SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 SCOPUS TECHNOLOGY, INC. - - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: [LOGO OF SCOPUS TECHOLOGY] NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 15, 1996 TO THE SHAREHOLDERS: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Scopus Technology, Inc., a California corporation (the "Company"), will be held on Thursday, August 15, 1996, at 2:00 p.m., local time, at the Berkeley Marina Marriott, 200 Marina Boulevard, Berkeley, California 94710 for the following purposes: 1. To elect five (5) directors to serve for the ensuing year and until their successors are duly elected and qualified. 2. To amend the Company's 1991 Stock Option Plan to increase the number of shares available for issuance thereunder by 500,000 shares to an aggregate of 3,700,000 shares. 3. To ratify the appointment of Coopers & Lybrand L.L.P. as independent accountants for the Company for the 1997 fiscal year. 4. 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 shareholders of record at the close of business on July 17, 1996 are entitled to notice of and to vote at the meeting. All shareholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are urged to sign and return the enclosed proxy as promptly as possible in the postage-prepaid envelope enclosed for that purpose. Any shareholder attending the meeting may vote in person if he or she has returned a proxy. By Order of the Board of Directors A. Aaron Omid Corporate Secretary Emeryville, California July 22, 1996 - - -------------------------------------------------------------------------------- IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. - - -------------------------------------------------------------------------------- SCOPUS TECHNOLOGY, INC. PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 15, 1996 The enclosed Proxy is solicited on behalf of the Board of Directors of Scopus Technology, Inc. (the "Company") for use at the Annual Meeting of Shareholders to be held on Thursday, August 15, 1996, at 2:00 p.m. local time, or at any adjournment thereof, for the purpose set forth herein and in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will be held at the Berkeley Marina Marriott, 200 Marina Boulevard, Berkeley, California 94710. The proxy solicitation materials were mailed on or about July 22, 1996 to all shareholders of record on July 17, 1996. INFORMATION CONCERNING SOLICITATION AND VOTING REVOCABILITY OF PROXIES Any proxy given pursuant to this solicitation may be revoked by the person giving it any time before its use by delivering to the Secretary of the Company, Scopus Technology, Inc., Suite 700, 1900 Powell Street, Emeryville, California 94608, written notice of revocation or a duly executed proxy bearing a later date, or by attending the meeting and voting in person. RECORD DATE AND PRINCIPAL STOCK OWNERSHIP Shareholders of record at the close of business on July 17, 1996 are entitled to vote at the Annual Meeting. The issued and outstanding stock of the Company on July 17, 1996 consisted of 11,876,147 shares of Common Stock, par value $0.001 per share. VOTING AND SOLICITATION Proxies properly executed, duly returned to the Company and not revoked, will be voted in accordance with the specifications made. Where no specifications are given, such proxies will be voted as the management of the Company may propose. If any matter not described in this proxy is properly presented for action at the meeting, the persons named in the enclosed form of proxy will have discretionary authority to vote according to their best judgment. With regard to the election of directors, votes may be cast in favor of or withheld from each nominee; votes that are withheld will be excluded entirely from the vote and will have no effect. Abstentions may be specified on the other proposals and will be counted as present for the purposes of determining the existence of a quorum regarding such item. -1- Except with respect to the election or removal of directors, each share of Common Stock is entitled to one vote per share and the affirmative vote of a majority of the shares present in person or by proxy is required for the approval of any matters voted upon at the meeting or any adjournments thereof. A quorum of shareholders is constituted by the presence, in person or by proxy, of holders of record of Common Stock representing a majority of the aggregate number of votes entitled to be cast. The expense of the solicitation of proxies for this meeting, including the cost of the mailing, will be borne by the Company. The Company requests that brokerage houses and other custodians, nominees and fiduciaries forward materials to the beneficial owners of shares of common stock held of record by such persons and will reimburse such broker and other fiduciaries for their reasonable out-of-pocket expenses incurred when the solicitation materials are forwarded. DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS Proposals of shareholders intended to be presented at the next Annual Meeting must be received by the Secretary, Scopus Technology, Inc., Suite 700, 1900 Powell Street, Emeryville, California 94608, no later than March 24, 1997. PROPOSAL ONE: ELECTION OF DIRECTORS VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS Each shareholder voting in the selection of directors may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such shareholder's shares are entitled, or may distribute such votes on the same principal among as many candidates as the shareholder chooses, provided that votes cannot be cast for more than the total number of directors to be elected at the meeting. However, no shareholder may cumulate votes for any candidate unless the candidate's name has been placed in nomination prior to the voting and at least one shareholder at the meeting has given notice of the intention to cumulate votes prior to the voting. A board of five (5) directors is to be elected at the Annual Meeting. The Company's Board of Directors currently consists of five (5) persons. The five (5) nominees receiving the highest number of Votes Cast will be elected as directors for the ensuing year. For this purpose, the "Votes Cast" are defined under California law to be the shares of the Company's Common Stock represented and "voting" at the Annual Meeting. Votes that are withheld from any director will be counted for purposes of determining the presence or absence of a quorum, but have no legal effect under California law. While there is no definitive statutory or case law authority in California as to the proper treatment of abstentions in the counting of votes with respect to the election of directors, the Company believes that abstentions should be counted for purposes of determining the presence or absence of a quorum for the transaction of business. In the absence of controlling precedent to the contrary, the Company intends to treat -2- abstentions in this manner. Broker non-votes will also be counted for purposes of determining the presence or absence of a quorum for the transaction of business. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE NOMINEES LISTED BELOW: NAME AGE PRINCIPAL OCCUPATION - - ---------------------- --- ------------------------------------------------------ Ori Sasson................. 33 Chairman of the Board, Chief Executive Officer and President of the Company J. Michael Cline........... 35 Director, General Partner of General Atlantic Partners Christopher R. Gibbons..... 46 Director, Chief Information Officer of Microsoft Corporation Mark Gorenberg............. 40 Director, General Partner of Hummer Winblad Equity Partners II Max D. Hopper.............. 60 Director, Retired Chairman of SABRE Group Except as set forth below, each nominee has been engaged in his principal occupation described above during the past five (5) years. Ori Sasson is a co-founder of the Company and has served as the Company's Chairman of the Board since the Company's inception in March 1991. Mr. Sasson has also served as the Company's Chief Executive Officer and President since February 1994 and as Secretary from March 1991 to February 1992. From January 1990 to March 1991 and from September 1986 to January 1989, Mr. Sasson was an independent software design consultant. From January 1989 to January 1990, Mr. Sasson was a software engineer at Sybase Corporation, a client/server relational database management software Company. From December 1984 to August 1986, Mr. Sasson was a support engineer at Hewlett Packard Company, a manufacturer of computers and related products. Mr. Sasson earned a B.A. degree in Computer Science and a M.S.C. degree in Engineering both from the University of California at Berkeley. J. Michael Cline has been a director of the Company since June 1994. Mr. Cline has been a general partner at General Atlantic Partners ("GAP"), a private investment firm, since September 1989. Mr. Cline earned a B.S. degree in Business from Cornell University and a M.B.A. degree from Harvard Business School. Mr. Cline is also a director of Digital Tools, Inc., FICS, Inc., Management Information Technology, Inc. and Manugistics. Christopher R. Gibbons has been a director of the Company since September 1995. Mr. Gibbons has been the Chief Information Officer at Microsoft Corporation, a packaged software developer, since July 1993. From December 1989 to June 1993, Mr. Gibbons was Senior Vice President and Chief Information Officer at Promus Companies, an operator of hotels, casinos and related service providers. Mr. Gibbons earned a B.A. degree in Economics from Lawrence University, and a M.S. degree in Accounting and Information Systems from the J.L. Kellogg Graduate School of Management at Northwestern University. -3- Mark Gorenberg has been a director of the Company since October 1992. Since July 1993, Mr. Gorenberg has been a general partner of Hummer Winblad Equity Partners II, an investment partnership, and, since July 1990, Mr. Gorenberg has been an associate of Hummer Winblad Equity Partners. Mr. Gorenberg earned a B.S. degree in Electrical Engineering from the Massachusetts Institute of Technology, a M.S. degree in Electrical Engineering from the University of Minnesota and a M.S. degree in Engineering Management from Stanford University. Mr. Gorenberg is also a director of Escalade Corporation, Integrity QA Software, Pop Rocket, Inc., ReliaSoft Corporation, Spider Technologies Inc. and Viewpoint DataLabs. Max D. Hopper has been a director of the Company since April 1995. From November 1985 to January 1995, Mr. Hopper served in various positions at American Airlines, a subsidiary of AMR Corporation, an international travel provider, most recently serving as Senior Vice President, Information Systems and Chairman, The SABRE Group. Mr. Hopper earned a B.S. degree in Mathematics from the University of Houston. Mr. Hopper is also a director of BBN Planet, Computer Language Research, Convex Corporation, Gartner Group, Gupta Corporation, USDATA Corporation and VTEL Corporation. All directors hold office until the next annual meeting of shareholders or until their successors have been elected and qualified. Officers serve at the discretion of the Board. Ori Sasson and A. Aaron Omid, the Company's Vice President, Sales and Secretary, are brothers. There are no other family relationships among any of the executive officers or directors of the Company. BOARD MEETINGS AND COMMITTEES The Board of Directors of the Company held six (6) meetings during fiscal 1996. The Audit Committee, which currently consists of Messrs. Cline and Gorenberg, held two (2) meetings during fiscal 1996. The Audit Committee assists the Board in fulfilling its oversight responsibilities by meeting regularly with the Company's independent accountants and operating and financial management. The Audit Committee reviews the audit performed by the Company's independent accountants and reports the results of such audit to the Board. The Audit Committee reviews the Company's annual financial statements and all material financial reports provided to the shareholders; reviews the Company's internal auditing, accounting and financial controls; and reviews the Company's policies governing compliance with laws, regulations, and rules of ethics and conflicts of interest. The Compensation Committee, which currently consists of Messrs. Cline and Hopper, held two meetings during fiscal 1996. The Compensation Committee makes recommendations to the Board of Directors regarding the Company's executive compensation policies, establishes and approves salaries paid to the executive officers of the Company and administers the Company's Employee Stock Purchase Plan and 1991 Stock Option Plan, in which capacity the Compensation Committee reviews and approves all stock option grants to employees. The Board of Directors currently has no nominating committee or committee performing a similar function. -4- No director attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board of Directors held during fiscal 1996 and (ii) the total number of meetings held by all committees of the Board of Directors during fiscal 1996 on which such director served. DIRECTOR COMPENSATION Directors receive no cash remuneration for serving on the Board other than reimbursement of certain expenses incurred in connection with attendance of Board meetings. Non-employee directors are entitled to participate in the Company's Director Option Plan (the "Director Plan"). The Director Plan provides for the grant of nonstatutory stock options to non-employee directors of the Company. Under the Director Plan, each new non-employee director is automatically granted a nonstatutory option to purchase 15,000 shares of Common Stock on the date upon which such person first becomes a non-employee director. In addition, on the date of each non-employee director's annual reelection to the Board, each director who has been a non-employee director for at least six (6) months will automatically receive a nonstatutory option to purchase 3,750 shares of the Company's Common Stock. The exercise price of each option granted under the Director Plan is equal to the fair market value of the Common Stock on the date of grant. The initial 15,000 share option grant vests as to 25% of the shares on the first anniversary of the date of grant and as to an additional 1/48th of the shares subject to such option each month thereafter. The 3,750 share annual grant vests in full four (4) years following the grant date. The principal terms of the Director Plan are described in Appendix A hereto. No ---------- options have been granted to date under the Director Plan. On April 12, 1995, Mr. Hopper was granted an option under the Company's 1991 Stock Option Plan (the "Option Plan") to purchase 15,000 shares of Common Stock at an exercise price of $0.816 per share which equaled the fair market value of the Common Stock on the date of grant as determined by the Company's Board of Directors. The option granted to Mr. Hopper vests over a four (4) year period. -5- EXECUTIVE OFFICERS Listed below are the executive officers of the Company as of May 31, 1996: NAME AGE TITLE - - ------------------- --- ----------------------------------------------- Ori Sasson 33 Chairman, Chief Executive Officer and President A. Aaron Omid 36 Vice President, Sales and Secretary William C. Leetham 43 Chief Financial Officer Mark J. Barrenechea 30 Vice President, Product Development Jeffrey G. Bork 38 Vice President, Marketing Lyle D. York 54 Vice President, Customer Services Steve Jacob 41 Vice President, Europe EXECUTIVE COMPENSATION COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee during fiscal 1995 were Messrs. Cline and Hopper, each of whom is a non-employee director. No member of the Compensation Committee has a relationship that would constitute an interlocking relationship with executive officers or directors of another entity. COMPENSATION OF DIRECTORS Non-employee directors receive no cash remuneration for serving on the Board of Directors. Non-employee directors are entitled to participate in the Company's Director Stock Option Plan. COMPENSATION OF EXECUTIVE OFFICERS The following table shows, as to the Chief Executive Officer and each of the three other most highly compensated executive officers during the 1996 fiscal year (collectively, the "Named Executive Officers"), information concerning compensation paid for services to the Company in all capacities during the fiscal year ended March 31, 1996, as well as total compensation paid to the Named Executive Officers for the Company's previous two fiscal years: -6- SUMMARY COMPENSATION TABLE LONG-TERM ANNUAL COMPENSATION COMPENSATION (1) ------------ FISCAL ------------------- OPTIONS NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) GRANTED - - -------------------------------------------------- ------ -------- -------- ------------ Ori Sasson 1996 $ 96,000 $40,000 150,000 Chairman , Chief Executive Officer and President 1995 96,000 5,000 -- William C. Leetham(3) 1996 115,008 -- 50,000 Chief Financial Officer 1995 5,000 -- -- A. Aaron Omid 1996 96,000 60,000 -- Vice President, Sales and Secretary 1995 96,000 5,000 -- Lyle D. York 1996 96,000 23,000 15,000 Vice President, Customer Service 1995 91,696 5,000 -- - - ------------------- (1) Excludes certain perquisites and other personal benefits, such as life insurance premiums paid by the Company. These amounts, in the aggregate, did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus for such executive officer. (2) Includes bonus amounts earned in the fiscal year indicated even though such bonus amounts may be paid in a subsequent fiscal year. (3) Mr. Leetham joined the Company in March 1995. OPTIONS GRANTED AND OPTIONS EXERCISED IN THE LAST FISCAL YEAR The following tables set forth information regarding stock options granted to and exercised by the Named Executive Officers during the last fiscal year, as well as options held by such officers as of March 31, 1996, the last day of the Company's 1996 fiscal year. OPTION GRANTS IN LAST FISCAL YEAR POTENTIAL REALIZABLE VALUE AT ANNUAL RATES OF STOCK PRICE APPRECIATION INDIVIDUAL GRANTS(1) FOR OPTION TERM (2) -------------------------------------------------------- ------------------------ % OF TOTAL OPTIONS GRANTED TO EXERCISE OR OPTIONS EMPLOYEES BASE PRICE EXPIRATION NAME GRANTED IN FISCAL YEAR PER SHARE DATE 5% 10% - - ------------------- ------- ------------------ ----------- ---------- ----------- ----------- Ori Sasson 50,000 4.5% $6.80 9/13/05 $ 66,458.90 $105,824.69 Ori Sasson 100,000 8.9% $0.816 4/12/05 $132,917.80 $211,649.38 William C. Leetham 50,000 4.5% $0.816 4/12/05 $ 66,458.90 $105,824.69 A. Aaron Omid -- -- -- -- -- -- Lyle D. York 15,000 1.3% $4.00 8/31/05 $ 97,733.68 $155,624.54 - - ------------------- (1) Each of these options was granted pursuant to the Company's Option Plan and is subject to the terms of such plan as described in Appendix A ---------- hereto. (2) In accordance with the rules of the Securities and Exchange Commission (the "Commission"), shown are the hypothetical gains or "option spreads" that would exist for the respective options. These gains are based on assumed rates of annual compounded stock price appreciation of 5% and 10% from the date the option was granted over the full option term. The 5% and 10% assumed rates of appreciation are mandated by the rules of the Commission and do not represent the Company's estimate or projection of future increases in the price of its Common Stock. -7- AGGREGATE UNEXERCISED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END OPTION VALUES ---------------------------------------------------------- VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS SHARES OPTIONS AT FISCAL YEAR END: AT FISCAL YEAR END (1): ACQUIRED VALUE --------------------------- --------------------------- NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - - ------------------- ----------- ---------- ----------- ------------- ------------ ------------- Ori Sasson -- -- 33,333 116,667 $472,795.27 $1,355,604.73 William C. Leetham -- -- 12,500 37,500 $177,300.00 $ 531,900.00 A. Aaron Omid -- -- -- -- -- -- Lyle D. York 5,000 $70,920.00 15,833 34,167 $224,575.27 $ 436,864.73 - - ------------------- (1) The values for "in-the-money" options represent the difference between the exercise price of the options and the closing price of the Company's Common Stock on March 31, 1996, which was $15 per share. EMPLOYEE BENEFIT PLANS 1991 Stock Option Plan. Each Named Executive Officer is entitled to participate in the Company's Option Plan. The Option Plan was adopted by the Board of Directors and the shareholders in November 1991 and amended in October 1992, April 1995, and September 1995. Prior to the proposed amendment to the Option Plan being voted on at the Annual Meeting, a total of 3,200,000 shares of Common Stock had been reserved for issuance thereunder. As of June 15, 1996, 1,271,521 shares were subject to outstanding options under the Option Plan and 650,972 shares were available for future grant. The principal terms of the Option Plan are described in Appendix A hereto. ---------- Employee Stock Purchase Plan. Each Named Executive Officer is entitled to participate in the Company's Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan was adopted by the Board of Directors and the shareholders in September 1995. A total of 200,000 shares of Common Stock has been reserved for issuance under the Purchase Plan. As of June 15, 1996, 42,080 shares had been issued under the Purchase Plan. The principal terms of the Purchase Plan are described in Appendix C hereto. ---------- BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors consists of J. Michael Cline and Max D. Hopper, neither of whom is an employee of the Company. The Board has delegated to the Compensation Committee the responsibility for establishing and administering the Company's executive compensation plans, subject to Board approval of major new compensation programs and the Chief Executive Officer's compensation. In discharging these responsibilities, the Committee consults with outside compensation consultants, attorneys and other specialists. The Company's compensation philosophy is that cash compensation should be substantially linked to the short-term performance of the Company and that longer-term incentives, such as stock options and stock ownership, should be aligned with the Company's objective to enhance shareholder value over the long term. The Company believes that the use of stock options and stock ownership links the interest of officers and employees of the Company to the interest of the shareholders. In addition, the Compensation Committee believes that the total compensation package must be competitive with other -8- companies in the industry to ensure that the Company can continue to attract, retain and motivate key executives who are critical to the long-term success of the Company. Compensation for the Company's executive officers consists of three principal components: base salary, cash bonuses and stock options. Base Salary. The base salaries of executive officers are initially determined by evaluating the responsibilities of the position held and the experience and performance of the individual, with reference to the competitive marketplace for executive talent, including a comparison to base salaries for comparable positions based on the Compensation Committee's periodic surveys of the industry. Cash Bonuses. The Company's executive cash bonus plan is designed to reward executive officers for the achievement of Company performance objectives, as well as the executive officer's individual performance objectives. For fiscal 1996, bonuses were determined by the Compensation Committee based upon a total executive bonus pool determined based upon overall Company financial performance and, with respect to allocation of the bonus pool among executive officers, an evaluation of individual performance. For fiscal 1997, a bonus pool will be established based upon the Company's operating profit for the fiscal year and individual executive bonuses will be allocated out of this pool based upon individual performance, the executive's base salary and the Committee's assessment of the executive's contribution to the Company. This plan emphasizes the Compensation Committee's belief that, when the Company is successful, the executives should be appropriately compensated. Conversely, if the Company is not sufficiently profitable, no bonuses will be paid. Stock Options. The principal equity compensation components of executive compensation are options granted under the Company's stock option programs. Stock options are generally granted when an executive joins the Company, with additional options granted from time to time for promotions and performance. The initial option granted to the executive vests over a period of four years. The Compensation Committee believes that the stock option participation provides a method of retention and motivation for the senior level executives of the Company and also aligns senior management's objectives with long-term stock price appreciation. Executives are also eligible to participate in a payroll deduction employee stock purchase plan pursuant to which stock may be purchased at 85% of the lower of the closing sale price for the Common Stock reported on the Nasdaq National Market at the beginning or end of each six-month offering (up to a maximum stock value of $25,000 per calendar year or 10 percent of salary, whichever is less). CEO Compensation. Compensation of the Company's Chief Executive Officer is determined by the Compensation Committee, subject to Board approval. Mr. Sasson's compensation package in 1996 consisted of the same benefits program as other executive officers, as itemized above, including base salary, cash bonus, stock options and other employee benefit programs. Mr. Sasson received no material compensation or benefits in 1996 not provided to all executive officers. Mr. Sasson's compensation package was designed, however, to provide for a higher proportion of his compensation to be dependent on Company performance as compared to other executive officers. In this regard, Mr. Sasson received no increase in base salary in 1996 as compared to 1995, while the Committee provided to Mr. Sasson the opportunity to achieve a significant bonus based upon Company performance. The Committee has also -9- sought to provide to Mr. Sasson incentive to promote long-term shareholder value, through Mr. Sasson's participation in the Company's stock option programs. The Compensation Committee has considered the potential impact of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Section"). The Section disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for any of the Named Executive Officers, unless such compensation is performance-based. Since the cash compensation of each of the Named Executive Officers is below the $1 million threshold and the Compensation Committee believes that any options granted under the Option Plan will meet the requirements of being performance-based, the Compensation Committee believes that the Section will not reduce the tax deduction available to the Company. The Company's policy is to qualify, to the extent reasonable, its executive officers' compensation for deductibility under applicable tax laws. However, the Compensation Committee believes that its primary responsibility is to provide a compensation program that will attract, retain and reward the executive talent necessary to the Company's success. Consequently, the Compensation Committee recognizes that the loss of a tax deduction could be necessary in some circumstances. Other elements of executive compensation include participation in a Company-wide life insurance program, including a long-term disability insurance program. Executives are also eligible for Company-wide medical benefits and participation in a 401(k) plan under which the Company currently provides no matching contributions. COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS J. Michael Cline Max D. Hopper -10- COMPARISON OF TOTAL CUMULATIVE SHAREHOLDER RETURN The following graph sets forth the Company's total cumulative shareholder return as compared to the Standard and Poors 500 Stock Index (the "S&P 500") and the Morgan Stanley Tech-35 Index through June 30, 1996. Total shareholder return assumes $100 invested in common stock of the Company on November 16, 1995, the date of the Company's initial public offering, at the $12.00 initial public offering price, and a similar amount invested on such date in the stocks represented in the S&P 500 Index and the Morgan Stanley Tech-35 Index. Total return also assumes reinvestment of dividends; the Company has paid no cash dividends on its common stock. Historical stock price performance should not be relied upon as indicative of future stock price performance. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG SCOPUS TECHNOLOGY, INC., S&P 500 INDEX AND MORGAN STANLEY TECH-35 INDEX PERFORMANCE GRAPH APPEARS HERE Measurement Period SCOPUS S&P MORGAN STANLEY (Fiscal Year Covered) TECHNOLOGY 500 INDEX TECH-35 INDEX - - --------------------- ---------- --------- -------------- Measurement Pt- 11/17/95 $100 $100 $100 FYE 12/95 $210 $103 $92 FYE 03/96 $125 $108 $92 FYE 06/96 $129 $112 $94 -11- PROPOSAL TWO: APPROVAL OF AMENDMENT TO 1991 STOCK OPTION PLAN The Company's Board of Directors and shareholders have previously adopted and approved the Company's Option Plan. A total of 3,200,000 shares of Common Stock are presently reserved for issuance under the Option Plan. On July 17, 1996, the Board of Directors approved an amendment to the Option Plan, subject to shareholder approval, to increase the shares reserved for issuance thereunder by 500,000 shares, bringing the total number of shares issuable under the Option Plan to 3,700,000. As of June 15, 1996, 650,972 shares were available for future issuance under the Option Plan. At the Annual Meeting, the shareholders are being requested to consider and approve the proposed amendment to the Option Plan to increase the number of shares of Common Stock reserved for issuance thereunder by 500,000 shares, bringing the total number of shares issuable under the Option Plan to 3,700,000. The Board believes that the amendment will enable the Company to continue its policy of widespread employee stock ownership as a means to motivate high levels of performance and to recognize key employee accomplishments. For a description of the principal features of the Option Plan, see "Appendix A--Description of 1991 Stock Option Plan." VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS The approval of the amendment to the Option Plan requires the affirmative vote of a majority of the Votes Cast on the proposal at the Annual Meeting. An abstention will have the same effect as a vote against the proposal, and, pursuant to California law, a broker non-vote will not be treated as a Vote Cast on the proposal. THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE AMENDMENT OF THE OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER. PROPOSAL THREE: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS The Board of Directors has selected Coopers & Lybrand L.L.P., independent accountants, to audit the financial statements of the Company for the 1996 fiscal year. This nomination is being presented to the shareholders for ratification at the meeting. Coopers & Lybrand L.L.P. has audited the Company's financial statements since 1992. A representative of Coopers & Lybrand L.L.P. is expected to be present at the meeting, will have the opportunity to make a statement, and is expected to be available to respond to appropriate questions. -12- VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS The affirmative vote of a majority of the shares represented, in person or by proxy, and voting at the Annual Meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) is required to ratify the Board's selection. If the shareholders reject the nomination, the Board will reconsider its selection. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL 1997 AND RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THIS PROPOSAL. -13- OTHER INFORMATION SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information, based on review of information on file with the Securities and Exchange Commission and Company stock records, with respect to beneficial ownership of the Company's voting stock as of June 15, 1996, (i) by each person (or group of affiliated persons) which is known by the Company to own beneficially more than five percent of the Company's voting stock, (ii) by each of the Company's directors, (iii) by each executive officer named in the Summary Compensation Table, and (iv) by all directors and executive officers as a group. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to community property laws where applicable. PERCENT BENEFICIAL OWNER NUMBER OF SHARES OWNERSHIP - - -------------------------------------------------- ---------------- --------- Ori Sasson(1)(2).................................. 1,303,750 11.0% A. Aaron Omid(1)(3)............................... 1,018,000 8.6% Sharam Sasson(1)(4)............................... 1,035,000 8.7% Bahram Nour-Omid(1)(5)............................ 857,121 7.2% David C. Schwab(1)(6)............................. 765,000 6.5% General Atlantic Partners(7) 125 East 56th Street New York, NY 1002 J. Michael Cline................................ 2,366,666 20.0% Christopher R. Gibbons............................ -0- * Mark Gorenberg (8)................................ 36,325 * Max D. Hopper(9).................................. 10,000 * All executive officers and directors as a group (12 persons) (10)............................... 4,186,859 35.1% - - ------------------- (1) The shareholder's address is c/o Scopus Technology, Inc., Suite 700, 1900 Powell Street, Emeryville, CA 94608. (2) Includes 290,000 shares subject to options held by GAP and 43,750 shares issuable upon the exercise of options held by Mr. Ori Sasson which are exercisable within 60 days of June 15, 1996. Also includes 570,000 held by Mr. Ori Sasson and Ms. Susan Sasson as trustees for their own benefit and 400,000 shares held in trust by Mr. Ori Sasson as trustee for the benefit of Mr. Sharam Sasson's minor children. Excludes 400,000 shares held in trust for the benefit of Mr. Ori Sasson's minor children. Mr. Sharam Sasson is the trustee of such trust and Mr. Ori Sasson disclaims beneficial ownership of such shares. (3) Includes 290,000 shares subject to options held by GAP. (4) Includes 290,000 shares subject to options held by GAP. Also includes 345,000 shares held in trust by Mr. Sharam Sasson and Ms. Fariba Sasson as trustees for their own benefit and 400,000 shares held in trust by Mr. Sharam Sasson as trustee for the benefit of Mr. Ori Sasson's minor children. Excludes 400,000 shares held in trust for the benefit of Mr. Sharam Sasson's minor children. Mr. Ori Sasson is the trustee of such trust and Mr. Sharam Sasson disclaims beneficial ownership of such shares. (5) Includes 290,000 shares subject to options held by GAP. Excludes 450,000 shares held in trust for the benefit of Dr. Nour-Omid's minor children. Mr. Iraj Barkohanai is the trustee of such trust and Dr. Nour-Omid disclaims beneficial ownership of such shares. (6) Includes 40,000 shares subject to options held by GAP. (7) Includes 1,066,371 shares held by General Atlantic Partners 13, L.P. and 100,295 shares held by GAP Coinvestment Partners, L.P. Includes 1,200,000 shares transferable to GAP upon the exercise of options held by funds affiliated with GAP. The general partner of General Atlantic Partners 13, L.P. is General Atlantic Partners, a New York general partnership. The general partners of General Atlantic Partners are Steven A. Denning, David C. Hodgson, Stephen P. Reynolds, J. Michael Cline, William O. Grabe and William E. Ford. The same individuals are the general partners of GAP Coinvestment Partners, L.P. Mr. Cline disclaims beneficial -14- ownership of shares owned by General Atlantic Partners 13, L.P., GAP Coinvestment Partners, L.P. and the other GAP funds except to the extent of his pecuniary interest therein. (8) Includes 29,167 shares held by funds affiliated with Hummer Winblad Venture Partners. Mr. Gorenberg disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. (9) Includes 5,000 shares issuable upon the exercise of options held by Mr. Hopper which are exercisable within 60 days of June 15, 1996. (10) Includes 78,917 shares issuable upon the exercise of options which are exercisable within 60 days of June 15, 1996 and 620,000 shares transferable to GAP from shareholders of the Company who are not officers or directors upon the exercise of options held by funds affiliated with GAP. -15- CERTAIN TRANSACTIONS The Company and Microsoft Corporation are parties to a software license agreement dated January 1, 1995. In fiscal 1996, the Company recognized approximately $465,000 of revenues from such contract. Christopher Gibbons, a director of the Company, is an officer of Microsoft Corporation. OTHER MATTERS The Company knows of no other matters to be submitted at the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy card to vote the shares they represent as the Board of Directors of the Company may recommend. SECTION 16(A) REPORTING DELINQUENCIES Based solely on its review of copies of filings under Section 16(a) of the Securities Exchange Act of 1934, as amended, received by it, or written representations from certain reporting persons, the Company believes that during fiscal 1996 all Section 16 filing requirements were met, with the exception that Ori Sasson, A. Aaron Omid, Max D. Hopper and Lyle York each filed one late Form 4. MISCELLANEOUS The Company's Annual Report for the fiscal year ended March 31, 1996 is being mailed to the shareholders of record concurrently with this Proxy Statement. The Annual Report is not part of this Proxy Statement. THE BOARD OF DIRECTORS SCOPUS TECHNOLOGY, INC. Emeryville, California July 22, 1996 -16- APPENDIX A DESCRIPTION OF THE 1991 STOCK OPTION PLAN General. The Option Plan authorizes the Board of Directors (the "Board"), ------- or one or more committees which the Board may appoint among its members (the "Committee"), to grant (1) stock options, (2) stock purchase rights, (3) stock appreciation rights ("SARs"), and (4) Long-Term Performance Awards. Options granted under the Option Plan may be either "incentive stock options" as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock options, as determined by the Board or the Committee (the "Administrator"). Purpose. The general purpose of the Option Plan is to attract and retain ------- the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, consultants and officers, and to promote the success of the Company's business. Administration. The Option Plan may be administered by the Board or the -------------- Committee. Subject to the other provisions of the Option Plan, the Administrator has the authority to: (i) interpret the plan and apply its provisions; (ii) prescribe, amend or rescind rules and regulations relating to the plan; (iii) select the persons to whom options and SARs are to be granted; (iv) determine the number of shares to be made subject to each option and SAR; (v) determine whether and to what extent options and SARs are to be granted; (vi) prescribe the terms and conditions of each option and SAR (including the exercise price, whether an option will be classified as an incentive stock option or a nonstatutory option and the provisions of the stock option or stock purchase agreement to be entered into between the Company and the grantee); (vii) amend any outstanding option or SAR subject to applicable legal restrictions; (viii) authorize any person to execute, on behalf of the Company, any instrument required to effect the grant of an option or SAR; and (ix) take any other actions deemed necessary or advisable for the administration of the Option Plan. All decisions, interpretations and other actions of the Administrator shall be final and binding on all holders of options or SARs and on all persons deriving their rights therefrom. Eligibility. The Option Plan provides that options and SARs may be granted ----------- to the Company's employees and consultants (as such terms are defined in the Option Plan). Incentive stock options may be granted only to employees. Any optionee who owns more than 10 percent of the combined voting power of all classes of outstanding stock of the Company (a "10% Shareholder") is not eligible for the grant of an incentive stock option unless the exercise price of the option is at least 10 percent of the fair market value of the Common Stock on the date of grant. Terms and Conditions of Options. Each option granted under the Option Plan ------------------------------- is evidenced by a written stock option agreement between the optionee and the Company and is subject to the following terms and conditions: (a) Exercise Price. The Administrator determines the exercise price of -------------- options to purchase shares of Common Stock at the time the options are granted. However, excluding options issued to 10% Shareholders, the exercise price under an incentive stock option must not be less than 100 percent of the A-1 fair market value of the Common Stock on the date the option is granted. If the Common Stock is listed on any established stock exchange or a national market system, the fair market value shall be the average of the means between the high bid and low asked prices for the Common Stock on the five market trading days immediately preceding the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; provided, however, that in the event the fair market value as so determined is more than 20 percent greater or more than 20 percent less than the mean between the high bid and low asked prices for such stock as so quoted on the date of determination, then the Administrator shall be entitled to determine the fair market value in good faith, at a price within the range of prices from the fair market value as otherwise determined above to the mean between the high bid and low asked prices on the date of determination. If the Common Stock is traded on the over-the-counter market, the fair market value shall be the average of the closing sales prices for such stock (or the average of the closing bids, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Common Stock) on the five market trading days immediately preceding the date of determination, as reported in The Wall Street Journal or such other source as the Administrator of the Plan deems reliable; provided, however, that in the event the fair market value as so determined is more than 20 percent greater or more than 20 percent less than the closing sales price for such stock (or the closing bid, if no sales were reported) as so quoted on the date of determination, then the Administrator shall be entitled to determine the fair market value in good faith, at a price within the range of prices from the fair market value as otherwise determined above to the closing price (or closing bid, as applicable) on the date of determination. (b) Form of Consideration. The means of payment for shares issued upon --------------------- exercise of an option is specified in each option agreement and generally may be made by cash, check, a full-recourse promissory note, other shares of Common Stock of the Company owned by the optionee, delivery of an exercise notice together with irrevocable instructions to a broker to deliver the exercise price to the Company from sale or loan proceeds, or by a combination thereof. (c) Exercise of the Option. Each stock option agreement will specify the ---------------------- term of the option and the date when the option is to become exercisable. However, in no event shall an option granted under the Option Plan be exercised more than 10 years after the date of grant. Moreover, in the case of an incentive stock option granted to a 10 percent Shareholder, the term of the option shall be for no more than five years from the date of grant. (d) Termination of Employment. If an optionee's employment terminates for ------------------------- any reason (other than death or permanent disability), the optionee may exercise his or her option or SAR, but only within such period of time as is determined by the Administrator at the time of grant, not to exceed six (6) months (three (3) months in the case of an Incentive Stock Option) from the date of such termination, and only to the extent that the optionee was entitled to exercise it at the date of such termination (but in no event later than the expiration of the term of such option or SAR as set forth in the option or SAR Agreement). To the extent that the optionee was not entitled to exercise an option or SAR at the date of such termination, and to the extent that the optionee does not exercise such option or SAR (to the extent otherwise so entitled) within the time specified herein, the option or SAR shall terminate. A-2 (e) Permanent Disability. If an employee is unable to continue employment -------------------- with the Company as a result of permanent and total disability (as defined in the Code), then all options and SARs held by such optionee under the Option Plan shall expire upon the earlier of (i) six months after the date of termination of the optionee's employment or (ii) the expiration date of the option or SAR. The optionee may exercise all or part of his or her option or SAR at any time before such expiration to the extent that such option or SAR was exercisable at the time of termination of employment. (f) Death. If an optionee dies while employed by the Company, the ----- optionee's estate or a person who acquired the right to exercise the deceased optionee's option or SAR may exercise the option or SAR, but only within six (6) months (or such lesser period as the option or SAR agreement may provide, or such longer period, not to exceed twelve (12) months, as the option or SAR agreement may provide) following the date of death, and only to the extent the optionee was entitled to exercise it at the date of death. To the extent that the optionee was not entitled to exercise an option or SAR at the time of death, and to the extent that the optionee's estate or a person who acquired the right to exercise such option does not exercise such option or SAR within the period described above, the option or SAR shall terminate. (g) Termination of Options. Each stock option agreement will specify the ---------------------- term of the option and the date when all or any installment of the option is to become exercisable. Notwithstanding the foregoing, however, the term of any incentive stock option shall not exceed 10 years from the date of grant. No option may be exercised by any person after the expiration of its term. (h) Nontransferability of Options. During an optionee's lifetime, his or ----------------------------- her option(s) shall be exercisable only by the optionee and shall not be transferable other than by will or laws of descent and distribution. (i) Value Limitation. If the aggregate fair market value of all shares of ---------------- Common Stock subject to an optionee's incentive stock option which are exercisable for the first time during any calendar year exceeds $100,000, the excess options shall be treated as nonstatutory options. (j) Other Provisions. The stock option agreement may contain such terms, ---------------- provisions and conditions not inconsistent with the Option Plan as may be determined by the Administrator. Stock Appreciation Rights. The Option Plan permits the Company to grant ------------------------- SARs in connection with all or any part of an option, either concurrently with the grant of the option or at any time thereafter during the term of the option. The SAR shall entitle the optionee to exercise the SAR by surrendering to the Company unexercised a portion of the related option. The optionee shall receive in exchange from the Company an amount equal to the excess of (1) the fair market value on the date of exercise of the SAR of the Common Stock covered by the surrendered portion of the related option over (2) the exercise price of the Common Stock covered by the surrendered portion of the related option. The Administrator may place limits on the amount that may be paid upon exercise of an SAR; provided, however, that such limits shall not restrict the exercisability of the related option. When an SAR is exercised, the related option, to the extent surrendered, shall cease to be exercisable. An SAR may only be exercised at a time A-3 when the fair market value of the Common Stock covered by the related option exceeds the exercise price of the Common Stock covered by the related option. At the discretion of the Administrator, SARs may be granted without related options. Such an SAR shall entitle the optionee, by exercising the SAR, to receive from the Company an amount equal to the excess of (1) the fair market value of the Common Stock covered by the exercised portion of the SAR, as of the date of such exercise, over (2) the fair market value of the Common Stock covered by the exercised portion of the SAR, as of the last market trading date prior to the date on which the SAR was granted; provided, however, that the Administrator may place limits on the aggregate amount that may be paid upon exercise of an SAR. SARs shall be exercisable, in whole or in part, at such times as the Administrator shall specify in the optionee's SAR agreement. Stock Purchase Rights. The Option Plan permits the Company to grant rights --------------------- to purchase Common Stock either alone or in combination with other awards granted under the Option Plan or in combination with cash awards made outside of the Option Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer, which shall in no event exceed thirty (30) days from the date upon which the Administrator made the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's employment with the Company for any reason (including death or disability). The purchase price for shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. Long-Term Performance Awards. Long-Term Performance Awards are cash or ---------------------------- stock bonus awards that may be granted either alone or in addition to other awards granted under the Option Plan. Such awards shall be granted for no cash consideration. The Administrator shall determine the nature, length and starting date of any performance period (the "Performance Period") for each Long-Term Performance Award, and shall determine the performance or employment factors, if any, to be used in the determination of Long-Term Performance Awards and the extent to which such Long-Tenn Performance Awards are valued or have been earned. Long-Term Performance Awards may vary from participant to participant and between groups of participants and shall be based upon the achievement of the Company and individual performance factors or such other criteria or combination of criteria as the Administrator may deem appropriate. Performance Periods may overlap and participants may participate simultaneously with respect to Long-Term Performance Awards that are subject to different Performance Periods and different performance factors and criteria. Long-Term Performance Awards shall be confirmed by, and be subject to the terms of, a Long-Term Performance Award agreement. The terms of such awards need not be the same with respect to each participant. A-4 At the beginning of each Performance Period, the Administrator may determine for each Long-Term Performance Award subject to such Performance Period the range of dollar values or number of shares of Common Stock to be awarded to the participant at the end of the Performance Period if and to the extent that the relevant measures of performance for such Long-Term Performance Award are met. Such dollar values or number of shares of Common Stock may be fixed or may vary in accordance with such performance or other criteria as may be determined by the Administrator. Adjustment Upon Changes in Capitalization and Corporate Transactions. In -------------------------------------------------------------------- the event that the stock of the Company is changed by reason of any stock split, reverse stock split, stock dividend, recapitalization or other change in the capital structure of the Company, appropriate proportional adjustments shall be made in the number and class of shares of stock subject to the Option Plan, the number and class of shares of stock subject to any option or right outstanding under the Option Plan, and the exercise price of any such outstanding option or right. Any such adjustment shall be made upon approval of the Board and, if required, the shareholders of the Company, whose determination shall be conclusive. Notwithstanding the above, in connection with any merger, consolidation, acquisition of assets or like event involving the Company, each outstanding option and right shall be assumed or an equivalent option or right substituted by a successor corporation. If the successor corporation does not assume the options or substitute substantially equivalent options, or if the Administrator determines in its sole discretion that the options should not continue to be outstanding, then the exercisability of all outstanding options and rights shall be automatically accelerated. In the event of a Change in Control of the Company (as defined in the Option Plan, and which includes a merger or a sale of all or substantially all of the Company's assets), if the Board of Directors so determines in its discretion, outstanding options and rights shall have their exercisability fully accelerated and/or the option and right holders may be paid in cash the excess of the change in control price over the option or right exercise price. Amendments, Suspensions and Termination of the Option Plan. The Board may ---------------------------------------------------------- amend, suspend or terminate the Option Plan at any time; provided, however, that shareholder approval is required for any amendment to the extent necessary to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934 ("Rule 16b-3") or Section 422 of the Code, or any similar rule or statute. In any event, the Option Plan will terminate automatically in 2001. Federal Tax Information for Option Plan. Options granted under the Option --------------------------------------- Plan may be either "incentive stock options," as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or nonstatutory options. An optionee who is granted an incentive stock option will not recognize taxable income either at the time the option is granted or upon its exercise, although the exercise may subject the optionee to the alternative minimum tax. Upon the sale or exchange of the shares more than two years after grant of the option and one year after exercising the option, any gain or loss will be treated as long term capital gain or loss. If these holding periods are not satisfied, the optionee will recognize ordinary income at the time of sale or exchange equal to the difference between the exercise price and the lower of (i) the fair market value of the shares at the date of the option exercise or (ii) the sale price of the shares. A different rule for measuring ordinary income upon such a premature disposition may apply if the optionee is also A-5 an officer, director, or 10% Shareholder of the Company. The Company will be entitled to a deduction in the same amount as the ordinary income recognized by the optionee. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income will be characterized as long-term or short-term capital gain or loss, depending on the holding period. All other options which do not qualify as incentive stock options are referred to as nonstatutory options. An optionee will not recognize any taxable income at the time he or she is granted a nonstatutory option. However, upon its exercise, the optionee generally will recognize taxable income measured as the excess of the then fair market value of the shares purchased over the purchase price. Any taxable income recognized in connection with an option exercise by an optionee who is also an employee of the Company may be subject to tax withholding by the Company. Upon resale of such shares by the optionee, any difference between the sales price and the optionee's purchase price, to the extent not recognized as taxable income as described above, will be treated as long-term or short-term capital gain or loss, depending on the holding period. The Company will be entitled to a tax deduction in the same amount as the ordinary income recognized by the optionee with respect to shares acquired upon exercise of a nonstatutory option. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS UNDER THE OPTION PLAN, DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE. A-6 APPENDIX B DESCRIPTION OF THE 1995 DIRECTOR OPTION PLAN The essential features of the Director Plan are outlined below. The 1995 Director Option Plan (the "Director Plan") was adopted by the Board and the shareholders in September 1995. A total of 75,000 shares of the Company's Common Stock have been reserved for issuance under the Director Plan and are available for grant as of the date hereof. PURPOSE The purposes of the Director Plan are to attract and retain the best available individuals for service as non-employee directors of the Company ("Outside Directors"), to provide additional incentive to the Outside Directors and to encourage their continued service on the Board. ADMINISTRATION The Director Plan is administered by the Board of Directors, who receive no additional compensation for such service. All grants of options under the Director Plan are automatic and non discretionary pursuant to the terms of the Director Plan. All questions of interpretation or application of the Director Plan are determined by the Board, whose decisions are final and binding upon all participants. ELIGIBILITY Options under the Director Plan may be granted only to Outside Directors of the Company. As of the date hereof, there were 3 Outside Directors of the Company, all of whom have been nominated to serve as directors for the following year. These individuals were eligible to receive grants of options as of the effective date of the Director Plan, which date was September 13, 1995. PARTICIPATION The Director Plan provides for grants of options to be made in two ways: a. Each Outside Director elected to the Board after the effective date of the public offering (November 16, 1995) is automatically granted an option to purchase 15,000 shares (the "First Option") upon the date on which such individual first becomes a director, whether through election by the shareholders of the Company or by appointment by the Board of Directors in order to fill a vacancy. However, directors who have been employees of the Company while serving on the Board will not receive a First Option upon becoming an Outside Director. B-1 b. Each Outside Director who has served on the Board for at least six months is automatically granted an option to purchase 3,750 shares (the "Subsequent Option") on the date of such Outside Director's annual re-election to the Board. TERMS OF OPTIONS Each option granted under the Director Plan is evidenced by a written stock option agreement between the Company and the optionee. Options are generally subject to the terms and conditions listed below. Exercise of the Option. Twenty-five percent (25%) of the shares subject to the First Option become exercisable on the first anniversary of its date of grant, and one forty-eighth (1/48th) of the shares subject to the First Option become exercisable monthly thereafter, with the effect that the option becomes exercisable as to the full number of shares on the fourth anniversary of the date of its grant. The Subsequent Option becomes exercisable for all of the shares subject to such Subsequent Option on the fourth anniversary of its date of grant. Options granted under the Director Plan expire ten years after the date of grant. An option is exercised by giving written notice of exercise to the Company specifying the number of whole shares of Common Stock to be purchased and by tendering payment of the purchase price. Payment for shares purchased upon exercise of an option is in the form of cash, check, certain other shares of the Company's Common Stock, a "cashless exercise" or any combination of these payment methods. Exercise Price. The per share exercise price for shares to be issued pursuant to exercise of an option under the Director Plan is 100% of the fair market value per share of the Company's Common Stock on the date of grant of the option. The fair market value is determined to be the closing sales price on any established stock exchange or national market system on which the Common Stock is listed on the date of the grant of the option, as reported in The Wall Street Journal, or such other source as the Board deems reliable. Termination of Status as Director. If an optionee ceases to serve as a director (other than upon optionee's death or total and permanent disability), he or she may, but only within three months after the date he or she ceases to be a director of the Company, exercise his or her option to the extent that he or she was entitled to exercise it at the date of such termination (but in no event later than the expiration of its ten year term). In the event an optionee ceases to serve as a director due to the optionee's death or total and permanent disability (as defined in the Internal Revenue Code), the option will remain exercisable (to the extent the option was exercisable at the date the optionee ceased to be a director) for twelve months after the date the optionee ceases to be a director (but in no event later than the expiration of the option's ten year term). To the extent that the director was not entitled to exercise the option at the date of such termination, or if he or she does not exercise such option within the time specified, the option terminates. Capital Changes. In the event of any changes made in the Company's capitalization which result in an exchange of Common Stock for a greater or lesser number of shares without receipt of consideration, appropriate adjustment shall be made in the exercise price and in the number of shares B-2 subject to options outstanding under the Director Plan, as well as the number of shares reserved for issuance under the Director Plan. Liquidation or Dissolution. In the event of a proposed liquidation or dissolution of the Company, options under the Director Plan shall terminate immediately prior to the consummation of such proposed action. Merger or Asset Sale. In the event of a merger of the Company or the sale of substantially all of the assets of the Company, each option may be assumed or an equivalent option substituted by the successor corporation. If the successor does not agree to assume or substitute the option, each option shall also become fully exercisable for a period of thirty days from the date the Board notifies the optionee of the option's full exercisability, after which period the option shall terminate. Nontransferability of Option. Options granted pursuant to the Director Plan 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. Other Provisions. The option agreement may contain such other terms, provisions and conditions not inconsistent with the Director Plan as may be determined by the Board. AMENDMENT AND TERMINATION OF THE DIRECTOR PLAN The Board may at any time amend, alter, suspend or discontinue the Director Plan, but no amendment, alteration, suspension or discontinuance shall be made which would impair the rights of any optionee under any grant theretofore made without such optionee's consent. In addition, to the extent necessary and desirable to comply with any applicable law or regulation, including the requirements of an established stock exchange or quotation system, the Company shall obtain shareholder approval of any amendment to the Director Plan in such a manner and to such a degree as required. TAX INFORMATION - THE DIRECTOR PLAN Options granted pursuant to the Director Plan are "nonstatutory options" and will not qualify for any special tax benefits to the optionee. An optionee will not recognize any taxable income at the time the option is granted. Upon exercise of the option, the optionee will generally recognize ordinary income for federal tax purposes measured by the excess, if any, of the fair market value of the shares over the exercise price. Because shares held by directors might be subject to restrictions on resale under Section 16(b) of the Exchange Act, the date of taxation may be deferred unless the optionee files an election with the Internal Revenue Service pursuant to Section 83(b) of the Code within thirty days after the date of exercise. Upon a resale of shares acquired pursuant to an option under the Director Plan, any difference between the sales price and the exercise price, to the extent not recognized as ordinary income as B-3 provided above, will be treated as capital gain or loss. The tax rate on net capital gain (net long-term capital gain minus net short-term capital loss) is capped at 28%. Capital losses are allowed in full against capital gains plus $3,000 of other income. The Company will be entitled to a tax deduction in the amount and at the time that the optionee recognizes ordinary income with respect to shares acquired upon exercise of an option under the Director Plan. The Company is not required to withhold any amount for tax purposes on any such income included by the optionee. THE FOREGOING SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT OF OPTIONS UNDER THE DIRECTOR PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE OPTIONEE MAY RESIDE. B-4 APPENDIX C DESCRIPTION OF THE 1995 EMPLOYEE STOCK PURCHASE PLAN General. The 1995 Employee Stock Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors and approved by the shareholders on September 13, 1995. A total of 200,000 shares of Common Stock have been reserved for issuance under the Purchase Plan. The purpose of the Purchase Plan is to provide employees with an opportunity to purchase Common Stock of the Company through payroll deductions in a manner that qualifies under Section 423 of the Internal Revenue Code (the "Code"). Administration. The Purchase Plan is administered by the Board of Directors or a Committee of the Board (collectively, the "Administrator"). Eligibility. Only employees employed by the Company or its subsidiaries on the first day of an offering period may participate in the Purchase Plan. For this purpose, an "employee" is any person who is regularly employed at least twenty hours per week and at least five months per calendar year by the Company or any of its subsidiaries. No employee shall be granted an option under the Purchase Plan if: (i) immediately after the grant of the option, the employee (or any other person whose stock would be attributed to the employee pursuant to Section 424(d) of the Code) would own five percent or more of the total combined voting power or value of the stock of the Company or any of its subsidiaries; or (ii) which permits such participant's rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries to accrue at a rate which exceeds $25,000 worth of stock (determined with reference to the fair market value of the Common Stock at the time of grant) in a calendar year. Subject to these eligibility criteria, the Purchase Plan permits eligible employees to purchase Common Stock through payroll deductions subject to certain limitations described below. See "Payment of Purchase Price; Payroll Deductions." Offering Period. The Administrator determines the start and end dates of each offering period, except that an offering period cannot exceed twenty-seven months in length. The Administrator may also create purchase periods during an offering period. Normally, a participant's payroll deductions are accumulated throughout a purchase period and, at the end of the purchase period, shares of the Company's Common Stock are purchased with the accumulated payroll deductions. The first offering period began on the effective date of the Company's initial public offering and will end on the last trading day on or before October 31, 1996. The first offering period consists of two purchase periods which began on the effective date of the Company's initial public offering and on May 1, 1996, respectively. Purchase Price. The purchase price per share at which shares will be sold in an offering under the Purchase Plan is the lower of (i) 85% of the fair market value of a share of Common Stock on the first day of an offering period, or (ii) 85% of the fair market value of a share of Common Stock on the last day of each purchase period. The fair market value of the Common Stock on a given date is generally the closing sale price of the Common Stock as reported on the Nasdaq National Market for such date. C-1 Payment of Purchase Price; Payroll Deductions. The purchase price of the shares is accumulated by payroll deductions over the purchase period. The Purchase Plan provides that the aggregate of such payroll deductions during the purchase period shall not exceed 10% of the participant's compensation during any offering period, nor $21,250 in any purchase period. During the offering period, a participant may discontinue his or her participation in the Purchase Plan, and may decrease or increase the rate of payroll deductions in an offering period within limits set by the Administrator. All payroll deductions made for a participant are credited to the participant's account under the Purchase Plan, are withheld in whole percentages only and are included with the general funds of the Company. Funds received by the Company pursuant to exercises under the Purchase Plan are also used for general corporate purposes. A participant may not make any additional payments into his or her account. Withdrawal. A participant may terminate his or her participation in the Purchase Plan at any time by giving the Company a written notice of withdrawal. In such event, the payroll deductions credited to the participant's account will be returned, without interest, to such participant. Payroll deductions will not resume unless a new subscription agreement is delivered in connection with a subsequent offering period. Termination of Employment. Termination of a participant's employment for any reason, including death, 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 without interest to such participant, his or her designated beneficiaries or the executors or administrators of his or her estate. Adjustments Upon Changes in Capitalization. In the event of any changes in the capitalization of the Company effected without receipt of consideration by the Company, such as a stock split, stock dividend, combination or reclassification of the Common Stock, resulting in an increase or decrease in the number of shares of Common Stock, proportionate adjustments will be made by the Board in the shares subject to purchase and in the price per share under the Purchase Plan. In the event of liquidation or dissolution of the Company, the offering periods then in progress will terminate immediately prior to the consummation of such event unless otherwise provided by the Board. In the event of a sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Purchase Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Administrator determines to shorten the offering period then in progress by setting a new exercise date. If the Administrator shortens the offering period in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall provide notice to each participant at least ten business days prior to the new exercise date that the Exercise Date has been changed to the new Exercise Date and that his or her option will be automatically exercised on the new Exercise Date unless prior to such date the participant has withdrawn from the offering period. Amendment and Termination. The Board may at any time and for any reason amend or terminate the Purchase Plan, except that no such termination shall affect options previously granted and no amendment shall make any change in an option granted prior thereto which adversely affects the rights C-2 of any participant. Shareholder approval for amendments to the Purchase Plan shall be obtained in such a manner and to such a degree as required to comply with all applicable laws or regulations. The Plan will terminate in May 2005, unless terminated earlier by the Board in accordance with the Purchase Plan. Certain Federal Income Tax Information. The Purchase Plan, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the Purchase Plan are sold or otherwise disposed of. Upon sale or other disposition of the shares, the participant will generally be subject to tax in an amount that depends upon the holding period. If the shares are sold or otherwise disposed of more than two years from the Enrollment Date and one year from the applicable Exercise Date, the participant will recognize ordinary income measured as the lesser of (a) the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price, or (b) an amount equal to 15% of the fair market value of the shares as of the Enrollment Date. Any additional gain will be treated as long-term capital gain. If the shares are sold or otherwise disposed of before the expiration of these holding periods, 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 Company generally 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 recognized by participants upon a sale or disposition of shares prior to the expiration of the holding periods described above. THE FOREGOING BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND THE COMPANY WITH RESPECT TO THE SHARES PURCHASED UNDER THE PURCHASE PLAN DOES NOT PURPORT TO BE COMPLETE, AND 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. C-3 PROXY SCOPUS TECHNOLOGY, INC. PROXY for Annual Meeting of Shareholders To Be Held August 15, 1996 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned shareholder of SCOPUS TECHNOLOGY, INC., a California corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement, each dated July 17, 1996, and hereby appoints Ori Sasson and William C. Leetham, proxies and attorneys-in-fact, each with full power of substitution, on behalf of the undersigned, to represent the undersigned at the Annual Meeting of Shareholders of SCOPUS TECHNOLOGY, INC. to be held at the Berkeley Marina Marriott Hotel, 200 Marina Boulevard, Berkeley, California 94710, on Thursday, August 15, 1996 at 2:00 p.m., local time, and at any adjournment or adjournments thereof, and to vote all shares of Common Stock that the undersigned would be entitled to vote if then and there personally present, on all matters set forth on the reverse side hereof. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREIN. IF NO SPECIFICATION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH OF THE PERSONS AND THE PROPOSALS ON THE REVERSE SIDE HEREOF AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXYHOLDER DEEMS ADVISABLE. CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE [X] Please mark votes as in this example. 1. Election of Directors Nominees: Ori Sasson, J. Michael Cline, Christopher R. Gibbons, Mark Gorenberg, Max D. Hopper FOR WITHHELD [_] [_] [_] ----------------------------------- For all nominees except as noted above MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_] 2. Proposal to amend the Company's 1991 Stock Option Plan to increase the number of shares available for issuance thereunder by 500,000 shares to an aggregate of 3,700,000 shares. FOR AGAINST ABSTAIN [_] [_] [_] 3. Proposal to ratify the appointment of Coopers & Lybrand L.L.P. as independent accountants for the fiscal year ending March 31, 1997. FOR AGAINST ABSTAIN [_] [_] [_] 4. To vote or otherwise represent the shares on any and all other business which may properly come before the meeting or any adjournment or adjournments thereof, according and in the discretion of the proxyholder. Please mark, sign, date and return the proxy card promptly using the enclosed envelope. Note: Please sign exactly as your name appears on your stock certificate. If the stock is registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians, attorneys and corporate officers should insert their titles. Signature:_______________________________ Date:_______________ Signature:_______________________________ Date:_______________