAL 1 AND "FOR" PROPOSALS 2, 3, 4 AND 5.
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Item 1 - Election of the following Nominees as Directors: Howle, Savoy, Leach, Covey, King, Bell and Kivits
<S> <C> <C>
FOR WITHHELD Withheld for the following only
all for all (Write the name of the nominees(s) in the space below)
Nominees Nominees
/ / / / ---------------------------------- / /
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<CAPTION>
Item 2 - Approval of Item 3 - Approval of Item 4 - Approval of Item 5 - Ratification of
Company's 1996 Stock the Amended and modification to the Selection of KPMG Peat
Option Plan Restated Harbinger Company's Amended and Marwick LLP as Independent
Corporation Employee Restated 1993 Stock Auditors
Stock Purchase Plan Option Plan for
Nonemployee Directors
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For Against Abstain For Against Abstain For Against Abstain For Against Abstain
/ / / / / / / / / / / / / / / / / / / / / / / /
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PLEASE MARK YOUR CHOICE LIKE THIS IN /X/ BLUE OR BLACK INK.
Date
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Signature
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Signature if held jointly
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ACCOUNT NUMBER COMMON Please mark, date and sign as your name appears above and
return in the enclosed envelope
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[REVERSE OF PROXY CARD]
HARBINGER CORPORATION
1055 Lenox Park Blvd.
Atlanta, GA 30319
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints C. Tycho Howle, David T. Leach and Joel G.
Katz, and each of them, with full power of substitution, as Proxy, to represent
and vote all the shares of Common Stock of Harbinger Corporation held of record
by the undersigned on March 29, 1996, at the annual meeting of shareholders to
be held on May 8, 1996 or any adjournment thereof, as designated on the reverse
side hereof and in their discretion as to other matters.
Please sign exactly as name appears on the reverse side. When shares are
held by joint tenants, both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
(Please date and sign on reverse)
(Continued on reverse side)
