<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<CAPTION>
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
HARBINGER CORPORATION
1277 Lenox Park Boulevard
Atlanta, Georgia 30319
(404) 467-3000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Harbinger Corporation (the "Company") will be held at the J.W. Marriott, 3300
Lenox Road N.E., Atlanta, Georgia 30326, at 9:00 a.m., Atlanta, Georgia time, on
Friday, April 24, 1998 (the "Meeting"), to consider and act upon:
1. the election of five persons to serve as members of the Company's
Board of Directors;
2. a proposal to increase the number of shares available for issuance
under the Company's 1996 Stock Option Plan from 5,125,000 shares to
5,825,000 shares, an increase of 700,000 shares;
3. a proposal to increase the number of shares available for issuance
under the Company's Amended and Restated Employee Stock Purchase
Plan from 225,000 shares to 325,000 shares, an increase of 100,000
shares;
4. a proposal to increase the number of shares available for issuance
under the Company's Amended and Restated 1993 Stock Option Plan for
Nonemployee Directors from 225,000 shares to 350,000 shares, an
increase of 125,000 shares;
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 13,
1998, 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 1, 1998
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
1277 LENOX PARK BOULEVARD
ATLANTA, GEORGIA 30319
--------------------
PROXY STATEMENT
---------------------
APRIL 24, 1998
-------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
SHAREHOLDERS MEETING
This Proxy Statement and the enclosed proxy ("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
April 24, 1998 at 9:00 a.m., Atlanta, Georgia 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 J.W. Marriott, 3300 Lenox Road N.E., Atlanta, Georgia 30326. The Company
intends to mail this Proxy Statement and the accompanying Proxy card on or about
April 1, 1998, 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 13, 1998 will be entitled to notice of and to vote at the Annual Meeting.
At the close of business on March 13, 1998, the Company had outstanding and
entitled to vote 27,545,770 shares of common stock, par value $.0001 per share
("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 existence of a quorum at the Annual Meeting,
whether or not the shareholder abstains on all or any matter to be acted on at
the Annual 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
1
<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 each 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. There are no
dissenter's rights with respect to any matter to be acted upon pursuant to this
Proxy Statement.
PROXIES AND SOLICITATION
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.
Proxies will be solicited from the Company's shareholders by mail. The
Company will pay all expenses in connection with the solicitation, including
postage, printing and handling, and the expenses incurred by brokers,
custodians, nominees and fiduciaries in forwarding proxy material to beneficial
owners. The Company may employ a proxy solicitation firm to solicit proxies in
connection with the Annual Meeting, and the Company estimates that the fee
payable for such services will be less than $10,000. It is possible that
directors, officers and other employees of the Company may make further
solicitation personally or by telephone, facsimile or mail. Directors, officers
and other employees of the Company will receive no additional compensation for
any such further solicitation.
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 13, 1998, 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 for
election to 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
DIRECTORS AND EXECUTIVE OFFICERS COMMON STOCK OF CLASS
------------------------- -----------------------
<S> <C> <C>
C. Tycho Howle(2) .......................................... 1,149,396 4.2%
David T. Leach(3) .......................................... 443,354 1.6
James C. Davis(4) .......................................... 340,708 1.2
William B. King(5) ......................................... 63,066 *
Stuart L. Bell(6) .......................................... 41,625 *
William D. Savoy(7) ........................................ 1,887,236 6.8
Benn R. Konsynski(8) ....................................... 17,832 *
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C> <C>
Klaus Neugebauer(9) ........................................ 7,500 *
Ad Nederlof(10) ............................................ 32,500 *
John D. Lowenberg(11) ...................................... 98,795 *
David Hildes(12) ........................................... 1,053,591 3.8
Joel G. Katz(13) ........................................... 59,962 *
David A. Meeker(14) ........................................ 12,200 *
James M. Travers(15) ....................................... 33,275 *
Willem van Neuwenhuyzen(16) ................................ 50,000 *
All executive officers and directors as a group
(15 persons)(17) ......................................... 5,291,040 18.6
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE
OTHER SHAREHOLDERS COMMON STOCK OF CLASS
------------------------- -----------------------
<S> <C> <C>
Vulcan Ventures, Inc./Paul G. Allen(18)
110 110th Avenue, N.E., Suite 550, Bellevue, WA 98004..... 1,827,236 6.6%
</TABLE>
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* Less than 1% of the outstanding Common Stock.
(1) Information with respect to "beneficial ownership" shown in the table
above is based on information supplied by the directors and executive
officers of the Company and filings made with the Commission or furnished
to the Company by other shareholders. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission
and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, the persons named in the
table above have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them. Percentage of
beneficial ownership is based on 27,545,770 shares of Common Stock
outstanding as of March 13, 1998 and includes shares of Common Stock
subject to options which may be exercised within 60 days of March 13,
1998. Such shares are deemed to be outstanding for the purposes of
computing the percentage ownership of the individual holding such shares,
but are not deemed outstanding for purposes of computing the percentage
of any other person shown in the table.
(2) Includes 798,083 shares held of record by Mr. Howle, 47,900 shares held
of record by Mr. Howle's wife, an aggregate of 14,391 shares held by Mr.
Howle's children, 131,000 shares held in a family limited partnership for
the benefit of Mr. Howle, his wife and children, 75,000 shares held by a
charitable remainder unitrust for the benefit of Mr. Howle and his wife
and certain designated charities, 8,022 shares held in a foundation
created by Mr. Howle, and 75,000 shares subject to options exercisable
within 60 days. Mr. Howle disclaims beneficial ownership of all such
shares, other than the shares held of record by Mr. Howle or for his
benefit.
(3) Includes 196,792 shares held jointly by Mr. Leach and his wife, and
246,562 shares subject to options exercisable within 60 days.
(4) Includes 202,896 shares held jointly by Mr. Davis and his wife, and
137,812 shares subject to options exercisable within 60 days.
(5) Includes 43,500 shares subject to options exercisable within 60 days.
(6) Includes 19,125 shares subject to options exercisable within 60 days.
(7) Includes 39,375 shares subject to options exercisable within 60 days.
Also includes 1,827,236 shares beneficially owned by Vulcan Ventures,
Inc. and Paul G. Allen, as to which Mr. Savoy disclaims beneficial
ownership. Mr. Savoy is the President of Vulcan Northwest, Inc. , a
company which is beneficially owned by Mr. Allen. Mr. Savoy's address is
110 110th Avenue N.E., Bellevue, WA 98004.
(8) Includes 14,532 shares subject to options exercisable within 60 days.
(9) Includes 1,500 shares subject to options exercisable within 60 days.
(10) Includes 32,500 shares subject to options exercisable within 60 days.
(11) Includes 45,295 shares held of record by Mr. Lowenberg, 42,500 shares
subject to options exercisable within 60 days and 11,000 shares held by
the Lowenberg Charitable Trust, the trustees of which are Mr. Lowenberg
and his wife, and as to which Mr. Lowenberg disclaims beneficial
ownership.
(12) Includes 963,812 shares held of record by Mr. Hildes, 67,020 shares
held by a charitable remainder trust of which Mr. Hildes and his wife are
income beneficiaries, and 23,759 shares subject to options exercisable
within 60 days. Mr. Hildes disclaims beneficial ownership of all such
shares, other than shares held of record by Mr. Hildes for his own
benefit.
(13) Includes 49,938 shares subject to options exercisable within 60 days.
(14) Includes 11,450 shares subject to options exercisable within 60 days.
(15) Includes 33,275 shares subject to options exercisable within 60 days.
(16) Includes 50,000 shares subject to options exercisable within 60 days.
(17) Includes 56,250 shares subject to warrants exercisable within 60 days and
820,828 shares subject to options exercisable within 60 days.
(18) Includes 1,770,986 shares and 56,250 shares subject to warrants
exercisable within 60 days beneficially owned by Paul G. Allen. Excludes
39,375 shares held beneficially by Mr. Savoy, as to which Mr. Allen
disclaims beneficial ownership.
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3
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
INTRODUCTION
At the Annual Meeting, five directors are to be elected for the terms
described below. The Board of Directors of the Company is divided into three
classes that serve staggered three-year terms and are as nearly equal in number
as possible. At a meeting of the Board of Directors in October 1997, the size of
the Board was increased from nine to ten members, effective upon completion of
the merger (the "Premenos Merger") with Premenos Technology Corp. ("Premenos").
In November 1997, the size of the Board was further increased from ten to eleven
members, effective upon completion of the Premenos Merger. The Premenos Merger
was completed on December 19, 1997. Ad Nederlof, David Hildes and David T. Leach
are nominees to serve as Class II directors for a term expiring at the Company's
Annual Meeting of Shareholders in 2001. Klaus Neugebauer is a nominee to serve
as a Class I director for a term expiring at the Company's Annual Meeting of
Shareholders in 2000. Messrs. Neugebauer, Nederlof, Hildes and Leach currently
are Class II directors whose terms expire at the Annual Meeting. If elected, Mr.
Hildes will fill the board seat created in October 1997 and Dr. Neugebauer will
fill a Board seat that was re-classified in March 1998 from a Class II to a
Class I seat effective upon the Annual Meeting. John D. Lowenberg, Sr. is a
nominee to serve as a Class III director for a term expiring at the Company's
Annual Meeting of Shareholders in 1999. If elected, Mr. Lowenberg will fill the
Board seat created in November 1997.
The Board of Directors has adopted a policy statement that provides as
follows: "[i]t 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 five 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 2001 ANNUAL MEETING (CLASS II)
DAVID T. LEACH
Mr. Leach, age 47, has been a director of the Company since February
1994 and has served as Chief Executive Officer of the Company since March 1997.
From February 1994 until March 1997, he served as President and Chief Operating
Officer of the Company. From June 1992 until February 1994, he was Executive
Vice President, Group Sales and Operations. 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.
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<PAGE> 7
AD NEDERLOF
Mr. Nederlof, age 51, has been a director of the Company since April
1997 and has served as the Chief Operating Officer of Richter Systems, Inc., a
provider of software applications for the retail industry, since March 1998.
Under the Company's policy statement regarding term limits for nonemployee
directors, Mr. Nederlof will be eligible to serve as a director through the date
of the Company's Annual Meeting to be held in 2005. Mr. Nederlof has been an
independent software consultant since 1996. He served as Vice President of
Oracle Northern Europe form 1994 to 1996, with responsibility for all Northern
European subsidiaries. From 1991 to 1994, he served as Managing Director of
Oracle Nederland BV, Oracle's Dutch subsidiary
DAVID HILDES
Mr. Hildes, age 47, has been a director of the Company since December
1997. Prior to the Premenos Merger, Mr. Hildes was Vice Chairman and Secretary
and a Director of Premenos from its organization in July 1995 until its
acquisition by the Company in December 1997. Mr. Hildes was a director and the
Treasurer of Premenos Corp. from October 1989 until July 1995, and Vice
Chairman, director and Secretary from July 1995 until December 1997. Mr. Hildes
was a member of the Board of Directors and co-founder of Apparel Computer
Systems, Inc., a predecessor to certain of the operations of Premenos Corp.,
from 1978 to 1989. In connection with the terms of the Premenos Merger, the
Company agreed to nominate Mr. Hildes for election as director at the Annual
Meeting and to recommend his election to the shareholders of the Company.
NOMINEE TO SERVE UNTIL THE 2000 ANNUAL MEETING (CLASS I)
KLAUS NEUGEBAUER
Dr. Neugebauer, age 59, has been a director of the Company since March 1997
and was a co-founder of Softlab GmbH, an international software development
company which was sold to BMW AG in 1991. Under the Company's policy statement
regarding term limits for nonemployee directors, Dr. Neugebauer will be eligible
to serve as a director through the date of the Company's Annual Meeting to be
held in 2005. Dr. Neugebauer is a member of a number of German industrial boards
and acts as a strategic information technology advisor to the State of Bavaria
and the German Federal Government, and since 1991, has been a partner in NSE
Inc., an investment firm that specializes in the software industry.
NOMINEE TO SERVE UNTIL THE 1999 ANNUAL MEETING (CLASS III)
JOHN D. LOWENBERG, SR.
Mr. Lowenberg, age 55, has been a director of the Company since December
1997. Under the Company's policy statement regarding term limits for nonemployee
directors, Mr. Lowenberg will be eligible to serve as a director through the
date of the Company's Annual Meeting to be held in 2006. Mr. Lowenberg is
forming a private investment fund expected to be called Anvil Investment
Associates, L.P. He will be a principal of the general partner of that fund.
From 1970 to October 1997, he was employed by The Robinson-Humphrey Company, an
investment banking firm, in increasingly senior capacities, serving as a
Managing Director and a Director at the time of his departure. Mr. Lowenberg
previously served as a director of the Company and its predecessors from 1983 to
May 1995. Mr. Lowenberg has served as a Trustee since 1988 and the Chairman
since 1990 of the Investment Committee of Denison University.
CURRENT DIRECTORS
The Directors of the Company continuing in office are Class III directors,
elected to serve until the 1999 Annual Meeting, and Class I directors, elected
to serve until the 2000 Annual Meeting, and are as follows:
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<PAGE> 8
C. TYCHO HOWLE
Mr. Howle, age 48, currently serves as a Class III director. He has
served as Chairman of the Board of Directors of the Company and its predecessors
since 1983, and served as Chief Executive Officer until March 1997. 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. Mr. Howle is also a director of
Logility, Inc.
WILLIAM D. SAVOY
Mr. Savoy, age 33, currently serves as a Class III director and 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. Vulcan Ventures, Inc., a shareholder of the Company, and Vulcan
Northwest, Inc. are beneficially owned by Paul G. Allen. Mr. Savoy is also a
director of Telescan, Inc., C/net, Inc., U.S. Satellite Broadcasting Co., Inc.,
Ticketmaster Corporation and USA Networks, Inc.
BENN R. KONSYNSKI
Dr. Konsynski, age 47, currently serves as a Class III director and has
been a director of the Company since December 1996. Under the Company's policy
statement regarding term limits for nonemployee directors, Dr. Konsynski will be
eligible to serve as a director through the date of the Company's Annual Meeting
to be held in 2004. Since 1993, Dr. Konsynski has been the George S. Craft
Professor of Business Administration at the Goizueta Business School at Emory
University. From 1987 to 1993, he was on the faculty at Harvard Business School.
Prior to the dissolution of Harbinger NET Services, L.L.C. ("HNS"), Dr.
Konsynski was a member of the Board of Managers of HNS. See "Certain
Transactions." Dr. Konsynski is also a director of Tessco Technologies, Inc.
JAMES C. DAVIS
Mr. Davis, age 45, currently serves as a Class I director and has
served as President and Chief Operating Officer of the Company since March 1997
and a director of the Company since April 1997. He served as President of
Harbinger Group Operations from January 1995 until March 1997. 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.
STUART L. BELL
Mr. Bell, age 44, currently serves as a Class I director and 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 currently serves as the Vice-Chairman of Interval
International, a time share exchange company. He served as Chairman of
Innovative Medical Research, a provider of clinical trials, from January 1995
until February 1998, and as Executive Vice President and Chief Financial Officer
of CUC International from 1983 to January 1995. Mr. Bell is also a director of
International Telephone Data Services and Alarmguard Holdings.
WILLIAM B. KING
Mr. King, age 53, currently serves as a Class I director and 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
6
<PAGE> 9
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.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1997, the Board of Directors held ten meetings. All of the
directors attended at least 75% of the aggregate total number of meetings of the
Board of Directors held during their tenure 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. William B. King, Stuart L. Bell and Benn Konsynski
presently serve on the Audit Committee. The Audit Committee met one time in
1997. The primary functions of the Audit Committee are to (i) review the scope
and timing of the audit and non-audit services to be rendered by the Company's
independent accountants, to review audit plans of the independent accountants
and to review the reports upon completion of their audits, (ii) 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 (iii) to report to the Board of Directors on its activities.
William D. Savoy, William B. King and Stuart L. Bell presently serve on the
Compensation Committee. The Compensation Committee met four times in 1997. 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 plan including approval
of all awards thereunder, to approve management incentive plans for senior
management, 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. Under this plan,
Nonemployee Directors receive an option to purchase 6,000 shares of the
Company's common stock upon becoming a director and then each year immediately
following the Annual Shareholders meeting. These options vest ratably upon a
director's attendance at each of the regular board meetings.
BOARD REPRESENTATION
Effective December 19, 1997, the Company completed its merger with
Premenos. Pursuant to the terms of Merger Agreement dated as of October 23, 1997
among the Company, Premenos and Olympic Subsidiary Corporation, a Delaware
corporation and a wholly-owned subsidiary of the Company, the Company agreed to
nominate David Hildes for election as a Director at the Annual Meeting and to
recommend his election to the shareholders of the Company.
EXECUTIVE OFFICERS
In addition to the individuals nominated for or serving as directors
above who are also executive officers of the Company, the following individuals
presently serve as executive officers of the Company:
JOEL G. KATZ
Mr. Katz, age 34, has served as Chief Financial Officer and Secretary of
Harbinger since January 1997. He served as Vice President, Finance and Secretary
from January 1995 to January 1997 and Senior Director of Finance of the Company
from February 1994 to January 1995. 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.
7
<PAGE> 10
JAMES M. TRAVERS
Mr. Travers, age 46, has served as President and General Manager of the
Company's Software Division since June 1997. From January 1994 until June 1997,
he served as President of Harbinger Enterprise Solutions Division. In this
capacity, Mr. Travers managed the business operations acquired from Texas
Instruments, Inc. ("TI"). From 1978 through 1994, Mr. Travers served in various
managerial positions with TI, including Vice President for North American Field
Operations and most recently 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 1994.
DAVID A. MEEKER
Mr. Meeker, age 55, has served as Senior Vice President, North American
Sales since January 1997. From January 1995 through January 1997, he served as
Vice President, Sales. 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 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.
WILLEM VAN NIEUWENHUYZEN
Mr. van Nieuwenhuyzen, age 50, has served as General Manager, Europe,
Middle East and Africa since October 1997 and was appointed an officer of
Harbinger in November 1997. From September 1995 to October 1997 he served as
Manager of Global Accounts, Europe, Middle East and Africa, of Hewlett-Packard
EMEA SA, and from May 1991 to September 1995, as Director of Computer Systems
Organization of Hewlett-Packard Netherlands BV.
8
<PAGE> 11
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 1997 (collectively the "Named Executive
Officers") for the fiscal years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
--------------------------- ------------
Securities All Other
Underlying Compensation
Name and Principal Position (1) Year Salary Bonus Options (#) (2)
- -------------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
C. Tycho Howle 1997 $213,977 $ 81,000 150,000 --
Chairman and Director 1996 187,555 110,500 150,000 --
1995 157,134 65,920 -- --
David T. Leach 1997 $187,133 $ 74,000 56,250 --
Chief Executive 1996 151,569 83,520 120,000 --
Officer and Director 1995 127,634 52,602 -- --
James C. Davis 1997 $167,017 $ 65,000 56,250
President, Chief Operating 1996 141,758 105,465 157,500 --
Officer and Director 1995 106,727 29,094 60,000 --
James M. Travers 1997 $140,985 $ 59,000 72,500 $25,000 (3)
President and General Manager 1996 126,675 79,300 -- --
Software Division 1995 106,673 89,200 75,000 --
David A. Meeker 1997 $137,634 $ 51,000 22,500 --
Senior Vice President, Sales 1996 119,667 58,279 -- --
1995 95,740 50,000 67,500 --
</TABLE>
- ---------------
(1) In March 1997 effective January 2, 1997, Mr. Howle became Chairman, Mr.
Leach became Chief Executive Officer and Mr. Davis became President and
Chief Operating Officer. Immediately prior thereto, Mr. Howle served as the
Chairman and Chief Executive Officer, Mr. Leach served as President and
Chief Operating Officer and Mr. Davis served as President, Harbinger Group
Operations.
(2) In accordance with rules of the Securities and Exchange Commission, other
compensation in the form of perquisites and other personal benefits has
been omitted if such perquisites and other personal benefits constituted
less than the lesser of $50,000 or 10% of the total annual salary and bonus
for the Named Executive Officer for such year.
(3) Mr. Travers was reimbursed $25,000 for certain expenses incurred in
connection with his relocation to Atlanta, Georgia from Dallas, Texas.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted
during the year ended December 31, 1997 to the Named Executive Officers:
9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Number of Price Appreciation for
Securities Exercise Option Term (2)
Underlying % of Total Options or Base -----------------------
Options Granted to Employees Price Expiration
Granted (1) in Fiscal ($/Sh) Date 5% 10%
----------- -------------------- ---------- ---------- ---- ------
Year
----
<S> <C> <C> <C> <C> <C> <C>
C. Tycho Howle 150,000 4.9% $ 17.42 01/04/04 $1,063,753 $2,478,998
David T. Leach 56,250 1.8% 16.49 01/02/04 377,611 879,994
James C. Davis 56,250 1.8% 16.49 01/02/04 377,611 879,994
James M. Travers 72,500 2.4% 20.23 05/02/04 597,196 1,391,721
David A. Meeker 22,500 0.7% 17.42 01/06/04 159,563 371,850
</TABLE>
- -----------------
(1) The options granted to the named executive officers were awarded under
the Company's 1996 Stock Option Plan (the "1996 Plan"). The options
granted under the 1996 Plan are exercisable for a period not to exceed
seven years from the date of grant. Options generally vest over four
years 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, 1997,
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 1997 AND 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Shares December 31, 1997 at December 31, 1997(2)
Acquired On Value --------------------------- ----------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. Tycho Howle 37,500 $ 424,875 - 262,500 - $3,456,938
David T. Leach - - 205,312 154,688 $4,680,730 2,508,995
James C. Davis - - 83,437 190,313 1,527,777 3,150,854
James M. Travers 18,600 343,814 8,400 110,000 200,522 1,467,301
David A. Meeker 18,600 308,238 8,950 56,250 213,652 1,046,532
</TABLE>
- ----------------
(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
$28.125 as reported by The Nasdaq Stock Market on December 31, 1997 and
the exercise price of the options.
10
<PAGE> 13
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.
On March 4, 1997, the Company entered into an employment agreement with
C. Tycho Howle effective as of January 4, 1997 in order to insure Mr. Howle's
continued services as Chairman of the Board of the Company. The employment
agreement provides for a four year term at an initial base salary of $220,000,
with bonus opportunity of 50% of base salary at target if certain performance
criteria are met. In addition to the terms of the Company's standard employment
agreement described above, Mr. Howle's employment agreement provides for: (i) an
option grant under the 1996 Plan to purchase 150,000 shares of Common Stock at a
price equal to the Fair Market Value of the Company's stock on the date of the
grant (the "Option"), (ii) termination for cause by the Company without payment
of severance, (iii) voluntary departure by Mr. Howle without severance, and (iv)
termination without cause by the Company with payment of severance.
The Company may terminate Mr. Howle for cause if Mr. Howle: (i)
knowingly and willfully engages in misconduct with respect to the business and
affairs of the Company, (ii) violates any policy of the Company in a material
way relating to ethical business conduct, practices, or fiduciary duties of a
senior executive, (iii) knowingly and willfully breaches any material provision
of his employment agreement which is not remedied within thirty (30) days after
receipt of notice, (iv) commits a felony or an illegal act involving moral
turpitude or fraud or dishonesty which may reasonably be expected to have a
material adverse effect on the Company, or (v) fails to comply with reasonable
directives of the Board, if not remedied within 30 days after receipt of notice.
If the Company terminates Mr. Howle without cause, then the Company will be
obligated to pay Mr. Howle the net present value of the compensation that would
be payable to Mr. Howle during the remaining term of his employment agreement.
Mr. Howle's Option vests ratably over four years. In the event Company
terminates Mr. Howle without cause, the Option will continue to vest as if he
were still employed by the Company. Further, in the event of a "Change in
Control" of the Company, Mr. Howle's Option shall immediately vest in its
entirety. A "Change in Control" shall be deemed to have occurred if (and only
if) any of the following shall have taken place: (i) a change in control is
reported by the Company in response to either Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or Item 1 of Form 8-K promulgated under the Exchange Act; (ii)
any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) directly or indirectly, of securities of the Company representing
forty percent (40%) or more of the combined voting power of the Company's then
outstanding securities; or (iii) following the election or removal of directors,
a majority of the Board consists of individuals who were not members of the
Board two years before such election or removal, unless the election of each
director who was not a director at the beginning of such two-year period has
been approved in advance by directors representing at least a majority of the
directors then in office who were directors at the beginning of the two-year
period.
On July 1, 1997, Harbinger entered into employment agreements with
David T. Leach and James C. Davis, effective as of January 2, 1997, in order to
insure their continued services as Chief Executive Officer and as President and
Chief Operating Officer of Harbinger, respectively, on substantially the same
terms as Mr. Howle's agreement (except that neither Mr. Leach nor Mr. Davis
received a stock option grant in connection with his employment agreement). The
employment agreements provide for a four-year term at an initial base salary of
$200,000 for Mr. Leach and $175,000 for Mr. Davis, with a bonus opportunity of
50% of base salary at target if certain performance criteria are met. The
agreements provide that stock options granted to Messrs. Leach and Davis will
vest immediately upon a Change of Control.
11
<PAGE> 14
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of the Common Stock to file initial statements of
beneficial ownership (Form 3) and statements of changes in beneficial ownership
(Forms 4 and 5) of Common Stock and any other equity securities of the Company
with the Securities and Exchange Commission and The Nasdaq Stock Market.
Officers, directors and greater than ten percent shareholders are required by
Securities Exchange Commission regulations to furnish the Company with copies of
all such forms they file.
Based solely on a review of the copies of the forms that it has
received, and on written representations from certain reporting persons that no
additional forms were required, the Company believes that its officers,
directors and greater than ten percent beneficial owners complied with all of
these filing requirements in 1997.
401(K) PROFIT SHARING PLAN
In 1997, the Company maintained three separate 401(k) savings and
retirement plans for the benefit of its domestic employees. In accordance with
Section 401(k) of the Internal Revenue Code, to be eligible for participation,
employees must be age 18 or older and meet length of service criteria (six or
twelve months of employment) as stipulated in each plan. Each plan provides for
matching contributions to be made by the Company. Under the terms of the plan
covering the former employees of Premenos, the Company is required to match 50%
of employee contributions to a maximum of 5% of their annual compensation. Under
the terms of the plan covering the former employees of Supply Tech, Inc., the
Company is required to match 25% of employee contributions to a maximum of 6% of
their annual compensation. Under the terms of the plan covering all other
domestic employees, subject to certain limitations, the Company may make a
discretionary matching contribution of up to $300 of the employee contributions
at a rate determined annually by the Board of Directors of the Company. Total
Company contributions under all 401(k) plans totaled $454,000 for the year ended
December 31, 1997.
The Board of Directors of the Company has approved the consolidation of
these plans into one standard 401(k) plan for all domestic employees. Management
anticipates that the new plan will be implemented by the third quarter of 1998
and will require the Company to match 50% of employee contributions to a maximum
of 4% of their annual compensation, subject to a $2,200 limit per employee.
STOCK OPTION PLANS AND STOCK PURCHASE PLAN
Stock Option Plans. The Company's 1996 Stock Option Plan (the "1996
Plan") was approved by the Company's shareholders and became effective on May 8,
1996. The 1996 Plan replaced the Company's Amended and Restated 1989 Stock
Option Plan (the "1989 Plan"). Following approval of the 1996 Plan at the Annual
Shareholders Meeting in 1996, no further stock options were granted under the
1989 Plan. The 1989 Plan continues in effect only with respect to outstanding
stock options which were granted under that plan and will terminate and cease to
exist as of the date on which all outstanding stock options which were granted
under the 1989 Plan are exercised in full, expired or canceled. The 1996 Plan
was amended at the 1997 Annual Shareholder Meeting to increase the number of
shares available for issuance by 1,500,000 and was further amended at a Special
Shareholder Meeting on December 18, 1997 in connection with the Premenos Merger
to increase the number of shares available for issuance by 1,000,000. The
purpose of the 1996 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 Plan is 5,125,000 shares, plus an amount equal to the number of
all shares that are either not subject to options granted under the 1989 Plan or
were subject to options granted under the 1989 Plan or were subject to Options
granted thereunder that expire without exercise to officers consultants and key
employees. If Proposal 2 below is approved, the number of shares reserved for
issuance under the 1996 Plan will be increased by 700,000 shares. Options
granted under the 1996 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 1996 Plan permits the grant of stock appreciation rights in
connection with the grant of stock options. Stock options may be granted under
the 1996 Plan for all employees and consultants of the Company, or of any
present or future subsidiary or parent of the
12
<PAGE> 15
Company, who are considered "key employees" or "key consultants." The 1996 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 Plan and to prescribe,
amend and rescind the rules and regulations pertaining to the 1996 Plan. Options
granted under the 1996 Plan generally vest ratably over 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, unless otherwise approved by the Compensation Committee.
Any incentive stock option that is granted under the 1996 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 Plan is exercisable for a period
determined by the Compensation Committee, which period may not 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). Options terminate upon expiration of such
period, or earlier upon termination of the recipient's employment with the
Company, or as determined by the Compensation Committee.
The terms of the 1989 Plan are substantially similar to the terms of
the 1996 Plan. The material difference between the plans is the manner of
exercise permitted by the 1996 Plan. Under the 1996 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 terms: (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 a period as approved by the Board of Directors; (b)
interest shall accrue at a per annum rate equal to the prime rate as 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.
As of March 13, 1998, options to purchase 781,422 shares of Common
Stock were outstanding under the 1989 Plan and 1,372,820 shares of Common Stock
had been issued upon exercise of options granted under such plan. As of March
13, 1998, options to purchase 3,393,099 shares of Common Stock were outstanding
under the 1996 Stock Option Plan and 357,618 shares of Common Stock had been
issued upon exercise of options granted under such 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 225,000 shares of the Company's
Common Stock have been reserved for issuance under the Nonemployee Directors
Plan. If Proposal No. 4 is approved, the number of shares reserved for issuance
under the Nonemployee Directors Plan will be increased by 125,000 shares.
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
13
<PAGE> 16
Directors Plan provides for the automatic granting of non-qualified stock
options to Nonemployee Directors. Each Nonemployee Director receives an option
to purchase 6,000 shares of Common Stock 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) 6,000
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, unless otherwise approved by the
Compensation Committee. 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 13, 1998, options to purchase an aggregate of 130,500
shares of Common Stock were outstanding under the Nonemployee Directors Plan and
approximately 189,000 shares had been issued pursuant to the exercise of options
granted under the plan.
Amended and Restated Harbinger Corporation Employee Stock Purchase
Plan. On May 8, 1995, the shareholders of the Company approved the Harbinger
Corporation Amended and Restated Employee Stock Purchase Plan ("Stock Purchase
Plan") to be effective January 1, 1996. 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. The Stock Purchase Plan authorizes the issuance of up to
225,000 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 Proposal 3 below is approved, the number of shares
reserved for issuance under the Stock Purchase Plan will be increased by 100,000
shares.
An employee who elects 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. 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
shares of Common Stock as can be purchased with the participant's payroll
deductions. On the last day of the Purchase Period, the participant is deemed to
have exercised this option, at the option price, to the extent of such
participant's accumulated payroll deductions. The participant may not purchase
Common Stock having a fair market value (measured on the first business day of
the Purchase Period) in excess of $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. Interest is not paid on
amounts deducted from an employee's pay and used to purchase Common Stock under
the Stock Purchase Plan. An employee may not sell shares 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.
An employee elects to participate 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
remains in effect. 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.
14
<PAGE> 17
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 13, 1998, approximately 735 employees are eligible
to participate in 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
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 is not eligible to rejoin the Stock Purchase Plan until the second Purchase
Period following the Purchase Period of withdrawal. In the event a participant
who is an officer who files reports under Section 16 of the Securities Exchange
Act of 1934, as amended, ceases participation in the Plan, such officer may not
re-enroll in the Plan under the Purchase Period beginning coincident with or
immediately following the expiration of a six-month period beginning upon the
effective date of such officer's withdrawal from the Plan.
The Plan is administered by the Compensation Committee. No member of
the Board of Directors is eligible to participate in the Stock Purchase Plan
during the period he serves as a member of the Compensation Committee. The
proceeds received by the Company from the sale of Common Stock pursuant to the
Stock Purchase Plan will be used for general corporate purposes.
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 the 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.
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 employee's employer 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 purchase Common
Stock under the Stock Purchase Plan.
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 (i.e., the
amounts withheld from the employee's compensation used to purchase 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). Generally, if the shares
have been held for more than eighteen months, such gain or loss will be
long-term capital gain or loss.
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 Purchase Period in which the stock was purchased. This
amount, however, is not subject to social security taxes
15
<PAGE> 18
or other 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).
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 1997 compensation was
determined for the executive officers of the Company, with particular detail
given to the 1997 compensation for the Company's Chief Executive Officer.
During 1997, the Compensation Committee was comprised of William D.
Savoy, Stuart L. Bell 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 other executive officers
and key employees, administering the Company's stock option and stock purchase
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 factors such 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 Culpepper and Associates 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. Additionally,
for certain executive officers, compensation arrangements are often set forth in
employment contracts with specified terms.
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
16
<PAGE> 19
employee, the cash bonus is based in whole or in part upon the attainment of
financial objectives, either for the Company as a whole, or for the employee's
area of responsibility. For 1997, these objectives were weighted 50% to the
attainment of targeted operating income and 50% to the attainment of targeted
revenue. The Compensation Committee believes that the equal weighting of revenue
and operating income emphasized 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 of 225% of
targeted bonus depending on the level of financial performance and other goals
achieved. Since bonus payments are based in whole or in part 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 (excluding purchased in process product development, write-off
of software development costs, acquisition related and other one-time charges)
and revenues for the year ended December 31, 1997 were $18.6 million and $120.7
million, respectively, as compared to an operating income and revenues of $2.8
million and $89.2 million, respectively, for the year ended December 31, 1996.
Total cash bonuses of approximately $1.1 million were paid to 47 members of
senior management participating in the incentive plan during 1997. Total cash
bonuses of approximately $778,000 were paid to 20 members of senior management
participating in the plan during 1996.
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 Stock Option Plans have generally been
long-term (seven years) and options granted since July 1994 generally vest
ratably over the four years following the date of grant. All such options are
priced and exercisable at fair market value on the date of grant. With such
features, the Company considers stock options as an effective way of aligning
the interest of management with the interest of the Company's shareholders to
promote growth in the Company's stock price and 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 1997, options to purchase 477,500 shares of the
Company's Common Stock were awarded to executive officers. As of December 31,
1997, options to purchase an aggregate 4,628,341 shares of the Company's Common
Stock were held by 859 employees under the Company's Stock Option Plans.
Included in this amount as of December 31, 1997 are options to purchase
approximately 1,079,850 shares of the Company's Common Stock at an average
exercise price of $16.90 held by executive officers named in the Summary
Compensation Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
David T. Leach became the Chief Executive Officer of the Company in
March 1997, effective January 2, 1997, succeeding C. Tycho Howle. Mr. Howle
remained Chairman of the Company. In establishing the 1997 cash bonus
compensation for Mr. Leach, the Company observed similar guidelines as set forth
for executive officers generally. The Company did not assign specific weighting
to guidelines or factors other than the weighting that is applied to the
achievement of operating income and revenue goals. During 1997, Mr. Leach's base
salary was increased to $200,000, effective April 1, 1997, as compared to
$160,000 for the immediately preceding year in which he served as President and
Chief Operating Officer. The Compensation Committee approved a bonus of $74,000
to Mr. Leach for 1997, reflecting the fact that the Company had not met its
targeted goals for operating income and revenue for 1997. Mr. Leach's bonus was
targeted at 50% of base salary if the Company achieved targeted operating income
and revenue goals. In 1996, Mr. Leach received a bonus of $83,520.
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
17
<PAGE> 20
compensation paid, to the extent feasible. The Compensation 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
Stuart L. Bell
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 December
29, 1997, 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>
- -------------------------------------------------------------------------------------------------------------------------------
12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HARBINGER CORPORATION 152.1 173.6 278.9
Nasdaq Stock Market (US Companies) 64.9 74.5 72.8 103.0 126.7 155.5
Nasdadq Computer and Data Processing Stocks 52.6 55.7 67.7 103.0 127.1 156.2
</TABLE>
The Stock Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (together, the "Acts"), except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, William Savoy, William King and Stuart Bell served as
members of the Compensation Committee of the Board of Directors. None of these
directors served as an officer or employee or was formerly an officer of the
Company or its subsidiaries.
18
<PAGE> 21
CERTAIN TRANSACTIONS
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
Telecommunications, Inc. ("BellSouth") invested $3.0 million in HNS in exchange
for a $3.0 million Subordinated Convertible Debenture (the "HNS Debenture") of
HNS, due five years from its issue date and bearing interest at 6% per annum.
Assuming immediate conversion of the HNS Debenture and exercise of outstanding
HNS options, BellSouth would have acquired 2.2 million HNS common shares, and
the Company and BellSouth would own 70% and 24%, and Company shareholders,
officers and directors would own 6%, respectively, of the HNS common shares
outstanding following such conversion.
On January 1, 1997, because of the expiration of restrictions of the
Company's ability to appoint a majority of the HNS Board of Managers, the
Company exercised its rights as majority shareholder of HNS by appointing a
majority of the members of the HNS Board of Managers. As a result, effective
January 1, 1997, the Company accounted for its investment in HNS by
consolidating the statements of financial position and results of operations of
HNS with those of the Company. Also on January 1, 1997, the Company purchased
the HNS Debenture pursuant to a Debenture Purchase Agreement dated January 1,
1997 between the Company and BellSouth. The Company acquired the HNS Debenture
for an aggregate purchase price of $1.5 million in cash and 242,288 shares of
Common Stock valued at $4.2 million (the "BellSouth Shares"). The Company also
agreed to register the BellSouth Shares on one occasion at BellSouth's request,
subject to certain terms and conditions. Further, BellSouth may elect to offer
the BellSouth Shares for sale during certain other offerings of Company
securities. After completing the purchase and conversion of the HNS Debenture,
the Company owned approximately 93% of HNS.
Immediately thereafter, the Company acquired the minority interest in
HNS by exercising an option under the HNS operating agreement to call (the
"Call") the remaining 585,335 shares of HNS held by minority shareholders (which
included directors and officers of the Company) and exchanged the HNS shares for
cash of approximately $1.6 million or $2.66 per share, an identical amount paid
to BellSouth. The following executive officers, directors and owners of 5% or
more of the voting securities of the Company also owned the number of HNS common
shares opposite their names, which shares were converted into cash: Mr. Howle
(50,000 shares), Mr. Leach (35,714 shares), Mr. Davis (35,714 shares), Mr. Katz
(2,500 shares), Mr. King (4,286 shares), Dr. Konsynski (4,000 shares) and Vulcan
Ventures (76,429 shares). As a result of these transactions, the Company became
the sole shareholder of HNS. The Company also exchanged the outstanding options
granted under the Amended and Restated HNS Stock Option Plan (the "HNS Plan")
for options to purchase shares of Common Stock under the 1996 Plan. The
following executive officers and directors also held options to purchase HNS
shares under the HNS Plan, which options were converted into options for the
number of shares of Common Stock and at the exercise price set forth opposite
their names: Mr. Leach (option for 56,250 shares at $17.67 per share), Mr. Davis
(option for 56,250 shares at $16.49 per share), Dr. Konsynski (option for 4,219
shares at $16.15 per share and option for 5,625 shares at $16.49 per share) .
The purchase price of the HNS Debenture was determined in arms-length
negotiations between the parties and certain employees or affiliates of
BellSouth were members of the HNS Board of Managers. Dr. Konsynski abstained
from voting on the acquisition of the Debenture at the Company's Board meeting
and from approving the Call at the HNS meeting of Managers.
The Company and HNS 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 granted the Company the
non-exclusive right to license and distribute HNS products, if any, which may
have been derived from the Company's products, for a royalty determined by the
Company and HNS in connection with such software
19
<PAGE> 22
products released by HNS. Also under the Software License Agreement, the Company
provided HNS a right to license and distribute certain Company software programs
and HNS paid the Company a royalty based on HNS's software revenues derived from
Company products. Under a Management Agreement and a Development Agreement, the
Company provided 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 was 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. Amounts charged to HNS by
the Company for services provided during the periods ending December 31, 1996
and 1995 were $1,785,000 and $324,000, respectively. Additionally, the Company
paid expenses of $505,000 and $413,000 during such periods on behalf of HNS.
These amounts subsequently were reimbursed by HNS. The Company recognized
royalty revenue from HNS of $1,199,000 for the year ended December 31, 1996
related to HNS's licensing of products which include the Company's technology
and for referral fees. These royalty revenues and referral fees from HNS were
determined based on a royalty agreement between the Company and HNS. At December
31, 1996, the Company had an amount due from HNS of approximately $1,760,000 for
services provided and expenses incurred by the Company, and for certain direct
expenses incurred by the Company on behalf of HNS and for the royalty revenue
earned from HNS.
OTHER TRANSACTIONS
The Company has purchased insurance on the lives of Messrs. Howle,
Leach, Davis and Travers. 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.
In July 1997, the Company completed a follow-on offering of 2.9 million
shares of Common Stock. The investment banking firm of The Robinson-Humphrey
Company LLC was a co-manager of the offering. Mr. Lowenberg, a nominee for
director, was a Director and Managing Director of The Robinson-Humphrey Company
LLC until October 1997.
The Company earned $465,000 in revenue in 1997 for software
development, consulting and network services under an ongoing contract with
Lifeline Networks, B.V. ("Lifeline"), an entity in which Ad Nederlof is a
minority shareholder. Mr. Nederlof has been a director of the Company since
April 1997 and is a nominee as a Class II director. The Company also paid
$63,000 to Lifeline for expenses relating to office space shared by Lifeline and
the Company's Dutch subsidiary under an ongoing lease.
PROPOSAL 2
AMENDMENT TO THE 1996 STOCK OPTION PLAN
The Board has approved and recommends to the Shareholders that they
approve a proposal to amend the Company's 1996 Stock Option Plan to increase the
number of shares of Common Stock available for grant under such plan from
5,125,000 to 5,825,000, an increase of 700,000 shares of Common Stock. As of
March 13, 1997, there were approximately 3,402,829 outstanding options to
purchase shares of Common Stock under the 1996 Plan. Therefore, in the event
that the proposed amendment is approved, approximately 2,364,582 options would
be available for grant under the 1996 Plan. The text of the proposed amendment
to the 1996 Plan is set forth in Annex A to this Proxy Statement. The 1996 Plan
is described above under "Proposal 1--Stock Option Plans and Stock Purchase
Plan" and is qualified in its entirety by reference to the text of the 1996
Plan.
The proposed amendment to the 1996 Plan will be adopted upon receiving
the affirmative vote of holders of a majority of the shares present or
represented by proxy at the Annual Meeting. Proxies will be voted in accordance
with the specifications marked thereon, and if no specification is made, will be
voted "FOR" adoption of the proposed amendment to the 1996 Plan. The Board has
determined that the amendment to the 1996 Plan is in the best interest of the
Company and its shareholders. The proposed amendment would provide additional
shares for
20
<PAGE> 23
grant to officers, directors, consultants and key employees of the Company. The
Board believes that grants of stock options are an effective method to attract
and retain officers, directors, consultants and key employees and that the
availability of shares for future grants under the plan is important to the
Company's business prospects and operations.
The Board of Directors recommends a vote FOR the approval of the
Amendment to the 1996 Plan.
PROPOSAL 3
AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN
The Board has approved and recommends to the shareholders that they
approve a proposal to amend the Company's Amended and Restated Harbinger
Corporation Employee Stock Purchase Plan to increase the number of shares of
Common Stock available for issuance under such plan from 225,000 to 325,000, an
increase of 100,000 shares of Common Stock. As of March 13, 1998, there were
approximately 174,637 shares of Common Stock available for issuance under the
Stock Purchase Plan. Therefore, in the event that the proposed amendment is
approved, approximately 274,637 shares would be available for issuance under the
Stock Purchase Plan. The text of the proposed amendment to the Stock Purchase
Plan is set forth as Annex B to this Proxy Statement. The Stock Purchase Plan is
described above under "Proposal 1--Stock Option Plans and Stock Purchase Plan"
and is qualified in its entirety by reference to the text of the Stock Purchase
Plan.
The proposed amendment to the Stock Purchase Plan will be adopted upon
receiving the affirmative vote of holders of a majority of the shares present or
represented by proxy at the Annual Meeting. Proxies will be voted in accordance
with the specifications marked thereon, and if no specification is made, will be
voted "FOR" adoption of the proposed amendment to the Stock Purchase Plan. The
Board has determined that the Amendment to the Stock Purchase Plan is in the
best interest of the Company and its shareholders. The Board believes that
availability of the Stock Purchase Plan is an effective method to attract and
retain employees, as it effectively aligns the interests of employee
participants and the shareholders.
The Board of Directors recommends a vote FOR the approval of the
Amendment to the Stock Purchase Plan.
PROPOSAL 4
AMENDMENT TO AMENDED AND RESTATED 1993 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
The Board has approved and recommends to the shareholders that they
approve a proposal to amend the Amended and Restated 1993 Stock Option Plan for
Nonemployee Directors (the "Director Plan") to increase the number of shares of
Common Stock available for grant under such plan from 225,000 to 350,000, an
increase of 125,000 shares of Common Stock. As of March 13, 1998, there were
approximately 130,500 outstanding options to purchase shares of Common Stock
under the Director Plan. Therefore, in the event that the proposed amendment is
approved, approximately 166,625 options would be available for grant under the
Directors Stock Option Plan. The text of the proposed amendment is set forth in
Annex C to this Proxy Statement. The Director Plan is described above under
"Proposal 1 - Stock Option Plans and Stock Purchase Plan" and is qualified in
its entirety by reference to the text of the Director Plan.
The proposed amendment to the Director Plan will be adopted upon
receiving the affirmative vote of holders of a majority of the shares present or
represented by proxy at the Annual Meeting. Proxies will be voted in accordance
with the specifications marked thereon, and if no specifications is made, will
be voted "FOR" adoption of the proposed amendment to the Directors Stock Option
Plan. The Board has determined that the amendment to the Directors Stock Option
Plan is in the best interest of the Company and its shareholders. The proposed
amendment would provide additional shares for grants to attract and retain
non-employee directors.
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<PAGE> 24
The Board of Directors recommends a vote FOR the approval of
modifications to the Director Plan to increase the number of shares available
for issuance by 125,000 shares.
PROPOSAL 5
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
In January 1998, the Board of Directors appointed the accounting firm
of KPMG Peat Marwick LLP to serve as its independent auditor. The appointment of
this firm was recommended to the Board by its Audit Committee. 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.
The Board of Directors recommends that the shareholders vote FOR
ratification of selection of independent auditors.
On December 26, 1995, the Company dismissed its independent public
accountants, Arthur Andersen LLP. Prior to December 26, 1995, Arthur Andersen
LLP was engaged as the principal accountant to audit the Company's financial
statements. The reports by Arthur Andersen LLP on the Company's financial
statements for the fiscal years ended December 31, 1994 and December 31, 1993
and subsequent interim periods, did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. The dismissal of the former accountants
was recommended by the Company's Audit Committee and approved by the Company's
Board of Directors.
During the Company's fiscal years ended December 31, 1994 and December
31, 1993, and during the subsequent interim fiscal periods following the
Company's fiscal year ended December 31, 1994 through the date of dismissal,
there were no disagreements with Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Arthur
Andersen LLP, would have caused it to make reference to the subject matter of
the disagreement in their reports. Also, there were no reportable events of the
nature described in Rule 304(a)(l)(v) during the Company's fiscal years ended
December 31, 1994 and December 31, 1993, or during the subsequent interim fiscal
periods following the Company's fiscal year ended December 31, 1994 through the
date of dismissal.
On January 2, 1996, the Company announced the appointment of KPMG Peat
Marwick LLP as independent accountants to audit the Company's financial
statements for 1995.
SHAREHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any
proposal by a shareholder of the Company for consideration at the 1999 Annual
Meeting of Shareholders must be received by the Company no later than December
25, 1998, if any such proposal is to be eligible for inclusion in the Company's
proxy materials for its 1998 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 1998 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 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.
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<PAGE> 25
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
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<PAGE> 26
ANNEX A
TEXT OF PROPOSED AMENDMENT TO THE
1996 STOCK OPTION PLAN
SECTION 1. Section 3.1 of the Plan is hereby amended by deleting the
first sentence of Section 3.1 of the Plan in its entirety and substituting in
lieu thereof the following:
"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 5,825,000,
plus the number of Prior Plan Shares."
A-1
<PAGE> 27
ANNEX B
TEXT OF PROPOSED AMENDMENT TO THE
AMENDED AND RESTATED HARBINGER CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. Section 4(a) of the Plan is hereby amended by deleting the
first sentence of Section 4(a) of the Plan in its entirety and substituting in
lieu thereof the following:
"(a) The maximum number of shares which may be granted and
purchased under the Plan may not exceed three hundred twenty-five
thousand (325,000) 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."
A-2
<PAGE> 28
ANNEX C
TEXT OF PROPOSED AMENDMENT TO THE
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
SECTION 1. Section 2 of the Plan is hereby amended by deleting the
first sentence of Section 2 of the Plan in its entirety and substituting in lieu
thereof the following:
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment
as provided in Section 6, the total number of shares of $.0001 par
value common stock (the "Common Stock") of the Company for which
options may be granted under the Plan (the "Shares") shall be 350,000
less the number of Shares of Common Stock issuable pursuant to options
granted under the Restated 1992 Stock Option Plan for Nonemployee
Directors."
A-3
<PAGE> 29
APPENDIX
HARBINGER CORPORATION
1277 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 13, 1998, at the annual meeting of shareholders to
be held on April 24, 1998 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.
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
through 5.
[ ] I PLAN TO ATTEND MEETING
THE BOARD OR DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN PROPOSAL 1 AND
"FOR" PROPOSALS 2 THROUGH 5.
1. Election of the following Nominees as Directors:
Hildes, Leach, Lowenberg, Nederlof, Neugebauer
<TABLE>
<S> <C> <C>
[ ] FOR all Nominees [ ] WITHHELD for all
Nominees
</TABLE>
INSTRUCTIONS: Withhold for the following only (Write the name of the
nominee(s) in the space below)
- --------------------------------------------------------------------------------
(continued on other side)
2. Approval of modification to the Company's 1996 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of modification to the Company's Amended and Restated Harbinger
Corporation Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of modification to the Company's Amended and Restated 1993 Stock
Option Plan for Nonemployee Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Ratification of Selection of KPMG Peat Marwick LLP as Independent Auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE MARK YOUR CHOICE LIKE
THIS IN [X] BLUE OR BLACK INK,
Date
--------------------------
Signature
---------------------
------------------------------
Signature if held jointly
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE ENCLOSED
ENVELOPE.
