<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(c)(2))
</TABLE>
COMPUTRON SOFTWARE, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
COMPUTRON SOFTWARE, INC.
301 ROUTE 17 NORTH
RUTHERFORD, NEW JERSEY 07070
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 1997
TO THE STOCKHOLDERS:
The annual meeting of stockholders (the "Annual Meeting") of Computron
Software, Inc. (the "Company") will be held at the Meadowlands Hilton, 2 Harmon
Plaza, Secaucus, New Jersey, telephone number (201) 348-6900 on May 30, 1997, at
9:00 A.M. for the following purposes:
(1) To elect seven directors to serve until the next Annual Meeting or
until their respective successors shall have been duly elected and
qualified;
(2) To approve certain amendments to the 1995 Stock Option Plan; and
(3) To transact such other business as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on April 25, 1997 are
entitled to notice of and to vote at the Annual Meeting. A list of stockholders
eligible to vote at the meeting will be available for inspection at the meeting
and for a period of ten days prior to the meeting during regular business hours
at the corporate headquarters at the address above.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the Annual Meeting, please sign and
date the enclosed proxy card and return it promptly in the enclosed envelope,
which requires no additional postage if mailed in the United States.
By Order of the Board of Directors
John A. Rade
Chief Executive Officer and President
Rutherford, New Jersey
April 30, 1997
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
<PAGE> 3
COMPUTRON SOFTWARE, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 1997
This Proxy Statement is furnished to stockholders of record of Computron
Software, Inc. (the "Company") as of the close of business on April 25, 1997 in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board of Directors" or "Board") for use at the Annual Meeting of
Stockholders to be held on May 30, 1997 (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in person
or by proxy. All properly executed and unrevoked proxies in the accompanying
form that are received in time for the meeting will be voted at the meeting or
any adjournment thereof in accordance with instructions thereon, or if no
instructions are given, will be voted "FOR" the election of the named nominees
as Directors of the Company, "FOR" the approval of the Amended and Restated 1995
Stock Option Plan and will be voted in accordance with the best judgment of the
persons appointed as proxies with respect to other matters which properly come
before the Annual Meeting. Any person giving a proxy may revoke it by written
notice to the Company at any time prior to exercise of the proxy. In addition,
although mere attendance at the Annual Meeting will not revoke the proxy, a
stockholder who attends the meeting may withdraw his or her proxy and vote in
person. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions will be counted in tabulations of the votes
cast on each of the proposals presented at the Annual Meeting, whereas broker
non-votes will not be counted for purposes of determining whether a proposal has
been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials), including the Annual Report on Form 10-K with the
financial statements of the Company for the fiscal year ended December 31, 1996,
is being distributed concurrently herewith to stockholders.
The mailing address of the principal executive offices of the Company is
301 Route 17 North, Rutherford, New Jersey 07070. This Proxy Statement and the
accompanying form of proxy are being mailed to the stockholders of the Company
on or about May 1, 1997.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock, par
value $0.01 per share (the "Common Stock"). At the Annual Meeting, each
stockholder of record at the close of business on April 25, 1997 will be
entitled to one vote for each share of Common Stock owned on that date as to
each matter presented at the Annual Meeting. On April 25, 1997, 20,903,680
shares of Common Stock were outstanding. A list of stockholders eligible to vote
at the Annual Meeting will be available for inspection at the Annual Meeting and
for a period of ten days prior to the Annual Meeting during regular business
hours at the principal executive offices of the Company at the address specified
above.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting for the election of the seven
nominees named below as Directors of the Company to serve until the next Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominees.
The Board of Directors does not currently anticipate that any nominee will be
unable to be a candidate for election.
The Board of Directors currently has seven members, all of whom are
nominees for election. Each director shall serve until the next Annual Meeting
or until their respective successors shall have been duly elected and qualified.
Elias Typaldos, Gennaro Vendome, Gregory Kopchinsky and Robert Migliorino were
elected to the Board of Directors by the stockholders at the 1996 annual
stockholders meeting. Michael Berty and William Vogel were appointed by the
Board of Directors to fill vacancies on the Board of Directors in August 1996
and John Rade was appointed by the Board of Directors to fill a vacancy on the
Board of Directors in February 1997. The affirmative vote of a plurality of the
Company's outstanding Common Stock represented and voting at the Annual Meeting
is required to elect the Directors.
NOMINEES FOR ELECTION AS DIRECTORS
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each nominee during
the last five years has been furnished to the Company by such nominee. Except as
indicated, each of the nominees has had the same principal occupation for the
last five years.
Elias Typaldos, 46, a founder of the Company, has been Vice President,
Research and Development and a director since the Company's formation in 1978.
He has served as Chairman of the Board of Directors since March 1997.
John A. Rade, 62, joined the Company as a Director, President and Chief
Executive Officer in February 1997. Prior to joining the Company, Mr. Rade, was
from April 1995, a Vice President of American Management Systems, Inc. and was
also still active at S-Cubed International, a company in the client server
system development and consulting market, which he founded in February 1990.
Gennaro Vendome, 50, a founder of the Company, has been Vice President,
Enterprise Sales and a director since the Company's formation in 1978. Mr.
Vendome was Treasurer of the Company from 1981 until 1991 and Secretary of the
Company from 1982 until 1991. Prior to joining the Company, Mr. Vendome was a
project leader of the MISTER WIZARD computer system of the AT&T Corp./New York
Telephone Co.
Gregory Kopchinsky, 45, has been a director since 1994. Mr. Kopchinsky is a
partner of the venture capital partnership Canaan Partners, which through its
affiliates is a principal stockholder of the Company. Mr. Kopchinsky joined
Canaan Partners as a General Partner in 1990. From 1984 to 1990, he was a Vice
President at J. P. Morgan with principal responsibility for private debt and
equity financings. Prior to joining J. P. Morgan, Mr. Kopchinsky was an attorney
with Davis Polk & Wardwell specializing in complex financing transactions.
Robert Migliorino, 46, has been a director since 1991. Mr. Migliorino is a
founding partner of the venture capital partnership Canaan Partners, which
through its affiliates is a principal stockholder of the Company.
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<PAGE> 5
Prior to establishing Canaan Partners in 1987, he spent 15 years with General
Electric Co. in their Drive Systems, Industrial Control, Power Delivery,
Information Services and Venture Capital businesses.
Michel Berty, 57, has been a director since August 1996. Since September
1992, Mr. Berty has been the Chairman and Chief Executive Officer of CAP Gemini
America (CGA), the U.S. subsidiary of the CAP Gemini Group, a leading
international information technology consulting organization. Prior to that, Mr.
Berty was General Secretary at Cap Gemini Sogeti Group from 1986 to September
1992.
William E. Vogel, 59, has been a director since August 1996. Since 1971,
Mr. Vogel has been Chief Executive Officer of Centennial Financial Group, Inc.,
which is the parent of Centennial Life Insurance Company. Mr. Vogel has also
been the Chief Executive Officer of W.S. Vogel Agency, Inc. since 1961. In
November 1992, an affiliate of Centennial Financial Group, Inc., Thayer Street
Holding Co., filed a voluntary petition under Chapter 11 in United States
Bankruptcy Court, Kansas City, Missouri. The proceedings were concluded in
October 1994.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors reviews, acts on and reports
to the Board of Directors with respect to various auditing and accounting
matters, including the selection of the Company's auditors, the scope of the
annual audits, fees to be paid to the auditors, the performance of the Company's
auditors and the accounting practices of the Company. Messrs. Kopchinsky and
Migliorino are the only members of the Audit Committee.
The Compensation Committee of the Board of Directors determines the
salaries and incentive compensation of the officers of the Company and provides
recommendations for the salaries and incentive compensation of the other
employees and the consultants of the Company. The Compensation Committee also
administers various incentive compensation, stock and benefit plans. Messrs.
Kopchinsky and Migliorino are the only members of the Compensation Committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal year 1996, the Board of Directors and the Audit Committee
held five and two formal meetings, respectively. The Compensation Committee did
not meet formally in 1996 as its duties were performed by the Board of
Directors. During fiscal year 1996, each incumbent Director attended at least
75% of the aggregate number of meetings of the Board of Directors and the total
number of meetings held by all Committees on which he served. In addition to
formal meetings, the Board of Directors and the Audit and Compensation
Committees meet frequently on an informal basis.
COMPENSATION OF DIRECTORS
Cash Compensation. Directors do not receive a fee for attending Board of
Directors or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties as Directors of the Company.
Stock Option Grant. Under the Company's Amended and Restated 1995 Stock
Option Plan (the "Option Plan"), each non-employee Director first elected or
appointed to the Board of Directors after the date of the initial public
offering of the Company's Common Stock will automatically be granted an option
for 15,000 shares of Common Stock on the date of his or her election or
appointment to the Board of Directors, provided such individual has not
previously been in the employ of the Company. In addition, at each Annual
Meeting of Stockholders, each individual granted an initial grant under the
Option Plan's Automatic Option Grant Program with at least six months of service
on the Board of Directors who will continue to serve as a
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<PAGE> 6
non-employee Director following the meeting will automatically be granted an
option for 3,000 shares of Common Stock, whether or not such individual has been
in the prior employ of the Company or joined the Board of Directors prior to the
effective date of the Option Plan. Each option granted under the automatic grant
program will have an exercise price equal to 100% of the fair market value of
the Common Stock on the automatic grant date and a maximum term of ten years,
subject to earlier termination upon the optionee's cessation of Board of
Director service. Each automatic option will be immediately exercisable;
however, any shares purchased upon exercise of the option will be subject to
repurchase by the Company should the optionee's service as a non-employee
Director cease prior to vesting in the shares. The initial 15,000 share grant
will vest in successive equal annual installments over the optionee's initial
four-year period of service on the Board of Directors. Each additional 3,000
share grant will vest upon the optionee's completion of one year of service on
the Board of Directors, as measured from the grant date. However, each
outstanding option will immediately vest upon (i) certain changes in the
ownership or control of the Company or (ii) the death or disability of the
optionee while serving on the Board of Directors. Under this program, Messrs.
Berty and Vogel each received an initial option grant of 15,000 shares of Common
Stock at an exercise price of $4.81, and each will receive a 3,000-share option
grant on the date of the Annual Meeting, if such individuals are reelected.
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<PAGE> 7
EXECUTIVE OFFICERS AND INFORMATION
REGARDING EXECUTIVE OFFICER COMPENSATION
EXECUTIVE OFFICERS
The executive officers of the Company as of April 25, 1997 were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Elias Typaldos............................. 46 Vice President, Research and Development
and Chairman of the Board
John A. Rade............................... 62 President, Chief Executive Officer and
Director
Michael R. Jorgensen....................... 45 Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
Gennaro Vendome............................ 50 Vice President, Enterprise Sales and
Director
Robert T. Hewitt........................... 49 Vice President, Product Development
Vincent W. Renz............................ 40 Vice President, Client Services
Alex Plavocos.............................. 50 Vice President, Marketing
William H. Burke........................... 35 Vice President, Finance and Administration
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Michael R. Jorgensen joined the Company as Executive Vice President and
Chief Financial Officer, Treasurer and Secretary in February 1997. Prior to
joining the Company, from June 1993 to September 1996, Mr. Jorgensen was Senior
Vice President and Chief Financial Officer of Ground Round Restaurants, Inc., a
publicly-held chain of family restaurants. Prior to that, from March 1992 to
April 1993, he was Vice President/Finance-Middle East of Alghanim Industries.
Mr. Jorgensen was Chief Financial Officer of International Proteins Corporation
from May 1988 to September 1991.
Alex Plavocos joined the Company in June 1994 as Vice President, Marketing.
From July 1991 to June 1994, Mr. Plavocos was Director of Corporate Marketing
for Information Builders Inc., a software company. Mr. Plavocos held various
marketing positions with Applied Data Research/Computer Associates, a software
company, from November 1983 to June 1991.
Vincent W. Renz joined the Company in April 1988 as Vice President, Product
Planning and Management. He is currently Vice President, Client Services
responsible for client support, professional services and business development.
Prior to joining Computron, he was a manager for Deloitte Haskins & Sells in the
Management Consulting Division.
Robert T. Hewitt joined the Company as Vice President, Product Development
in April 1996. From June 1988 to April 1996, Mr. Hewitt was Senior Vice
President, Product Development at Financial Technologies International, Inc., a
software development company.
William H. Burke joined the Company as Vice President, Finance and
Administration in February 1997. Prior to joining the Company, Mr. Burke was a
Senior Manager with the international accounting firm of Arthur Andersen LLP,
specializing in technology related industries. Mr. Burke was employed by Arthur
Andersen LLP from January 1985 to February 1997, and is a Certified Public
Accountant.
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<PAGE> 8
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
received for the three fiscal years ended December 31, 1996, by the Company's
Chief Executive Officers who served in such capacity in the fiscal year 1996 and
the four most highly compensated executive officers of the Company, other than
the CEO, whose total compensation during fiscal year 1996 exceeded $100,000 and
who were serving as executive officers as of fiscal year ended December 31, 1996
or served during fiscal year 1996 (collectively, the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(1)
ANNUAL COMPENSATION ------------
-------------------------------------- SECURITIES ALL
FISCAL OTHER ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS COMPENSATION
- - ---------------------------------- ------ -------- ------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Andreas Typaldos(3)............... 1996 $383,600 $ -- $ -- -- $ 7,896(5)
Chief Executive Officer 1995 453,600 -- -- -- 9,854(5)
1994 468,976(4) -- -- 60,000 13,188(5)
Adrian A. Peters(6)............... 1996 93,750
Chief Executive Officer
Elias Typaldos.................... 1996 222,557 -- -- -- $ 6,214(8)
Vice President, Research 1995 288,581 -- -- -- 7,694(8)
and Development 1994 273,771(7) -- -- 15,000 8,511(8)
Joseph Esposito(9)................ 1996 200,000 20,645 -- -- 2,000(10)
President, Worldwide 1995 200,000 62,500 -- -- 1,833(10)
Operations 1994 50,000 -- -- 180,000 --
Carl Rosenberg(11)................ 1996 141,615 8,037 22,500(12) -- 1,682(13)
Vice President, North 1995 141,250 14,695 28,750(12) -- 2,271(13)
American Sales 1994 87,589 -- 18,769(12) 45,000 708(13)
Richard Yonker(14)................ 1996 168,750 17,500 -- -- 6,428(15)
Chief Financial Officer
</TABLE>
- - ---------------
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payments during
1994, 1995 or 1996.
(2) Other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted the lesser of $50,000
or 10% of the total annual salary and bonus for the Named Executive Officer
for the year.
(3) Mr. Typaldos served as Chief Executive Officer of the Company from November
1991 to July 1996 and continued as Chairman of the Board of Directors until
November 1996.
(4) Includes $56,700 of deferred compensation earned in 1994 and paid in 1995.
(5) Includes for 1994, 1995 and 1996, respectively, matching contributions to
the Company's 401(k) plan in the amount of $2,310, $2,310 and $2,375,
premiums on life and disability insurance for the benefit of the Named
Executive Officer in the amounts of $9,381, $7,544 and $5,521, and interest
paid by the Company in 1994 on behalf of the Named Executive Officer for a
loan against insurance in the amount of $1,497.
(6) Mr. Peters served as Chief Executive Officer of the Company from August
1996 to January 1997.
(7) Includes $16,371 of deferred compensation earned in 1994 but paid in 1995.
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<PAGE> 9
(8) Includes for 1994, 1995 and 1996, respectively, matching contributions to
the Company's 401(k) plan in the amount of $2,310, $2,310 and $2,375 and
premiums on life and disability insurance for the benefit of the Named
Executive Officer in the amounts of $6,201, $5,384 and $3,839,
respectively.
(9) Mr. Esposito voluntarily terminated his employment with the Company in
March 1997.
(10) Represents a matching contribution to the Company's 401(k) plan.
(11) Mr. Rosenberg voluntarily terminated his employment with the Company in
September 1996.
(12) Represents an advance on future commissions.
(13) Represents a matching contribution to the Company's 401(k) plan.
(14) Mr. Yonker voluntarily terminated his employment with the Company in
October 1996.
(15) Represents reimbursement of certain business expenses.
1995 STOCK OPTION PLAN
The Option Plan was adopted by the Board of Directors and approved by the
stockholders in June 1995. The Board of Directors approved certain amendments to
the Option Plan in April 1997. These amendments are discussed in detail at
"Proposal 2 -- Approval of the Amended and Restated 1995 Stock Option Plan."
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options or appreciation rights were granted to the Named Executive
Officers during fiscal year 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to the
Named Executive Officers regarding stock option holdings as of December 31,
1996. No stock options were exercised by such persons in fiscal year 1996. No
stock appreciation rights were exercised by any Named Executive Officer during
fiscal year 1996 and no stock appreciation rights were outstanding as of
December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andreas Typaldos........................... 30,000 30,000 $ -- $ --
Adrian Peters.............................. -- -- -- --
Elias Typaldos............................. 7,500 7,500 -- --
Joseph Esposito............................ 90,000 90,000 -- --
Carl Rosenberg............................. 22,500 22,500 -- --
Richard Yonker............................. -- -- -- --
</TABLE>
- - ---------------
(1) Based on the fair market value of the Company's Common Stock using the
closing selling price on the Nasdaq National Market of $1.50 per share of
Common Stock at the end of 1996, less the exercise price payable for such
shares. At the end of 1996, the fair market value per share of the Company's
Common
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<PAGE> 10
Stock was less than the exercise price payable per share subject to these
options. Therefore, none of such options were in-the-money.
EMPLOYMENT AGREEMENTS
The Company and Mr. John A. Rade have agreed to certain terms concerning
Mr. Rade's employment by the Company, although such terms have not been
formalized in an executed agreement. Pursuant to these terms, Mr. Rade's base
salary for fiscal year 1997 is $250,000. During the first year of his employment
with the Company, Mr. Rade is guaranteed a bonus of $100,000, payable in four
equal installments, and is eligible for an additional bonus of up to $100,000
based upon his performance as measured by a business plan, which shall be
submitted by Mr. Rade and approved by the Board of Directors each year (the
"Business Plan"). On subsequent anniversaries of Mr. Rade's hire date, Mr. Rade
may receive a bonus of up to $200,000 based upon his performance as measured by
the Business Plan. In the event Mr. Rade's employment is terminated for any
reason other than good cause, the Company will provide him with severance
payments equal to his base compensation for one year from the date of
termination.
The terms also provide that Mr. Rade is entitled to 25,000 restricted
shares of Common Stock and two stock options. The first stock option grant is
for 300,000 shares of Common Stock, which shall vest in three equal annual
installments commencing on the first anniversary of his hire date. The other
stock option grant for 300,000 shares of Common Stock, which is subject to
shareholder approval of the amendments to the Option Plan, shall vest either
upon the earlier to occur of the completion of seven years of service with the
Company or the achievement of certain milestones as measured by the performance
of and trading volume of the Company's Common Stock. The Company may also be
required to grant to Mr. Rade additional options in the event of certain stock
issuances by the Company.
SEVERANCE AGREEMENTS
Mr. Andreas Typaldos resigned from the Company in November 1996 (the
"Termination Date"). Pursuant to a term sheet signed by the Company and Mr.
Typaldos, the Company is required to pay Mr. A. Typaldos his full salary for one
full year following the Termination Date, or a total of $453,600. In addition,
Mr. A. Typaldos retained a grant of stock options for an aggregate of 30,000
shares of Common Stock, and received a grant of additional stock options for an
aggregate of 60,000 shares of Common Stock, which options fully vested on the
Termination Date. Such term sheet has not been formalized into an executed
agreement.
Mr. Joseph Esposito resigned from the Company in March 1997. Pursuant to a
severance agreement, Mr. Esposito is entitled to receive severance pay for one
year totaling $200,000 and a previously earned bonus of $20,000. Under this
agreement, Mr. Esposito has the right to retain certain stock options and to
receive certain severance payments contingent upon execution of certain customer
agreements. Also, Mr. Esposito agreed to provide reasonable support to the
Company for a certain period, to refrain from competing with the Company for a
period of one year, and to refrain from soliciting business and/or employees of
the Company for a period of one year.
KEY-PERSON LIFE INSURANCE
The Company maintains a life insurance policy in the amount of $2.65 and
$2.4 million on the lives of Elias Typaldos and Gennaro Vendome, respectively,
with the Company as the beneficiary of a portion of such policies.
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<PAGE> 11
401(K) PLAN
The Company participates in a tax-qualified employee savings and retirement
plan (the "401(k) Plan") which covers all of the Company's employees with three
months of service who are at least 21 years of age. Pursuant to the 401(k) Plan,
employees may elect to reduce their current compensation by up to the
statutorily prescribed annual limit and have the amount of such reduction
contributed to the 401(k) Plan. The 401(k) Plan requires matching contributions
by the Company on behalf of all participants in the 401(k) Plan. In 1996, the
Company made matching contributions in the amount of 25% of the first six
percent contributed by each employee. The 401(k) Plan is intended to qualify
under Section 401 of the Internal Revenue Code of 1986, as amended, so that
contributions by employees or by the Company to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company, if any, will be
deductible by the Company when made. The trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in a number
of investment options.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation provides that, except to the
extent prohibited by the Delaware General Corporation Law, its directors shall
not be personally liable to the Company or its stockholders for monetary damages
for any breach of fiduciary duty as directors of the Company. Under Delaware
law, the directors have a fiduciary duty to the Company which is not eliminated
by this provision of the Certificate of Incorporation and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of
non-monetary relief will remain available. In addition, each director will
continue to be subject to liability under Delaware law for breach of the
director's duty of loyalty to the Company for acts or omissions which are found
by a court of competent jurisdiction to be not in good faith or involving
intentional misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited by Delaware
law. This provision also does not affect the directors' responsibilities under
any other laws, such as the Federal securities laws or state or Federal
environmental laws. In addition the Company has obtained liability insurance for
its officers and directors.
The Certificate of Incorporation also provides that the Company shall
indemnify, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law, all of its present and former officers and directors,
and any party agreeing to serve as an officer, director or trustee of any entity
at the Company's request, in connection with any civil or criminal proceeding
threatened or instituted against such party by reason of actions or omissions
while serving in such capacity. Indemnification by the Company includes payment
of expenses in defense of the indemnified party in advance of any proceeding or
final disposition thereof. The rights to indemnification provided in this
provision do not preclude the exercise of any other indemnification rights by
any party pursuant to any law, agreement or vote of the stockholders or the
disinterested directors of the Company.
Section 145 of the Delaware General Corporation Law generally allows the
Company to indemnify the parties described in the preceding paragraph for all
expenses, judgments, fines and amounts in settlement actually paid and
reasonably incurred in connection with any proceedings so long as such party
acted in good faith and in a manner reasonably believed to be in or not opposed
to the Company's best interests and, with respect to any criminal proceedings,
if such party had no reasonable cause to believe his or her conduct to be
unlawful. Indemnification may only be made by the Company if the applicable
standard of conduct set forth in Section 145 has been met by the indemnified
party upon a determination made (1) by the Board of Directors
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<PAGE> 12
by a majority vote of a quorum of directors who are not parties to such
proceedings, or (2) if such a quorum is not obtainable or if directed by a
quorum of disinterested directors, by independent legal counsel in a written
opinion, or (3) by the stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1996, Messrs. Kopchinsky and Migliorino served as
members of the Company's Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The Compensation Committee also is
responsible for the administration of the Company's Option Plan under which
option grants may be made to executive officers. The Compensation Committee has
reviewed and is in accord with the compensation paid to executive officers in
fiscal year 1996.
GENERAL COMPENSATION POLICY. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive officer's
compensation contingent upon the Company's performance as well as upon such
executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
FACTORS. The principal factors which the Compensation Committee considered
with respect to each executive officer's compensation package for fiscal year
1996 are summarized below. The Compensation Committee may, however, in its
discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
BASE SALARY. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
without the industry and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to individual, as
the Compensation Committee deems appropriate.
From time to time, the Compensation Committee may advocate cash bonuses
when such bonuses are deemed to be in the best interest of the Company.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided through
grants of stock options. The grants are designed to align the interests of each
executive officer with those of the stockholders and to provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the Company. Each option grant allows the
individual to acquire shares of the Company's Common Stock at a fixed price per
share (generally, the market price on the grant date) over a specified period of
time (up to ten years). Each option generally becomes exercisable in
installments over a five-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option grant will
provide a return to the executive officer only if the executive officer remains
10
<PAGE> 13
employed by the Company during the vesting period, and then only if the market
price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level
intended to create a meaningful opportunity for stock ownership based on the
executive officer's current position with the Company, the base salary
associated with that position, the size of comparable awards made to individuals
in similar positions within the industry, the individual's potential for
increased responsibility and promotion over the option term and the individual's
personal performance in recent periods. The Compensation Committee also
considers the number of unvested options held by the executive officer in order
to maintain an appropriate level of equity incentive for that individual.
However, the Compensation Committee does not adhere to any specific guidelines
as to the relative option holdings of the Company's executive officers. There
were no stock options granted to executive officers in fiscal year 1996.
CEO COMPENSATION. In advising the Board of Directors with respect to the
compensation payable to the Company's Chief Executive Officer, the Compensation
Committee seeks to achieve two objectives: (i) establish a level of base salary
competitive with that paid by companies within the industry which are of
comparable size to the Company and by companies outside of the industry with
which the Company competes for executive talent and (ii) to make a significant
percentage of the total compensation package contingent upon the Company's
performance and stock price appreciation.
The suggested base salary established for Mr. Rade on the basis of the
foregoing criteria was intended to provide a level of stability and certainty
each year. Accordingly, this element of compensation was not affected to any
significant degree by Company performance factors. Mr. Rade's base salary for
fiscal year 1997 is $250,000. Mr. Rade also receives a guaranteed bonus and is
eligible to receive an additional performance-measured bonus. Upon his
employment by the Company, Mr. Rade was granted 25,000 shares of restricted
stock and two stock options. The first stock option for 300,000 shares shall
vest in three equal annual installments, and the other stock option for 300,000
shares, subject to shareholder approval of the amendments to the Option Plan,
shall vest either upon the earlier to occur of the completion of seven years of
service with the Company or the achievement of certain performance-measured
milestones. The Company may grant Mr. Rade additional options in the event of
certain stock issuances.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive officers
which is not considered to be performance based. Compensation which does qualify
as performance-based compensation will not have to be taken into account for
purposes of this limitation. The Option Plan contains certain provisions which
are intended to assure that any compensation deemed paid in connection with the
exercise of stock options granted under that plan with an exercise price equal
to the market price of the option shares on the grant date will qualify as
performance-based compensation.
11
<PAGE> 14
The Compensation Committee does not expect that the compensation to be paid
to the Company's executive officers for the 1997 fiscal year will exceed the $1
million limit per officer. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Compensation Committee will reconsider this decision should the
individual compensation of any executive officer ever approach the $1 million
level.
THE COMPENSATION COMMITTEE
Gregory Kopchinsky
Robert Migliorino
April 29, 1997
12
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a table comparing the annual percentage change in the
Company's cumulative total stockholder return on its Common Stock from August
24, 1995 (the date public trading of the Company's stock commenced) to the last
day of the Company's last completed fiscal year (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the excess of the Company's share price
at the end over the price at the beginning of the measurement period, by (ii)
the share price at the beginning of the measurement period) with the cumulative
total return so calculated of the Nasdaq Stock Market-US Index and a stock index
comprised of companies in a line of business similar to the Company during the
same period.
COMPARISON OF 16 MONTH CUMULATIVE TOTAL RETURN(1) AMONG COMPUTRON SOFTWARE,
INC.,
THE NASDAQ STOCK MARKET (US) INDEX AND THE HAMBRECHT & QUIST COMPUTER SOFTWARE
INDEX
<TABLE>
<CAPTION>
COMPUTRON NASDAQ STOCK
SOFTWARE MARKET H&Q COMPUTER
MEASUREMENT PERIOD INC.|(SYMBOL: (U.S.)|(SYMBOL: SOFTWARE|(SYMBOL:
(FISCAL YEAR COVERED) CTRN) INAS) IHCS)
<S> <C> <C> <C>
8/24/95 100 100 100
SEP-95 99 102 101
DEC-95 103 103 101
MAR-96 34 108 110
JUN-96 28 117 120
SEP-96 20 121 123
DEC-96 9 127 122
</TABLE>
- - ---------------
(1) $100 invested on August 24, 1995 in Computron Software, Inc. Common Stock
and on July 31, 1995 in The Nasdaq Stock Market (US) Index and The Hambrecht
& Quist Computer Software Index including reinvestment of dividends. Fiscal
year ending December 31, 1996.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made by
the Company under those statutes, the preceding Compensation Committee Report on
Executive Compensation and the Company Stock Performance Graph will not be
incorporated by reference into any of those prior filings, nor will such report
or graph be incorporated by reference into any future filings made by the
Company under those statutes.
13
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 25, 1997 by (i) each
Director and nominee for Director, (ii) each of the Named Executive Officers,
(iii) each person known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock and (iv) all executive officers and Directors
as a group. The information concerning beneficial owners of more than 5% of the
Company's Common Stock is based solely on filings with the Securities and
Exchange Commission on Schedules 13(D), 13(G) and on Forms 3, 4 and 5.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK BENEFICIALLY PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER OWNED(1) OUTSTANDING(1)
- - ---------------------------------------------------- ------------------------- --------------------
<S> <C> <C>
Andreas Typaldos.................................... 5,675,584(2) 27.1%
Adrian Peters....................................... -- --
Elias Typaldos...................................... 3,287,674(3) 15.7
Joseph Esposito..................................... 90,000(4) *
Carl Rosenberg...................................... 33,750(4) *
Richard Yonker...................................... -- *
John A. Rade........................................ 25,000 *
Gregory Kopchinsky.................................. 3,234,360(5) 15.5
Robert Migliorino................................... 3,230,360(6) 15.5
Michel Berty........................................ -- *
William Vogel....................................... -- *
Gennaro Vendome..................................... 1,590,247(7) 7.6
Funds controlled by Canaan Partners(8).............. 3,230,360(9) 15.5
All current directors and executive officers
as a group (12 persons)........................... 8,175,290(10) 40.0%
</TABLE>
- - ---------------
* Represents beneficial ownership of less than one percent of the Common
Stock.
(1) Applicable percentage of ownership as of April 25, 1997 is based upon
20,903,680 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to
shares. Gives effect to the shares of Common Stock issuable within 60 days
of April 25, 1997 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date.
(2) Includes (i) 755,504 shares owned by The Andreas Typaldos GRAT dated
September 29 1993, (ii) 11,047 shares owned by Renee Typaldos, Mr.
Typaldos' wife, (iii) 755,504 shares owned by The Renee Typaldos GRAT dated
September 29 1993, (iv) 229,845 shares held by the Andreas Typaldos Family
Partnership, (v) 350,000 shares held by the Andreas Typaldos Charitable
Remainder Annuity Trust, (vi) 3,528,684 shares owned by Andreas Typaldos
Family Partners and (vi) 45,000 shares of Common Stock which may be
purchased within 60 days of April 25, 1997.
(3) Includes (i) 379,251 shares owned by The Elias Typaldos GRAT dated October
13, 1994, (ii) 374,205 shares owned by The Judith Typaldos GRAT dated
October 13, 1994, (iii) 1,147,750 shares held by the Elias Typaldos Family
Partnership, (iv) 287,500 shares held by the Elias Typaldos Charitable
Remainder Annuity Trust, and (v) 11,250 shares of Common Stock which may be
purchased within 60 days of April 25, 1997 upon the exercise of stock
options.
14
<PAGE> 17
(4) Consists of shares of Common Stock which may be purchased within 60 days of
April 25, 1997 upon the exercise of stock options.
(5) Includes (i) 2,884,714 shares of Common Stock held by Canaan Offshore and
(ii) 345,646 shares of Common Stock held by Canaan L.P. Mr. Kopchinsky is a
general partner of Canaan Partners, the general partner of each of these
entities. In such capacity, Mr. Kopchinsky may be deemed to be the
beneficial owner of such shares, although he disclaims such beneficial
ownership except to the extent of his pecuniary interest, if any.
(6) Includes (i) 2,884,714 shares of Common Stock held by Canaan Offshore and
(ii) 345,646 shares of Common Stock held by Canaan L.P. Mr. Migliorino is a
general partner of Canaan Partners, the general partner of each of these
entities. In such capacity, Mr. Migliorino may be deemed to be the
beneficial owner of such shares, although he disclaims such beneficial
ownership except of his pecuniary interest, if any.
(7) Includes (i) 237,249 shares held by The Gennaro Vendome GRAT dated January
24, 1995, (ii) 240,704 shares held by The Carol Vendome GRAT dated January
24, 1995, (iii) 5,656 shares held by Carol Vendome as custodian for Laura
Vendome, (iv) 109,096 shares held by the Vendome Family Partnership, (v)
160,000 shares held by the Vendome Charitable Remainder Annuity Trust and
(vi) 11,250 shares of Common Stock which may be purchased within 60 days of
April 25, 1997 upon the exercise of stock options.
(8) The address of Canaan Partners is 105 Rowayton Avenue, Rowayton, CT 06853.
(9) Includes (i) 2,884,714 shares of Common Stock held by Canaan Offshore and
(ii) 345,646 shares of Common Stock held by Canaan L.P.
(10) Includes 64,509 shares of Common Stock which may be purchased within 60
days of April 25, 1997 upon the exercise of stock options. Also includes
(i) 2,884,714 shares of Common Stock held by Canaan Offshore and (ii)
345,646 shares of Common Stock held by Canaan, L.P. Messrs. Kopchinsky and
Migliorino are general partners of Canaan Partners, the general partner of
each of these entities. In such capacity, Messrs. Kopchinsky and Migliorino
may be deemed to be the beneficial owner of such shares, although they each
disclaim such beneficial ownership except of their pecuniary interest, if
any.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's Directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their ownership of the Company's
Common Stock and any changes in that ownership to the Securities and Exchange
Commission and the Nasdaq National Market Surveillance Department. Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Statement any failure to file by these dates during fiscal
year 1996. Based solely on its review of such forms received by it from such
persons for their fiscal year 1996 transactions, the Company believes that all
filing requirements applicable to such officers, directors and greater than ten
percent beneficial owners were complied with, except that Messrs. Berty and
Vogel, Directors of the Company, did not timely file a Form 3 Initial Statement
of Beneficial Ownership ("Form 3") and Messrs. Peters and Comandini, former
Chief Executive Officer and former Chief Financial Officer of the Company,
respectively, did not file a Form 3.
15
<PAGE> 18
CERTAIN TRANSACTIONS
In January 1995, the Company entered into a consulting services and product
marketing agreement with S-Cubed International. Pursuant to this agreement,
S-Cubed International provides software and other technology to the Company, in
addition to certain offshore development services. Mr. Rade, who joined the
Company as Chief Executive Officer and President in February 1997, founded
S-Cubed International in February 1990 and owns 45% of its outstanding stock.
The Company believes that the amounts paid to S-Cubed International are
comparable to the amounts the Company would have otherwise paid for comparable
services from an unaffiliated party. During the year ended December 31, 1996,
the Company recorded as expense $675,000 related to work performed by S-Cubed
International on behalf of the Company.
During fiscal year 1996, the Company made certain payments to CAP Gemini
America ("CGA") pursuant to an acquisition by the Company of certain business
operations of CGA and for services provided by CGA. Michel Berty, a director of
the Company, is the Chairman and Chief Executive Officer of CGA. The total
payments made to CGA during 1996 were $2,079,000, including $1,150,000 for a
portion of the purchase price paid for the acquisition of such business
operations from CGA.
16
<PAGE> 19
PROPOSAL 2
APPROVAL OF THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN
The Company's stockholders are being asked to approve an amendment to the
Company's Option Plan which includes the following changes:
(i) increase the number of shares of Common Stock available for
issuance by 2,000,000 shares;
(ii) increase the number of shares of Common Stock for which a person
participating in the Option Plan may receive options and separately
exercisable stock appreciation rights by 550,000 shares in the aggregate
over the term of the Option Plan;
(iii) allow all non-employee directors to receive discretionary grants
under the Discretionary Option Grant Program of the Option Plan;
(iv) eliminate the restriction that the individuals who serve as Plan
Administrator may not receive any discretionary option grants or direct
stock issuances from the Company while serving as Plan Administrator or
during the twelve month period preceding appointment as Plan Administrator;
(v) require stockholder approval of future amendments to the Option
Plan only to the extent necessary to satisfy applicable laws or
regulations;
(vi) eliminate the six month holding period requirement for the
exercise of any stock appreciation rights granted under the Option Plan;
and
(vii) allow the shares issued under the Option Plan which are
subsequently reacquired by the Company pursuant to the Company's exercise
of its repurchase rights to be added back to the share reserve available
for future issuance under the Option Plan.
The amendment to the Option Plan was adopted by the Board of Directors in
April 1997, subject to stockholder approval at the 1997 Annual Meeting. The
Board believes it is in the best interests of the Company to increase the share
reserve so that the Company can continue to attract and retain the services of
those persons essential to the Company's growth and financial success. The
purpose of the remaining changes to the Option Plan is to provide the Plan
Administrator with more flexibility as is allowed under recent changes to the
regulations governing employee option plans such as the Option Plan.
The following is a summary of the principal features of the Option Plan.
The summary, however, does not purport to be a complete description of all the
provisions of the Option Plan. Any stockholder of the Company who wishes to
obtain a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's principal executive offices in Rutherford,
New Jersey.
EQUITY INCENTIVE PROGRAMS
The Option Plan contains two separate equity incentive programs: (i) a
Discretionary Option Grant Program and (ii) an Automatic Option Grant Program.
The principal features of these programs are described below. The Option Plan
(other than the Automatic Option Grant Program) is administered by the
Compensation Committee of the Board of Directors. This committee (the "Plan
Administrator") has
17
<PAGE> 20
complete discretion (subject to the provisions of the Option Plan) to authorize
option grants under the Discretionary Option Grant Program. However, all grants
under the Automatic Option Grant Program will be made in strict compliance with
the provisions of that program, and no administrative discretion will be
exercised by the Plan Administrator with respect to the grants made thereunder.
SHARE RESERVE
A total of 3,500,000 shares of Common Stock (including the share increase
subject to approval under this proposal) has been reserved for issuance over the
term of the Option Plan. In no event may any one participant in the Option Plan
be granted stock options and separately exercisable stock appreciation rights
for more than 1,000,000 (including the share increase subject to approval under
this proposal) shares in the aggregate over the term of the Option Plan.
In the event any change is made to the outstanding shares of Common Stock
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will be
made to the securities issuable (in the aggregate and to each participant) under
the Option Plan and to the securities and exercise price under each outstanding
option.
ELIGIBILITY
Officers and other employees of the Company and its parent or subsidiaries
(whether now existing or subsequently established), non-employee members of the
Board of Directors and the board of directors of its parent or subsidiaries and
consultants and independent advisors of the Company and its parent and
subsidiaries are eligible to participate in the Discretionary Option Grant
Program. Non-employee members of the Board are also eligible to participate in
the Automatic Option Grant Program.
As of April 25, 1997, approximately eight executive officers, all other
employees of the Company and no non-employee Board members were eligible to
participate in the Option Plan, and two non-employee Board members were eligible
to participate in the Automatic Option Grant Program.
VALUATION
The fair market value per share of Common Stock on any relevant date under
the Option Plan will be the closing selling price per share on that date on the
Nasdaq National Market or the over-the-counter ("OTC") market as reported on the
OTC Bulletin Board, or on the last preceding date for which such quotation
exists. On April 25, 1997, the closing selling price per share of Common Stock
as reported on the OTC Bulletin Board was $1.875.
AMENDMENT AND TERMINATION
The Board of Directors may amend or modify the Option Plan in any or all
respects whatsoever subject to any required stockholder approval. The Board may
terminate the Option Plan at any time, and the Option Plan will in all events
terminate on June 15, 2005.
18
<PAGE> 21
DISCRETIONARY OPTION GRANT PROGRAM
Options may be granted under the Discretionary Option Grant Program at an
exercise price per share not less than eighty-five percent (85%) of fair market
value per share of Common Stock on the option grant date. No granted option will
have a term in excess of ten years.
Upon cessation of service, the optionee will have a limited period of time
in which to exercise any outstanding option to the extent such option is
exercisable for vested shares. The Plan Administrator will have complete
discretion to extend the period following the optionee's cessation of service
during which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.
The Plan Administrator is authorized to issue two types of stock
appreciation rights in connection with option grants made under the
Discretionary Option Grant Program:
Tandem stock appreciation rights provide the holders with the right to
surrender their options for an appreciation distribution from the Company
equal in amount to the excess of (a) the fair market value of the vested
shares of Common Stock subject to the surrendered option over (b) the
aggregate exercise price payable for such shares. Such appreciation
distribution may, at the discretion of the Plan Administrator, be made in
cash or in shares of Common Stock.
Limited stock appreciation rights may be granted to officers of the
Company as part of their option grants. Any option with such a limited
stock appreciation right in effect may be surrendered to the Company upon
the successful completion of a hostile take-over of the Company. In return
for the surrendered option, the officer will be entitled to a cash
distribution from the Company in an amount per surrendered option share
equal to the excess of (a) the take-over price per share over (b) the
exercise price payable for such share.
The Plan Administrator has the authority to effect the cancellation of
outstanding options under the Discretionary Option Grant Program which have
exercise prices in excess of the then current market price of Common Stock and
to issue replacement options with an exercise price based on the market price of
Common Stock at the time of the new grant.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, each individual who first becomes
a non-employee Board member after the Company's initial public offering will
automatically be granted at that time an option grant for 15,000 shares of
Common Stock. In addition, on the date of each Annual Stockholders Meeting,
beginning with the 1996 Annual Meeting, each individual who received an initial
15,000-share option grant and who is to continue to serve as a non-employee
Board member after such meeting will automatically be granted an option to
purchase 3,000 shares of Common Stock, provided such individual has served as a
non-employee Board member for at least six months prior to the date of such
Annual Meeting. There will be no limit on the number of such 3,000-share options
which any one non-employee Board member may receive over the period of Board
service.
Each option will have an exercise price per share equal to 100% of the fair
market value per share of Common Stock on the option grant date and a maximum
term of ten years measured from the option grant date.
19
<PAGE> 22
Each option will be immediately exercisable for all the option shares, but
any purchased shares will be subject to repurchase by the Company, at the
exercise price paid per share, upon the optionee's cessation of Board service.
Each initial option grant will vest (and the Company's repurchase rights will
lapse) in four equal annual installments over the optionee's period of Board
service, with the first such installment to vest upon the completion of one year
of Board service measured from the option grant date. Each annual option grant
will vest (and the Company's repurchase rights will lapse) upon the completion
of one year of Board service measured from the option grant date.
The shares subject to each automatic option grant will immediately vest
upon the optionee's death or permanent disability or an acquisition of the
Company by merger or asset sale or a hostile change in control of the Company
(whether by successful tender offer for more than 50% of the outstanding voting
stock or by proxy contest for the election of Board members). In addition, upon
the successful completion of a hostile takeover, each automatic option grant may
be surrendered to the Company for a cash distribution per surrendered option
share in an amount equal to the excess of (a) the take-over price per share over
(b) the exercise price payable for such share.
GENERAL PROVISIONS
ACCELERATION
In the event that the Company is acquired by merger or asset sale, each
outstanding option under the Discretionary Option Grant Program which is not to
be assumed by the successor corporation or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation will
automatically accelerate in full. Any options assumed or replaced in connection
with such acquisition will be subject to immediate acceleration in the event the
individual's service is subsequently terminated within 18 months following the
acquisition. The Plan Administrator has the discretion to provide for the
acceleration of all outstanding options under the Discretionary Grant Program
upon a hostile change in control of the Company (whether by successful tender
offer for more than 50% of the outstanding voting stock or by proxy contest for
the election of Board members) or upon the termination of the individual's
service within 18 months following the change in control.
FINANCIAL ASSISTANCE
The Plan Administrator may permit one or more optionees to pay the exercise
price of outstanding options under the Option Plan by delivering a promissory
note payable in installments. The Plan Administrator will determine the terms of
any such promissory note. However, the maximum amount of financing provided any
optionee may not exceed the cash consideration payable for the issued shares
plus all applicable taxes incurred in connection with the acquisition of the
shares. Any such promissory note may be subject to forgiveness in whole or in
part, at the discretion of the Plan Administrator, over the optionee's period of
service.
SPECIAL TAX ELECTION
The Plan Administrator may provide one or more holders of options with the
right to have the Company withhold a portion of the shares otherwise issuable to
such individuals in satisfaction of the tax liability incurred by such
individuals in connection with the exercise of those options. Alternatively, the
Plan
20
<PAGE> 23
Administrator may allow such individuals to deliver previously acquired shares
of Common Stock in payment of such tax liability.
STOCK AWARDS
The table below shows, as to each of the Named Executive Officers listed in
the Summary Compensation Table, each director and nominee for director, and the
various indicated groups, the number of shares of Common Stock subject to
options granted between January 1, 1996 and April 25, 1997 under the Option Plan
together with the weighted average exercise price payable per share.
OPTION TRANSACTIONS
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
NAME OPTION SHARES EXERCISE PRICE
- - ------------------------------------------------------------------ ------------- --------------
<S> <C> <C>
Andreas Typaldos(1)............................................... -- --
Adrian Peters(2).................................................. -- --
Elias Typaldos
Vice President, Research and Development and
Chairman of the Board of Directors........................... -- --
Joseph Esposito(3)................................................ -- --
Carl Rosenberg(4)................................................. -- --
Richard Yonker(5)................................................. -- --
John A. Rade
President, Chief Executive Officer and Director................. 300,000 1.00
Gennaro Vendome
Vice President, Enterprise Sales and Director................... -- --
Gregory Kopchinsky
Director........................................................ 15,000 1.00
Robert Migliorino
Director........................................................ 15,000 1.00
Michel Berty
Director........................................................ 15,000 4.81
William E. Vogel
Director........................................................ 15,000 4.81
All non-employee directors as a group (4 persons)................. 60,000 2.91
All current executive officers as a group (8 persons)............. 450,000 1.00
All employees, including current officers who are not
executive officers, as a group.................................. 50,000 1.00
</TABLE>
- - ---------------
(1) Mr. Typaldos served as Chief Executive Officer of the Company from November
1991 to November 1996.
(2) Mr. Peters served as Chief Executive Officer of the Company from August 1996
to January 1997.
(3) Mr. Esposito served as President, Worldwide Operations of the Company from
October 1994 to March 1997.
(4) Mr. Rosenberg served as Vice President, North American Sales of the Company
from May 1994 to September 1996.
(5) Mr. Yonker served as Chief Financial Officer of the Company from December
1995 to October 1996.
21
<PAGE> 24
FEDERAL INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the Option Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise disposed
of. For Federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. A qualifying disposition occurs if the sale
or other disposition is made after the optionee has held the shares for more
than two years after the option grant date and more than one year after the
exercise date. If either of these two holding periods is not satisfied, then a
disqualifying disposition will result.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the optionee.
22
<PAGE> 25
STOCK APPRECIATION RIGHTS
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
the appreciation distribution for the taxable year in which the ordinary income
is recognized by the optionee.
ACCOUNTING TREATMENT
Option grants with exercise prices less than the fair market value of the
shares on the grant or issue date will result in a compensation expense to the
Company's earnings equal to the difference between the exercise price and the
fair market value of the shares on the grant date. Such expense will be
accruable by the Company over the period that the option shares are to vest.
Option grants at 100% of fair market value will not result in any charge to the
Company's earnings but the Company must disclose, in pro-forma statements to the
Company's financial statements, the impact those options would have upon the
Company's reported earnings were the value of those options at the time of grant
treated as compensation expense. Whether or not granted at a discount, the
number of outstanding options may be a factor in determining the Company's
earnings per share on a fully-diluted basis. Under the new FASB release,
footnote disclosure will be required as to the impact the outstanding options
under the Option Plan would have upon the Company's reported earnings were those
options appropriately valued as compensation expense.
Should one or more optionees be granted stock appreciation rights which
have no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to the
Company's earnings.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the 1997 Annual Meeting
is required for approval of the amendment to the Option Plan. Should such
stockholder approval not be obtained, then the share reserve will not be
increased, the limit on the number of shares of Common Stock for which a
participant of the Option Plan may receive options and separately exercisable
stock appreciation rights will not be increased and the members of the
Compensation committee will not become eligible to receive option grants under
the Discretionary Option Grant Program. The Option Plan will, however, continue
to remain in effect, and option grants may continue to be made pursuant to the
provisions of the Plan prior to its amendment until the available reserve of
Common Stock under such plan is issued.
23
<PAGE> 26
NEW PLAN BENEFITS
The following table sets forth certain information regarding the options
granted to date under the Option Plan based on the amendments subject to
approval under this proposal, together with the option exercise price payable
per share, and the options expected to be granted under the Automatic Option
Grant Program on the date of the 1997 Annual Meeting at an exercise price per
share equal to the closing selling price per share of Common Stock on that date
on either Nasdaq National Market or the Over-the-Counter Market, as the case may
be, provided the individuals are to continue to serve as Board members after the
meeting.
OPTION TRANSACTIONS
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
NAME OPTION SHARES EXERCISE PRICE
- - ------------------------------------------------------------------ ------------- --------------
<S> <C> <C>
Andreas Typaldos(1)............................................... -- --
Adrian Peters(2).................................................. -- --
Elias Typaldos
Vice President, Research and Development and
Chairman of the Board of Directors.............................. -- --
Joseph Esposito(3)................................................ -- --
Carl Rosenberg(4)................................................. -- --
Richard Yonker(5)................................................. -- --
John A. Rade
President, Chief Executive Officer and Director................. 300,000 1.00
Gennaro Vendome
Vice President, Enterprise Sales and Director................... -- --
Gregory Kopchinsky
Director........................................................ 25,000 (6)
Robert Migliorino
Director........................................................ 25,000 (6)
Michel Berty
Director........................................................ 28,000 (6)
William E. Vogel
Director........................................................ 28,000 (6)
All non-employee directors as a group (4 persons)................. 106,000 (6)
All current executive officers as a group (8 persons)............. 400,000 1.00
All employees, including current officers who are not executive
officers, as a group............................................ -- --
</TABLE>
- - ---------------
(1) Mr. Typaldos served as Chief Executive Officer of the Company from November
1991 to November 1996.
(2) Mr. Peters served as Chief Executive Officer of the Company from August 1996
to January 1997.
(3) Mr. Esposito served as President, Worldwide Operations of the Company from
October 1994 to March 1997.
(4) Mr. Rosenberg served as Vice President, North American Sales of the Company
from May 1994 to September 1996.
(5) Mr. Yonker served as Chief Financial Officer of the Company from December
1995 to October 1996.
24
<PAGE> 27
(6) The exercise price per share shall equal the closing selling price per share
on the date such amendments to the Option Plan are approved by the
stockholders, provided that Messrs. Kopchinsky, Migliorino, Berty and Vogel
are each elected as members of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE OPTION PLAN. THE BOARD BELIEVES THAT IT IS IN
THE BEST INTERESTS OF THE COMPANY TO CONTINUE TO HAVE A COMPREHENSIVE EQUITY
INCENTIVE PROGRAM FOR THE COMPANY WHICH WILL PROVIDE A MEANINGFUL OPPORTUNITY
FOR OFFICERS, EMPLOYEES AND NONEMPLOYEE BOARD MEMBERS TO ACQUIRE A SUBSTANTIAL
PROPRIETARY INTEREST IN THE ENTERPRISE AND THEREBY ENCOURAGE SUCH INDIVIDUALS TO
REMAIN IN THE COMPANY'S SERVICE AND MORE CLOSELY ALIGN THEIR INTERESTS WITH
THOSE OF THE STOCKHOLDERS.
SELECTION OF AN INDEPENDENT PUBLIC ACCOUNTANT AND AUDITOR
The Company has not yet selected or recommended an independent public
accountant and auditor to serve for fiscal year 1997. Arthur Andersen LLP served
as the Company's independent public accountant and auditor during fiscal year
1996. The Audit Committee of the Board of Directors and the Company are in the
process of recommending and selecting the Company's independent public
accountant and auditor to serve for the fiscal year 1997.
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission, stockholder proposals intended for presentation at the 1998 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than January 1, 1998 if such proposals are to be considered for inclusion
in the Company's Proxy Statement.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on such
matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
By Order of the Board of Directors
John A. Rade
President and Chief Executive Officer
Rutherford, New Jersey
April 30, 1997
25
<PAGE> 28
APPENDIX A [EDGAR ONLY]
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
<PAGE> 29
COMPUTRON SOFTWARE, INC.
1995 STOCK OPTION PLAN
(AS AMENDED AND RESTATED AS OF APRIL 1997)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to promote the interests
of Computron Software, Inc., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for
them to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two separate equity
programs:
(i) the Discretionary Option Grant Program under
which eligible persons may, at the discretion of the Plan Administrator,
be granted options to purchase shares of Common Stock, and
(ii) the Automatic Option Grant Program under
which Eligible Directors shall automatically receive option grants at
periodic intervals to purchase shares of Common Stock.
B. The provisions of Articles One and Four shall apply to
both equity programs under the Plan and shall accordingly govern the interests
of all persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive
authority to administer the Discretionary Option Grant Program with respect to
Section 16 Insiders.
B. Administration of the Discretionary Option Grant Program
with respect to all other persons eligible to participate in that program may,
at the Board's discretion, be vested in the Primary Committee or a Secondary
Committee, or the Board may retain the power to administer that program with
respect to all such persons.
<PAGE> 30
C. Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and
shall be subject to removal by the Board at any time. The Board may also at
any time terminate the functions of any Secondary Committee and reassume all
powers and authority previously delegated to such committee.
D. The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it
may deem appropriate for proper administration of the Discretionary Option
Grant Program and to make such determinations under, and issue such
interpretations of, the provisions of such program and any outstanding options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Option Grant Program under its jurisdiction or any option
thereunder.
E. Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any option grants
made under the Plan.
F. Administration of the Automatic Option Grant Program shall
be self-executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to option
grants made thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary
Option Grant Program are as follows:
(i) Employees,
(ii) non-employee members of the Board or the
board of directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors
who provide services to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine
which eligible persons are to receive option grants, the time or times when
such option grants are to be made, the number of shares to be covered by each
such grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each option is to become
exercisable and
2.
<PAGE> 31
the vesting schedule (if any) applicable to the option shares and the maximum
term for which the option is to remain outstanding.
C. The individuals eligible to receive option grants under
the Automatic Option Grant Program shall be (i) those individuals who are first
elected or appointed as non-employee Board members on the Automatic Option
Grant Program Effective Date and (ii) those individuals who are first elected
or appointed as non-employee Board members after such date, whether through
appointment by the Board or election by the Corporation's stockholders. A non-
employee Board member who has previously been in the employ of the Corporation
(or any Parent or Subsidiary) shall not be eligible to receive an option grant
under the Automatic Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares
repurchased by the Corporation on the open market. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall not
exceed 3,500,000 shares. Such authorized share reserve is comprised of (i) the
number of shares which remained available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the
Corporation's stockholders prior to such date, including the shares subject to
the outstanding options incorporated into the Plan and any other shares which
would have been available for future option grants under the Predecessor Plan,
plus (ii) an increase of 375,000 shares authorized by the Board under the Plan
as of the Plan Effective Date, plus (iii) an additional increase of 2,000,000
shares authorized by the Board, subject to stockholder approval.
B. No one person participating in the Plan may receive
options and separately exercisable stock appreciation rights for more than
1,000,000 shares of Common Stock in the aggregate over the term of the Plan.
C. Shares of Common Stock subject to outstanding options
shall be available for subsequent issuance under the Plan to the extent (i) the
options (including any options incorporated from the Predecessor Plan) expire
or terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by
the Corporation at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan, shall be added back to the
number of shares of Common Stock available for subsequent issuance under the
Plan. However, should the exercise price of an option under the Plan
(including any option incorporated from the Predecessor Plan) be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an option under
the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is
3.
<PAGE> 32
exercised, and not by the net number of shares of Common Stock issued to the
holder of such option.
D. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities for which
any one person may be granted options and separately exercisable stock
appreciation rights over the term of the Plan, (iii) the number and/or class of
securities for which automatic option grants are to be subsequently made per
Eligible Director under the Automatic Option Grant Program and (iv) the number
and/or class of securities and the exercise price per share in effect under
each outstanding option (including any option incorporated from the Predecessor
Plan) in order to prevent the dilution or enlargement of benefits thereunder.
The adjustments determined by the Plan Administrator shall be final, binding
and conclusive.
4.
<PAGE> 33
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the
Plan applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the
Plan Administrator but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Section I
of Article Four and the documents evidencing the option, be payable in one or
more of the forms specified below:
(i) cash or check made payable to the
Corporation,
(ii) shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date, or
(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant
to which the optionee shall concurrently provide irrevocable written
instructions to (a) a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for the purchased
shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by reason of
such exercise and (b) the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.
5.
<PAGE> 34
B. Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in
excess of ten (10) years measured from the option grant date.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise
of any options held by the Optionee at the time of cessation of Service or
death:
(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain exercisable
for such period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option, but
no such option shall be exercisable after the expiration of the option
term.
(ii) Any option exercisable in whole or in part
by the Optionee at the time of death may be subsequently exercised by
the personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution.
(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is exercisable on the
date of the Optionee's cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service.
(iv) Should the Optionee's Service be terminated
for Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(v) In the event of a Corporate Transaction,the
provisions of Section III of this Article Two shall govern the period
for which the outstanding options are to remain exercisable following
the Optionee's cessation of Service and shall supersede any provisions
to the contrary in this section.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of
Service from the period
6.
<PAGE> 35
otherwise in effect for that option to such greater period of time as
the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or
(ii) permit the option to be exercised, during
the applicable post-Service exercise period, not only with respect to
the number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the
Optionee would have vested under the option had the Optionee continued
in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall
be established by the Plan Administrator and set forth in the document
evidencing such repurchase right.
F. Limited Transferability of Options. During the lifetime
of the Optionee, the option shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory
Option may,in connection with the Optionee's estate plan, be assigned in whole
or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned option may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned option (or portion
thereof) shall be the same as those in effect for the option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to the terms of this Section
II.
A. Eligibility. Incentive Options may only be granted to
Employees.
7.
<PAGE> 36
B. Exercise Price. The exercise price per share shall not be
less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To
the extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive
Option is granted is a 10% Stockholder, then the exercise price per share shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each
outstanding option shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. However, an outstanding option shall NOT
so accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation (or
parent thereof) or to be replaced with a comparable option to purchase shares
of the capital stock of the successor corporation (or parent thereof), (ii)
such option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested option shares
at the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent: (i) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.
8.
<PAGE> 37
C. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of
Common Stock subject to those rights) upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or replaced (or
those repurchase rights are to be assigned) in the Corporate Transaction.
D. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
E. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan on both an aggregate
and per Optionee basis following the consummation of such Corporate Transaction
and (ii) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same.
F. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for fully-
vested shares until the earlier of (i) the expiration of the option term or
(ii) the expiration of the one (1)-year period measured from the effective date
of the Involuntary Termination.
G. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of
one or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of
Common Stock subject to those rights) upon the occurrence of a Change in
Control or (ii) condition any such option acceleration (and the termination of
any outstanding repurchase rights) upon the subsequent Involuntary Termination
of the Optionee's Service within a specified period following the effective
date of such Change in Control. Any options accelerated in connection with a
Change in Control shall remain fully exercisable until the expiration or sooner
termination of the option term.
9.
<PAGE> 38
H. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One
Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non-Statutory Option under the Federal tax laws.
I. The grant of options under the Discretionary Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any
time and from time to time, with the consent of the affected option holders,
the cancellation of any or all outstanding options under the Discretionary
Option Grant Program (including outstanding options incorporated from the
Predecessor Plan) and to grant in substitution new options covering the same or
different number of shares of Common Stock but with an exercise price per share
based on the Fair Market Value per share of Common Stock on the new option
grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority
to grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
B. The following terms shall govern the grant and exercise of
tandem stock appreciation rights:
(i) One or more Optionees may be granted the
right, exercisable upon such terms as the Plan Administrator may
establish, to elect between the exercise of the underlying option for
shares of Common Stock and the surrender of that option in exchange for
a distribution from the Corporation in an amount equal to the excess of
(A) the Fair Market Value (on the option surrender date) of the number
of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (B) the
aggregate exercise price payable for such shares.
(ii) No such option surrender shall be effective
unless it is approved by the Plan Administrator, either at the time of
the option surrender or at any earlier time. If the surrender is so
approved, then the distribution to which the Optionee shall be entitled
may be made in shares of Common Stock valued at Fair Market Value on the
option surrender date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.
10.
<PAGE> 39
(iii) If the surrender of an option is rejected by
the Plan Administrator, then the Optionee shall retain whatever rights
the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (A) five (5) business days after the
receipt of the rejection notice or (B) the last day on which the option
is otherwise exercisable in accordance with the terms of the documents
evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the option grant date.
C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:
(i) One or more Section 16 Insiders may be
granted limited stock appreciation rights with respect to their
outstanding options.
(ii) Upon the occurrence of a Hostile Take-Over,
each such individual holding one or more options with such a limited
stock appreciation right in effect shall have the unconditional right
(exercisable for a thirty (30)-day period following such Hostile Take-
Over) to surrender each such option to the Corporation, to the extent
the option is at the time exercisable for vested shares of Common Stock.
In return for the surrendered option, the Optionee shall receive a cash
distribution from the Corporation in an amount equal to the excess of
(A) the Take-Over Price of the shares of Common Stock which are at the
time vested under each surrendered option (or surrendered portion
thereof) over (B) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
option surrender date.
(iii) The grant of such limited stock appreciation
right shall automatically constitute the pre-approval by the Plan
Administrator of any subsequent exercise of that right in accordance
with the terms of this Paragraph C. Accordingly, no further approval of
the Plan Administrator or the Board shall be required in connection with
the actual surrender of such option and the cash distribution to which
the optionee shall thereupon become entitled.
(iv) The balance of the option (if any) shall
continue in full force and effect in accordance with the documents
evidencing such option.
11.
<PAGE> 40
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. GRANT DATES. Option grants shall be made on the dates
specified below:
1. Each Eligible Director who is first elected or
appointed as a non-employee Board member on or after the Automatic Option Grant
Program Effective Date shall automatically be granted, on the date of such
initial election or appointment, a Non-Statutory Option to purchase 15,000
shares of Common Stock.
2. On the date of each Annual Stockholders Meeting,
beginning with the 1995 Annual Meeting, each individual who received an initial
option grant under the Automatic Option Grant Program and who is to continue to
serve as an Eligible Director after such meeting, shall automatically be
granted, whether or not such individual is standing for re-election as a Board
member at that Annual Meeting, a Non-Statutory Option to purchase an additional
3,000 shares of Common Stock, provided such individual has served as a non-
employee Board member for at least six (6) months prior to the date of such
Annual Meeting. There shall be no limit on the number of such 3,000 share
option grants any one Eligible Director may receive over his or her period of
Board service.
B. EXERCISE PRICE.
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall be payable in one or more
of the alternative forms authorized under the Discretionary Option Grant
Program. Except to the extent the sale and remittance procedure specified
thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.
C. OPTION TERM. Each option shall have a term of ten (10)
years measured from the option grant date.
D. EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any
shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's
cessation of Board service prior to vesting in those shares. Each initial
grant shall vest, and the Corporation's repurchase right shall lapse, in a
series of four (4) equal and successive annual installments over the Optionee's
period of continued service as a Board
12.
<PAGE> 41
member, with the first such installment to vest upon the Optionee's completion
of one (1) year of Board service measured from the option grant date. Each
annual grant shall vest upon the Optionee's completion of one (1) year of Board
service measured from the option grant date.
E. EFFECT OF TERMINATION OF BOARD SERVICE. The following
provisions shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's death,
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution) shall
have a twelve (12)-month period following the date of such cessation of
Board service in which to exercise each such option.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares of Common Stock for which the option is exercisable at the
time of the Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at
the time subject to the option shall immediately vest so that such
option may, during the twelve (12)-month exercise period following such
cessation of Board service, be exercised for all or any portion of such
shares as fully-vested shares of Common Stock.
(iv) In no event shall the option remain exercisable
after the expiration of the option term. Upon the expiration of the
twelve (12)-month exercise period or (if earlier) upon the expiration of
the option term, the option shall terminate and cease to be outstanding
for any vested shares for which the option has not been exercised.
However, the option shall, immediately upon the Optionee's cessation of
Board service, terminate and cease to be outstanding to the extent it is
not exercisable for vested shares on the date of such cessation of Board
service.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. Immediately following the consummation of
the Corporate Transaction, each
13.
<PAGE> 42
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).
B. In connection with any Change in Control, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as fully-
vested shares of Common Stock. Each such option shall remain exercisable for
such fully-vested option shares until the expiration or sooner termination of
the option term or the surrender of the option in connection with a Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee
shall have a thirty (30)-day period in which to surrender to the Corporation
each automatic option at the time held by him or her. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to the surrendered option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate exercise
price payable for such shares. Such cash distribution shall be paid within
five (5) days following the surrender of the option to the Corporation. No
approval or consent of the Board shall be required in connection with such
option surrender and cash distribution.
D. The grant of options under the Automatic Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
14.
<PAGE> 43
ARTICLE FOUR
MISCELLANEOUS
I. FINANCING
A. The Plan Administrator may permit any Optionee to pay the
option exercise price under the Discretionary Option Grant Program by
delivering a promissory note payable in one or more installments. The terms of
any such promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its sole
discretion. Promissory notes may be authorized with or without security or
collateral. In all events, the maximum credit available to the Optionee may
not exceed the sum of (i) the aggregate option exercise price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee in connection with the option exercise.
B. The Plan Administrator may, in its discretion, determine
that one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options or stock appreciation rights under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options under the Plan (other than the options
granted under the Automatic Option Grant Program) with the right to use shares
of Common Stock in satisfaction of all or part of the Taxes incurred by such
holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such Non-Statutory Option, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of
the Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
(ii) Stock Delivery: The election to deliver to
the Corporation, at the time the Non-Statutory Option is exercised, one
or more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise triggering the Taxes) with
an aggregate Fair Market Value
15.
<PAGE> 44
equal to the percentage of the Taxes (not to exceed one hundred percent
(100%)) designated by the holder.
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Discretionary Option Grant Program became effective on
the Plan Effective Date. The Automatic Option Grant Program became effective
on the Automatic Option Grant Program Effective Date and the initial option
grants under the Automatic Option Grant Program were made to the Eligible
Directors at that time.
B. The Plan was amended in April 1997 to effect the following
changes: (i) increase the number of shares of Common Stock which may be issued
under the Plan by an additional 2,000,000 shares, (ii) increase the number of
shares of Common Stock for which any one person may receive option grants and
separately exercisable stock appreciation rights over the term of the Plan to
1,000,000 shares, (iii) allow non-employee Board members serving as the Primary
Committee to participate in the Discretionary Option Grant Program, and (iv)
revise the administrative provisions and stockholder approval requirements of
the Plan to reflect the recent amendments authorized by the Securities and
Exchange Commission to the short-swing trading exemptions available for
transactions under the Plan. The amendment is subject to stockholder approval
at the 1997 Annual Meeting. If such stockholder approval is not obtained, (i)
any stock options granted on the basis of the 2,000,000-share increase shall
not become exercisable in whole or in part and shall terminate without ever
becoming exercisable for any of those shares, (ii) the limit on the number of
shares of common Stock issuable to any one individual under the Plan shall
remain at 450,000 shares and (iii) members of the Primary Committee shall not
be eligible to receive option grants under the Discretionary Option Grant
Program.
C. The Plan shall serve as the successor to the Predecessor
Plan, and no further option grants shall be made under the Predecessor Plan
after the Plan Effective Date. All options outstanding under the Predecessor
Plan as of such date shall, immediately upon approval of the Plan by the
Corporations's stockholders, be incorporated into the Plan and treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Common
Stock.
D. The option/vesting acceleration provisions of Article Two
relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator's discretion, be extended to one or more options incorporated
from the Predecessor Plan which do not otherwise provide for such acceleration.
E. The Plan shall terminate upon the earliest of (i) ten (10)
years from the date of approval of the Plan by the Board, (ii) the date on
which all shares available for issuance under the Plan shall have been issued
pursuant to the exercise of options under the Plan or (iii) the termination of
all outstanding options in connection with a Corporate Transaction. Upon such
16.
<PAGE> 45
Plan termination, all options outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the
documents evidencing such options.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations
with respect to options or stock appreciation rights at the time outstanding
under the Plan unless the Optionee consents to such amendment or modification.
In addition, certain amendments may require stockholder approval pursuant to
applicable law or regulations.
B. Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program that are in excess of the number
of shares then available for issuance under the Plan, provided any excess
shares actually issued under that program are held in escrow until there is
obtained stockholder approval of an amendment sufficiently increasing the
number of shares of Common Stock available for issuance under the Plan. If
such stockholder approval is not obtained within twelve (12) months after the
date the first such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees the
exercise price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
or stock appreciation right under the Plan and the issuance of any shares of
Common Stock upon the exercise of any option or stock appreciation right shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options and stock appreciation rights granted under it and the shares of Common
Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws,
including the filing and effectiveness of the Form S-8 registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
17.
<PAGE> 46
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at
any time for any reason, with or without cause.
18.
<PAGE> 47
APPENDIX
The following definitions shall be in effect under the Plan:
A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under the Plan.
B. AUTOMATIC OPTION GRANT PROGRAM EFFECTIVE DATE shall mean the date
on which the Underwriting Agreement is executed and the initial public offering
price of the Common Stock is established.
C. BOARD shall mean the Corporation's Board of Directors.
D. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the Board
approved such election or nomination.
E. CODE shall mean the Internal Revenue Code of 1986, as amended.
F. COMMON STOCK shall mean the Corporation's common stock.
G. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the
A-1.
<PAGE> 48
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those immediately prior to
such transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets.
H. CORPORATION shall mean Computron Software, Inc., a Delaware
corporation.
I. DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary
option grant program in effect under the Plan.
J. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible
to participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Article One.
K. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
L. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.
M. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as such
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time traded on the
Over-the-Counter Market, then the Fair Market Value shall be the closing
selling price per
A-2.
<PAGE> 49
share of Common Stock on the date in question, as such price is reported
on the OTC Bulletin Board or any successor system. If there is no
closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iv) For purposes of option grants made on the date the
Underwriting Agreement is executed and the initial public offering price
of the Common Stock is established, the Fair Market Value shall be
deemed to be equal to the established initial offering price per share.
For purposes of option grants made prior to such date, the Fair Market
Value shall be determined by the Plan Administrator after taking into
account such factors as the Plan Administrator shall deem appropriate.
N. HOSTILE TAKE-OVER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept.
O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
P. INVOLUNTARY TERMINATION shall mean the termination of the Service
of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following
(A) a change in his or her position with the Corporation which
materially reduces his or her level of responsibility, (B) a reduction
in his or her level of compensation (including base salary, fringe
benefits and any non-discretionary and objective-standard incentive
payment or bonus award) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without the individual's consent.
Q. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the
A-3.
<PAGE> 50
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of any Optionee or other person in the Service of
the Corporation (or any Parent or Subsidiary).
R. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
S. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
T. OPTIONEE shall mean any person to whom an option is granted under
the Discretionary Option Grant or Automatic Option Grant Program.
U. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
V. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
W. PLAN shall mean the Corporation's 1995 Stock Option Plan, as set
forth in this document.
X. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant Program with respect to one or more
classes of eligible persons, to the extent such entity is carrying out its
administrative functions under that program with respect to the persons under
its jurisdiction.
Y. PLAN EFFECTIVE DATE shall mean the date on which the Underwriting
Agreement is executed and the initial public offering price of the Common Stock
is established.
Z. PREDECESSOR PLAN shall mean the Corporation's existing 1992 Stock
Option Plan.
AA. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant Program with respect to Section 16 Insiders.
A-4.
<PAGE> 51
AB. SECONDARY COMMITTEE shall mean a committee of two (2) or more
Board members appointed by the Board to administer the Discretionary Option
Grant Program with respect to eligible persons other than Section 16 Insiders.
AC. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
AD. SECTION 12(g) REGISTRATION DATE shall mean the first date on
which the Common Stock is registered under Section 12(g) of the 1934 Act.
AE. SERVICE shall mean the provision of services to the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
AF. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.
AG. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
AH. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
AI. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of such
holder's options or the vesting of his or her shares.
AJ. 10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
AK. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-5.
<PAGE> 52
================================================================================
(FORM OF PROXY)
COMPUTRON SOFTWARE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 30, 1997
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of Computron Software, Inc., hereby
appoints John A. Rade, President and Chief Executive Officer and
Michael R. Jorgensen, Executive Vice President, Chief Financial
Officer and Treasurer and Secretary and each of them, with full power
of substitution, proxies to vote the shares of stock which the
undersigned could vote if personally present at the Annual Meeting of
Stockholders of Computron Software, Inc. to be held at the Meadowlands
Hilton, 2 Harmon Plaza, Secaucus, New Jersey 07094, telephone number
(201) 348-6900 on May 30, 1997, at 9:00 A.M., or any adjournment
thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy
Statement)
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees below
(1) Elias Typaldos; (2) John A. Rade; (3) Gennaro Vendome; (4)
Gregory Kopchinsky; (5) Robert Migliorino;
(6) Michael Berty; and (7) William Vogel
INSTRUCTION: To withhold authority to vote for an individual
nominee, write the nominee's name in the space provided
below.)
----------------------------------------------------------------------
2. APPROVAL OF AMENDED AND RESTATED 1995 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
as described in the Proxy Statement.
(continued, and to be signed, on other side)
<PAGE> 53
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
I,2
(continued from other side)
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR
APPROVAL OF THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN.
Dated:
-------------------------------,
1997
-------------------------------
-------------------------------
Signature(s) of Stockholder
NOTE: Please date and sign
exactly as your name appears on
the envelope in which this
material was mailed. If shares
are held jointly, each
stockholder should sign.
Executors, administrators,
trustees, etc. should use full
title and, if more than one,
all should sign. If the
stockholder is a corporation,
please sign full corporate name
by an authorized officer. If
the stockholder is a
partnership, please sign full
partnership name by authorized
person.
