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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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[ ] 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
Platinum Software Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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[ ] 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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PLATINUM SOFTWARE CORPORATION
195 Technology Drive
Irvine, California 92618-2402
[PLATINUM LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------
TO BE HELD APRIL 29, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Platinum Software Corporation (the "Company"), a Delaware corporation, will be
held on Thursday, April 29, 1999 at 10:00 a.m., Pacific Time, at the offices of
the Company located at 195 Technology Drive, Irvine, California 92618-2402,
telephone number (949) 453-4000, for the following purposes:
1. To elect five (5) directors to serve until the next annual
meeting of stockholders or until their successors are elected and
qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation to change the Company's name to Epicor Software
Corporation.
3. To approve the Company's 1999 Nonqualified Stock Option
Plan, which provides for the grant of nonqualified stock options with
respect to an aggregate of 2,000,000 shares of Common Stock of the
Company to officers, directors, and employees of the Company as well as
consultants to the Company.
4. To approve an amendment to the Company's Employee Stock
Purchase Plan to increase the authorized number of shares of Common
Stock reserved for issuance by 550,000 shares.
5. To ratify the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending December
31, 1999.
6. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 16, 1999
are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting. However,
in order to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.
By Order of the Board of Directors
L. George Klaus
Chairman of the Board
Irvine, California
March 29, 1999
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. Any stockholder
present at the meeting may withdraw his or her proxy and vote personally on each
matter brought before the meeting. Stockholders attending the meeting whose
shares are held in the name of a broker or other nominee who desire to vote
their shares at the meeting should bring with them a proxy or letter from that
firm confirming their ownership of shares.
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PLATINUM SOFTWARE CORPORATION
[PLATINUM LOGO]
-------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board" or "Board of Directors") of PLATINUM SOFTWARE CORPORATION (the
"Company") for use at the Annual Meeting of Stockholders (the "Annual Meeting of
Stockholders") to be held on Thursday, April 29, 1999, at 10:00 a.m., Pacific
Time, or at any adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting of Stockholders will be held at the offices of the Company
located at 195 Technology Drive, Irvine, California 92618-2402. The telephone
number at that location is (949) 453-4000.
These proxy solicitation materials and the Annual Report to
Stockholders for the transition period ended December 31, 1998, including
financial statements, were first mailed on or about March 29, 1999, to all
stockholders entitled to vote at the Annual Meeting of Stockholders.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT MEETING
Proposals that are intended to be presented by stockholders of the
Company at the Company's 2000 Annual Meeting of Stockholders must be received by
the Company at its principal executive offices no later than November 29, 1999,
in order to be considered for inclusion in the Company's proxy statement
relating to that meeting.
REVOCABILITY OF PROXIES; VOTING
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person. An automated system administered by
the Company's transfer agent will tabulate votes cast at the Annual Meeting of
Stockholders. A majority of the shares entitled to vote, represented in person
or by proxy, will constitute a quorum at the Annual Meeting of Stockholders.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum. Abstentions will be treated as shares
present and entitled to vote for purposes of any matter requiring the
affirmative vote of a majority or other proportion of the shares present and
entitled to vote. With respect to shares relating to any proxy as to which a
broker non-vote is indicated on a proposal, those shares will not be considered
present and entitled to vote with respect to any such proposal. Abstentions or
broker non-votes or other failures to vote will have no such effect in the
election of directors, who will be elected by a plurality of the affirmative
votes cast. With respect to any matter brought before the Annual Meeting
requiring the affirmative vote of a majority
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or other proportion of the outstanding shares, an abstention or broker non-vote
or other failure to vote will have the same effect as a vote against the matter
being voted upon.
SOLICITATION
The Company will bear the entire cost of the solicitation of proxies,
including costs incurred in connection with the preparation, assembly, printing
and mailing of this proxy statement, the proxy and any additional information
furnished to the Company's stockholders in relation to the Annual Meeting of
Stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock of the Company beneficially owned by others for forwarding to such
beneficial owners. The Company may reimburse persons representing beneficial
owners of Common Stock of the Company for their costs of forwarding solicitation
materials 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 has engaged Georgeson & Company, Inc. to assist in
the solicitation of proxies and anticipates paying such firm approximately
$5,000, plus costs for their services.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on March 16, 1999
("Record Date") are entitled to notice of and to vote at the Annual Meeting of
Stockholders. The Company has two (2) classes of equity securities outstanding,
designated Common Stock, $.001 par value ("Common Stock" or the "Company's
Common Stock"), and Series C Preferred Stock, $.001 par value ("Series C
Preferred Stock"). At the Record Date, ____________ shares of Common Stock and
______ shares of Series C Preferred Stock were issued and outstanding. Each
share of Common Stock outstanding at the record date will be entitled to one (1)
vote with respect to each proposal herein and any other matter that properly may
come before the Annual Meeting of Stockholders.
VOTING AND CONVERSION RIGHTS OF SERIES C PREFERRED STOCK
Each share of Series C Preferred Stock is convertible into ten (10)
shares of Common Stock, as adjusted for any stock dividends, combinations or
splits with respect to such shares, at any time at the option of the holder. In
addition, each share of Series C Preferred Stock automatically converts into ten
(10) shares of Common Stock, as adjusted as provided above, ten (10) days
following the date that the average closing price of the Common Stock for twenty
(20) consecutive days has exceeded $25.00 per share, as adjusted as provided
above. Each share of Series C Preferred Stock will be entitled to vote with the
holders of Common Stock on an as-converted basis on all matters presented for
stockholder approval.
MERGER WITH DATAWORKS CORPORATION/CHANGE IN FISCAL YEAR
Effective December 31, 1998 at 11:59 p.m. the Company merged with
DataWorks Corporation ("DataWorks") and as a result of the merger ("Merger")
DataWorks became a wholly owned subsidiary of the Company. Effective December
30, 1998, the Company changed its fiscal year end from June 30 to December 31.
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PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
Currently, there are six (6) members of the Board of Directors. W.
Douglas Hajjar has informed the Company that he will not stand for reelection.
Accordingly, effective as of the Annual Meeting of Stockholders the authorized
number of directors will be fixed at five (5). At the Annual Meeting of
Stockholders, five (5) directors are to be elected by the holders of Common
Stock. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for Management's five (5) nominees named below. If any
Management nominee is unable or declines to serve as a director at the time of
the Annual Meeting of Stockholders, the proxies will be voted for a nominee
designated by the present Board of Directors to fill the vacancy. The Company is
not aware of any nominee who will be unable to or will decline to serve as a
director. The term of office for each person elected as a director will continue
until the next Annual Meeting of Stockholders or until his successor has been
elected and qualified.
The names of the nominees and certain information about them are set
forth below:
L. George Klaus.......................58 President, Chairman of the Board,
Chief Executive Officer
Stuart W. Clifton.....................54 Director, Vice Chairman
Donald R. Dixon.......................51 Director
Arthur J. Marks.......................54 Director
L. John Doerr.........................47 Director
The Board of Directors recommends a vote "FOR" the election of all of the
nominees listed above.
Mr. Klaus has been a Director of the Company and has served as
President and Chief Executive Officer of the Company since February 1996 and
Chairman of the Board since September 1996. From July 1993 to October 1995, Mr.
Klaus served as President, Chief Executive Officer and Chairman of the Board of
Frame Technology, Inc., a publicly held software company which produced software
tools for authoring, managing and distributing business-critical documents. From
October 1992 to July 1993, Mr. Klaus was Chairman of the Board and President at
Integral Development Corporation, a software company that produces software
tools and applications for the financial services industry. From December 1991
to May 1992, Mr. Klaus was Chief Operating Officer at Cadence Design Systems,
Inc., a publicly held software company. In addition, Mr. Klaus was President and
Chief Operating Officer at Valid Logic Systems, Inc., a publicly held supplier
of electronic design automation software tools from October 1989 to December
1991. Mr. Klaus currently serves on the board of FileNet Corporation, a public
company.
Mr. Clifton has been a Director and Vice Chairman of the Company since
the closing of the Merger with DataWorks Corporation on December 31, 1998. Mr.
Clifton served as President, Chief Executive Officer and as Chairman of the
Board of Directors of DataWorks from January 1987 through December 31, 1998.
Between 1971 and 1986, Mr. Clifton held various management positions at Triad
Systems Corporation, a vertical distribution software company, in which he was
involved from its inception, most recently as Executive Vice President and
General Manager. Mr. Clifton also serves on the Board of Directors of Star
Buffet, Inc., a food-service company.
Mr. Dixon has been a Director of the Company since September 1995. Mr.
Dixon has served as President of Trident Capital, Inc., a private investment
firm, since June 1993, and before that as Co-President of Partech International,
Inc., an international venture capital and money management firm, from June 1988
until June 1993. Mr. Dixon also is a director of BankAmerica Merchant Services,
Inc., and Evolving Systems, Inc., both of which are public companies and several
other private companies.
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Mr. Marks has been a Director of the Company since October 1994. Mr.
Marks is presently a general partner of and is the manager of the Information
Technology Group at New Enterprise Associates, a venture capital firm
specializing in technology companies. Mr. Marks has been a general partner of
New Enterprise Associates since 1984. Mr. Marks is currently on the Board of
Directors of the following publicly traded corporations: Object Design, Inc.,
and Progress Software Corporation.
Mr. Doerr has been a Director of the Company since October 1994. Mr.
Doerr has served as a general partner of Kleiner Perkins Caufield & Byers, a
venture capital firm specializing in information and life science companies,
since 1980. Mr. Doerr is currently on the Board of Directors of the following
public companies: Intuit, Inc., Macromedia, Inc., Sun Microsystems and Netscape
Communications Corporation.
DataWorks Corporation, Stuart W. Clifton, Norman R. Farquhar, and
certain former officers and directors of DataWorks have been named as defendants
in a lawsuit alleging violations of the federal securities laws. The complaint,
which was filed on November 3, 1998 in the United States District Court for the
Southern District of California, purports to be brought on behalf of a class of
stockholders, and alleges that between January 28, 1998 and July 16, 1998, the
defendants issued misleading statements concerning DataWorks' acquisition of
Interactive Group, Inc. and sales of certain products. The complaint does not
specify the dollar amount of damages alleged or relief requested. The Company is
also named in the lawsuit as a defendant as a successor of DataWorks.
COMMITTEES
The Board of Directors has a standing Compensation Committee, Audit
Committee and Executive Committee. The functions of the Compensation Committee
include advising the Board of Directors on officer compensation and on employee
compensation generally and administering the Company's stock option plans. See
"Report of the Compensation Committee on Executive Compensation" below. The
Compensation Committee, which presently consists of two outside directors,
Messrs. Dixon and Doerr, held two meetings during the 12 months ended December
31, 1998. The Audit Committee is responsible for recommending to the Board of
Directors the appointment of the Company's outside auditors, examining the
results of audits and quarterly reviews and reviewing internal accounting
controls. The Audit Committee, which presently consists of two outside
directors, Mr. Dixon and W. Douglas Hajjar, held four meetings during the 12
months ended December 31, 1998. The Executive Committee is empowered to take
day-to-day board actions between regularly scheduled board meetings, and is
presently comprised of two directors, Messrs. Dixon and Klaus. During the 12
months ended December 31, 1998, the Executive Committee held no meetings. The
Board of Directors has no nominating committee or any committee performing the
functions of such a committee.
BOARD MEETINGS
The Board of Directors held a total of seven meetings during the 12
months ended December 31, 1998. No member of the Board of Directors attended
fewer than 75% of the meetings of the Board of Directors, and no director
attended fewer than 75% of the meetings of committees upon which such director
served.
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OTHER EXECUTIVE OFFICERS
In addition to Mr. Klaus, the other current executive officers of the
Company are William R. Pieser, age 45, Executive Vice President, Product
Operations and Marketing, Ken Lally, age 55, Executive Vice President, Field and
Customer Operations, and Norman R. Farquhar, age 52, Executive Vice President
and Chief Financial Officer.
Mr. Pieser joined the Company in February 1996. From February 1996 to
June 1998, Mr. Pieser served as Senior Vice President, Marketing and Business
Development of the Company. In July 1998, Mr. Pieser became Executive Vice
President, Product Operations and Marketing. Mr. Pieser served as Vice President
of Marketing at Frame Technology, Inc. from October 1993 to October 1995. From
October 1991 to October 1993, Mr. Pieser was Vice President of Marketing at
Raima Corporation, a supplier of development tools. From October 1990 through
October 1991, Mr. Pieser served as Director of Sales for HDC Computer
Corporation.
Mr. Lally joined the Company in April 1996. From April 1996 to June
1998, Mr. Lally served as Senior Vice President, Worldwide Field Operations of
the Company. In July 1998, Mr. Lally became Executive Vice President, Field and
Customer Operations. Mr. Lally served as Vice President of Spectrum Services for
Cadence Design Systems, Inc. from January 1995 through April 1996. Mr. Lally was
Vice President of North American Sales at Cadence from December 1991 through
January 1995. From December 1990 through December 1991, Mr. Lally was Vice
President of North American Sales at Valid Logic Systems, Inc. Prior to joining
Valid, Mr. Lally was employed at Prime Computer for ten years.
Mr. Farquhar has served as Executive Vice President and Chief Financial
Officer of the Company since the closing of the Merger with DataWorks on
December 31, 1998. Prior to December 31, 1998, Mr. Farquhar served as Executive
Vice President and Chief Financial Officer of DataWorks from February 1996 and
as director of DataWorks from August 1995. From April 1993 to December 1995, Mr.
Farquhar served as Senior Vice President, Chief Financial Officer and Secretary
of Wonderware Corporation, a manufacturer of software for the industrial
automation industry. From December 1991 to April 1993, he was Vice President of
Finance and Chief Financial Officer of MTI Technology Corporation, a developer
of system-managed storage solutions. From November 1987 to December 1991, he was
a Senior Vice President and Chief Financial Officer of Amperif Corporation, a
manufacturer of cache-based data storage subsystems. Mr. Farquhar is also a
member of the Board of Directors of Alteer Corporation, a medical software
company, and a member of the Board of Directors and Chairman of the Audit
Committee of Artecon, Inc., a manufacturer of host and network-attached data
storage products.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION. The following table sets forth summary
information concerning compensation paid or accrued for services rendered to the
Company in all capacities during the 12 months ended December 31, 1998 to the
Company's Chief Executive Officer and to the Company's four most
highly-compensated executive officers:
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SUMMARY COMPENSATION TABLE(1)
Annual Compensation Long Term Compensation Awards
------------------------------------------ -----------------------------
Name Other Restricted Securities All
and Year Annual Stock Underlying Other
Principal Position Ended Salary($) Bonus($) Compensation($) Awards($) Options(#) Compensation($)
------------------ -------- ---------- ---------- --------------- ---------- ---------- ---------------
L. George Klaus 12-31-98 559,167(2) 620,216(3) 444,188(4) (5) 500,000 --
Chairman of the Board, 06-30-98 527,500 509,456 423,058(4) -- -- --
Chief Executive Officer 06-30-97 500,000 180,000 855,251(6) -- -- --
and President
Ken Lally 12-31-98 236,167(2) 265,459(3) 169,544(7) (8) 250,000 --
Executive Vice President 06-30-98 211,000 243,000 169,544(7) -- -- --
Field and Customer 06-30-97 200,000 97,000 373,274(9) -- -- --
Operations
William R. Pieser 12-31-98 242,350(2) 244,880(3) 115,380(10) (11) 250,000 --
Executive Vice President 06-30-98 221,500 196,884 105,157(10) -- -- --
Product Operations 06-30-97 210,000 75,000 192,544(12) -- -- --
and Marketing
- ----------
(1) Effective December 30, 1998, the Company changed its fiscal year end
from June 30 to December 31. The information presented in this table
includes the 12 months ended December 31, 1998 and the 12 months ended
June 30, 1998 and June 30, 1997.
(2) Includes salary for the final six months of the fiscal year ended June
30, 1998 and the final six months of the calendar year ended December
31, 1998.
(3) Includes bonus for the fiscal year ended June 30, 1998 as well as
prorated bonus for six months ended December 31, 1998.
(4) Consists of waiver of accrued interest on two loans in the aggregate
principal amount of $7,000,000 and insurance which provides for
reimbursement for health and dental costs in excess of the amounts
payable under the Company's group health and dental plans. See
"Employment Agreements and Related Party Transactions."
(5) Mr. Klaus received a restricted stock grant of 2,000,000 shares in
connection with his joining the Company in February 1996. See
"Employment Agreements and Related Party Transactions." Of the
2,000,000 shares, 350,000 vested on the grant date and 29,167 shares
vest each month thereafter for 36 months. The remaining 600,000 shares
vest based on the Company meeting operating revenue and profit after
tax thresholds for fiscal 1997, 1998 and 1999. If the Company does not
meet the thresholds, then the shares vest after 10 years. As of
December 31, 1998, 1,770,845 shares were vested. The value of Mr.
Klaus' restricted stock holdings at December 31, 1998, was $16,490,994,
which was determined by multiplying the number of restricted shares
times $12.8125, the closing price of the Company's common stock on
December 31, 1998, net of the consideration paid for the restricted
shares.
(6) Includes relocation expenses related to Mr. Klaus moving from Northern
California to Southern California, including $623,276 relating to the
sale of Mr. Klaus' prior residence (comprised of the shortfall on the
sale of the residence, carrying costs for six months, sales
commissions, legal fees and taxes). Also includes golf club membership
and moving expenses, closing costs on a new residence and a tax gross
up payment for certain reimbursed costs.
(7) Consists of waiver of accrued interest on two loans in the aggregate
principal amount of $2,812,500 and insurance which provides for
reimbursement for health and dental costs in excess of the amounts
payable under the Company's group health and dental plans. See
"Employment Agreements and Related Party Transactions."
(8) Mr. Lally received a restricted stock grant of 450,000 shares in
connection with his joining the Company in April 1996. See "Employment
Agreements and Related Party Transactions." Of the 450,000 shares,
49,980 vested on the grant date and 6,945 shares vest each month
thereafter for 36 months. The remaining 150,000 shares vest based on
the Company meeting operating revenue and profit after tax thresholds
for fiscal 1997, 1998 and 1999. If the Company does not meet the
thresholds, then the shares vest after 10 years. As of December 31,
1998, 329,185 shares were vested. The value of Mr. Lally's restricted
stock holdings at December 31, 1998, was $2,160,276, which was
determined by multiplying the number of restricted shares times
$12.8125, the closing price of the Company's common stock on December
31, 1998, net of the consideration paid for restricted shares.
(9) Relocation expense related to Mr. Lally moving from Northern California
to Southern California including $121,338 representing the shortfall on
the sale of Mr. Lally's prior residence as well as moving expenses,
closing costs on a new residence, and a tax gross up payment of
$166,664 for the reimbursed costs. Also includes golf club membership.
(10) Consists of waiver of accrued interest on two loans in the aggregate
principal amount of $1,750,000 and insurance which provides for
reimbursement for health and dental costs in excess of the amounts
payable under the Company's group health and dental plans. See
"Employment Agreements and Related Party Transactions."
(11) Mr. Pieser received a restricted stock grant of 500,000 shares in
connection with his joining the Company in February 1996. See
"Employment Agreements and Related Party Transactions." Of the 500,000
shares, 50,000 vested on the grant date and 8,334 shares vest each
month thereafter for 36 months. The remaining 150,000 shares vest based
on the Company meeting operating revenue and profit after tax
thresholds for fiscal 1997, 1998 and 1999. If the Company does not meet
the thresholds, then the shares vest after 10 years. As of December 31,
1998, 441,690 shares were vested. The value of Mr. Pieser's restricted
stock holdings at December 31, 1998, was $4,113,238, which was
determined by multiplying the number of restricted shares times
$12.8125, the closing price of the Company's common stock on December
31, 1998, net of the consideration paid for the restricted shares.
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(12) Relocation expenses related to Mr. Pieser moving from Northern
California to Southern California including moving expenses,
reimbursement of the shortfall on the sale of Mr. Pieser's prior
residence, closing costs on the purchase of a new residence and $90,949
as a tax gross up payment for certain reimbursed costs.
Option Grants. The following table sets forth certain information
concerning grants of stock options to each of the persons named in the Summary
Compensation Table during the 12 months ended December 31, 1998. In addition, in
accordance with the rules and regulations of the Securities and Exchange
Commission, the following table sets forth the hypothetical gains or "option
spreads" that would exist for the options. Such gains are based on assumed rates
of annual compound stock appreciation of 5% and 10% from the date on which the
options were granted over the full term of the options. No assurance can be
given that the rates of annual compound stock appreciation assumed for the
purposes of the following table will be achieved.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
- ----------------------------------------------------------------------------------------- -------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Expiration
Name Granted (#) Fiscal Year Base Price ($/Sh) Date 5% ($) 10% ($)
- ----------------------- -------------- ------------ ----------------- ---------- --------- ---------
L. George Klaus 500,000 (1)(3) 17.92 11.50 (2) 07-28-08 3,486,838 8,764,451
Ken Lally 250,000 (1)(4) 8.96 11.50 (2) 07-28-08 1,743,419 4,382,226
William R. Pieser 250,000 (1)(4) 8.96 11.50 (2) 07-28-08 1,743,419 4,382,226
- ----------
(1) Options granted have a term of ten (10) years, subject to earlier
termination in certain events related to termination of employment.
(2) Repriced stock option. See "Ten Year Option/SAR Repricings."
(3) Subject to continued employment with the Company or service as a
director or service provider to the Company, the option becomes
exercisable with respect to 333,333 shares on July 28, 2000 and the
remaining 167,667 shares vest on July 28, 2001.
(4) Subject to continued employment with the Company or service as a
director or service provider to the Company, the option becomes
exercisable with respect to 166,667 shares on July 28, 2000 and the
remaining 83,333 shares vest on July 28, 2001.
Option Exercises. The following table sets forth certain information
concerning the exercise of options by each of the Company's executive officers
named in the Summary Compensation Table during the 12 months ended December 31,
1998, including the aggregate value of gains on the date of exercise. In
addition, the table includes the number of shares covered by both exercisable
and unexercisable stock options as of December 31, 1998. Also reported are the
values for "in the money" options that represent the positive spread between the
exercise prices of any of such existing stock options and the closing sale price
of the Company's Common Stock as of December 31, 1998.
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AGGREGATED OPTION EXERCISE IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
-------------------------- --------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(1)
at Fiscal Year-End
----------------- ----------- -------------------------- --------------------------
Shares Acquired Value
on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ------------------ ----------------- ----------- ----------- ------------- ----------- -------------
L. George Klaus N/A N/A 0 500,000 0 656,250
Ken Lally N/A N/A 25,000 250,000 164,063 328,125
William R. Pieser N/A N/A 0 250,000 0 328,125
- ----------
(1) Market value of underlying securities at exercise date or year-end, as
the case may be, minus the exercise or base price on "in-the-money"
options. The closing sale price for the Company's Common Stock as of
December 31, 1998 on the NASDAQ National Market System was $12.8125.
The following table sets forth certain information concerning the
repricing of stock options with respect to the Company's executive officers
named in the Summary Compensation Table during the fiscal year ended December
31, 1998. See "Report of Board of Directors on Repricing."
TEN-YEAR OPTION/SAR REPRICINGS
- --------------------------------------------------------------------------------------------------------------------------------
Number of
Securities Exercise Length of Original
Underlying Market Price of Price at Option Term
Options/SARs Stock at Time of Time of Remaining at Date
Repriced or Repricing or Repricing or New Exercise of Repricing or
Name Date Amended(#) Amendment($) Amendment($) Price($) Amendment
- --------------------- -------- ------------ ---------------- ------------ ------------ ------------------
L. George Klaus 11-09-98 500,000 11.50 23.375 11.50 9 years, 8 months
Chairman of the
Board, President,
Chief Executive
Officer
Ken Lally 11-09-98 250,000 11.50 23.375 11.50 9 years, 8 months
Executive Vice
President, Field and
Customer Operations
William R. Pieser 11-09-98 250,000 11.50 23.375 11.50 9 years, 8 months
Executive Vice
President, Product
Operations and
Marketing
- ----------
Compensation of Directors. Except for those directors who are
representatives of venture capital firms, each of the Company's non-employee
directors receives annual retainers of $24,000, of which $24,000 was paid during
the 12 months ended December 31, 1998.
Employment Agreements and Related Party Transactions. The Company
entered into an offer letter with L. George Klaus when he joined the Company as
President and Chief Executive Officer in February 1996. The offer letter
provided for a base salary of $500,000 together with an annual bonus on a fiscal
year basis of up to $250,000 based on a performance plan. The offer letter also
provided that Mr. Klaus could earn an additional incentive bonus of up to
$250,000 upon fulfillment of certain performance criteria. In addition, Mr.
Klaus purchased 2,000,000 shares of restricted stock at a purchase price of
$3.50 per share, the then fair market value of the Company's Common Stock. In
payment of one half of the purchase price, Mr. Klaus executed a secured
five-year promissory note in the principal amount of $3,500,000. The note bears
simple interest at 6% per annum, is a recourse promissory note, and is secured
by a stock pledge of 2,000,000 shares of the Company's Common Stock. In April
1998, the Company waived the collection of all accrued interest to date and
going forward with respect to the promissory note. The Company retained a
repurchase right with respect to the restricted stock. The repurchase right
lapsed with respect to 350,000 shares on the date of the restricted stock grant,
and lapses with respect to 29,167 shares each month for 36 months so that after
three years the repurchase right shall not apply to 1,400,000 shares. The
repurchase right with respect to the remaining 600,000 shares lapses based on
fulfillment of certain performance criteria with respect to the Company's
operating revenues and
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profit after taxes for fiscal 1997, fiscal 1998 and fiscal 1999 years, or in any
event after ten years. In addition, the Company agreed to pay Mr. Klaus twelve
months severance, including salary and bonus in the event his employment is
terminated without cause or in the event that he is constructively terminated.
In the event of termination without cause or constructive termination, the
Company's repurchase right lapses with respect to the shares that would have
vested during the twelve month period following termination. Finally, the
Company agreed to provide a relocation package to Mr. Klaus to assist him to
relocate from northern California to Southern California. Such package included:
(i) paying the shortfall on the sale of his primary residence; (ii) reimbursing
Mr. Klaus certain financing and closing costs in connection with the purchase of
a new home; (iii) providing temporary housing in Southern California; and (iv)
paying moving expenses. See "Executive Compensation" for relocation amounts paid
in fiscal 1997. The Company has loaned to Mr. Klaus $3,500,000 pursuant to an
unsecured five-year recourse promissory note which bears interest at the rate of
6% per annum. This loan was used to fund Mr. Klaus' restricted stock purchase
along with the secured note referenced above. In April 1998, the Company waived
the collection of all accrued interest to date and going forward with respect to
this unsecured note.
The Company entered into an offer letter with William R. Pieser when he
joined the Company as Senior Vice President - Marketing and Business Development
in February 1996. The offer letter provided for a base salary of $210,000
together with an annual bonus on a fiscal year basis of up to $105,000 based on
a performance plan. The offer letter also provided that Mr. Pieser could earn an
additional incentive bonus of up to $105,000 upon fulfillment of certain
performance criteria. In addition, Mr. Pieser purchased 500,000 shares of
restricted stock at a purchase price of $3.50 per share, the then fair market
value of the Company's Common Stock. In payment of one half of the purchase
price, Mr. Pieser executed a secured five-year promissory note in the principal
amount of $875,000. The note bears simple interest at 6% per annum, is a
recourse promissory note, and is secured by a pledge of 500,000 shares of the
Company's Common Stock. In April 1998, the Company waived the collection of all
accrued interest to date and going forward with respect to the promissory note.
The Company retained a repurchase right with respect to the restricted stock.
The repurchase right lapsed with respect to 50,000 shares on the date of the
restricted stock grant, and lapses with respect to 8,334 shares each month for
36 months, so that after three years the repurchase right shall not apply to
350,000 shares. The repurchase right with respect to the remaining 150,000
shares lapses based on fulfillment of certain performance criteria with respect
to the Company's operating revenues and profit after taxes for fiscal 1997,
fiscal 1998 and fiscal 1999, or in any event after ten years. In addition, the
Company agreed to pay Mr. Pieser six months severance, including salary and
bonus in the event his employment is terminated without cause or in the event
that he is constructively terminated. In the event of termination without cause
or constructive termination, the Company's repurchase right lapses with respect
to the shares that would have vested during the six month period following
termination. Finally, the Company agreed to provide a relocation package to Mr.
Pieser to assist him to relocate from northern California to southern
California. The relocation package includes: (i) paying the shortfall on the
sale of his primary residence; (ii) reimbursing Mr. Pieser certain financing and
closing costs in connection with the purchase of a new home; (iii) providing
temporary housing in Southern California; and (iv) paying moving expenses. See
"Executive Compensation" for relocation amounts paid in fiscal 1997. The Company
also has loaned to Mr. Pieser $875,000 pursuant to a five-year unsecured
recourse promissory note, which bears interest at the rate of 6% per annum. This
loan was used to fund Mr. Pieser's restricted stock purchase along with the
secured note referenced above. In April 1998, the Company waived the collection
of all accrued interest to date and going forward with respect to this unsecured
note.
The Company entered into an offer letter with Ken Lally when he joined
the Company as Senior Vice President - Worldwide Field Operations in April 1996.
The offer letter provided for a base salary of $200,000 together with an annual
bonus on a fiscal year basis of up to $100,000 based on a performance plan. The
offer letter also provided that Mr. Lally could earn an additional incentive
bonus of up to $100,000 upon fulfillment of certain performance criteria. In
addition, Mr. Lally purchased 450,000 shares of restricted stock at a purchase
price of $6.25 per share, the then fair market value of the Company's Common
Stock. In payment of one half of the purchase price, Mr. Lally executed a
secured five-year promissory note in the principal amount of $1,406,250. The
note bears simple interest at 6% per annum, is a recourse promissory note, and
is secured by a pledge of 450,000 shares of the Company's Common Stock. In April
1998, the Company waived the collection of all accrued interest to date and
going forward with respect to the promissory note. The Company retained a
purchase right with respect
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to the restricted stock. The repurchase right lapsed with respect to 49,980
shares on the date of the restricted stock grant, and lapses with respect to
6,945 shares each month thereafter for 36 months, so that after three years the
repurchase right shall not apply to 300,000 shares. The repurchase right with
respect to the remaining 150,000 shares lapses based on fulfillment of certain
performance criteria with respect to the Company's operating revenues and profit
after taxes for fiscal 1997, fiscal 1998 and fiscal 1999, or in any event after
ten years. In addition, the Company agreed to pay Mr. Lally six months
severance, including salary and bonus in the event his employment is terminated
without cause or in the event that he is constructively terminated. In the event
of termination without cause or constructive termination, the Company's
repurchase right lapses with respect to the shares that would have vested during
the six month period following termination. Finally, the Company agreed to
provide a relocation package to Mr. Lally to assist him to relocate from
northern California to Southern California. Such package includes: (i) paying
the shortfall on the sale of his primary residence; (ii) reimbursing Mr. Lally
certain financing in closing costs in connection with the purchase of a new
home; (iii) providing temporary housing in Southern California; and (iv) paying
moving expenses. See "Executive Compensation" for relocation amounts paid in
fiscal 1997. The Company also has loaned to Mr. Lally $1,406,250 pursuant to a
five-year unsecured promissory note, which bears interest at 6% per annum. This
loan was used to fund Mr. Lally's restricted stock purchase along with the
secured note referenced above. In April 1998, the Company waived the collection
of all accrued interest to date and going forward with respect to this unsecured
note.
In connection with the DataWorks Merger, Stuart W. Clifton and the
Company entered into both an Executive Employment Agreement ("Employment
Agreement") and a Noncompetition Agreement ("Noncompetition Agreement"). The
Employment Agreement provides that Mr. Clifton will serve as an employee of the
Company as of the date of the Merger and for one year thereafter, or such
shorter or longer time as agreed by the parties. The Employment Agreement
provides that Mr. Clifton's base annual salary rate will be $450,000 and that he
will be entitled to a yearly bonus based on his achievement of milestones
relating to the Company's net revenue and net income projections. In addition,
effective as of the date of the Merger, the Company granted to Mr. Clifton an
option to purchase 375,000 shares of the Company's Common Stock.
Under the terms of the Employment Agreement, if Mr. Clifton's
employment is terminated for cause, all of his compensation will cease
immediately and no severance benefits will be provided. If Mr. Clifton's
employment is terminated other than for cause, Mr. Clifton will serve as a
consultant to the Company. The consulting period will last two years, or, if
longer, until three years after the date of the Merger in the event he is
terminated by the Company without cause (or he resigns following a change of
control of the Company). In the event that Mr. Clifton dies or becomes
permanently disabled while he is an employee of the Company, Mr. Clifton or his
estate, as appropriate, will be entitled to all of the consulting fees (as
described below) and to continued vesting of his options. During such time as
Mr. Clifton may serve as a consultant to the Company, the Company will pay Mr.
Clifton $450,000 per year and pay for Mr. Clifton's medical insurance. Mr.
Clifton will also be eligible to receive yearly bonuses during his consulting
term which are comparable to bonuses he received during his employment term.
Under the terms of the Noncompetition Agreement, Mr. Clifton may not
compete with the business of the Company or solicit employees of the Company to
leave their employment with the Company for a period of three years, commencing
on the date of the Merger or, if later, the time Mr. Clifton ceases to serve as
an employee or consultant of the Company. In consideration of these obligations,
the Company paid Mr. Clifton $1,000,000 on the date of the Merger.
Indemnification. Pursuant to the Merger Agreement between the Company
and DataWorks, from and after the time of the Merger, the Company has agreed to
cause the surviving corporation in the Merger to fulfill and honor in all
respects the obligations of DataWorks pursuant to any indemnification agreements
between DataWorks and its directors and officers as of the time of the Merger
(the "Indemnified Parties') and any indemnification provisions under DataWorks'
Certificate of Incorporation ("DataWorks' Certificate") and DataWorks' Bylaws as
in effect on the date of the Merger Agreement. The Certificate of Incorporation
and Bylaws of the surviving corporation in the Merger contains provisions with
respect to exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in DataWorks' Certificate and Bylaws as
in effect on the date of the Merger
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13
Agreement, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the time of the Merger in any manner that would
adversely affect the rights thereunder of individuals who, immediately prior to
the time of the Merger, were directors, officers, employees or agents of
DataWorks, unless such modification is required by law.
Pursuant to the Merger Agreement for a period of six years after the
time of the Merger, the Company agreed to cause the surviving corporation in the
Merger to use its commercially reasonable efforts to maintain in effect, if
available, directors and officers liability insurance covering those persons who
were covered by DataWorks' directors and officers liability insurance policy on
terms comparable to those applicable to the DataWorks director and officer
insurance policy, provided, however that in no event will the Company or the
surviving corporation in the Merger be required to expend in excess of 150% of
the annual premium currently paid by DataWorks for such coverage (or such
coverage as is available for such 150% of such annual premium).
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is a standing committee of the Board of
Directors of the Company as constituted at December 31, 1998. The Compensation
Committee is responsible for establishing and evaluating the effectiveness of
compensation policies and programs for the Company and for making determinations
regarding the compensation of the Company's executive officers.
The following report is submitted by the Compensation Committee with
respect to the executive compensation policies established by the Committee and
compensation paid or awarded to executive officers for the 12 months ended
December 31, 1998. On December 30, 1998 the Company changed its fiscal year end
from June 30 to December 31. As a result, the 12 months ended December 31, 1998
includes the last six months from the fiscal year ended June 30, 1998 as well as
the last six months of the calendar year 1998.
COMPENSATION POLICIES AND OBJECTIVES
In establishing and evaluating the effectiveness of compensation
programs for executive officers, as well as other employees of the Company, the
Compensation Committee is guided by three basic principles:
The Company must offer competitive salaries to be able to
attract and retain highly-qualified and experienced executives and
other management personnel.
Annual executive compensation in excess of base salaries
primarily should be tied to the Company's performance.
The financial interests of the Company's executive officers
should be aligned with the financial interests of the stockholders,
primarily through stock option or restricted stock grants which reward
executives for improvements in the market performance of the Company's
Common Stock.
Salaries and Employee Benefit Programs. In order to retain executives
and other key employees, and to be able to attract additional well-qualified
executives when the need arises, the Company strives to offer salaries and
health care and other employee benefit programs to its executives and other key
employees which are comparable to those offered to persons with similar skills
and responsibilities by competing businesses in the Company's line of business.
In addition, the Company requires its executives be based in Irvine, California
and, as a result, provides relocation packages to executives and key employees
who are required to relocate. In recommending salaries for executive officers,
the Committee (i) reviews the historical performance of the executives, and (ii)
informally reviews available information, including information published in
secondary sources, regarding prevailing salaries and compensation programs
offered by competing businesses which are comparable to the Company in terms of
size, revenue, financial performance and industry group. Many, though not all,
of these competing businesses whose shares are publicly traded, are included in
the Center for Research in
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Securities Prices Index for NASDAQ Computer and Data Processing Stocks included
in the Performance Graph on page ___ of this Proxy Statement. Another factor
which is considered in establishing salaries of executive officers is the
cost-of-living in Southern California where the Company and its executive
offices are headquartered, as such cost generally is higher than in other parts
of the country.
Performance-Based Compensation. The Company has established a cash
bonus plan for executives and key employees. Payment of bonuses is dependent on
the Company's achieving specific performance criteria for the fiscal year. The
performance criteria includes a Company operating revenue target and a Company
profit before taxes goal. One half of the bonus is based on achieving the
operating revenue goal and the other half is tied to achieving the profit before
taxes goal. Potential cash bonuses under the plan range from 5% to 100% of an
individual's base salary and can exceed 100% of base salary if greater than 100%
of the performance criteria are achieved.
The profit and revenue targets are established on the basis of annual
budget and forecasts developed by management and approved by the Compensation
Committee. This operating plan is developed on the basis of (i) the Company's
performance for the prior fiscal year, (ii) estimates of sales revenue for the
plan year based upon recent market conditions, trends and competition and other
factors which, based on historical experience, are expected to affect the level
of sales that can be achieved, (iii) historical operating costs and cost savings
that management believes can be realized, (iv) competitive conditions faced by
the Company, and (v) additional expenditures beyond prior fiscal years. By
taking all of these factors into account, including market conditions, the
earnings goal and revenue targets are determined.
As a result of this performance-based bonus program, executive
compensation, and the proportion of each executive's total cash compensation
that is represented by incentive or bonus income, may increase in those years in
which the Company's profitability increases.
Stock Options and Equity-Based Programs. The Compensation Committee
believes that the motivation of executives and key employees increases as the
market value of the Company's Common Stock increases. In order to align the
financial interests of executive officers and other key employees with those of
the stockholders, the Company grants stock options or makes restricted stock
grants to its executive officers and other key employees on a periodic basis,
taking into account, among other factors, the size and terms of previous grants
of equity-based compensation and stock holdings in determining awards. Stock
option or restricted stock grants, in particular, reward executive officers and
other key employees for performance that results in increases in the market
price of the Company's Common Stock, which directly benefits all stockholders,
Moreover, the Compensation Committee generally has followed the practice of
granting options on terms that provide that the options become exercisable in
cumulative annual installments, generally over a two to five-year period. The
Compensation Committee generally has followed the practice of making restricted
stock grants with vesting, tied, in part, to objective Company performance
targets. The Compensation Committee believes that these features of the option
and stock grants not only provide an incentive for executive officers to remain
in the employ of the Company, but also makes longer term growth in share prices
important for the executives who receive stock options or restricted stock
grants.
Other Matters. Section 162(m) of the Internal Revenue Code, enacted in
1993, generally disallows a tax deduction to public companies for compensation
over $1 million paid to any of the Company's Chief Executive Officer and four
other most highly compensated executive officers. Certain performance-based
compensation, however, is specifically exempt from the deduction limit. The
Company does not have a policy that requires or encourages the Compensation
Committee to qualify stock options or restricted stock awarded to executive
officers for deductibility under Section 162(m) of the Internal Revenue Code.
However, the Compensation Committee does consider the net cost to the Company in
making all compensation decisions.
CEO COMPENSATION FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
The 12 months ended December 31, 1998 includes the last six months of
the fiscal year ended June 30, 1998 and the last six months of the calendar year
ended December 31, 1998. The principal
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components of compensation for the Chief Executive Officer for the 12 months
ended December 31, 1998 included base salary, bonus, the waiver of accrued
interest on two loans and an option grant. L. George Klaus, the Company's Chief
Executive Officer, received a salary of $559,167 during the 12 months ending
December 31, 1998 which includes portions attributable to the Company's fiscal
year ended June 30, 1998. Mr. Klaus' base salary was negotiated as part of his
compensation package when he joined the Company in February 1996 and
subsequently increased 6% for the fiscal year ended June 30, 1998. In July 1998,
Mr. Klaus' salary was increased based on a study conducted by a compensation
consulting firm. Mr. Klaus' increased base salary reflects a premium over
competitive rates because of the Company's desire to maintain a skilled senior
executive of the stature of Mr. Klaus. Mr. Klaus also received a bonus of
$620,216 for the 12 months ending December 31, 1998, which includes portions
attributable to the Company's fiscal year ended June 30, 1998. Mr. Klaus' bonus
plan for the fiscal year ended June 30, 1998 provided for a target bonus of
$287,500. One half of the target bonus was based on achieving an operating
revenue goal for the Company, and the other half was based upon the Company
achieving a profit before taxes goal. Additional amounts could be earned if the
Company exceeded 100% of the operating revenue and profit goals. Bonuses are
paid if 75% of either the operating revenue or profit before taxes goals are met
based on objective formulas. The Company exceeded both the operating revenue and
the profit before taxes goals and, as a result, Mr. Klaus earned in excess of
the target bonus amount. The excess amount over the target bonus was determined
based on an objective formula. Mr. Klaus' bonus plan for the fiscal year ended
June 30, 1999 (which year was subsequently shortened when the Company changed
its fiscal year end to December 31) provided for a target bonus of $300,000.
One-half of the target bonus was based on achieving an operating revenue goal
and the other half was based on achieving a profit before taxes goal. Additional
amounts could be earned if the Company exceeded 100% of the operating revenue
and profit before taxes goals and bonuses are paid if 75% of either of the goals
are met. Bonus payment amounts are based on objective formulas. The Company,
achieved 96% of the prorated operating revenue target and 89% of the prorated
net profit before taxes target. Also, in April 1998, the Company waived the
collection of all accrued interest, including interest that might accrue in the
future on two promissory notes in the aggregate principal amount of $7,000,000.
The total amount of interest waived as of April 22, 1998 was $926,301 and the
total amount of interest waived that accrued in the fiscal year ended June 30,
1998 was $420,000. The interest was waived in recognition of the Company's
financial performance in the fiscal year ended June 30, 1998. In making this
decision, the Compensation Committee placed particular emphasis on the
significant achievements of the Company during the fiscal year ended June 30,
1998, including 62% revenue growth over fiscal 1997 and earnings per share of
$0.45 as compared to a loss per share of $0.20 in fiscal 1997. In July 1998, Mr.
Klaus was granted an option to purchase 500,000 shares of common stock at an
exercise price of $23.375. The option vests with respect to 333,333 shares on
the second anniversary of the grant date, and the remaining 166,667 shares vest
on the third anniversary of the grant date. This option was repriced in November
1998. See "Report of the Board of Directors on Repricing of Stock Options." In
making the option grant, the Company was guided by a study completed by a
compensation consulting firm. The option grant reflects a desire to provide
continued equity incentive to Mr. Klaus whose February 1996 grant of restricted
stock was substantially fully vested.
Compensation Committee Donald Dixon
L. John Doerr
REPORT OF THE BOARD OF DIRECTORS ON REPRICING OF STOCK OPTIONS
On October 29, 1998, the Board of the Directors of the Company approved
a plan to allow employees holding outstanding stock options whose exercise price
was in excess of the current market price to elect to have the options repriced
to the closing price of the Company's Common Stock on the Nasdaq National Market
on November 9, 1998. The plan provided for a twelve-month blackout on the
exercise of any repriced stock option. The plan was implemented to realign the
value of previously granted options, upon exerciseability, with the market value
at the time of the repricing. The expectation was that the opportunity to earn
compensation based on appreciation of the Company's Common Stock from the
repriced level will motivate employees to achieve superior results over the long
term and encourage key employees to remain with the Company. On December 4, 1998
the Financial Accounting Standards Board ("FASB") proposed an interpretive
opinion to Accounting Principles Board Opinion 25 which would provide for
variable plan accounting treatment of certain repriced stock options. The
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proposed effective date of the interpretive opinion is retroactive to December
15, 1998. In order to avoid any uncertainty regarding the application of
variable accounting to the Company's November 1998 repricing, the Board, on
December 14, 1998, amended the repricing plan to shorten the blackout period on
option exercises so that it expires on December 15, 1998.
Donald R. Dixon
L. John Doerr
Arthur J. Marks
W. Douglas Hajjar
L. George Klaus
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS OR FUTURE FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"); OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
("EXCHANGE ACT"), THAT MIGHT INCORPORATE BY REFERENCE PREVIOUS OR FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE PRECEDING
REPORT AND THE PERFORMANCE GRAPH ON PAGE 15 SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY OF SUCH FILINGS.
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PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
the Company, the Center for Research in Securities Prices Index for the NASDAQ
Stock Market (United States Companies) and the Center for Research in Securities
Prices Index for NASDAQ Computer and Data Processing Stocks (the "CRSP NASDAQ
Computer Index") for the period that commenced on October 22, 1992 (the date on
which the Company's Common Stock was first registered under the Exchange Act)
and ended on December 31, 1998. The graph assumes that all dividends have been
reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
(PLATINUM SOFTWARE CORPORATION, CRSP NASDAQ INDEX, CRSP NASDAQ COMPUTER INDEX)
[PERFORMANCE GRAPH]
06/1994 06/1995 06/1996 06/1997 06/1998 12/1998
------- ------- ------- ------- ------- -------
Platinum Software Corporation 100.0 236.7 118.4 169.4 398.0 209.2
CRSP Nasdaq Index 100.0 133.5 171.4 208.4 275.0 321.1
CRSP Nasdaq Computer Index 100.0 163.3 216.8 273.7 414.2 505.6
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 06/30/1994.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of March 16, 1999
regarding the beneficial ownership of the Common Stock and Series C Preferred
Stock of the Company by (i) each person known by management to be the beneficial
owner of more than 5% of any class of the Company's capital stock (based upon
reports filed by such persons with the Securities and Exchange Commission), (ii)
each director of the Company, (iii) each of the executive officers named in the
Summary Compensation Table, and (iv) all directors and executive officers of the
Company as a group:
Common Stock Series C Preferred Stock
---------------------------------- ---------------------------------
Amount and
Name and Address Amount and Nature Nature
of of Beneficial Percentage of Beneficial Percentage
Beneficial Owner Ownership(1) of Class Ownership(1) of Class
- --------------------------------------------- ------------------- ------------ -------------- ----------
Kleiner Perkins Caufield & Byers VII 1,168,502(3) 31,770(4)
KPCB Information Sciences Zaibatsu Fund
L. John Doerr(2)
2750 Sand Hill Road
Menlo Park, CA 94025
New Enterprise Associates VI 362,002 38,120
Limited Partnership
Arthur J. Marks(5)
1119 St. Paul Street
Baltimore, MD 21202
Trident Capital Partners Fund I, LP, 15,062(7) 25,415(8)
Trident Capital Partners Fund I, C.V.
Donald R. Dixon(6)
2480 Sand Hill Road, Ste. 100
Menlo Park, CA 94025
Capital Research and Management Company 2,075,000(9) - -
333 So. Hope Street
Los Angeles, CA 90071
SMALLCAP World Fund, Inc. 1,475,000(10) - -
333 So. Hope Street
Los Angeles, CA 90071
BKP Capital Management, Inc. 1,496,700 - -
One Sansome Street, Suite 3900
San Francisco, CA 94104
- -
L. George Klaus(11) 2,000,000 - -
William R. Pieser(11) 500,000 - -
Stuart W. Clifton(11) 920,048(12)
Ken Lally(11) 485,000(13) - -
Directors and officers as a group 3,929,410 - *
(7 persons)(14)
- ----------
* Less than 1%
(1) Unless otherwise indicated, the persons named in the table have sole
voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where
applicable.
(2) L. John Doerr, a director of the Company, is a general partner of KPCB
VII Associates, which is a general partner of each of Kleiner Perkins
Caufield & Byers VII and KPCB Information Sciences Zaibatsu Fund. Mr.
Doerr disclaims beneficial ownership of these shares other than to the
extent of his individual partnership interest.
(3) Consists of 1,168,502 shares held by Kleiner Perkins Caufield & Byers
VII.
(4) Consists of 30,181 shares held by Kleiner Perkins Caufield & Byers VII
and 1,589 shares held by KPCB Information Sciences Zaibatsu Fund II.
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(5) Arthur J. Marks, a director of the Company, is a general partner of NEA
Partners VI, which is the general partner of New Enterprise Associates
VI, Limited Partnership. Mr. Marks disclaims beneficial ownership of
these shares other than to the extent of his individual partnership
interest of the shares listed.
(6) Donald R. Dixon, a director of the Company, is president of Trident
Capital Inc., which is the general partner of Trident Capital, L.P.
which is the general partner of Trident Capital Partners Fund-I, L.P.
and Trident Capital Partners Fund-I, C.V. Mr. Dixon disclaims
beneficial ownership of these shares, other than to the extent of his
stock ownership in Trident Capital, Inc.
(7) Consists of 14,247 shares held by Donald Dixon and 618 shares held by
Trident Capital, Inc. and 197 shares owned by Trident Administrator
N.V.
(8) Consists of 21,218 shares held by Trident Capital Partners Fund-I, L.P.
and 4,197 shares held by Trident Capital Partners Fund-I, C.V.
(9) Capital Research and Management Company, an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940 is
deemed to be the beneficial owner of 2,075,000 shares of Common Stock
as a result of acting as investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of
1940.
(10) SMALLCAP World Fund, Inc., an investment company registered under the
Investment Company Act of 1940, which is advised by Capital Research
and Management Company, is the beneficial owner of 1,475,000 shares of
Common Stock.
(11) The business address of this individual is c/o Platinum Software
Corporation, 195 Technology Drive, Irvine, CA 92618-2402.
(12) Consists of 826,095 shares owned directly and 93,953 issuable pursuant
to options exercisable within sixty (60) days from the date hereof.
(13) Consists of 460,000 shares owned directly and 25,000 shares issuable
pursuant to options exercisable within sixty (60) days from the date
hereof.
(14) Excludes all shares of common stock and Series C Preferred Stock owned
by Kleiner Perkins Caufield & Byers, New Enterprise Associates, Trident
Capital Partners, and related entities as to which the respective
affiliated directors disclaim beneficial ownership other than to the
extent of their individual partnership interests.
VOTE REQUIRED AND VOTING PROCEDURES
The affirmative vote of a majority of the shares of the Company's
Common Stock and Series C Preferred Stock (on an as-converted basis) present or
represented and voting at the Annual Meeting of Stockholders will be required to
elect Management's five (5) nominee directors. Under applicable Delaware law, a
broker non-vote will have no effect on the outcome of the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF MANAGEMENT'S FIVE (5) NOMINEE DIRECTORS. Proxies solicited by
Management will be voted FOR the election of management's five (5) nominee
directors.
PROPOSAL TWO
AMENDMENT TO CERTIFICATE OF INCORPORATION TO CHANGE NAME
The Company's Certificate of Incorporation provides that the name of
the Company is "Platinum Software Corporation." On February 4, 1999, the
Company's Board of Directors approved an amendment to the Company's Certificate
of Incorporation to change the Company's name to "Epicor Software Corporation,"
subject to stockholder approval of this proposal. No other change to the
Company's Certificate of Incorporation, other than to change the Company's name
as recorded by the Delaware Secretary of State and to change the name under
which the Company transacts business and trades on the Nasdaq National Market
System is contemplated. The Company's new name will be effective upon the filing
of a certificate of amendment to the Company's Certificate of Incorporation with
the Delaware Secretary of State. Under the proposed amendment, Article 1 of the
Certificate would be amended and restated to read as follows: "The name of the
corporation is Epicor Software Corporation." Over the past year and a half the
Company has expanded its business operations from a provider of primarily
financial accounting software to a provider of enterprise resource planning
business software applications for the mid-market. The Board believes that the
proposed name better reflects the Company's expanded business operations and
connotes a leadership position in achieving the Company's objective of providing
customer-centric enterprise business software applications.
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VOTE REQUIRED AND VOTING PROCEDURES
The Company's stockholders are being asked to approve an amendment to
the Certificate of Incorporation. The affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock and Series C
Preferred Stock, (on an as-converted basis) are required to approve an amendment
to the Certificate. The effect of a broker non-vote or abstention is the same as
a vote against the proposal. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO "EPICOR
SOFTWARE CORPORATION."
PROPOSAL THREE
APPROVAL OF 1999 NONSTATUTORY STOCK OPTION PLAN
On February 4, 1999, the Board of Directors adopted the 1999
Nonstatutory Stock Option Plan (the "Plan") and reserved 2,000,000 shares of
Common Stock for issuance thereunder subject to stockholder approval. As of
March 16, 1999, no options have been granted pursuant to the Plan.
At the annual meeting, the stockholders are being asked to approve the
Plan and the reservation of shares thereunder.
SUMMARY OF THE 1999 PLAN
General. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors and
consultants of the Company and to promote the success of the Company's business.
Options granted under the Plan are nonstatutory stock options.
Administration. The Plan may generally be administered by the Board or
the Committee appointed by the Board (as applicable, the "Administrator").
Eligibility; Limitations. Nonstatutory stock options may be granted
under the Plan to employees, directors and consultants of the Company and any
parent or subsidiary of the Company. The Administrator, in its discretion,
selects the employees, directors and consultants to whom options are granted,
the time or times at which such options shall be granted, and the number of
shares subject to each such grant.
Section 162(m) of the Code places limits on the deductibility for
federal income tax purposes of compensation paid to certain executive officers
of the Company. In order to preserve the Company's ability to deduct the
compensation income associated with options granted to such persons, the Plan
provides that no employee, director or consultant may be granted, in any fiscal
year of the Company, options to purchase more than 1,500,000 shares of Common
Stock. Notwithstanding this limit, however, in connection with such individual's
initial employment with the Company, he or she may be granted options or stock
purchase rights to purchase up to an additional 1,500,000 shares of Common
Stock.
Terms and Conditions of Options. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an option may
not be less than 100% of the fair market value of the Common Stock on the date
such option is granted. The fair market value of the Common Stock is generally
determined with reference to the closing sale price for the Common Stock (or the
closing bid if no sales were reported) on the last market trading day prior to
the date the option is granted.
(b) Exercise of Option; Form of Consideration. The Administrator
determines when options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding option. Stock options granted under
the Plan generally vest and become exercisable over two to five years. The
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means of payment for shares issued upon exercise of an option is specified in
each option agreement. The Plan permits payment to be made by cash, check,
promissory note, other shares of Common Stock of the Company (with some
restrictions), cashless exercises, a reduction in the amount of any Company
liability to the optionee, any other form of consideration permitted by
applicable law, or any combination thereof.
(c) Term of Option. The term of an option may be no more than ten (10)
years from the date of grant. No option may be exercised after the expiration of
its term.
(d) Termination of Employment. If an optionee's employment or
consulting relationship terminates for any reason (other than death or
disability), then all options held by the optionee under the Plan expire on the
earlier of (i) the date set forth in his or her notice of grant or (ii) the
expiration date of such option. To the extent the option is exercisable at the
time of such termination, the optionee may exercise all or part of his or her
option at any time before termination.
(e) Death or Disability. If an optionee's employment or consulting
relationship terminates as a result of death or disability, then all options
held by such optionee under the Plan expire on the earlier of (i) 12 months from
the date of such termination or (ii) the expiration date of such option. The
optionee (or the optionee's estate or the person who acquires the right to
exercise the option by bequest or inheritance), may exercise all or part of the
option at any time before such expiration to the extent that the option was
exercisable at the time of such termination.
(f) Nontransferability of Options. Options granted under the Plan are
not transferable other than by will or the laws of descent and distribution, and
may be exercised during the optionee's lifetime only by the optionee.
(g) Other Provisions. The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.
Adjustments Upon Changes in Capitalization. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Plan, the number and class of shares of stock subject to any
option outstanding under the Plan, and the exercise price of any such
outstanding option.
In the event that a Change of Control (as defined below) occurs, the
vesting of all nonqualified options shall be accelerated and, concurrent with
the effective date of the Change of Control, such persons shall have the right
to exercise the nonqualified option in respect to any or all of the shares then
subject thereto. To the extent possible, the Administrator shall cause written
notice of the Change of Control to be given to the persons holding options not
less than ten (10) days prior to the anticipated effective date of the Change of
Control. In the event of a Change of Control, the Administrator may take such
other action as is equitable and fair.
The term "Change of Control" shall mean the occurrence of any of the
following:
(i) Any "person," as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, a Company subsidiary, or a Company employee benefit plan, including
any trustee of such plan acting as trustee) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (or a successor to the Company) representing fifty
percent (50%) or more of the combined voting power of the then outstanding
securities of the Company or such successor; or
(ii) At least a majority of the directors of the Company constitute
persons who were not at the time of their first election to the Board,
candidates proposed by a majority of the Board of Directors in office prior to
the time of such first election; or
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(iii) A merger or consolidation in which the Company is not the
surviving entity, except for a transaction, the principal purpose of which is to
change the state in which the Company is incorporated; or
(iv) A sale, transfer or other disposition of assets involving fifty
percent (50%) or more in value of the assets of the Company; or
(v) The dissolution of the Company, or liquidation of more than fifty
percent (50%) in value of the Company; or
(vi) Any reverse merger in which the Company is a surviving entity but
in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from the persons holding those securities
immediately prior to such reverse merger.
Amendment and Termination of the Plan. The Board may amend, alter,
suspend or terminate the Plan, or any part thereof, at any time and for any
reason. However, the Company shall obtain stockholder approval for any amendment
to the Plan to the extent necessary to comply with Section 162(m) of the Code,
or any similar rule or statute. No such action by the Board or shareholders may
alter or impair any option previously granted under the Plan without the written
consent of the optionee. Unless terminated earlier, the Plan shall terminate ten
years from the date of its approval by the stockholders or the Board of the
Company, whichever is earlier.
Repricing of Options. Options granted under the Plan may not be
repriced unless the repricing is approved by the stockholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES
An optionee does not recognize any taxable income at the time he or she
is granted a nonstatutory stock option. Upon exercise, the optionee recognizes
taxable income generally measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized in connection
with an option exercise by an employee of the Company is subject to tax
withholding by the Company. The Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Upon a disposition of
such shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
provided above, is treated as long-term or short-term capital gain or loss,
depending on the holding period. Net capital gains on shares held for more than
12 months are capped at 20%. Capital losses are allowed in full against capital
gains and up to $3,000 against other income.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON OPTIONEES, AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE
OF OPTIONS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
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CURRENT PLAN BENEFITS
The Company cannot now determine the number of stock options to be
granted in the future to the Company's Chief Executive Officer, the Company's
four most highly compensated executive officers, all executive officers as a
group, all directors who are not executive officers as a group or all employees
(including officers who are not executive officers) as a group. However, the
following table sets forth information with respect to stock option grants under
all plans during the 12 months ended December 31, 1998 to such persons:
CURRENT PLAN BENEFITS
Number of Shares Subject
Name and Position Dollar Value(1) to Options Granted
- ---------------------------------------------- ---------------- ------------------------
L. George Klaus, Chief Executive Officer $ 656,250 500,000
Ken Lally, Executive Vice President, Field $ 328,125 250,000
and Customer Operations
William R. Pieser, Executive Vice President, $ 328,125 250,000
Product Operations and Marketing
All Executive Officers as a Group (3 persons) $1,312,500 1,000,000
Non-Executive Director Group (4 persons) $ 36,250 10,000
All Other Employees (775 persons) $3,632,918 1,789,429
- ----------
(1) Difference between $12.8125 (the closing price of the Company's Common
Stock on December 31, 1998 as listed on the Nasdaq Stock Market) and
the exercise prices of such options, multiplied by the number of shares
subject to such options.
VOTE REQUIRED AND VOTING PROCEDURES
At the Annual Meeting, the stockholders are being asked to approve the
adoption of the 1999 Plan. The affirmative vote of a majority of the shares of
Common Stock and Series C Preferred Stock (on an as-converted basis) present or
represented and voting at the Annual Meeting will be required to approve the
adoption of the 1999 Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE COMPANY'S 1999 PLAN.
PROPOSAL FOUR
APPROVAL OF AMENDMENT OF THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN
The Company's Amended and Restated Employee Stock Purchase Plan (the
"Purchase Plan") authorizes the Company to sell up to a total of 450,000 shares
of its Common Stock to participating employees. The Purchase Plan was amended by
the Board of Directors of the Company in February 1999 to reserve an additional
550,000 shares of Common Stock for issuance under the Purchase Plan. As of March
1, 1999, 450,000 shares are reserved for issuance of which 357,195 shares have
been issued, leaving 92,805 shares available for issuance.
Approval of the addition of 550,000 shares to the pool reserved for
issuance under the Purchase Plan requires the affirmative vote of the holders of
a majority of the shares of Common Stock and Series C Preferred Stock (on an
as-converted basis) present in person or represented by proxy and entitled to
vote at the meeting.
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The Company believes that the Purchase Plan is an important factor in
attracting and retaining skilled personnel. Prior to the Merger, the Company and
its subsidiaries employed approximately 680 people and following the Merger the
number of employees increased to over 1,700. The Board of Directors is
soliciting stockholder approval of the increase in the number of shares reserved
under the Purchase Plan so that the Purchase Plan will be available to the
Company's expanded employee base resulting from the Merger.
VOTE REQUIRED AND VOTING PROCEDURES
The affirmative vote of a majority of the shares of Common and Series C
Preferred Stock (on an as-converted basis) present or represented and voting at
the Annual Meeting will be required to approve and ratify the increase in the
number of Shares reserved under the Purchase Plan. THE COMPANY'S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
The essential features of the Purchase Plan are outlined below.
GENERAL NATURE AND PURPOSE
The Purchase Plan was adopted by the Board of Directors and approved by
the stockholders in August 1992. The Purchase Plan and the right of participants
to make purchases under the Purchase Plan are intended to qualify under the
provisions of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). See "Tax Information - The Purchase Plan." The primary purpose of the
Purchase Plan is to provide employees of the Company and its subsidiaries with
an opportunity to purchase Common Stock through payroll deductions and to
increase their proprietary interest in the Company.
ADMINISTRATION
The Purchase Plan may be administered by the Board of Directors, or by
a committee appointed by the Board. All questions of interpretation of the
Purchase Plan will be determined by the Board of Directors or its committee, and
its decisions will be final and binding on all participants. The Purchase Plan
is currently administered by the Company's Compensation Committee.
ELIGIBILITY
Each employee of the Company may become a participant in the Purchase
Plan as of the first entry date occurring coincident with or immediately
following the later of the date upon which the employee has completed two
consecutive months of employment with the Company or the date on which the
employee attains the age of 21. The Purchase Plan has four entry dates occurring
on the first day of each quarter of the plan year. The plan year commences on
August 1 and ends on the following July 31. The quarterly entry dates are August
1, November 1, February 1, and May 1.
Members of the Board of Directors and officers of the Company who are
deemed to be "executive officers" as defined in the rules promulgated under the
Securities Exchange Act of 1934, as amended, are not eligible to participate in
the Purchase Plan. In addition, under the Code, no employee shall be granted any
stock under the Purchase Plan if immediately after the grant the employee would
own shares or hold outstanding options to purchase shares possessing 5% or more
of the total combined voting power of all classes of shares of the Company, or
if the grant would permit the employee's right to purchase shares under all
employee stock purchase plans of the Company and its subsidiaries to accrue
(i.e., become exercisable) at a rate which exceeds $25,000 of fair market value
of such shares (determined at the time such purchase right is granted) for any
calendar year in which the purchase right is outstanding at any time. As of the
Record Date, approximately 1,500 employees were eligible to participate in the
Purchase Plan.
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PARTICIPATION
The Purchase Plan is implemented by one offering period ("Offering
Period") during each six month period. Offering Periods commence on February 1
and August 1 of each year. On the first day of the Offering Period, the Company
grants to each eligible employee who has elected in writing to participate in
the Purchase Plan a right to purchase shares of Common Stock at the purchase
price described below. The purchase right is automatically exercised on the last
day of each six-month Offering Period unless the participant instructs the
Company otherwise. An employee who has satisfied the eligibility requirements of
the Purchase Plan may become a participant upon his or her completion and
delivery to the Company of a Subscription Agreement authorizing payroll
deductions. An employee who first becomes eligible to participate after the
commencement of an Offering Period shall commence participation on the next
Entry Date.
PURCHASE PRICE
The purchase price per share (the "Purchase Price") for which shares of
Common Stock will be sold in an offering under the Purchase Plan is the lower of
85% of the fair market value of a share of Common Stock on the first day of the
Offering Period, or 85% of the fair market value of a share of Common Stock on
the last day of the Offering Period. The fair market value of the Company's
Common Stock shall be the closing sale price of such stock in the
over-the-counter market as reported on the Nasdaq National Market.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The Purchase Price of shares is paid by means of accumulated payroll
deductions during the Offering Period. The amount of payroll deductions may not
exceed 10% of an employee's compensation or up to $25,000 for each calendar
year. A participant may terminate participation in the Purchase Plan at any time
prior to the end of an Offering Period. A participant may change his or her rate
of payroll deductions once during a plan year, but may decrease the rate of
payroll deductions (to an amount that is not less than 1% of such person's
compensation) at any time during an Offering Period. Payroll deductions for a
participant commence on the first payday following the date on which a
participant's payroll deduction authorization becomes effective and continue
thereafter unless such rate is changed or the employee's participation is
terminated.
PURCHASE OF STOCK; EXERCISE OF PURCHASE RIGHT
By executing a Subscription Agreement to participate in the Purchase
Plan, an employee is entitled to have shares placed under a purchase right
issued to him or her. Unless the employee's participation is terminated or the
participant instructs the Company otherwise his or her purchase right for the
purchase of shares will be exercised automatically with all amounts held in his
or her account at the end of each Offering Period at the applicable price. The
shares purchased for an employee will be delivered to him or her as promptly as
practicable after the end of an Offering Period. Any cash remaining in the
participant's account shall remain in the account and be applied to the purchase
of shares at the termination of the next Offering Period.
WITHDRAWAL
At any time prior to the end of the applicable Offering Period, a
participant may withdraw the amounts held in his or her account by executing and
delivering to the Company a notice of withdrawal from the Purchase Plan. As soon
as practicable after such withdrawal, the payroll deductions credited to the
participant's account shall be returned to the participant, without interest. An
employee who has withdrawn from the Purchase Plan shall be excluded from
participation for the remainder of the particular Offering Period during which
the withdrawal is received and the next succeeding Offering Period, but may be
reinstated as a participant the next subsequent Offering Period by executing and
delivering a new Subscription Agreement.
TERMINATION OF EMPLOYMENT
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Termination of a participant's employment for any reason, including
retirement, death or discharge, cancels his or her participation in the Purchase
Plan immediately. In such event, the payroll deductions credited to the
participant's account will be returned to such participant or, in the case of
death, to the participant's beneficiary, without interest.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION; MERGER, CONSOLIDATION OR
REORGANIZATION
In the event of any changes in the capitalization of the Company, such
as stock splits or stock dividends, or in the event of any merger, sale or other
reorganization, appropriate adjustments will be made by the Company in the
shares authorized for issuance under the Purchase Plan, in the shares subject to
purchase under the Purchase Plan and in the purchase price per share.
In the event that the Company at any time proposes to merge into,
consolidate with or to enter into any other reorganization (including the sale
of substantially all of its assets or a "reverse" merger in which the Company is
the surviving entity), the Purchase Plan shall terminate, unless provision is
made in writing in connection with such transaction for the continuance of the
Purchase Plan, with appropriate adjustments as to number and kind of shares and
prices. If provision is not made for the continuance of the Purchase Plan, the
Board of Directors or the Committee shall cause written notice of the proposed
transaction to be given to the persons holding purchase rights not less than 10
days prior to the anticipated effective date of the proposed transaction, and
all purchase rights shall be accelerated and, concurrent with the effective date
of the proposed transaction, such purchase rights shall be exercised
automatically as if such effective date were the last day of the applicable
Offering Period.
NONASSIGNABILITY
No rights or accumulated payroll deductions of a participant under the
Purchase Plan may be pledged, assigned or transferred for any reason (other than
upon the death of a participant) and any such attempt may be treated by the
Company as an election to withdraw from the Purchase Plan.
AMENDMENT AND TERMINATION OF THE PURCHASE PLAN
The Board of Directors may at any time amend or terminate the Purchase
Plan, except that termination of the Purchase Plan shall not affect purchase
rights previously granted thereunder nor may any amendment make any change in a
purchase right granted prior thereto which adversely affects the rights of any
participant. In addition, to the extent necessary and desirable to comply with
Section 423 of the Code (or any other applicable law or regulation, including
the requirements of the Nasdaq National Market or an established stock exchange)
the Company shall obtain stockholder approval of any Purchase Plan amendment in
such manner and to such degree as required.
TAX INFORMATION - THE PURCHASE PLAN
The Purchase Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Sections 423 of the
Code. Under such provision, no income will be taxable to a participant at the
time of grant or purchase of shares. However, a participant may become liable
for tax upon disposition of shares acquired under the Purchase Plan, and the tax
consequences will depend upon how long a participant has held the shares before
disposition. Upon sale or other disposition of the shares, the participant will
generally be subject to tax and the amount of the tax will depend upon the
holding period. If the shares are sold or otherwise disposed of more than two
(2) years from the first day of the Offering Period or more than one (1) year
from the date of transfer of the stock to the participant, then the participant
will recognize ordinary income measured as the lesser of (i) the excess of the
fair market value of the shares at the time of such sale or disposition over the
purchase price, or (ii) an amount equal to 15% of the fair market value of the
shares as of the first day of the Offering Period. Any additional gain will be
treated as long-term capital gain. If the shares are sold or disposed of before
the expiration of this holding period, the participant will recognize ordinary
income generally measured as the excess of the fair market value of the shares
on the date the shares are purchased over the purchase price. Any additional
gain or loss on such sale or disposition will be long-term or short-term capital
gain or loss, depending on the holding period. The
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Company is not entitled to a deduction for amounts taxed as ordinary income or
capital gain to a participant except to the extent of ordinary income is
recognized by participants upon a sale or disposition of shares prior to the
expiration of the holding period(s) described above.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON THE PARTICIPANT AND THE COMPANY WITH RESPECT TO THE SHARES
PURCHASED UNDER THE PURCHASE PLAN. REFERENCE SHOULD BE MADE TO THE APPLICABLE
PROVISIONS OF THE CODE. IN ADDITION, THE SUMMARY DOES NOT DISCUSS THE TAX
CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE INCOME TAX LAWS OF ANY STATE OR
FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
PROPOSAL FIVE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1999, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Ernst & Young LLP began auditing the Company's financial statements on
July 15, 1994. Representatives of Ernst & Young LLP are expected to be present
at the meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
In the Company's two most recent fiscal years there have been no
disagreements between the Company and Ernst & Young LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
The audit report of Ernst & Young LLP on the Company's consolidated
financial statements for the fiscal years ended June 30, 1997, June 30, 1998 and
the six month period ended December 31, 1998 contained no adverse opinion or
disclaimer of opinion and it was not qualified or modified as to uncertainty,
audit scope or accounting principles.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than 10% stockholders
are required by regulations promulgated by the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) reports they
file. Based solely on the review of copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that during the twelve months ended December 31, 1998 the
Company's officers, directors and all persons who own more than 10% of a
registered class of the Company's equity securities complied with all Section
16(a) filing requirements.
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OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting of Stockholders. If other matters properly come before the meeting, it
is the intention of the persons named in the enclosed form of Proxy to vote the
shares they represent as the Board of Directors may recommend.
TRANSACTION OF OTHER BUSINESS
As of the date of the Proxy Statement, the Board of Directors is not
aware of any other matters other than those set forth herein and in the Notice
or Annual Meeting of Stockholders that will come before the Meeting. Should any
other matters requiring the vote of stockholders arise, it is intended that
proxies will be voted in respect thereto in accordance with the best judgment of
the person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum
consisting of a majority of the outstanding shares entitled to vote is
represented at the meeting, no business can be transacted. Therefore, please be
sure to date and sign your proxy exactly as you name appears on your stock
certificate and return it in the enclosed postage prepaid envelope.
THE COMPANY'S TRANSITION REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE COMPANY'S SIX MONTHS ENDED DECEMBER 31, 1998, WILL BE
FURNISHED TO THE COMPANY'S STOCKHOLDERS AS OF THE RECORD DATE FOR THE ANNUAL
MEETING OF STOCKHOLDERS, WITHOUT CHARGE, UPON WRITTEN REQUEST. IF YOU DESIRE TO
OBTAIN A COPY OF SUCH TRANSITION REPORT ON FORM 10-K, PLEASE DIRECT SUCH WRITTEN
REQUEST TO PLATINUM SOFTWARE CORPORATION, ATTENTION: INVESTOR RELATIONS, 195
TECHNOLOGY DRIVE, IRVINE, CALIFORNIA 92618-2402.
THE BOARD OF DIRECTORS
Dated: March 29, 1999
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PLATINUM SOFTWARE CORPORATION
1999 NONSTATUTORY STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Nonstatutory Stock Option
Plan are:
o to attract and retain the best available personnel for
positions of substantial responsibility,
o to provide additional incentive to Employees, Directors and
Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan will be Nonstatutory Stock
Options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Platinum Software Corporation, a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
30
(j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers, employed by
the Company or any Parent or Subsidiary of the Company. A Service Provider shall
not cease to be an Employee in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.
(o) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
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(p) "Option" means a nonstatutory stock option granted pursuant to
the Plan, that is not intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.
(q) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(r) "Optioned Stock" means the Common Stock subject to an Option.
(s) "Optionee" means the holder of an outstanding Option granted
under the Plan.
(t) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(u) "Plan" means this 1999 Nonstatutory Stock Option Plan.
(v) "Service Provider" means an Employee including an Officer,
Consultant or employee Director.
(w) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(x) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is two million (2,000,000) Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated).
4. Administration of the Plan.
(a) Administration. The Plan shall be administered by (i) the
Board or (ii) a Committee, which committee shall be constituted to satisfy
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock;
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(ii) to select the Service Providers to whom Options may be
granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price (which shall not
be less than 100% of Fair Market Value), the time or times when Options may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(ix) to modify or amend each Option (subject to Section 14(b)
of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to determine the terms and restrictions applicable to
Options;
(xii) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and
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(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
Notwithstanding the foregoing or any other provisions of the Plan, the
Administrator shall not be allowed to adjust or amend the exercise price of any
Options previously granted hereunder, whether through amendment, cancellation or
replacement grants or through any other means without the approval of the
stockholders of the Company.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Options may be granted to Service Providers.
6. Limitations.
(a) No Guarantee of Continued Service Relationship. Neither the
Plan nor any Option shall confer upon an Optionee any right with respect to
continuing the Optionee's relationship as a Service Provider with the Company,
nor shall they interfere in any way with the Optionee's right or the Company's
right to terminate such relationship at any time, with or without cause.
(b) Internal Revenue Code Section 162(m) Limitations. The
following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 1,500,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 1,500,000 Shares
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12.
7. Term of Plan. The Plan shall become effective upon the date of its
approval by the stockholders of the Company. It shall continue in effect for ten
(10) years, unless sooner terminated under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement.
9. Option Exercise Price and Consideration.
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(a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, but shall in no event be less than 100% of Fair Market Value.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement (after the payment of any applicable tax withholding);
(vii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or
(viii) any combination of the foregoing methods of payment.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from
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the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option
Agreement, to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option
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Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
12. Adjustments Upon Changes in Capitalization or Change of Control.
(a) In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of merger, consolidation or reorganization in which the Company is the
surviving corporation or of a recapitalization, stock split, combination of
shares, reclassification, reincorporation, stock dividend (in excess of 2%), or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors in the aggregate number and kind of
shares subject to this Plan, and the number and kind of shares and the price per
share subject to outstanding Options in order to preserve, but not to increase,
the benefits to persons then holding Options.
(b) In the event that a Change of Control (as defined below)
occurs, the vesting of all Options shall be accelerated immediately prior
thereto and Optionees holding such Options shall have the right to exercise
their Options in respect to any or all of the Shares then subject thereto. To
the extent possible, the Administrator shall cause written notice of the Change
of Control to be given to the persons holding Options not less than ten (10)
days prior to the anticipated effective date of the Change of Control. In
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the event of a Change of Control, the Administrator may take such other action
as is equitable and fair.
(c) For the purposes of this Agreement, the term "Change of
Control" shall mean the occurrence of any of the following:
(i) Any "person," as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, a Company subsidiary, or a Company employee benefit
plan, including any trustee of such plan acting as trustee) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company (or a successor to the Company)
representing fifty percent (50%) or more of the combined voting power of the
then outstanding securities of the Company or such successor; or
(ii) At least a majority of the directors of the Company
constitute persons who were not at the time of their first election to the
Board, candidates proposed by a majority of the Board of Directors in office
prior to the time of such first election; or
(iii) A merger or consolidation in which the Company is not
the surviving entity, except for a transaction, the principal purpose of which
is to change the state in which the Company is incorporated; or
(iv) A sale, transfer or other disposition of assets
involving fifty percent (50%) or more in value of the assets of the Company; or
(v) The dissolution of the Company, or liquidation of more
than fifty percent (50%) in value of the Company; or
(vi) Any reverse merger in which the Company is a surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such reverse merger.
13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
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(b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of
an Option the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
16. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLATINUM SOFTWARE CORPORATION
The undersigned hereby appoints L. George Klaus and Norman R.
Farquhar proxies, with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of stock of Platinum Software Corporation
standing in the name of the undersigned with all powers which the undersigned
would possess if present at the Annual Meeting of Stockholders of the Company to
be held April 29, 1999 or any adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
* FOLD AND DETACH HERE *
40
Please Mark
Your vote as [X]
indicated in
this sample
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
Item 1- ELECTION OF DIRECTORS - L. George Klaus Donald R. Dixon For Withhold for All
Stuart W. Clifton Arthur J. Marks L. John Doerr [ ] [ ]
WITHHELD FOR: (Write that nominee's name in the space provided below.)
_____________________________________________________
For Against Abstain
Item 2- NAME CHANGE - Amendment of Certificate of Incorporation to change the [ ] [ ] [ ]
Company's name to Epicor Software Corporation.
For Against Abstain
Item 3 - APPROVAL OF NONQUALIFIED STOCK OPTION PLAN - Approval of the Company's [ ] [ ] [ ]
1999 Nonstatutory Stock Option Plan which provides for the grant of nonqualified
stock options with respect to 2,000,000 shares of common stock to officers,
directors, employees and consultants of the Company.
For Against Abstain
Item 4 - AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN - Approval of an amendment to [ ] [ ] [ ]
the Company's Employee Stock Purchase Plan increasing the number of shares of
common stock reserved for issuance by 550,000 shares of common stock.
For Against Abstain
Item 5- APPOINTMENT OF ERNST & YOUNG, L.L.P. AS INDEPENDENT ACCOUNTANTS. [ ] [ ] [ ]
Signature(s) Date
--------------------------------------------------------- -----------
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.