SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934, as amended.
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
AXS-ONE INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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[LOGO TO COME]
AXS-ONE INC.
301 ROUTE 17 NORTH
RUTHERFORD, NEW JERSEY 07070
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2001
TO OUR STOCKHOLDERS:
The annual meeting of stockholders (the "Annual Meeting") of AXS-One Inc.
(the "Company") (formerly known as Computron Software, Inc.) will be held at the
Renaissance Meadowlands Hotel, 801 Rutherford Avenue, Rutherford, NJ 07070,
telephone number (201) 231-3100 on June 13, 2001, at 10:00 a.m. for the
following purposes:
(1) To elect eight directors to serve until the next Annual Meeting or until
their respective successors shall have been duly elected and qualified;
(2) To approve an amendment to the 1998 Stock Option Plan increasing the
number of shares subject to options granted under the Plan by 1,500,000
shares, for a total of 3,000,000 shares.
(3) To transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on May 4, 2001 are
entitled to notice of and to vote at the Annual Meeting. A list of stockholders
eligible to vote at the meeting will be available for inspection at the meeting
and for a period of ten days prior to the meeting during regular business hours
at the corporate headquarters at the address above.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the Annual Meeting, please sign and
date the enclosed proxy card and return it promptly in the enclosed envelope,
which requires no additional postage if mailed in the United States. A copy of
the Company's Annual Report for the year 2000 is enclosed.
By Order of the Board of Directors,
/s/ John A. Rade
John A. Rade
Chief Executive Officer and President
Rutherford, New Jersey
April 25, 2001
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
AXS-ONE INC.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2001
This Proxy Statement is furnished to stockholders of record of AXS-One Inc.
(the "Company") (formerly known as Computron Software, Inc.) as of the close of
business on May 4, 2001 in connection with the solicitation of proxies by the
Board of Directors of the Company (the "Board of Directors" or "Board") for use
at the Annual Meeting of Stockholders to be held on June 13, 2001 (the "Annual
Meeting").
Shares cannot be voted at the meeting unless the owner is present in person
or by proxy. All properly executed and unrevoked proxies in the accompanying
form that are received in time for the meeting will be voted at the meeting or
any adjournment thereof in accordance with instructions thereon, or if no
instructions are given, will be voted "FOR" the election of the named nominees
as Directors of the Company, "FOR" the approval of the amendment to the 1998
Stock Option Plan, and will be voted in accordance with the best judgment of the
persons appointed as proxies with respect to other matters which properly come
before the Annual Meeting. Any person giving a proxy may revoke it by written
notice to the Company at any time prior to exercise of the proxy. In addition,
although mere attendance at the Annual Meeting will not revoke the proxy, a
stockholder who attends the meeting may withdraw his or her proxy and vote in
person. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions will be counted as votes "WITHHELD" with
respect to election of directors or "AGAINST" with respect to the amendment to
the 1998 Stock Option Plan in tabulations of the votes cast on each of the
proposals presented at the Annual Meeting, whereas broker non-votes will not be
counted and therefore will not affect the vote with respect to any such
proposal.
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials), including the Annual Report on Form 10-K with the
financial statements of the Company for the fiscal year ended December 31, 2000,
is being distributed concurrently herewith to stockholders. The expense of this
proxy solicitation will be borne by the Company. In addition to solicitation by
mail, proxies may be solicited in person or by telephone, telegraph or other
means by directors or employees of the Company or its subsidiaries without
additional compensation. The Company will reimburse brokerage firms and other
nominees, custodians and fiduciaries for costs incurred by them in mailing proxy
materials to the beneficial owners of shares held of record by such persons.
The mailing address of the principal executive offices of the Company is 301
Route 17 North, Rutherford, New Jersey 07070. This Proxy Statement and the
accompanying form of proxy are being mailed to the stockholders of the Company
on or about May 11, 2001.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock, par
value $0.01 per share (the "Common Stock"). At the Annual Meeting, each
stockholder of record at the close of business on May 4, 2001 will be entitled
to one vote for each share of Common Stock owned on that date as to each matter
presented at the Annual Meeting. On April 6, 2001 there were 24,784,742 shares
of Common Stock outstanding. A list of stockholders eligible to vote at the
Annual Meeting will be available for inspection at the Annual Meeting and for a
period of ten days prior to the Annual Meeting during regular business hours at
the principal executive offices of the Company at the address specified above.
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form of
proxy intend to vote at the Annual Meeting for the election of the eight
nominees named below as Directors of the Company to serve until the next Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominees.
The Board of Directors does not currently anticipate that any nominee will be
unable to be a candidate for election.
The Board of Directors currently has eight members, all of whom, other than
Mr. Weingarten (who in October 2000 was elected by the Board to fill a vacancy),
were elected to the Board of Directors by the stockholders at the 2000 annual
stockholders meeting, and all of whom are nominees for election. Each director
shall serve until the next Annual Meeting or until their respective successors
shall have been duly elected and qualified. The affirmative vote of a majority
of the shares of the Company's outstanding Common Stock represented and voting
at the Annual Meeting is required to elect the Directors.
NOMINEES FOR ELECTION AS DIRECTORS
The following information with respect to the principal occupation or
employment, other affiliations and business experience of each nominee during
the last five years has been furnished to the Company by such nominee. Except as
indicated, each of the nominees has had the same principal occupation for the
last five years.
ELIAS TYPALDOS, 50, a founder of the Company, has been Senior Vice
President, Research and Development and a director since the Company's formation
in 1978, and Chairman of the Board since March 1997.
JOHN A. RADE, 66, joined the Company as a Director, President and Chief
Executive Officer in February 1997. Prior to joining the Company, Mr. Rade, was
from April, 1995, a Vice President of American Management Systems, Inc. and was
also still active at S-Cubed International (now named Mergence Technology
Corporation), a company in the client server system development and consulting
market, which he founded in February 1990. Prior to this he held senior
management positions with Information Science, Inc., Cap Gemini, and Computer
Science Corporation.
GENNARO VENDOME, 54, a founder of the Company, has been a Vice President and
director since the Company's formation in 1978. Mr. Vendome was Treasurer of the
Company from 1981 until 1991 and Secretary of the Company from 1982 until 1991.
ROBERT MIGLIORINO, 51, has been a director since 1991. Mr. Migliorino is a
founding partner of the venture capital partnership Canaan Partners, which
through its affiliates was until early 2000 a principal stockholder of the
Company. Prior to establishing Canaan Partners in 1987, he spent 15 years with
General Electric Co. in their Drive Systems, Industrial Control, Power Delivery,
Information Services and Venture Capital businesses.
WILLIAM E. VOGEL, 63, has been a director since August 1996. Since 1971,
Mr. Vogel has been Chief Executive Officer of Centennial Financial Group, Inc.,
which is in the health insurance business. He has also been the Chief Executive
Officer of W.S. Vogel Agency, Inc., a life insurance brokerage general agency,
since 1961. In November 2000, Mr. Vogel became an employee and Executive Sales
Manager for Benefitmall.com.
EDWIN T. BRONDO, 53, has been a director since May 1997. Mr. Brondo is
currently retired. From August 1998 to March 2000 he was Executive Vice
President and Chief Financial Officer of e-Vantage Solutions, Inc (formerly
called Elligent Consulting Group, Inc.), a technology consulting company.
e-Vantage Solutions may be deemed to be an affiliate of the Company by virtue of
the relationship of
2
e-Vantage Solutions with a major stockholder of the Company. Mr. Brondo was
Chief Administrative Officer and Senior Vice President of First Albany
Companies, Inc., an investment banking firm, from June 1993 until
December 1997.
DANIEL H. BURCH, 49, has been a director since October 1999. Mr. Burch is
the President and founder of MacKenzie Partners, Inc., a proxy solicitation and
mergers and acquisitions firm. From January 1990 to the founding of MacKenzie
Partners in February 1992, Mr. Burch was Executive Vice President at Dewe
Rogerson & Company, an investor and public relations firm.
ALLAN WEINGARTEN, 63, has been a director since October 2000.
Mr. Weingarten is currently Senior Vice President, Chief Financial Officer of
U.S. Industries, Inc. a manufacturer of home and building products. He is also a
director of Programmers Paradise, Inc. From January 2000 to December 2000, he
was a Private Investor and Business Consultant for Carl Marks Consulting Group
LLC. From June 1997 to December 1999 he was Executive Vice President and Chief
Financial Officer of VoCall Communications Corporation. After his retirement in
1995 as a Senior Partner at Ernst & Young, LLP, and until 1997 he was an
independent business consultant.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors reviews, acts on and reports
to the Board of Directors with respect to various auditing and accounting
matters, including the selection of the Company's auditors, the scope of the
annual audits, fees to be paid to the auditors, the performance of the Company's
auditors and the accounting practices of the Company. The Audit Committee met
five times during 2000. Messrs. Migliorino, Vogel and Brondo were the members of
the Audit Committee until July 28, 2000, at which time Messrs. Migliorino and
Brondo left the Committee and Mr. Burch joined the Committee. Mr. Weingarten
joined the Committee on October 30, 2000.
The Company's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached as an appendix to this Proxy Statement.
Messrs. Burch, Vogel and Weingarten, the current members of the Audit Committee,
are each independent for purposes of Section 121(A) of the listing standards of
the American Stock Exchange, on which the Company's Common Stock is traded.
The Compensation Committee of the Board of Directors determines the salaries
and incentive compensation of the CEO and other senior officers of the Company
and administers the Company's stock option plans. The Compensation Committee
held one formal meeting during 2000. Messrs. Vogel and Burch were the members of
the Compensation Committee until July 28, 2000, at which time they were replaced
by Messrs. Migliorino and Brondo.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal year 2000, the Board of Directors held ten meetings. Except as
noted below, during fiscal year 2000, each incumbent Director attended at least
75% of the number of meetings held of the Board of Directors and Committees on
which he served. Mr. Brondo was eligible to attend four Audit Committee meetings
and one Compensation Committee meeting during 2000, but was unable to attend two
of such Audit Committee meetings. In addition to formal meetings, the Board of
Directors and the Audit and Compensation Committees meet frequently on an
informal basis.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. Directors do not receive a fee for attending Board of
Directors or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties as Directors of the Company.
STOCK OPTION GRANT. Under the Company's 1998 Stock Option Plan, each
non-employee Director first elected or appointed to the Board of Directors after
June 1998 will automatically be granted an option
3
for 20,000 shares of Common Stock on the date of his or her election or
appointment to the Board of Directors. In addition, at each Annual Meeting of
Stockholders commencing with the 1998 meeting, each non-employee director with
at least twelve months of service on the Board of Directors who will continue to
serve as a non-employee Director following the meeting will automatically be
granted an option for 10,000 shares of Common Stock. Each option granted under
the automatic grant program will have an exercise price equal to 100% of the
fair market value of the Common Stock on the automatic grant date, a maximum
term of ten years, subject to earlier termination upon the optionee's cessation
of Board of Director service, and will vest in successive equal annual
installments on the first four anniversaries of the date of grant. However, each
outstanding option will immediately vest upon (i) certain changes in the
ownership or control of the Company or (ii) the death or disability of the
optionee while serving on the Board of Directors. Pursuant to the automatic
option grant program, Messrs. Migliorino, Burch, Vogel and Brondo will each
receive a 10,000-share option grant on the date of the Annual Meeting, if such
individuals are reelected.
EXECUTIVE OFFICERS AND INFORMATION
REGARDING EXECUTIVE OFFICER COMPENSATION
EXECUTIVE OFFICERS
The executive officers of the Company as of March 31, 2001 were as follows:
NAME AGE POSITION
- ---- -------- ------------------------------------------
John A. Rade.............................. 66 President, Chief Executive Officer, and
Director
Michael R. Jorgensen...................... 48 Executive Vice President, North America
Elias Typaldos............................ 50 Senior Vice President, Research and
Development and Chairman of the Board
Gennaro Vendome........................... 54 Vice President and Director
Paul Abel................................. 47 Vice President, Secretary and General
Counsel
William G. Levering III................... 41 Vice President, Chief Financial Officer
and Treasurer
Nat Bosco................................. 45 Vice President and General Manager,
AXSPoint Solutions
Dennis Piccininni......................... 53 President, Tivity
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
MICHAEL R. JORGENSEN joined the Company as Executive Vice President and
Chief Financial Officer, Treasurer and Secretary in February 1997. Effective
March 2, 2001, Mr. Jorgensen became Executive Vice President, North America.
Prior to joining the Company, from June 1993 to December 1996, Mr. Jorgensen was
Senior Vice President and Chief Financial Officer of Ground Round
Restaurants, Inc., a publicly-held chain of family restaurants. Prior to that,
from March 1992, to April 1993, he was Vice President/Finance-Middle East of
Alghanim Industries. Mr. Jorgensen was Chief Financial Officer of International
Proteins Corporation from May 1988 to September 1991. Prior to 1991,
Mr. Jorgensen served in a senior financial role with several multinational
companies in the finance manufacturing and information technology/software
industry.
PAUL ABEL joined the Company in April 1997 as Secretary and Corporate
Counsel and was promoted to Vice President, Secretary and General Counsel in
June 1998. From October 1996 to March 1997, Mr. Abel served as Project Manager
for Charles River Computers, an IT systems integrator. From 1983 to
September 1996, Mr. Abel was an attorney with Matsushita Electric Corporation of
America, an electronic products manufacturer/distributor.
4
WILLIAM G. LEVERING III joined the Company as Revenue Controller in
June 1996, was promoted to Corporate Controller in February 1997, Vice
President, Corporate Controller in July 1998, and became Vice President, Chief
Financial Officer and Treasurer on March 2, 2001. Prior to joining the Company,
Mr. Levering was a Senior Manager with the international accounting firm of KPMG
LLP. Mr. Levering was employed by KPMG LLP from August 1982 to June 1996 and is
a Certified Public Accountant.
NAT BOSCO joined the Company in January 2001 as Vice President and General
Manager of the AXSPoint Solutions line of business. From May 2000 to
January 2001 Mr. Bosco was a Director at EE21, a recent Internet venture. From
April 1998 to April 2000, Mr. Bosco held the position of President at Legacy
Consulting, a privately held company. Coopers & Lybrand employed Mr. Bosco from
1992 through 1998, as a managing associate.
DENNIS W. PICCININNI joined the Company in January 2001. Mr. Piccininni is
President of the Tivity line of business. Prior to joining the Company he was
the President and CEO of Systemcorp from December 1998 to July of 2000. From
1990 to 1998 Mr. Piccininni was Vice President and General Manager, Americas for
ABT Corporation.
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
received for the three fiscal years ended December 31, 2000, by the Company's
Chief Executive Officer who served in such capacity in the fiscal year 2000, and
the four most highly compensated executive officers of the Company, other than
the CEO, whose total compensation during fiscal year 2000 exceeded $100,000 and
who were serving as executive officers as of fiscal year ended December 31, 2000
or served during fiscal year 2000 (collectively, the "Named Executive
Officers"):
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- ----------------------------
SECURITIES ALL
FISCAL OTHER ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
- --------------------------- -------- -------- -------- ------------- --------------- ---------- -------------
John A. Rade...................... 2000 $300,000 $100,000 -- -- -- $ 18,660(1)
Chief Executive Officer 1999 275,000 125,000 -- -- -- 22,770(1)
and President 1998 250,008 100,000 -- -- 88,000 20,714(1)
Michael R. Jorgensen.............. 2000 190,000 25,000 -- -- 50,000 12,473(2)
Executive Vice President, 1999 180,000 95,000 -- -- -- 12,679(2)
North America * 1998 165,000 10,000 -- -- 72,500 10,774(2)
Elias Typaldos.................... 2000 289,224 -- -- -- -- 19,611(3)
Senior Vice President, 1999 289,224 -- -- -- -- 18,787(3)
Research and Development 1998 289,224 -- -- -- -- 7,056(3)
William G. Levering III........... 2000 146,417 67,500 -- -- 35,000 5,174(4)
Vice President, Chief Financial 1999 138,333 48,300 -- -- -- 4,407(4)
Officer and Treasurer * 1998 120,000 34,000 -- -- -- 4,069(4)
Gennaro Vendome................... 2000 166,920 -- 73,204(5) -- -- 8,033(6)
Vice President 1999 166,920 -- 87,548(5) -- -- 7,842(6)
1998 166,920 -- 55,927(5) -- -- 7,842(6)
- ------------------------------
* See "Information Concerning Executive Officers Who Are Not Directors" for
prior positions with the Company held by Messrs. Jorgensen and Levering.
(1) Includes premiums on life and disability insurance and matching
contributions to the Company's 401(k) plan of $5,000, $4,800 and $5,250 for
1998, 1999 and 2000, respectively. In addition, 1998 includes $10,800, 1999
includes $9,150 and 2000 includes $9,000 of an auto allowance.
(2) Includes premiums on life and disability insurance and matching
contributions to the Company's 401(k) plan of $5,000 for 1998, $4,800 for
1999 and $5,012 for 2000, as well as an auto allowance of $4,800 for 1998,
$6,800 for 1999 and $6,600 for 2000.
5
(3) Includes for 1998, 1999 and 2000, respectively, matching contributions to
the Company's 401(k) plan in the amount of $2,000, $2,000 and $4,708, and
premiums on life and disability insurance. In addition, the Company provided
an automobile to the officer and amounts included in compensation were $0,
$11,730 and $9,447 for 1998, 1999 and 2000, respectively.
(4) Includes premiums on life and disability insurance and matching
contributions to the Company's 401(K) plan in the amount of $3,600 for 1998,
$4,156 for 1999 and $4,676 for 2000.
(5) Includes for 1998, 1999 and 2000 respectively, commissions of $52,002,
$85,844 and $71,500 and amounts for auto allowance of $3,925, $1,704 and
$1,704.
(6) Includes for 1997, 1998 and 1999 respectively, premiums on life and
disability insurance, and matching contributions to the Company's 401(k)
plan of $2,000 in 1998, $2,000 in 1999 and $2,191 in 2000.
1995 STOCK OPTION PLAN
The 1995 Stock Option Plan was adopted by the Board of Directors and
approved by the Stockholders in June 1995. The Board of Directors and
Stockholders approved certain amendments to the 1995 Stock Option Plan in 1997.
1998 STOCK OPTION PLAN
The 1998 Stock Option Plan was adopted by the Board of Directors, and
approved by the Stockholders in June 1998. See Proposal 2 for a proposed
amendment to the 1998 Stock Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
OPTION GRANTS IN FISCAL 2000
--------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10% ($)
- ---- ----------- ------------- ----------- ---------- -------- --------
John A. Rade..................... -- -- -- -- -- --
Michael R. Jorgensen............. 50,000(2) 2.4% 1.88 10 years 153,116 388,023
Elias Typaldos................... -- -- -- -- -- --
William G. Levering III.......... 10,000(3) 0.5% 2.13 10 years 34,695 87,924
William G. Levering III.......... 25,000(2) 1.2% 1.88 10 years 76,558 194,012
Gennaro Vendome.................. -- -- -- -- -- --
- --------------------------
(1) The dollar amounts under these columns are the result of calculations at the
hypothetical rates of appreciation of 5% and 10% as prescribed by the
Securities and Exchange Commission. The Company expresses no opinion
regarding whether future appreciation, if any, will be realized and
expressly disclaims any representations to that effect.
(2) Options are exercisable twenty-five percent on each anniversary of the
original grant date.
(3) Options vest four years from grant date or earlier if certain milestones are
met.
6
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to the Named
Executive Officers regarding stock option holdings as of December 31, 2000, and
stock options exercised during fiscal 2000. No stock appreciation rights were
exercised by any Named Executive Officer during fiscal year 2000 and no stock
appreciation rights were outstanding as of December 31, 2000.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
OPTIONS VALUE --------------------------- ---------------------------
NAME EXERCISED(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- ----------- ------------- ----------- -------------
John A. Rade.................... -- $ -- 458,667 229,333 $ -- $ --
Michael R. Jorgensen............ -- -- 162,708 109,792 -- --
Elias Typaldos.................. -- -- -- -- -- --
William G. Levering III......... 25,000 101,250 12,500 47,500 -- --
Gennaro Vendome................. -- -- -- -- -- --
- ------------------------
(1) Based on the fair market value of the Company's Common Stock using the
closing selling price on the American Stock Exchange of $0.69 per share of
Common Stock at December 31, 2000, less the exercise price payable for such
shares.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company typically has employment agreements with all its employees
including the Named Executive Officers, which detail initial annual salary,
stock options, benefits and severance agreements, if applicable. The Named
Executive Officers' severance agreements range from six months to one year.
7
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers. The
Compensation Committee also is responsible for the administration of the
Company's Option Plans under which option grants may be made to executive
officers and other employees. The Compensation Committee has reviewed and is in
accord with the compensation paid to executive officers in fiscal year 2000.
GENERAL COMPENSATION POLICY. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive officer's
compensation contingent upon the Company's performance as well as upon such
executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
FACTORS. The principal factors which the Compensation Committee considered
with respect to each executive officer's compensation package for fiscal year
2000 are summarized below. The Compensation Committee may, however, in its
discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
BASE SALARY. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
without the industry and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to individual, as
the Compensation Committee deems appropriate.
From time to time, the Compensation Committee may advocate cash bonuses when
such bonuses are deemed to be in the best interest of the Company.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided through
grants of stock options. The grants are designed to align the interests of each
executive officer with those of the stockholders and to provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the Company. Each option grant allows the
individual to acquire shares of the Company's Common Stock at a fixed price per
share (generally, the market price on the grant date) over a specified period of
time (up to ten years). Each option generally becomes exercisable in
installments over a four-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option grant will
provide a return to the executive officer only if the executive officer remains
employed by the Company during the vesting period, and then only if the market
price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the executive
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term and the individual's personal
performance in recent periods. The Compensation Committee also considers the
number of unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that individual. However, the
Compensation Committee does not adhere to any specific guidelines as to the
relative option holdings of the Company's executive officers.
8
CEO COMPENSATION. In advising the Board of Directors with respect to the
compensation payable to the Company's Chief Executive Officer, the Compensation
Committee seeks to achieve two objectives: (i) establish a level of base salary
competitive with that paid by companies within the industry which are of
comparable size to the Company and by companies outside of the industry with
which the Company competes for executive talent and (ii) to make a significant
percentage of the total compensation package contingent upon the Company's
performance and stock price appreciation.
The base salary established for Mr. Rade on the basis of the foregoing
criteria was intended to provide a level of stability and certainty each year.
Accordingly, this element of compensation was not affected to any significant
degree by Company performance factors. Mr. Rade also received a bonus for 2000
to bring him in line with 1999 compensation, and was eligible to receive (but
did not receive) an additional performance-measured bonus. Upon his employment
by the Company, Mr. Rade was granted 25,000 shares of restricted stock and two
stock options. The first stock option for 300,000 shares shall vest in three
equal annual installments, and the other stock option for 300,000 shares shall
vest either upon the earlier to occur of the completion of seven years of
service with the Company or the achievement of certain performance-measured
milestones. The Company granted Mr. Rade 88,000 additional options due to
antidilution provisions contained in the original stock option agreement related
to certain stock issuances. 50% of these additional options vest in the manner
of the first stock option and 50% vest in the manner of the other stock option.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive
officers, which is not considered to be performance based. Compensation that
does qualify as performance-based compensation will not have to be taken into
account for purposes of this limitation. The Option Plans contain certain
provisions which are intended to assure that any compensation deemed paid in
connection with the exercise of stock options granted under that plan with an
exercise price equal to the market price of the option shares on the grant date
will qualify as performance-based compensation.
The Compensation Committee does not expect that the compensation to be paid
to the Company's executive officers for the 2000 fiscal year will exceed the
$1 million limit per officer. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Compensation Committee will reconsider this decision should the
individual compensation of any executive officer ever approach the $1 million
level.
THE COMPENSATION COMMITTEE
Robert Migliorino
Edwin T. Brondo
April 25, 2001
9
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee reviews AXS-One's financial reporting process on behalf
of the Board of Directors. In fulfilling its responsibilities, the Audit
Committee has reviewed and discussed the audited consolidated financial
statements contained in the 2000 Annual Report on SEC Form 10-K with AXS-One's
management and the independent auditors. Management is responsible for the
consolidated financial statements and the reporting process, including the
system of internal controls. The independent auditors are responsible for
expressing an opinion on the conformity of those audited consolidated financial
statements with accounting principles generally accepted in the United States of
America.
The Audit Committee discussed with the independent auditors those matters
required to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended. In addition, the Audit
Committee has discussed with the independent auditors the auditors' independence
from AXS-One and its management, including the matters in the written
disclosures and letter received from the independent auditors, as required by
Independence Standards Board No. 1, Independence Discussions with Audit
Committees.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited consolidated financial statements be included in AXS-One's
Annual Report on SEC Form 10-K for the year ended December 31, 2000, for filing
with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
William E. Vogel
Daniel H. Burch
Allan Weingarten
April 25, 2001
10
PERFORMANCE GRAPH
Set forth below is a table comparing the annual percentage change in the
Company's cumulative total stockholder return on its Common Stock from
December 31, 1995 to the last day of the Company's last completed fiscal year
(as measured by dividing (i) the sum of (A) the cumulative amount of dividends
for the measurement period, assuming dividend reinvestment, and (B) the excess
of the Company's share price at the end over the price at the beginning of the
measurement period, by (ii) the share price at the beginning of the measurement
period) with the cumulative total return so calculated of the Amex Market Value
Index and a stock index comprised of companies in a line of business similar to
the Company during the same period.
COMPARISON OF 5 YEARS CUMULATIVE TOTAL RETURN(1) AMONG AXS-ONE INC., THE JP
MORGAN H & Q COMPUTER SOFTWARE INDEX AND THE AMEX MARKET VALUE INDEX.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
DEC-95 DEC-96 DEC-97 DEC-98 DEC-99 DEC-00
AXS-ONE INC. 100 8.33 13.19 5.21 19.44 3.82
AMEX MARKET VALUE 100 101.59 127.06 136.38 174.22 179.02
JP MORGAN H & Q COMPUTER SOFTWARE 100 121.56 146.98 192.01 436.87 326.63
- ------------------------
(1) $100 invested on 12/31/95 in AXS-One Inc. Common Stock, JP Morgan H & Q
Computer Software Index and the Amex Market Value Index, including
reinvestment of dividends. Fiscal year ending December 31, 2000.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made by
the Company under those statutes, the preceding Compensation Committee Report on
Executive Compensation, Audit Committee Report and the Company Stock Performance
Graph will not be incorporated by reference into any of those prior filings, nor
will either such report or graph be incorporated by reference into any future
filings made by the Company under those statutes.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 6, 2001 by (i) each Director
and nominee for Director, (ii) each of the Named Executive Officers, (iii) each
person known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock and (iv) all executive officers and Directors as a group.
The information concerning beneficial owners of more than 5% of the Company's
Common Stock is based on filings with the Securities and Exchange Commission on
Schedules 13(D), 13(G) and on Forms 3, 4, and 5; and certain other information
obtained by the Company.
NUMBER OF SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) PERCENTAGE OF SHARES OUTSTANDING (1)
- ---------------------------------- -------------------------------- ------------------------------------
Elias Typaldos.................... 3,246,424 (2) 13.10%
John A, Rade...................... 544,067 (3) 2.20
Gennaro Vendome................... 1,579,247 (4) 6.37
Robert Migliorino................. 85,680 (6) *
William Vogel..................... 67,000 (7) *
Edwin T. Brondo................... 76,000 (8) *
Daniel H. Burch................... 10,000 (9) *
Allan Weingarten.................. -- *
Michael R. Jorgensen.............. 208,541 (10) *
William G. Levering III........... 25,000 (11) *
Andreas Typaldos.................. 4,068,084 (12) 16.41
London Merchant Securities PLC.... 1,784,100 (5) 7.20
Lion Investments Limited.......... 1,784,100 (5) 7.20
Westpool Investment Trust PLC..... 1,784,100 (5) 7.20
All Current Directors and
Executive Officers As a Group
(13 persons).................... 5,800,709 (13) 23.61%
- ------------------------
*Represents beneficial ownership of less than one percent of the Common
Stock outstanding.
(1) Applicable percentage of ownership as of April 6, 2001 is based upon
24,784,742 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to shares.
Gives effect to the shares of Common Stock issuable within 60 days of
April 6, 2001 upon exercise of all options and other rights beneficially
owned by the indicated stockholders on that date.
(2) Includes (i) 327,521 shares owned by the Elias Typaldos Grantor Retained
Annuity Trust dated October 13, 1994, (ii) 1,147,750 shares held by the
Elias Typaldos Family Limited Partnership, (iii) 331,938 shares owned by the
Judith Typaldos Grantor Retained Annuity Trust dated October 13, 1994 and
(iv) 47,313 shares held by Judith Typaldos. Mr. Typaldos' business address
is the Company's principal executive offices.
(3) Includes 458,667 shares of Common Stock which may be purchased within
60 days of April 6, 2001 upon the exercise of stock options granted on
March 3, 1997. On March 3, 1997, Mr. Rade also received unvested stock
option grants for 229,333 shares, which will vest upon the earlier to occur
of the completion of seven years of service with the Company or the
achievement of certain milestones as measured by the performance of and
trading volume of the Company's Common Stock.
(4) Includes (i) 89,407 shares held by Carol Vendome, (ii) 149,062 shares held
by the Vendome Grantor Retained Annuity Trust dated January 24, 1995,
(iii) 151,297 shares held by the Carol Vendome Grantor Retained Annuity
Trust dated January 24, 1995, (iv) 5,655 shares held by Carol Vendome as
custodian for Laura Vendome, and (v) 109,095 shares held by the Vendome
Family Limited Partnership. Mr. Vendome's business address is the Company's
principal executive offices.
12
(5) This number represents the number of shares beneficially owned by London
Merchant Securities PLC; Lion Investments Limited; Westpool Investment Trust
PLC as a "group" under Section 13(d) of the Securities Exchange Act of 1934.
The number includes 125,000 shares of Common Stock issuable upon exercise of
warrants by Lion Investments Limited and 250,000 shares of Common Stock
issuable upon exercise of warrants by Westpool Investment Trust PLC. Lion
Investments Limited and Westpool Investment Trust PLC are investment
companies wholly owned by London Merchant Securities PLC. Of the total
number of shares beneficially owned, Lion Investments Limited has voting and
dispositive power over 534,100 shares; Westpool Investment Trust PLC has
voting and dispositive power over 1,250,000 shares and London Merchant
Securities has shared voting and shared dispositive power over 1,784,100
shares. The address for London Merchant Securities PLC, Lion Investments
Limited and Westpool Investment Trust PLC is Carlton House, 33 Robert Adam
Street, London W1M 5AH England.
(6) Includes 44,250 shares of Common Stock which may be purchased within
60 days of April 6, 2001 upon exercise of stock options.
(7) Includes (i) 14,000 shares held by the William E. Vogel IRA and (ii) 46,500
shares of Common Stock which may be purchased within 60 days of April 6,
2001 upon exercise of stock options.
(8) Includes (i) 1,500 shares held by Pamela R. Brondo, Mr. Brondo's wife, as
custodian for Edwin T. Brondo, Jr. UTMA/NY and (ii) 37,500 shares of Common
Stock which may be purchased within 60 days of April 6, 2001 upon exercise
of stock options.
(9) This number represents the number of shares of Common Stock which may be
purchased by Mr. Burch within 60 days of April 6, 2001 upon the exercise of
stock options.
(10) This number represents the number of shares of Common Stock which may be
purchased by Mr. Jorgensen within 60 days of April 6, 2001 upon the exercise
of stock options.
(11) This number represents the number of shares of Common Stock which may be
purchased by Mr. Levering within 60 days of April 6, 2001 upon the exercise
of stock options.
(12) Includes (i) 680,504 shares owned by the Andreas Typaldos GRAT dated
September 29, 1993; (ii) 11,047 shares owned by Renee Typaldos,
Mr. Typaldos' wife, (iii) 755,504 shares owned by the Renee Typaldos GRAT
dated September 29, 1993,and (iv) 1,758,279 shares held by the Andreas
Typaldos Family Limited Partnership. Mr. Typaldos' business address is
eVantage solutions, Inc., 152 West 57th Street, New York, NY 10019.
(13) Includes 839,208 shares of Common Stock which may be purchased within
60 days of April 7, 2000 upon the exercise of stock options.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Under the securities laws of the United States, the Company's Directors,
Executive Officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their ownership of the Company's
Common Stock and any changes in that ownership to the Securities Exchange
Commission, the American Stock Exchange and the Company. Specific due dates for
these reports have been established and the Company is required to report in
this Proxy Statement any failure to file by these dates during fiscal year 2000.
Based solely on its review of such forms received by it from such persons for
their fiscal year 2000 transactions, the Company believes that all filing
requirements applicable to such officers, directors, and greater than ten
percent beneficial owners were complied with, except that the following filings
were not timely made but were filed in April 2001: Form 5 Annual Statements of
Changes in Beneficial Ownership relating to stock options granted to Mr. Brondo
in June 2000 and to Messrs. Jorgensen and Levering in November 2000.
13
CERTAIN TRANSACTIONS
During the year ended December 31, 2000, the Company recorded as expense
approximately $422,000 related to work performed by Mergence Technology
Corporation on behalf of the Company, which sum includes royalties paid to
Mergence in connection with the Company's licensing to its customers of certain
software owned by Mergence. Mergence is the successor-in-interest to S-Cubed
International's rights and obligations under certain contracts with the Company.
Mr. Rade, who joined the Company as Chief Executive Officer and President in
February 1997, founded S-Cubed International in February 1990 and currently
beneficially owns 53% of the outstanding stock of Mergence. The Company believes
that the amounts paid to Mergence are comparable to the amounts the Company
would have otherwise paid for comparable services from an unaffiliated party.
The Company entered into a Consulting Agreement dated September 29, 1997
with Andreas Typaldos, the Company's former chairman and principal stockholder.
The Agreement provides for consulting services during the period of December 1,
1997 through November 30, 2000, in exchange for $300,000 for each of the first
two years and $250,000 for the third year. The agreement was not renewed.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE 1998 STOCK OPTION PLAN
The Company's stockholders are being asked to approve an amendment to the
Company's 1998 Stock Option Plan (the "1998 Plan") which would increase the
number of shares of Common Stock available for options issued under the 1998
Plan by 1,500,000 shares to a maximum of 3,000,000 shares.
The Board of Directors adopted the amendment to the 1998 Plan in
March 2001, subject to stockholder approval at the 2001 Annual Meeting. The
Board believes that it is in the best interests of the Company to increase the
share reserve so that the Company can continue to attract and retain the
services of those persons essential to the Company's growth and financial
success.
The following is a summary of the principal features of the 1998 Plan. The
summary, however, does not purport to be a complete description of all the
provisions of the 1998 Plan. Any stockholder of the Company who wishes to obtain
a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's principal executive offices in Rutherford,
New Jersey.
ADMINISTRATION
The 1998 Plan is administered and interpreted by a committee of the Board of
Directors (currently the Compensation Committee) consisting of two or more
non-employee directors, each of whom is intended to be, to the extent required
by Rule 16b-3 under the Securities Exchange Act of 1934 ("Rule 16b-3") and
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), a
non-employee director as defined in Rule 16b-3 and an outside director as
defined under Section 162(m) of the Code (the "Committee"). If no Committee
exists which has the authority to administer the 1998 Plan, the functions of the
Committee will be exercised by the Board of Directors. Except with regard to
non-employee directors, the Committee has the full authority and discretion,
subject to the terms of the 1998 Plan, to grant awards under the 1998 Plan and
to determine the persons to whom awards will be granted. With regard to grants
to non-employee directors, the Board administers and interprets the 1998 Plan.
ELIGIBILITY
All employees and consultants of the Company and its affiliates are eligible
to receive grants of stock options and stock appreciation rights under the 1998
Plan. Non-employee directors of the Company automatically receive grants of
stock options under the 1998 Plan and are eligible to receive discretionary
grants of stock options under the 1998 Plan.
14
AVAILABLE SHARES
A maximum of 3,000,000 shares (increased from 1,500,000 under this proposed
amendment) of Common Stock may be subject to options issued, or used for stock
appreciation right reference purposes, under the 1998 Plan. The fair market
value of the Company's Common Stock (as determined under the 1998 Plan) was
$0.65 per share on April 24, 2001.
The maximum number of shares of Common Stock subject to options or stock
appreciation rights which may be granted to any employee during any calendar
year will not exceed 200,000 shares, except that, for the calendar year in which
such individual commences his or her employment, the maximum grant will not
exceed 400,000 shares. If a tandem stock appreciation right or a limited stock
appreciation right is granted in tandem with a stock option, it will apply
against the individual limits for both stock options and stock appreciation
rights, but only once against the maximum number of shares available under the
1998 Plan. To the extent that shares of Common Stock for which options or stock
appreciation rights are permitted to be granted to an employee during a calendar
year of the Company are not covered by a grant during such calendar year, such
shares of Common Stock will be available for grant or issuance to the employee
in any subsequent calendar year during the term of the 1998 Plan.
The Committee or the Board, as applicable, may make appropriate adjustments
to the number of shares available for awards and the terms of outstanding awards
to reflect any change in the Company's capital structure or business by reason
of a stock dividend, extraordinary dividend, stock split, recapitalization,
reorganization, merger, consolidation or sale of all or substantially all the
assets of the Company (and certain other events).
TYPES OF AWARDS
STOCK OPTIONS. The 1998 Plan authorizes the Committee to grant stock
options to purchase shares of the Company's Common Stock to employees and
consultants of the Company and its affiliates. Options granted to employees of
the Company or any "subsidiary" or "parent" (within the meaning of Section 424
of the Code) may be in the form of incentive stock options ("ISOs") or
non-qualified stock options. Options granted to non-employee directors of the
Company, consultants of the Company and its affiliates and employees of
affiliates that do not qualify as "subsidiaries" or "parents" may only be
non-qualified stock options. The Committee determines the number of shares
subject to each option, the term of each option (which may not exceed ten years
(or five years in the case of an ISO granted to a ten percent stockholder)), the
exercise price, the vesting schedule (if any), and the other material terms of
the option. No option may have an exercise price less than the fair market value
of the Common Stock at the time of grant (or, in the case of an ISO granted to a
ten- percent stockholder, 110 percent of fair market value).
Options granted to employees and consultants are exercisable at such time or
times and subject to such terms and conditions as determined by the Committee at
grant. All options granted to employees and consultants might be made
exercisable in installments, and the Committee may accelerate the exercisability
of such options. The exercise price of an option may be paid in cash, by a
cashless exercise procedure through a broker or by such other methods approved
by the Committee (which may include payment in shares of Common Stock owned for
at least six months).
STOCK APPRECIATION RIGHTS. The 1998 Plan authorizes the Committee to grant
stock appreciation rights ("SARs") to employees and consultants, either with a
stock option ("Tandem SARs") or independent of a stock option ("Non-Tandem
SARs"). A SAR is a right to receive a payment either in cash or Common Stock, as
the Committee may determine, equal in value to the excess of the fair market
value of one share of Common Stock on the date of exercise over the reference
price per share established in connection with the grant of the SAR. The
reference price per share covered by a SAR is the per share exercise price of
the related option in the case of a Tandem SAR and is the fair market value of
the Common Stock on the date of grant in the case of a Non-Tandem SAR.
15
A Tandem SAR may be granted at the time of the grant of the related stock
option or, if the related stock option is a non-qualified stock option, at any
time thereafter during the term of the related option. A Tandem SAR generally
may be exercised only at such times and to the extent the related option is
exercisable. A Tandem SAR is exercised by surrendering the same portion of the
related option. A Tandem SAR expires upon the termination of the related option.
A Non-Tandem SAR is exercisable as provided by the Committee and has such
other terms and conditions as the Committee may determine. A Non-Tandem SAR may
have a term no longer than ten years from its date of grant. A Non-Tandem SAR is
subject to acceleration of vesting or immediate termination upon termination of
employment in certain circumstances.
The Committee is also authorized to grant "limited SARs" to employees and
consultants, either as Tandem SARs or Non-Tandem SARs. Limited SARs become
exercisable only upon the occurrence of a change in control of the Company or
such other event as the Committee may, in its sole discretion, designate at the
time of grant or thereafter.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS. Under the 1998 Plan, each new
non-employee director of the Company receives an automatic grant of options to
purchase 20,000 shares of Common Stock on the date he or she begins service as a
non-employee director. In addition, each non-employee director receives an
automatic grant of options to purchase 10,000 shares of Common Stock on the date
of each annual meeting of stockholders, provided such individual has been a
non-employee director for the previous twelve months. The Board may also decide
to make discretionary grants of options to non-employee directors. The options
have a ten-year term and an exercise price equal to the fair market value of the
Common Stock at the time of grant. The automatic non-employee directors' stock
options vest and become exercisable in four equal installments on each of the
first four anniversaries of the date of grant; discretionary non-employee
directors' stock options vest and become exercisable in accordance with the
schedule set by the Board. Upon a change in control of the Company, all then
unvested options will fully vest and become exercisable in their entirety. The
exercise price may be paid in cash, by a cashless exercise procedure through a
broker or by such other methods approved by the Board of Directors (which may
include payment in shares of Common Stock owned for at least six months).
CHANGE IN CONTROL
Upon a change in control of the Company (as defined in the 1998 Plan), all
unvested options and Tandem and Non-Tandem SARs of employees and consultants
will fully vest and become exercisable in their entirety, provided that, no
acceleration of vesting and exercisability will occur with regard to options
that the Committee determines in good faith prior to a change in control of the
Company will be honored or assumed or new rights substituted therefor by a
participant's employer immediately following the change in control of the
Company.
AMENDMENT AND TERMINATION
The 1998 Plan may be amended or terminated in its entirety by the Board of
Directors or the Committee, provided that the rights granted to an individual
prior to such amendment or termination may not be impaired without the consent
of such individual. In addition, no such amendment, without stockholder approval
to the extent such approval is required by the laws of the State of Delaware,
Rule 16b-3, the rules of the American Stock Exchange or under Section 162(m) or
422 of the Code, may increase the aggregate number of shares of Common Stock
that may be issued under the 1998 Plan, increase the maximum individual award
limits for any calendar year, change the classification of employees and
consultants eligible to receive awards, decrease the minimum exercise price of
any option or SAR or extend the maximum option term under the 1998 Plan.
16
MISCELLANEOUS
Subject to limited post-service exercise periods and vesting in certain
instances, awards to participants under the 1998 Plan are generally forfeited
upon any termination of employment, consultancy or directorship. Awards have
such terms and terminate upon such conditions as may be contained in the
individual awards. Although awards are generally nontransferable (except by will
or the laws of descent and distribution), the Committee may determine at the
time of grant or thereafter that a non-qualified option granted to an employee
or consultant that is otherwise nontransferable may be transferable in whole or
in part and in such circumstances, and under such conditions, as specified by
the Committee.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal U.S. federal income tax
consequences with respect to options under the 1998 Plan is based on statutory
authority and judicial and administrative interpretations as of the date of this
Proxy Statement, which are subject to change at any time (possibly with
retroactive effect) and may vary in individual circumstances. Therefore, the
following is designed to provide a general understanding of the federal income
tax consequences (state, local and other tax consequences are not addressed
below). This discussion is limited to the U.S. federal income tax consequences
to individuals who are citizens or residents of the U.S., other than those
individuals who are taxed on a residence basis in a foreign country.
Under current federal income tax law and interpretation when an employee is
granted a stock option that qualifies as an incentive stock option (ISO), the
granting of such option to the employee is not a taxable event because there is
no transfer of property to the employee. The employer that granted the option is
not entitled to claim a trade or business expense deduction with respect to the
ISO.
When the employee exercises the qualified option (ISO), and holds the stock
for a specified period (generally two years from the date that the ISO was
granted and one year from the date that the option was exercised), the employer
does not take any tax deduction with respect to the exercise of the option, nor
does the employee recognize any income. The employer is however, allowed a
deduction when the holding period is met and the underlying stock is sold and
the employee recognizes income at the same time, generally at preferential
capital gains rates.
Certain events can disqualify the stock option from being considered
incentive stock options. These events include, but are not limited to, a failure
of the optionee to satisfy the holding period discussed above, limitations on
the amount of the fair market value of the underlying stock exercised in a
single year by an individual and alternative minimum tax consequences. These
disqualifying events can alter the timing of the tax deduction by the employer
and the recognition of income by the individual.
The treatment of nonqualified options, with no ascertainable fair market
value, is similar to that of disqualified ISO's. The taxable event generally
occurs when the option is exercised. The optionee recognizes compensation income
at that point, and the Company receives a corresponding deduction.
In addition: (i) any officers and directors of the Company subject to
Section 16(b) of the Exchange Act may be subject to special tax rules regarding
the income tax consequences concerning their options; (ii) any entitlement to a
tax deduction on the part of the Company is subject to the applicable federal
tax rules, including, without limitation, Section 162(m) of the Code regarding
the $1 million annual limitation on deductible compensation; (iii) in the event
that the exercisability of an award is accelerated because of a change in
control of the Company, payments relating to the awards, either alone or
together with certain other payments may constitute parachute payments under
Section 280G of the Code, which excess amounts may be subject to excise taxes
and be nondeductible by the Company; and (iv) the exercise of an ISO may have
implications in the computation of alternative minimum taxable income.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1 million per taxable year per person to its chief
17
executive officer and the four other officers whose compensation is disclosed in
its proxy statement, subject to certain exceptions. Options and SARs will
generally qualify under one of these exceptions if they are granted under a plan
that states the maximum number of shares which may be granted to any employee
during a specified period, the exercise price is not less than the fair market
value of the Common Stock at the time of grant, and the plan under which the
options and SARs are granted is approved by stockholders and is administered by
a compensation committee comprised of outside directors. The 1998 Plan is
intended to satisfy these requirements with respect to options and SARs granted
to employees.
The 1998 Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended and is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
OPTION TRANSACTIONS UNDER 1998 PLAN
NUMBER OF WEIGHTED
OPTION SHARES AVERAGE
GRANTED (1) EXERCISE PRICE
------------- --------------
John A. Rade................................................
President, Chief Executive Officer and Director........... -- $ --
Michael R. Jorgensen........................................
Executive Vice President, North America 50,000 1.88
Elias Typaldos..............................................
Senior Vice President, Research and Development and
Chairman of the Board of Directors -- --
Gennaro Vendome.............................................
Vice President and Director -- --
Paul Abel...................................................
Vice President, Secretary and General Counsel 20,000 2.00
William G. Levering III.....................................
Vice President, Chief Financial Officer and Treasurer 35,000 1.95
Nat Bosco...................................................
Vice President and General Manager, AXSPoint Solutions -- --
Dennis Piccininni...........................................
President, Tivity -- --
Daniel H. Burch.............................................
Director 40,000 0.50
Robert Migliorino...........................................
Director 0,000 1.69
William E. Vogel............................................
Director 40,000 1.69
Edwin T. Brondo.............................................
Director 40,000 1.69
Allan Weingarten............................................
Director 40,000 1.38
All non-employee directors as a group (5 persons)........... 200,000 1.39
All current executive officers as a group (7 persons)....... 105,000 1.93
All employees, including current officers who are not
executive officers, as a group............................ 1,414,775 3.14
- ------------------------
(1) Of the above options granted, 217,550 have been cancelled during the period
ended April 6, 2001. Additional options may have been granted to the
foregoing individuals under the Company's 1995 Stock Option Plan (which is
not being amended at the Annual Meeting).
The affirmative vote of a majority of the shares of the Company's
outstanding Common Stock present or represented, and entitled to vote, at the
Annual Meeting is required to approve this amendment to the 1998 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THIS AMENDMENT TO THE 1998 PLAN.
18
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG LLP to serve as the Company's
independent public accountant for fiscal year 2001. KPMG LLP served as the
Company's independent public accountant and auditor during fiscal year 2000.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services rendered for
the audit of the Company's annual consolidated financial statements for the year
ended December 31, 2000, and the reviews of the consolidated financial
information included in the Company's Forms 10-Q for fiscal 2000, was $350,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed in 2000 by KPMG LLP for professional services
related to financial information systems design and implementation.
ALL OTHER FEES
The aggregate fees billed by KPMG LLP for services other than services noted
above were approximately $27,000 for the year ended December 31, 2000. The Audit
Committee has considered whether, and concluded that, the provision of these
services is compatible with maintaining KPMG LLP's independence.
A member of KPMG LLP is expected to be in attendance at the Annual Meeting
with the opportunity to make a statement and respond to questions.
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission, stockholder proposals intended for presentation at the 2002 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than January 1, 2002, if such proposals are to be considered for inclusion
in the Company's proxy statement. In addition, if a stockholder does not advise
the Company by March 31, 2002, that the stockholder intends to submit a proposal
to the Company's stockholders that will not be included in the Company's proxy
statement, the proxies named in the Company's form of proxy may exercise their
discretionary authority in voting on the stockholder's proposal.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on such
matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
By Order of the Board of Directors,
/s/ John A. Rade
John A. Rade
President and Chief Executive Officer
Rutherford, New Jersey
April 25, 2001
19
AXS-ONE INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any government body or the public; the Corporation's systems of internal
controls regarding finance and accounting, and compliance with applicable laws
and regulations relating thereto; and the Corporation's auditing, accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants, which accountants are ultimately accountable to the Board of the
Directors and the Committee as representatives of the stockholders of the
Corporation, and, as a result of such review and appraisal, recommend to the
Board the selection, and, when appropriate, replacement, of such accountants.
Actively engage in a dialog with the independent accountants with respect to
any relationships with, or services to, the Corporation, disclosed by such
accountants, which may impact the objectivity and independence of such
accountants, and take (or recommend that the Board of Directors take)
appropriate action to oversee the independence of such accountants.
Provide an open avenue of communication among the independent accountants,
financial and senior management and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent accountants as well as anyone in the Corporation. The Audit
Committee has the ability to retain, at the Corporation's expense, special
legal, accounting or other consultants or experts it deems necessary in the
performance of its duties.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, as
"independence" is defined by applicable law and regulations (including
regulations of the national securities exchange or other market on which the
Common Stock of the Corporation is traded). All members of the Committee shall
be able to read and understand fundamental financial statements (e.g., balance
sheet, income statement and cash flow statement), and at least one member of the
Committee shall have past employment experience in finance or accounting,
requisite professional certification in accounting, or other comparable
experience or background which results in such member's financial sophistication
(e.g., being a CEO, CFO or other senior officer with financial oversight
responsibilities). Committee members may enhance their familiarity with finance
and accounting by participating in educational programs conducted by the
Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at each annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the
20
full Board, the members of the Committee may designate a Chair by majority vote
of the full Committee membership.
III. MEETINGS
The Committee shall meet at least once per quarter, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet separately, at least annually, with the CEO and CFO of the
Corporation and the independent accountants to discuss any matters that the
Committee or either of these groups believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review this Charter periodically, at least annually, as conditions dictate,
and submit any proposed revisions hereto to the Board for approval.
2. Review, prior to filing or distribution, the Corporation's annual and
quarterly financial statements and any reports or other financial
information submitted to any government body or the public, including any
certification, report, opinion, or review rendered by the independent
accountants.
3. Review internal reports prepared by the internal accounting department.
INDEPENDENT ACCOUNTANTS
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness, and approve the
fees and other compensation to be paid to the independent accountants. On an
annual basis, the Committee should review and discuss with the accountants
all significant relationships the accountants have with the Corporation to
determine the accountants' independence, including the Committee's receipt,
and evaluation, of the formal written statement of such relationships
consistent with Independence Standards Board Standard No. 1.
5. Review the performance of the independent accountants and recommend to the
Board of Directors any proposed discharge of the independent accountants
when circumstances warrant.
6. Periodically consult with the independent accountants out of the presence of
management about internal controls and the completeness and accuracy of the
organization's financial statements.
7. Prior to commencement of the annual audit, review with the independent
accountants their audit plan. Upon completion of the annual audit, and prior
to release of year-end operating results, discuss the results of the audit
with the independent accountants.
FINANCIAL REPORTING PROCESSES
8. In consultation with the independent accountants and the CEO and CFO, review
the integrity of the organization's financial reporting processes, both
internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles and practices as
applied in its financial reporting. Discuss with the independent accountants
any required items to be communicated in accordance with SAS 61, and
significant financial risk exposures and the steps management has taken to
monitor, control and report such exposures.
10. Consider and approve, if appropriate, changes to the Corporation's
accounting principles and practices as suggested by the independent
accountants or management.
21
PROCESS IMPROVEMENT
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management and the independent accountants regarding any
significant judgments made in the course of management's preparation of the
financial statements and the view of each as to appropriateness of such
judgments.
12. Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.
13. Review any significant disagreement between management and the independent
accountants in connection with the preparation of the financial statements.
14. Review with the independent accountants and management suggested changes or
improvements in financial or accounting practices, and monitor the
implementation by management of such changes and improvements which have
been approved by the Audit Committee.
LEGAL COMPLIANCE
15. Review with management whether the Corporation's internal accounting
procedure and controls provide reasonable assurance that the Corporation's
financial statements, reports and other financial information disseminated
to governmental organizations and the public satisfy applicable legal and
other requirements.
16. Review, with the Corporation's legal counsel, legal matters (including
inquiries received from regulators or governmental agencies) that are
brought to the Committee's attention that could have a significant impact on
the Corporation's financial statements.
OTHER RESPONSIBILITIES
17. Annually prepare a report to stockholders, as required by applicable law or
regulation, for inclusion in the Corporation's annual proxy statement or
other filings.
18. Maintain minutes of its meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
22
(Form of Proxy)
AXS-ONE INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - June 13, 2001
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of AXS-One Inc. hereby appoints John A. Rade,
President and Chief Executive Officer and William G. Levering III, Vice
President, Chief Financial Officer and Treasurer and each of them, with full
power of substitution, proxies to vote the shares of stock which the undersigned
could vote if personally present at the Annual Meeting of Stockholders of
AXS-One Inc. to be held the Renaissance Meadowlands Hotel, 801 Rutherford
Avenue, Rutherford, NJ 07070, telephone number (201) 231-3100 on June 13, 2001,
at 10:00 A.M. or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
FOR all nominees below WITHHOLD AUTHORITY
[_] (except as marked to the contrary) [_] to vote for all nominees below
(1) Elias Typaldos; (2) John A. Rade; (3) Gennaro Vendome; (4) Daniel H.
Burch; (5) Robert Migliorino; (6) William E. Vogel; (7) Edwin T. Brondo; and
(8) Allan Weingarten
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name in the space provided below.
2. APPROVAL OF AMENDMENT TO 1998 STOCK OPTION PLAN increasing the number of
shares subject to options granted under the Plan by 1,500,000 shares, for a
total of 3,000,000 SHARES, as described in the Proxy Statement.
FOR AGAINST ABSTAIN WITH RESPECT TO
[_] [_] [_]
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS AND FOR PROPOSAL 2.
NOTE: Please date and sign exactly as your name appears on the envelope in
which this material was mailed. If shares are held jointly, each stockholder
should sign. Executors, administrators, trustees, etc. should use full title
and, if more than one, all should sign. If the stockholder is a corporation,
please sign full corporate name by an authorized officer. If the stockholder
is a partnership, please sign full partnership name by an authorized person.
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Signature(s) of Stockholder
Dated:_______________________