1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/x/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
TIMELINE, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[TIMELINE LOGO]
June 17, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Timeline, Inc. to be held on Monday, July 15, 1996, at 4:00 P.M., PDT, at the
Woodmark Hotel, 1200 Carillon Point, Kirkland, Washington.
The accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement describe the matters to be presented at the meeting. In addition to
the formal business to be transacted, management will make a presentation on
developments of the past year and respond to comments and questions of general
interest to shareholders. I personally look forward to greeting those Timeline
shareholders able to attend the meeting.
Whether or not you plan to attend the Annual Meeting, it is important
that your shares be represented and voted. THEREFORE, PLEASE SIGN, DATE AND
PROMPTLY MAIL AS SOON AS POSSIBLE THE ENCLOSED PROXY IN THE PREPAID ENVELOPE
PROVIDED.
Thank you.
Sincerely,
/s/ John W. Calahan
John W. Calahan
President, Chief Executive Officer &
Director
3
TIMELINE, INC.
3055 112TH AVENUE N.E., SUITE 106
BELLEVUE, WASHINGTON 98004
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 15, 1996
----------------------
TO THE SHAREHOLDERS OF TIMELINE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Timeline, Inc., a Washington corporation (the "Company"), will be held on
Monday, July 15, 1996, at 4:00 P.M., PDT, at the Woodmark Hotel, 1200 Carillon
Point, Kirkland, Washington, for the following purposes:
1. To elect one director to hold a staggered term expiring in 1999;
2. To ratify the selection of Arthur Andersen LLP as independent
auditors of the Company for the year ending March 31, 1996; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on June 11, 1996
as the record date for the determination of shareholders entitled to notice of
and to vote at this Annual Meeting and at any continuation or adjournment
thereof.
By Order of the Board of Directors
/s/ Charles R. Osenbaugh
Charles R. Osenbaugh
Secretary
Bellevue, Washington
June 17, 1996
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE VOTED YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO ATTEND AND VOTE AT THE MEETING,
YOU MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A PROXY ISSUED IN YOUR
NAME.
4
TIMELINE, INC.
3055 112TH AVENUE N.E., SUITE 106
BELLEVUE, WASHINGTON 98004
--------------------
PROXY STATEMENT
--------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board of Directors" or the "Board") of Timeline, Inc., a Washington
corporation (the "Company" or "Timeline"), for use at the Annual Meeting of
Shareholders to be held on Monday, July 15, 1996, at 4:00 P.M., PDT (the "Annual
Meeting"), or at any continuation or adjournment thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at the Woodmark Hotel, 1200 Carillon Point, Kirkland,
Washington.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly and mailing of this Proxy Statement, the proxy
and any additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding shares of the Company's Common Stock (the "Common Stock") in
their names which are beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners for
their costs of forwarding the solicitation material to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other regular
employees of the Company. No additional compensation will be paid to directors,
officers or other regular employees for such services.
The Company intends to mail this proxy statement and accompanying proxy
card on or about June 19, 1996, to all shareholders entitled to vote at the
Annual Meeting.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
Company's 1997 Annual Meeting of Shareholders (the "1997 Annual Meeting") must
be received by the Company not later than February 3, 1997 in order to be
included in the proxy statement and proxy relating to the 1997 Annual Meeting.
In addition, any proposals to be brought before the shareholders must comply
with the procedural requirements contained in the Company's Bylaws.
VOTING AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on June
11, 1996 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on June 11, 1996, there were outstanding and entitled to vote
3,136,106 shares of Common Stock. Shareholders of record on such date are
entitled to one vote for each share of Common Stock held on all matters to be
voted upon at the meeting. All votes will be tabulated by the inspector of
election appointed for the Annual Meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes.
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A shareholder who abstains from voting on any or all proposals will be
included in the number of shareholders present at the Annual Meeting for the
purpose of determining the presence of a quorum. Abstentions will not be counted
either in favor of or against the election of the nominees or other proposals.
Brokers holding stock for the accounts of their clients who have not been given
specific voting instructions as to a matter by their clients may vote their
clients' proxies in their own discretion, to the extent permitted under the
rules of the National Association of Securities Dealers. Broker non-votes will
be included in determining the presence of a quorum, but will not be counted in
determining whether a matter has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 3055
112th Avenue N.E., Suite 106, Bellevue, Washington 98004, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation (the "Articles")
divide the Board of Directors into three classes, each class consisting, as
nearly as possible, of one-third of the total number of directors. The Articles
further provide that each class will be elected to serve for a staggered
three-year term. Vacancies on the Board may be filled only by persons elected by
a majority of the remaining directors. A director elected by the Board to fill a
vacancy (including a vacancy created by an increase in the Board of Directors)
will serve for the remainder of the full term of the class of directors in which
the vacancy occurred and until such director's successor is elected and
qualified, or until such directors' earlier death, resignation or removal.
The Board of Directors is presently composed of five members. The
director nominee, Mr. Charles R. Osenbaugh, is the nominee for the class of
directors to be elected at the annual meeting for a three-year term expiring at
the 1999 annual meeting of shareholders. At each annual meeting of the
shareholders, directors will be elected for a three-year term to succeed those
directors in the class whose term has so expired. If elected at the Annual
Meeting, the director nominee would serve until his successor is elected and
qualified, or until his earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting. It is the
intention of the persons named in the enclosed proxy, unless authorization to do
so is withheld, to vote the proxies received by them for the election of the
nominee named below. If, prior to the Annual Meeting, the nominee should become
unavailable for election, an event which currently is not anticipated by the
Board, the proxies will be voted for the election of such substitute nominee or
nominees as the Board of Directors may propose. Mr. Osenbaugh has agreed to
serve if elected and management has no reason to believe that he will be unable
to serve.
Set forth below is biographical information for Mr. Osenbaugh.
CHARLES R. OSENBAUGH has served as Executive Vice President -- Finance,
Chief Financial Officer, Treasurer, Secretary and a Director since inception.
From April 1988 to April 1993, Mr. Osenbaugh served as Executive Vice President,
Chief Executive Officer and a Director, and from April 1993 to July 1994 as
President and a Director, of Timeline Services, Inc. From 1975 to 1988, Mr.
Osenbaugh was a partner of Lasher & Johnson, a Seattle law firm. From 1973 to
1975, Mr. Osenbaugh practiced public accounting with Arthur Andersen & Co. He
holds a B.B.A. degree in economics and a J.D. degree, both from the University
of Iowa, and received his CPA certificate in 1975.
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Set forth below is biographical information for directors whose terms
continue after the annual meeting.
DIRECTORS WITH TERMS EXPIRING AT THE 1997 ANNUAL MEETING
DONALD K. BABCOCK is a founder of the Company and a Director since
inception. He currently serves as Senior Technologist, and previously was Senior
Vice President of Research & Development and Chief Technologist. He was also a
founder of Timeline Services, Inc. and served as a director from its inception
in 1977 until its merger into the Company in July 1994. From 1977 to April 1993,
Mr. Babcock also served as Senior Vice President and Chief Technologist of
Timeline Services, Inc. From 1970 to 1977, he was a consultant with Riggs,
Babcock & Mishko, a Tacoma, Washington-based data processing and consulting firm
to the property and casualty insurance industry. Mr. Babcock was Manager of
Systems Programming at United Pacific Insurance Company from 1965 to 1970, and a
data processor in the U.S. Air Force from 1955 to 1965.
KENT L. JOHNSON has been a Director of the Company since inception. He
is President of Alexander Hutton Capital, L.L.C., a Seattle-based investment
banking firm that he co-founded in October 1994 and that specializes in equity
capital formation for emerging growth companies. From April 1989 to June 1994,
he served as Senior Vice President and Chief Operating Officer of Brazier Forest
Industries, Inc., a Seattle-based forest products company. From 1987 to 1989, he
was President and Chief Executive Officer of OverDrive Systems, Inc., an
electronic publishing software company based in Cleveland, Ohio, and from 1982
to 1987, was President and Chief Executive Officer of Microrim, Inc., a database
software company located in Bellevue, Washington. Prior to entering the software
industry, Mr. Johnson was Chief Financial Officer of Fiberchem, Inc., a
wholesale distributor, from 1977 to 1982. Following his military career as an
officer in the U.S. Army, Mr. Johnson began his professional career as a
management consultant with Arthur Andersen & Co., where he was employed from
1970 to 1977. Mr. Johnson currently serves as a director of several private
companies, and devotes considerable time to private investment activities. Mr.
Johnson has a B.B.A. degree in Business Administration from the University of
Washington and an M.B.A. degree from Seattle University, where he serves on the
Business Advisory Board. He received his CPA certificate in 1970.
DIRECTORS WITH TERMS EXPIRING AT THE 1998 ANNUAL MEETING
JOHN W. CALAHAN is a founder of the Company and has been President,
Chief Executive Officer and a Director since inception in April 1993. He was
also a founder and director of the Company's predecessor, Timeline Services,
Inc., from its inception in 1977 until its merger into the Company in July 1994.
From 1977 to April 1993, Mr. Calahan also served as President of Timeline
Services, Inc. From 1971 to 1977, Mr. Calahan practiced public accounting in
Seattle with Arthur Andersen & Co., Ernst & Ernst (now Ernst & Young), and
Calahan, Reed & Gunn. He holds a B.A. degree in accounting from the University
of Washington and received his CPA certificate in 1972.
MICHAEL R. HALLMAN has been a director of the Company since inception.
Since November 1993, he has served as Chairman of the Board of Information
Optics Corporation, an optical computer memory and storage company located in
Issaquah, Washington. Mr. Hallman is also the founder and President of the
Hallman Group, a management consulting firm that focuses on marketing, sales,
organizational development and operations for the computer industry. From
February 1990 to March 1992, he was President and Chief Operating Officer of
Microsoft Corporation. From February 1987 to February 1990, Mr. Hallman served
as Vice President of the Boeing Company and as President of Boeing Computer
Services, Inc. Mr. Hallman started his career with the IBM Corporation, where he
last held the position of Vice President of Field Operations. He now serves as a
director of several public and private companies, including Intuit, Inc.,
InFocus Systems, Inc., Amdahl, Network Appliance Corp., and Keytronics
Corporation. Mr. Hallman holds a B.B.A. degree in Business Administration and an
M.B.A. degree, both from the University of Michigan.
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Set forth below is biographical information for the executive officers
of the Company.
FREDERICK W. DEAN serves as Vice President - Product Management and has
been a Vice President since the Company's inception. From 1979 to April 1993,
Mr. Dean served as Vice President at Timeline Services, Inc. He practiced public
accounting at Calahan, Reed & Gunn from 1978 to 1979, and at Arthur Andersen &
Co. from 1973 to 1977. From 1977 to 1978, Mr. Dean was the Controller of the
Seattle Mariners Baseball Club. Mr. Dean holds a B.A. degree in accounting from
the University of Washington.
MICHAEL G. EVANS has served as a Managing Director of London-based
Timeline Europe Ltd. since its inception in November 1995. From January 1995 to
November 1995, Mr. Evans was Senior Director of Financial Applications for North
America at Comshare, Inc. Prior to this, Michael worked for Comshare's United
Kingdom subsidiary for nine years. Mr. Evans earned a B.A. with Honors from The
University of Kent in Canterbury, Kent, England in 1975, and was qualified as a
Chartered Accountant in 1978.
MICHAEL R. MOORADIAN joined the Company as Vice President - North
American Sales in January 1996. From 1991 until 1995, Mr. Mooradian worked for
Comshare, Inc., first as a Marketing Representative, then Sales Manager, and
finally Central Regional Sales Director. Prior to that, he was a Senior Account
Executive with Ross Systems, Inc. from 1989 to 1991, a Sales Representative with
Corporate Class Software, Inc. from 1987 to 1989, and a Sales Representative
with Information Resources, Inc. from 1986 to 1987 and with Hewlett -Packard
from 1984 to 1986. Mr. Mooradian graduated from DePaul University in 1981 with a
B.S. in Business Administration.
ROBERT B. WALLACE serves as Vice President - Educational Services and
has been with the Company since July 1994, having joined the Company at
inception as Vice President of Consulting Services. From 1989 to April 1993, Mr.
Wallace was the Vice President of Sales and Marketing of Timeline Services, Inc.
He served as Senior Vice President and Chief Financial Officer of BMG
Corporation, a Seattle-based construction equipment manager, from 1987 to 1989.
From 1983 to 1989, Mr. Wallace was Senior Vice President, Chief Financial
Officer and Chief Operating Officer of Accountant MicroSystems, Inc., an
accounting systems software company in Bellevue, Washington. Mr. Wallace
previously practiced public accounting with Arthur Andersen & Co. He has a B.A.
degree in accounting from the University of Washington, and is a certified
public accountant.
DAVID B. KOUCHI joined the Company as Program Manager in October 1993,
became Director of Research & Development in March 1994, and recently was named
Vice President of Development. From May 1993 to October 1993, Mr. Kouchi was
Program Manager at Ackerley Communications, Inc., where he initiated the
downsizing of financial and operational software applications from
mini-computers onto a desktop client/server environment. While at Microsoft
Corporation from January 1991 to May 1993, Mr. Kouchi was a member of the
Microsoft Access(R) testing team where his responsibilities included performance
bench marking and analysis, development and testing of Access(R) user interface
enhancements, and development of demonstration applications. Mr. Kouchi was
employed as a software test analyst at Safeco Insurance Company in 1990. He
holds a B.A. degree in business administration/information systems from the
University of Washington.
OWEN A. CARTON has been Vice President of the Company since joining in
November 1993. From June 1992 to September 1993, Mr. Carton was Product Manager,
Database Management Products in Microsoft Corporation's Worldwide Marketing
Division, where he was responsible for developing and implementing business
strategies for the promotion of Microsoft database management software programs
and applications (i.e., Microsoft Access(R)) with domestic U.S. and worldwide
responsibility. From October 1986 to June 1992, Mr. Carton was employed by
Microsoft Ltd., a wholly-owned subsidiary of Microsoft which is responsible for
the sale and marketing of Microsoft products and for after-sales customer
support services and on-site installation of customized software products and
systems to major corporate clients in Europe. At Microsoft Ltd., Mr. Carton
ultimately attained the position of Corporate Account Manager within the
company's Finance Group, where he was responsible for the sale and
implementation of Microsoft products to major financial companies throughout the
U.K., including the Royal Bank of Scotland and the Union Bank of Switzerland and
the development of a Merchant Banking Sector Sales Program. Mr. Carton received
his Leaving Certificate Qualification with honors from St. Paul's College,
Dublin, Ireland, in 1982.
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THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF MR. OSENBAUGH
BOARD COMMITTEES AND MEETINGS
The Board of Directors, which held eight meetings during the year ended
March 31, 1996, has an Audit Committee and a Compensation Committee. Messrs.
Hallman and Johnson served as members of each of the Audit Committee and the
Compensation Committee for the year ended March 31, 1996.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the results and scope
of the audit and other services provided by the Company's independent auditors,
and reviews and evaluates the Company's internal control functions. During the
year ended March 31, 1996, the Audit Committee met one time.
The Compensation Committee administers the Company's stock option plans
and makes recommendations to the Board of Directors concerning compensation for
executive officers and consultants of the Company. During the year ended March
31, 1996, the Compensation Committee met two times.
The Company has agreed with H. J. Meyers & Co., Inc., (formerly Thomas
James Associates, Inc.) that, for a period of 36 months from the closing of the
Company's initial public offering in January 1995, the Company will allow an
observer designated by H. J. Meyers & Co., Inc. and acceptable to the Company to
attend all meetings of the Board of Directors. Such observer will have no voting
rights. He or she will be reimbursed for out-of-pocket expenses incurred in
attending such meetings, and will be indemnified against any claims arising out
of participation at Board meetings, including claims based on liabilities
arising under the securities laws.
During the year ended March 31, 1996, all of the directors attended at
least 75% of the total number of meetings of the Board of Directors and
committees on which they served.
PROPOSAL 2: RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the
Company's independent auditors for the year ending March 31, 1996, and has
further directed that management submit the selection of independent auditors
for ratification by the shareholders at the Annual Meeting. Arthur Andersen LLP
has audited the Company's financial statements since the Company's inception in
1993. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Shareholder ratification of the selection of Arthur Andersen LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Arthur Andersen LLP
to the shareholders for ratification as a matter of good corporation practice.
If the shareholders fail to ratify the selection, the Board will reconsider
whether or not to retain that firm. Even if the selection were ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if the Board determines that such a
change would be in the best interests of the Company and its shareholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the meeting will be
required to ratify the selection of Arthur Andersen LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of May 31, 1996 by: (i) each
director; (ii) the Company's Chief Executive Officer and each of its other four
most highly compensated executives (collectively, the "Named Executive
Officers") for the year ended March 31, 1996; and (iii) all directors and
executive officers of the Company as a group. The Company is not aware of any
person who is a beneficial owner of more than 5% of its Common Stock other than
certain of its executive officers who are identified below.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
----------------------------
NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF TOTAL
---------------- --------- --------
John W. Calahan (2) 413,876 14.6%
c/o Timeline, Inc.
3055 112th Avenue N.E., Suite 106
Bellevue, WA 98004
Charles R. Osenbaugh (3) 254,787 9.0
c/o Timeline, Inc.
3055 112th Avenue N.E., Suite 106
Bellevue, WA 98004
Donald K. Babcock (4) 187,175 6.6
c/o Timeline, Inc.
3055 112th Avenue N.E., Suite 106
Bellevue, WA 98004
Frederick W. Dean (5) 149,650 5.3
c/o Timeline, Inc.
3055 112th Avenue N.E., Suite 106
Bellevue, WA 98004
Michael R. Hallman (6) 85,273 3.0
600 Skyline Tower
10900 N.E. 4th Street
Bellevue, WA 98004
Kent L. Johnson (7) 51,998 1.8
c/o Alexander Hutton Capital, L.L.C.
1325 4th Avenue, Suite 535
Seattle, WA 98101
Robert B. Wallace (8) 17,505 0.6
c/o Timeline, Inc.
3055 112th Avenue N.E., Suite 106
Bellevue, WA 98004
All directors and executive officers as a group 1,175,299 41.0
(nine persons) (9)
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(1) This table is based upon information supplied by executive officers,
directors and principal shareholders. Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, each of the shareholders named in this table has sole
voting and investment power with respect to the shares shown as
beneficially owned by him or her.
(2) Includes (i) 11,276 shares issuable upon exercise of vested options
held by Mr. Calahan and (ii) 6,600 shares issuable upon exercise of
warrants granted to Mr. Calahan in connection with certain Company loan
guarantees.
(3) Includes (i) 11,026 shares issuable upon exercise of vested options
held by Mr. Osenbaugh and (ii) 17,325 shares issuable upon exercise of
warrants granted to Mr. Osenbaugh in connection with certain Company
loan guarantees. Does not include 15,015 shares held in an individual
retirement account belonging to Mr. Osenbaugh's spouse; Mr. Osenbaugh
disclaims any beneficial interest in such shares.
(4) Includes 8,776 shares issuable upon exercise of vested options held by
Mr. Babcock.
(5) Includes (i) 6,600 shares issuable upon exercise of warrants granted to
Mr. Dean in connection with certain Company loan guarantees and (ii)
4,650 shares issuable upon exercise of vested options held by Mr. Dean.
(6) Includes (i) 42,098 shares issuable upon exercise of vested options
held by Mr. Hallman and (ii) 4,125 shares issuable upon exercise of
warrants granted to Mr. Hallman in connection with a loan he made to
the Company.
(7) Includes 42,098 shares issuable upon exercise of vested options held by
Mr. Johnson
(8) Includes 13,875 shares issuable upon exercise of vested options held by
Mr. Wallace.
(9) Consists of Messrs. Calahan, Osenbaugh, Babcock, Dean, Wallace, Kouchi,
Hallman, Johnson, Carton, Evans, and Mooradian.
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EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the years ended March 31, 1996 and 1995,
respectively, certain compensation awarded or paid to, or earned by, the Named
Executive Officers:
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL OTHER
BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) OPTION (1) ($)(2)
- --------------------------- ---- ---------- ----- ---------- ------
John Calahan, President & Chief 1996 $183,035 -- 10,000 $10,515
Executive Officer 1995 111,702 -- 6,600(3) 5,665
Charles R. Osenbaugh, Executive 1996 145,030 -- 9,000 6,000
Vice President and Chief 1995 100,000 -- 17,325(3) 6,732
Financial Officer --
Frederick W. Dean, Vice 1996 106,869 -- 12,000 4,549
President -- Product 1995 106,367 -- 6,600(3) 8,548
Management
Robert B. Wallace, Vice President 1996 128,813 -- 26,000 --
-- Educational Services 1995 113,918 -- -- 2,023
Donald K. Babcock, Senior 1996 124,390 -- -- 2,613
Technologist 1995 104,836 -- -- 3,959
(1) All referenced options granted are exercisable at prices equal to the
fair market value of the Common Stock on the respective dates of grant.
(2) Represents dollar value of medical, disability, and life insurance
premiums paid by the Company for the benefit of the respective named
officers.
(3) Represents warrants to purchase the indicated number of shares of
Common Stock, at an exercise price of $3.64 per share, as consideration
for certain personal guarantees of loans incurred by the Company.
STOCK OPTION GRANTS AND EXERCISES
For the fiscal year ended March 31, 1996, no options were exercised by
the Named Executive Officers. The following table shows, for the fiscal year
ended March 31, 1996, certain information regarding options granted to the Named
Executive Officers:
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POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SHARES PERCENTAGE OF OF STOCK PRICE
UNDERLYING TOTAL OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO PRICE PER EXPIRATION OPTION TERM
NAME GRANTED (#1) EMPLOYEES SHARE DATE 5% 10%
- ---- ------------ --------- ----- ---- -- ---
John Calahan 10,000 5.4% $3.93 4/30/05 $24,900 $62,700
Charles Osenbaugh 9,000 4.8% 3.57 4/30/05 20,340 51,930
Frederick Dean 12,000 6.4% 3.57 4/30/05 27,120 69,240
Robert Wallace 6,000 3.2% 3.57 4/30/05 13,560 34,610
20,000 10.7% 6.75 8/03/05 45,200 115,400
The following table shows, for the fiscal year ended March 31, 1996,
certain information regarding options held at year end by the Named Executive
Officers.
FISCAL YEAR-END 1996 OPTION VALUES
NUMBER OF SHARES
OF COMMON STOCK VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR ENDED (1)
-------------------------- ------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
John Calahan, President & Chief Executive
Officer ................................. 17,876 7,500 $64,228 $18,375
Charles R. Osenbaugh, Executive Vice
President and Chief Financial Officer.... 28,351 6,750 93,812 18,968
Frederick W. Dean, Vice President --
Product Management ...................... 11,250 10,650 31,035 29,811
Robert B. Wallace, Vice President --
Educational Services .................... 13,875 36,875 38,123 39,153
Donald K. Babcock, Senior Technologist ...... 8,776 - 0 - 40,019 - 0 -
(1) Value of unexercised in-the-money options is calculated based on the
market value of the underlying securities, minus the exercise price,
and assumes sale of the underlying securities on March 31, 1996 at the
fair market value of $6.38 per share.
COMPENSATION OF DIRECTORS
During the year ended March 31, 1996, the Company did not compensate
its directors for their service as directors. Pursuant to the terms of the
Company's Directors' Non-Qualified Stock Option Plan, the non-employee directors
of the Company were each granted options to purchase 3,000 shares of Common
Stock on May 1, 1995. These options are also to be automatically granted to any
new non-employee director 90 days after he or she becomes a director.
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EMPLOYMENT AGREEMENTS
Messrs. Calahan, Kouchi and Babcock have entered into employment
agreements with the Company, each of which became effective February 1, 1995.
Mr. Calahan's five-year agreement provides for an annual salary of
$150,000, with an annual bonus of up to $75,000 based on achievement of net
income goals to be established by the Board of Directors. In the event of
termination of Mr. Calahan's employment by the Company during the initial 24
months of the agreement, except in the case of termination for cause, he will
continue to receive the remaining portion of his salary until expiration of such
24-month period. Under terms of a noncompete agreement with the Company, Mr.
Calahan has agreed not to compete with the Company for two years following
termination of his employment. If there is a change of control in the Company
which results in removal of Mr. Calahan as an executive officer or director of
the Company, the agreement provides that the Company will pay Mr. Calahan
$250,000.
Mr. Babcock's five-year agreement provides for an annual salary of
$127,000, and permits Mr. Babcock to defer up to $25,000 of his salary each
year. In the event of involuntary termination of Mr. Babcock's employment,
except in the case of termination for cause as specified in the agreement, he
will continue to receive $70,000 annually for each year remaining on his
employment contract from the date of termination. He has agreed not to compete
with the Company for a period of 10 years following the termination of his
employment.
CERTAIN TRANSACTIONS
The Company has granted warrants in connection with various loans made
to the Company and personal guarantees of third-party debt incurred by the
Company. The number of shares subject to each such warrant, and the exercise
price of each, was negotiated at the respective times each such warrant was
granted. In August 1993, Mr. Hallman was granted a warrant to purchase 4,125
shares of Common Stock, at an exercise price of $3.64 per share, in connection
with a loan he made to the Company. In July 1994, Messrs. Calahan, Osenbaugh and
Dean were granted warrants to purchase 6,600, 17,325 and 6,600 shares of Common
Stock, respectively, each at an exercise price of $3.64 per share, as
consideration for certain personal guarantees of loans incurred by the Company.
Mr. Osenbaugh is a 50% shareholder of SoftForce Inc., an Iowa-based
distributor of software which currently employs six persons. The remaining
shares of SoftForce, Inc. are owned by a brother of Mr. Osenbaugh. SoftForce
Inc. distributes Company products pursuant to a standard Company distribution
agreement. The Company believes its distribution agreement with SoftForce Inc.
was made on terms no less favorable to the Company than could have been obtained
from unaffiliated third party distributors.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and change in
ownership with the SEC and with the National Association of Securities Dealers,
Inc. Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all forms they file pursuant
to Section 16(a).
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5
disclosing delinquently reported transactions were required for those persons,
the Company believes that, during the year ended March 31, 1996, all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, except for the following: (1) No Form 3
Initial Statement of Beneficial Ownership of Securities was filed by February
10, 1996 for Michael Mooradian. Mr. Mooradian's beneficial ownership of Timeline
Securities has been reported on a Form 5 filed on May 15, 1996. (2) No Form 5
was filed by May 15, 1996 to reflect the termination of Kent Johnson's indirect
ownership of Timeline Securities owned by his former spouse. A Form 5 was filed
on or about June 14, 1996.
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OTHER BUSINESS
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting. If other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors
/s/ Charles R. Osenbaugh
Charles R. Osenbaugh
Secretary
June 17, 1995
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PLEASE MARK YOUR
/X/ VOTE AS IN THIS
EXAMPLE.
FOR WITHHOLD AUTHORITY
1. Election of
one director / / / / NOMINEE: Charles R. Osenbaugh
for a three
year term expiring at the 1999 Annual Meeting.
FOR AGAINST ABSTAIN
2. Ratification of the selection of Arthur
Andersen LLP as independent auditors / / / / / /
of the Company for the year ending
March 31, 1996.
3. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments or
postponements thereof.
I PLAN TO ATTEND MEETING / /
If you receive more than one Proxy Card, please sign and return all such cards
in the accompanying envelope.
Please sign, date and return this Proxy Card today, using the enclosed envelope.
SIGNATURE(S) ________________________________________________ DATE ____________
NOTE: Please sign above exactly as your name appears on this Proxy Card. If
shares are registered in more than one name, the signatures of all such
persons are required. A corporation should sign in its full corporate
name by a duly authorized officer, stating his/her title. Trustees,
guardians, executors and administrators should sign in their official
capacity, giving their full title as such if a partnership, please sign
in the partnership name by authorized person(s).
TIMELINE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Timeline, Inc., a Washington corporation (the
"Company"), hereby appoints John W. Calahan and Charles R. Osenbaugh, or either
of them, with full power of substitution in each, as proxies to cast all votes
which the undersigned shareholder is entitled to cast at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Monday, July 15, 1996, at
4:00 P.M. PDT, at the Woodmark Hotel, 1200 Carillon Point, Kirkland,
Washington, 98033 and any adjournments or postponements thereof upon the
matters set forth on the reverse side of this Proxy Card.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. UNLESS DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEE LISTED IN PROPOSAL 1, "FOR" PROPOSAL 2,
AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS. The undersigned hereby acknowledges receipt of
the Company's Proxy Statement and hereby revokes any proxy or proxies
previously given.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)