SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
METASOLV, INC.
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(Name of Registrant as Specified in its Charter)
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[LOGO]
METASOLV, INC.
5560 Tennyson Parkway
Plano, Texas 75024
April 21, 2001
TO THE STOCKHOLDERS OF METASOLV, INC.
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of MetaSolv, Inc. (the "Company"), which will be held at the Company's
headquarters located at 5560 Tennyson Parkway, Plano, Texas 75024, on Tuesday,
May 22, 2001, at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given
in the attached Proxy Statement and Notice of Annual Meeting of Stockholders.
It is important that your shares be represented and voted at the
meeting. WHETHER OR NOT YOU PLAN TO ATTEND the Annual Meeting, please COMPLETE,
sign, date and PROMPTLY return the ACCOMPANYING proxy in the ENCLOSED POSTAGE-
PAID envelope. Returning the proxy does NOT deprive you of your right to attend
the Annual Meeting. If you decide to attend the Annual Meeting and wish to
change your proxy vote, you may do so automatically by voting in person at the
meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ James P. Janicki
James P. Janicki
Chief Executive Officer and Director
[LOGO]
METASOLV, INC.
5560 Tennyson Parkway
Plano, Texas 75024
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 22, 2001
The Annual Meeting of Stockholders (the "Annual Meeting") of MetaSolv, Inc.
(the "Company") will be held at the Company's headquarters, located at 5560
Tennyson Parkway, Plano, Texas, 75024, on Tuesday, May 22, 2001, at 10:00 a.m.
for the following purposes:
1. To elect two directors of the Board of Directors to serve until their
three-year term expires or until their successors have been duly elected and
qualified;
2. To amend the Fourth Restated Certificate of Incorporation of MetaSolv
Software, Inc. ("MetaSolv Software"), a wholly-owned subsidiary of the Company,
to eliminate the provision, contained in such certificate pursuant to Section
251(g) of the General Corporation Law of the State of Delaware (the "DGCL"),
requiring that certain actions of MetaSolv Software be approved by a vote of the
stockholders of the Company;
3. To amend the provision of the Certificate of Incorporation of the
Company requiring the approval of 75% of the outstanding shares of the Company's
Common Stock as described herein; and
4. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the attached
Proxy Statement.
Only stockholders of record at the close of business on March 30, 2001 are
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at the Company's headquarters located at 5560 Tennyson
Parkway, Plano, Texas, during ordinary business hours for the ten-day period
prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Jonathan K. Hustis
Jonathan K. Hustis
Vice President--Business Services, General
Counsel and Corporate Secretary
Plano, Texas
April 21, 2001
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IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF
YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU
MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
- --------------------------------------------------------------------------------
METASOLV, INC.
5560 Tennyson Parkway
Plano, Texas 75024
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be held May 22, 2001
These proxy materials are furnished in connection with the solicitation
of proxies by the Board of Directors of MetaSolv, Inc., a Delaware corporation
(the "Company") and the recently formed holding company for MetaSolv Software,
Inc., a Delaware corporation ("MetaSolv Software"), for the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Company's headquarters,
located at 5560 Tennyson Parkway, Plano, Texas 75024, on Tuesday, May 22, 2001,
at 10:00 a.m., and at any adjournment or postponement of the Annual Meeting.
These proxy materials were first mailed to stockholders on or about April 21,
2001.
Effective January 1, 2001, MetaSolv Software completed a reorganization
in which the Company became the holding company of MetaSolv Software (the
"Transaction"). The Transaction was effected by a merger under Section 251(g) of
the General Corporation Law of the State of Delaware (the "DGCL"), which permits
the formation of a holding company structure without a vote of the stockholders.
By virtue of the Transaction, MetaSolv Software became a direct, wholly owned
subsidiary of the Company, and all of MetaSolv Software's outstanding capital
stock was converted, on a share-for-share basis, into capital stock of the
Company. Except for the name of the corporation, the provisions of the
certificate of incorporation of the Company after the effective time of the
Transaction and MetaSolv Software prior to the effective time of the Transaction
are identical. The authorized capital stock of the Company after the effective
time of the Transaction and the designations, rights, powers and preferences of
such capital stock, and its qualifications, limitations and restrictions, are
identical to those of MetaSolv Software prior to the effective time of the
Transaction. Stockholders received securities of the same class showing the same
proportional interests in the Company, having the same designations, rights,
powers and preferences, and having the same qualifications, limitations and
restrictions, as those held in MetaSolv Software. Unless the context otherwise
requires, references to the "Company" in this Proxy Statement refer to MetaSolv,
Inc., as successor to MetaSolv Software, as of January 1, 2001, and to MetaSolv
Software through December 31, 2000. Unless the context otherwise requires,
references to the "Long-Term Incentive Plan" refer to the MetaSolv, Inc. Long-
Term Incentive Plan as of January 1, 2001 and to the MetaSolv Software, Inc.
Long-Term Incentive Plan through December 31, 2000 and references to the
"Employee Stock Purchase Plan" refer to the MetaSolv, Inc. Employee Stock
Purchase Plan as of January 1, 2001 and to the MetaSolv Software, Inc. Employee
Stock Purchase Plan through December 31, 2000.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's Common Stock is the only type of security entitled to
vote at the Annual Meeting. On March 30, 2001, the record date for determination
of stockholders entitled to vote at the Annual Meeting, there were __________
shares of Common Stock outstanding. Each stockholder of record on March 30, 2001
is entitled to one vote for each share of Common Stock held by such stockholder.
Shares of Common Stock may not be voted cumulatively. All votes will be
tabulated by the inspector of election appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes.
Quorum Required
The Company's bylaws provide that the holders of a majority of the
Company's Common Stock issued and outstanding and entitled to vote at the Annual
Meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes will be counted as present for the purpose of determining the presence
of a quorum.
Votes Required
Proposal 1. Directors are elected by a plurality of the affirmative
votes cast by those shares present in person, or represented by proxy, and
entitled to vote at the Annual Meeting. The two nominees for director receiving
the highest number of affirmative votes will be elected. Abstentions and broker
non-votes will not be counted toward a nominee's total. Stockholders may not
cumulate votes in the election of directors.
Proposal 2. Amending the Fourth Restated Certificate of Incorporation
of MetaSolv Software to eliminate the provision relating to Section 251(g) of
the DGCL, which provides that certain actions of MetaSolv Software would have to
be approved by a vote of the stockholders of the Company, requires the
affirmative vote at the Annual Meeting of at least 75% of the outstanding shares
of the Company's Common Stock. Abstentions and broker non-votes will not be
counted as having been voted on the proposal. The proposed Fifth Amended and
Restated Certificate of Incorporation of MetaSolv Software is attached hereto as
Appendix A.
Proposal 3. Amending the provision in the Certificate of Incorporation
of the Company that requires the approval of 75% of the outstanding shares of
the Company's Common Stock in order to amend any provision of the Certificate of
Incorporation other than Articles I through IV requires the affirmative vote at
the Annual Meeting of at least 75% of the outstanding shares of the Company's
Common Stock. Abstentions and broker non-votes will not be counted as having
been voted on the proposal. The proposed Amended and Restated Certificate of
Incorporation of the Company is attached hereto as Appendix B.
Proxies
Whether or not you are able to attend the Company's Annual Meeting, you
are urged to complete and return the enclosed proxy, which is solicited by the
Company's Board of Directors and which will be voted as you direct on your proxy
when properly completed. In the event no directions are specified, such proxies
will be voted, FOR the Nominees to the Board of Directors (as set forth in
Proposal No. 1), FOR Proposal No. 2, FOR Proposal No. 3, and in the discretion
of the proxy holders as to other matters that may properly come before the
Annual Meeting. You may also revoke or change your proxy at any time before the
Annual Meeting. To do this, send a written notice of revocation or another
signed proxy with a later date to the Secretary of the Company at the Company's
principal executive offices before the beginning of the Annual Meeting. You may
also automatically revoke your proxy by attending the Annual Meeting and voting
in person. All shares represented by a valid proxy received prior to the Annual
Meeting will be voted.
Solicitation of Proxies
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the proxy,
and any additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers, employees or agents
of the Company. The Company has retained Mellon Investor Services ("Mellon") as
a proxy solicitor for the Company. Mellon will consult on the planning and the
organization of the Annual Meeting. In addition, Mellon will solicit banks,
brokers, nominees, institutions and large individual holders of the Company's
Common Stock. In exchange for Mellon's services, the Company will pay Mellon a
fee of $9,000 and reimburse Mellon for reasonable out-of-pocket expenses. In
addition, Mellon may institute a direct telephone campaign for an additional
fee.
2
PROPOSAL NO. 1
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ELECTION OF DIRECTORS
The Company currently has authorized seven directors. In accordance
with the terms of the Company's Certificate of Incorporation, the Board of
Directors is divided into three classes: Class I, whose term will expire at the
2003 Annual Meeting; Class II, whose term will expire at the 2001 Annual
Meeting; and Class III, whose term will expire at the 2002 Annual Meeting. At
the 2001 Annual Meeting, two directors will be elected to serve until the Annual
Meeting to be held in 2004 or until such directors' respective successors are
elected and qualified. The Board of Directors has selected two nominees as the
nominees for Class II. One of the nominees for the Board of Directors is
currently a director of the Company; both nominees are identified below. The
proxy holders intend to vote all proxies received by them in the accompanying
form for the nominees for directors listed below. In the event either nominee is
unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them for the nominees listed below. As of the date of this
Proxy Statement, the Board of Directors is not aware of any nominee who is
unable or will decline to serve as a director.
Nominees for Term Ending in 2004
Set forth below is information regarding the nominees, including their
ages, the period during which they have served as directors, and information
furnished by them as to principal occupations and directorships held by them in
corporations whose shares are publicly registered.
Director
Name Since Age
---------------------------------- ----------- -------
Lawrence J. Bouman 2000 54
Thomas Curtis Holmes, Jr. - 39
Mr. Bouman has served as a director of the Company since November 2000.
Since January 1999, Mr. Bouman has served as a technology advisor and
independent consultant to several private communications and technology
companies. From October 1995 to June 1998, Mr. Bouman was Senior Vice President
and Chief Technology Officer of LCI International, Inc., a communications
services provider. From June 1998 to January 1999, Mr. Bouman served as a member
of the acquisition transition team following Qwest Communications International,
Inc.'s acquisition of LCI International. Prior to 1995, Mr. Bouman held several
senior positions with MCI Telecommunications Corporation. From September 1999 to
October 2000, Mr. Bouman served as a director of Net Tel, a competitive local
exchange carrier. Mr. Bouman resigned as a director on October 2, 2000 and Net-
Tel filed for bankruptcy on November 3, 2000.
Mr. Holmes has served as President and Chief Operating Officer of the
Company since January 2001. From December 1996 to December 2000, Mr. Holmes
served as Vice President and General Manager of the Intelligent Network Unit of
Lucent Technologies, Inc., where his responsibilities included strategic
planning, product marketing, product management, development and deployment of
enhanced services applications. From July 1994 to December 1996, Mr. Holmes
served as Applications Group Director for Operations Support Systems for Lucent
Technologies/AT&T Network Systems.
Set forth below is information regarding the continuing directors of
the Company, including their ages, the period in which they have served as
directors, and information furnished by them as to principal occupations and
directorships held by them in corporations whose shares are publicly registered.
3
Director
Name Since Age
---------------------------------- ----------- -------
James P. Janicki 1994 45
John W. White 1998 61
John D. Thornton 1996 35
David R. Semmel 1994 44
Royce J. Holland 2000 53
James P. Janicki co-founded the Company in July 1992 and since such
time has served in various capacities. Mr. Janicki was appointed Chief Executive
Officer in May 1999. He served as President of the Company until January 2001
and has served as a director of the Company since April 1994. From June 1982 to
July 1992, Mr. Janicki was at Texas Instruments where he served in many
capacities, including as manager of the Texas Instruments' CASE consulting
practice from July 1987 to August 1990 and as manager of the Template software
business from August 1990 until July 1992. Texas Instruments develops and
manufactures semiconductors and other products in the electrical and electronics
industry. Mr. Janicki is the husband of Dana R. Brown, our Vice President-
Marketing.
John W. White has been a member of the Company's Board of Directors
since December 1998 and Chairman of the Board of Directors since August 1999.
Mr. White was Vice President and Chief Information Officer for Compaq Computer,
a developer and marketer of computer hardware and software, from February 1994
to October 1998, where he served as a member of the executive management team
for Compaq, overseeing its worldwide information systems activities. Prior to
February 1994, Mr. White was President of the Information Technology Group and
Chief Information Officer for Texas Instruments. Mr. White serves as a director
of Citrix, a provider of server-based computing solutions.
John D. Thornton has been a member of the Company's Board of Directors
since June 1996. Mr. Thornton is a General Partner of Austin Ventures, a venture
capital firm, where he has been employed since 1991. Mr. Thornton serves as a
director of Vignette Corporation, a developer of Internet relationship
management software.
David R. Semmel has served as a director of the Company since January
1994. Mr. Semmel has been a member of the general partner of Kettle Partners,
LP, a venture capital fund focusing on Internet and telecommunications
investments, from its inception in 1997. Mr. Semmel was a principal of the
general partner of Pangaea, LP, an equity hedge fund, from its inception in 1993
through June 2000. He has been the general partner of Pangaea Partners, LP, an
investment partnership, since 1988.
Royce J. Holland has served as a director of the Company since May
2000. Mr. Holland co-founded Allegiance Telecom, a telecommunications services
provider, in 1997 and has served as its Chairman of the Board and CEO since
then. Previously, Mr. Holland was at MFS Communications Company, Inc., a
communications services provider, as a Co-founder and a Director from its
inception in 1988, and also as President from 1990, through the completion of
its merger with WorldCom in December 1996. In January 1993, President George
Bush appointed Mr. Holland to the National Security Telecommunications Advisory
Committee. Mr. Holland has over twenty-five years experience in the
telecommunications, independent power and engineering/construction industries.
He also serves as a director of the following publicly traded companies: Choice
One Communications, a communications provider, CompleTel Europe, N.V., a
provider of telecommunications services in Europe, and CSG Systems
International, a provider of customer care and billing solutions.
Board of Directors Meetings and Committees
During 2000, the Board of Directors held seven meetings. For the
fiscal year, each of the directors during the term of his or her tenure attended
or participated in at least 75% of the aggregate of (i) the total number of
meetings or actions by written consent of the Board of Directors and (ii) the
total number of meetings held by all committees of the Board of Directors on
which each such director served. The Board of Directors has two standing
committees, the Audit Committee and the Compensation Committee.
4
During 2000, the Audit Committee of the Board of Directors held seven
meetings. The Audit Committee 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 independent accountants, the scope of the annual
audits, fees to be paid to the independent accountants, the performance of the
Company's independent accountants and the accounting practices of the Company.
The members of the Audit Committee are Mr. Thornton and Mr. Barry F. Eggers. The
Board of Directors has adopted a written charter for the Audit Committee, a copy
of which is attached hereto as Appendix C. Each member of the Audit Committee is
an "independent director," as such term is defined in Rule 4200(a)(14) of The
Nasdaq Marketplace Rules.
During 2000, the Compensation Committee held no formal meetings, but
acted by written consent on seven occasions. The Compensation Committee is
responsible for (i) establishing compensation programs designed to attract,
motivate and retain key executives responsible for the Company's success; (ii)
administering and maintaining such programs in a manner that will benefit the
long-term interests of the Company and its stockholders; and (iii) determining
the compensation of the Company's Chief Executive Officer. The members of the
Compensation Committee are Mr. Holland and Mr. Thornton.
Director Compensation
Non-employee directors receive $1,500 for each Board of Directors or
standing committee meeting attended in person, and $200 per meeting attended by
teleconference. All directors are reimbursed for reasonable expenses incurred by
them in attending Board of Directors and committee meetings.
Each non-employee director (other than venture capital investors and
founders who hold Company stock) is granted an option to purchase up to 30,000
shares of the Company's Common Stock under the Long-Term Incentive Plan on the
date he or she is elected to the Board of Directors. Each option will have an
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant, will have a term to be determined by the Compensation
Committee and will generally terminate within a specified time, as defined in
the Long-Term Incentive Plan, following the date the option holder ceases to be
a director. Each continuing non-employee director will receive an additional
award of a formula option of up to 30,000 shares upon each subsequent election
to the Board of Directors. Each option is immediately exercisable, but the
unvested shares under the option are subject to repurchase by the Company at the
original exercise price paid per share upon the director's cessation of service
as a director. The repurchase right lapses and one-third of the option shares
vest upon the completion of 12 months of service as a director from the date of
grant, and the balance of the option shares vest in a series of equal annual
installments over the next two years of service.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED
HEREIN.
5
PROPOSAL NO. 2
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AMENDMENT OF THE FOURTH RESTATED CERTIFICATE OF
INCORPORATION OF METASOLV SOFTWARE TO ELIMINATE THE
PROVISION RELATING TO SECTION 251(G) OF THE DELAWARE GENERAL
CORPORATION LAW
Effective January 1, 2001, the Company completed a reorganization into
a holding company structure in which MetaSolv Software became a wholly-owned
subsidiary of the Company. This holding company reorganization was conducted in
accordance with Section 251(g) of the DGCL and did not require a vote of
MetaSolv Software's stockholders. In connection with the Transaction and as
required by Section 251(g), MetaSolv Software amended its Certificate of
Incorporation to add the following language:
"ARTICLE XI
Any act or transaction by or involving the Corporation that requires
for its adoption under the General Corporation Law of the State of Delaware or
this Fourth Restated Certificate of Incorporation the approval of the
stockholders of the Corporation shall, pursuant to Section 251(g) of the General
Corporation Law of the State of Delaware, require, in addition, the approval of
the stockholders of MetaSolv, Inc., a Delaware corporation, or any successor
thereto by merger, by the same vote that is required by the General Corporation
Law of the State of Delaware and/or this Fourth Restated Certificate of
Incorporation. Notwithstanding the foregoing, nothing in this Article XI shall
be deemed or construed to require the approval of the stockholders of MetaSolv,
Inc. to elect or remove directors of the Corporation."
Article XI requires that the Company's subsidiary, MetaSolv Software,
obtain the vote of the Company's stockholders in connection with certain actions
that would, absent Article XI, otherwise require only the Company's approval as
MetaSolv Software's sole stockholder. Such actions include MetaSolv Software's
merger or consolidation, a sale of all or substantially all of its assets,
charter amendments and a corporate dissolution. Absent such a provision, there
is no general requirement under Delaware law that stockholders of a parent
entity be entitled to vote on these types of actions involving its wholly-owned
subsidiaries. Many of these types of actions are typically taken in the ordinary
course of business, and are not material to the holding company's stockholders,
such as changing a subsidiary's name or merging the subsidiary with another
wholly-owned subsidiary for tax, administrative or other reasons. Submitting a
vote to approve such actions to the Company's stockholders would require the
Company to identify the holdings and addresses of all stockholders, publish
notices and proxies, organize and hold a meeting of stockholders, and handle the
solicitation and tabulation of votes from a relatively diverse and widely
distributed group of stockholders, which would increase the expense of and would
in all likelihood delay the action. The amendment to MetaSolv Software's charter
to delete Article XI would enable the Company to avoid such expenses and delays.
However, the amendment would also, in all likelihood, eliminate the right of the
Company's stockholders to vote on a transaction in which the Company might
decide to sell or otherwise transfer all or substantially all of the assets of
MetaSolv Software to a third party unaffiliated with the Company, or to merge
MetaSolv Software with such an unaffiliated third party. Although the issue is
not settled under Delaware law, we believe that such a transaction could be
accomplished by the Company without the approval of the Company's stockholders,
after stockholder approval of this proposed amendment. The Company could choose
to submit any such transaction to its stockholders, but gives no assurances that
it would do so. While this amendment would eliminate the right of the
stockholders of the Company to vote on transactions occurring at the MetaSolv
Software level, it would enable the Company to administer its holding company
structure like most other public corporations with holding company structures.
Furthermore, stockholders of the Company would retain their existing rights to
vote on transactions occurring at the Company level. Considering all of the
foregoing factors, the Board of Directors believes that it is in the best
interests of the Company and its stockholders to delete Article XI as proposed,
and thereby to eliminate the significant expense and delay that would otherwise
result from preparation and distribution of a proxy statement, vote tabulation,
and other tasks required to obtain approval by the Company's stockholders of
MetaSolv Software's transactions.
6
The affirmative votes of the holders of 75% of the outstanding shares
of the Company's Common Stock are required for approval of this amendment to
MetaSolv Software's Fourth Restated Certificate of Incorporation. If this
proposed amendment is approved by the stockholders, the Company intends to
promptly effect such amendment by filing or causing to be filed an appropriate
amendment to MetaSolv Software's Fourth Restated Certificate of Incorporation
with the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE APPROVAL OF THE AMENDMENT TO METASOLV SOFTWARE'S FOURTH
RESTATED CERTIFICATE OF INCORPORATION.
7
PROPOSAL NO. 3
AMENDMENT OF THE PROVISION OF THE CERTIFICATE OF
INCORPORATION OF THE COMPANY REQUIRING THE APPROVAL OF 75% OF
THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK
Article XI of the Company's Certificate of Incorporation provides
that, except with respect to Article I (which pertains to the name of the
Company), Article II (which pertains to the registered office of the Company),
Article III (which pertains to the purpose of the Company) and Article IV (which
pertains to the capitalization of the Company), the approval of the holders of
75% of the outstanding shares of the Company's Common Stock is required to amend
any provision of the Company's Certificate of Incorporation. In addition,
because Article XI requires supermajority approval for all provisions in the
Certificate of Incorporation other than those set forth above, any future
amendments to the Company's charter, regardless of how material they are to the
stockholders of the Company, would require a supermajority approval in order to
be amended. Delaware law does not otherwise require supermajority approval in
order to amend a company's charter.
A charter modification typically involves a lengthy and expensive
process. Every time the Board of Directors proposes a charter amendment, the
Company must identify the holdings and addresses of all stockholders, publish
notices and proxies, organize and hold a meeting of stockholders, and handle the
solicitation and tabulation of votes. In addition, submitting a vote to approve
a charter amendment requires the filing of a proxy statement with, and possible
review of the proxy statement by, the Securities and Exchange Commission. The
supermajority approval requirement increases the time, expense and burden since
the approval of the holders of 75% of outstanding shares is invariably more
difficult to obtain than the approval of the holders of a majority of
outstanding shares.
The Board of Directors believes that Article XI of the Certificate of
Incorporation of the Company as currently drafted is too stringent and
unnecessarily burdens the Company with respect to amendments that public
corporations generally can effect by a majority vote. The Board of Directors of
the Company believes that the approval of the holders of 75% of the outstanding
shares of the Company's Common Stock is appropriate in order to amend provisions
of the Company's charter designed to discourage, delay or prevent a merger or
acquisition of the Company without the approval of the Board of Directors. These
provisions include those that (i) provide for the power of the board of
directors to amend the bylaws of a company, (ii) provide for a classified board
of directors with staggered, three-year terms and (iii) prohibit stockholders of
a company from acting by written consent.
Accordingly, the Company proposes to amend Article XI such that the
approval of the holders of 75% of the outstanding shares of the Company's Common
Stock would be required only in connection with the amendment of Article VI
(which pertains to the power of the Board of Directors of the Company to amend
the Bylaws of the Company), Article VII (which pertains to the classification of
the Board of Directors of the Company), Article IX (which prohibits the
stockholders of the Company from taking an action by written consent), and
Article XI (which would require the vote of 75% of the outstanding shares of the
Company's Common Stock in order to amend these four articles). All other
amendments would require the approval of the holders of a simple majority of the
outstanding shares of the Company's Common Stock.
Based on its evaluation of all of the foregoing factors, the Board of
Directors believes that the amendment of Article XI of the Company's charter to
require a supermajority approval only in connection with the amendment of
Article VI, Article VII, Article IX and Article XI is in the best interests of
the Company and the stockholders of the Company.
The affirmative votes of the holders of 75% of the outstanding shares
of the Company's Common Stock are required for approval of this amendment to the
Certificate of Incorporation of the Company. If this proposed amendment is
approved by the stockholders, the Company intends to promptly effect such
amendment by filing or causing to be filed an appropriate amendment to its
Certificate of Incorporation with the State of Delaware.
8
Recommendation of the Board of Directors:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO ARTICLE XI OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY.
9
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 2001, certain
information with respect to shares beneficially owned by (i) each person who is
known by the Company to be the beneficial owner of more than five percent of the
Company's outstanding shares of Common Stock, (ii) each of the Company's
directors and the executive officers named in the Summary Compensation Table and
(iii) all current directors and executive officers as a group. Unless otherwise
indicated, each person named below has an address in care of the Company's
principal executive offices. Beneficial ownership has been determined in
accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain
shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire shares (for example, upon exercise of an option
or warrant) within sixty (60) days of the date as of which the information is
provided. In computing the percentage ownership of any person, the amount of
shares is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of such acquisition rights. As a result,
the percentage of outstanding shares of any person as shown in the following
table does not necessarily reflect the person's actual voting power at any
particular date. Applicable percentage of ownership as of February 28, 2001 is
based upon 36,039,462 shares of Common Stock outstanding.
Shares Beneficially Owned
as of February 28, 2001
-----------------------------------------
Number of Percentage of
Beneficial Owner Shares Class
- ------------------------------------------------------------------------ ------------------ -------------------
John D. Thornton..................................................... 5,828,569 16.17%
Entities affiliated with Austin Ventures (1)
Michael J. Watters (2)............................................... 3,276,633 9.09
William N. Sick, Jr. ................................................ 4,480,322 12.43
Business Resources International, Inc. (3)
Putnam Investments, LLC (4).......................................... 3,371,734 9.36
Massachusetts Financial Services Company (5)......................... 2,436,047 6.76
Barry F. Eggers...................................................... 288,757 *
Entities affiliated with Weiss, Peck & Greer (6)
James P. Janicki (7)................................................. 1,354,053 3.62
David R. Semmel (8).................................................. 816,746 2.27
Royce W. Holland (9)................................................. 31,000 *
John W. White (10)................................................... 33,334 *
Lawrence J. Bouman (11).............................................. 36,600 *
Joseph W. Pollard (12)............................................... 411,061 1.14
Eleanor M. Luce (13) ................................................ 222,606 *
Sidney V. Sack (14) ................................................. 687,863 1.88
Glenn A. Etherington (15)............................................ 294,229 *
T. Curtis Holmes (16)................................................ 669,622 1.82
All directors and executive officers as a group (14 persons) (17).... 10,864,207 27.55%
- -------------------
* Less than 1%
(1) Includes 40,205 shares held by John Thornton Family I, Ltd., 1,549,454
shares held by Austin Ventures IV-A, L.P., 3,250,546 shares held by
Austin Ventures IV-B, L.P., 957,922 shares held by Austin Ventures VI,
L.P. and 26,942 shares held by Austin Ventures VI Affiliates Fund,
L.P. Mr. Thornton, one of our directors, is a Partner of AV Partners
IV, L.P., which is the general partner of Austin Ventures IV-A, L.P.
and Austin Ventures IV-B, L.P., and a general partner of AV Partners
VI, L.P., which is the general partner of Austin Ventures VI, L.P. and
Austin Ventures VI Affiliates Fund, L.P. Mr. Thornton disclaims
beneficial ownership of the shares held by John Thornton Family I,
Ltd., Austin Ventures IV-A, L.P., Austin Ventures IV-B, L.P., Austin
Ventures VI, L.P. and Austin Ventures VI Affiliates Fund, L.P., except
to the extent of his pecuniary
10
interest therein arising from his partnership interest in John
Thornton Family I, Ltd., AV Partners IV, L.P. and AV Partners VI,
L.P., as the case may be.
(2) Consists of shares held by The Watter's Children Trust, the Michael
and Carole Watters Charitable Remainder Trust and MCDA International
Partnership, Ltd. The address of Mr. Watters is 101 E. Park Blvd.,
Suite 600, Plano, Texas 75024. Information with respect to such
beneficial ownership was obtained from a Schedule 13G filed with the
Securities and Exchange Commission and reflects shares beneficially
owned by Mr. Watters as of December 31, 2000.
(3) Includes 2,333,967 shares held by Business Resources International,
Inc., 229,536 shares held by Jill Melanie Sick 1991 Trust, 229,536
shares held by David Louis Sick 1991 Trust, 114,818 shares held by
Louis Pitchlyn Williams 1992 Trust and 16,875 shares held by Jill M.
Sick.
(4) Consists of shares held by Putnam Investment Management LLC and Putnam
Advisory Company, LLC, each a wholly owned subsidiary of Putnam
Investments, LLC. The address of Putnam Investments, LLC is One Post
Office Square, Boston, Massachusetts 02109. Information with respect
to such beneficial ownership was obtained from a Schedule 13G filed
with the Securities and Exchange Commission and reflects shares
beneficially owned by Putnam Investments, LLC as of December 31, 2000.
(5) The address of Massachusetts Financial Services is 500 Boylston
Street, Boston, Massachusetts 02116. Information with respect to such
beneficial ownership was obtained from a Schedule 13G filed with the
Securities and Exchange Commission and reflects shares beneficially
owned by Massachusetts Financial Services Company as of December 31,
2000.
(6) Includes 106,446 shares held by WPG Enterprise Fund III, L.L.C.,
121,744 shares held by Weiss, Peck & Greer Venture Associates IV,
L.L.C., 15,393 shares held by Weiss, Peck & Greer Venture Associates
IV Cayman (Overseas), L.P. and 4,679 shares held by WPG Information
Sciences Entrepreneur Fund, L.P. Mr. Eggers, one of our directors, is
a Managing Member of WPG VC Fund Adviser, L.L.C., which is the Fund
Investment Advisory Member of WPG Enterprise Fund III, L.L.C. and
Weiss, Peck & Greer Venture Associates IV, L.L.C., is the general
partner of WPG Information Sciences Entrepreneur Fund, L.P. and is a
general partner of Weiss, Peck & Greer Venture Associates IV Cayman,
L.P. Mr. Eggers disclaims any beneficial ownership of the shares held
by these funds, except to the extent of his pecuniary interests
therein.
(7) Consists of (i) 58,500 shares held of record by Mr. Janicki and his
spouse as joint tenants, (ii) 1,141,464 shares subject to stock
options held by Mr. Janicki that are exercisable within 60 days of
February 28, 2001, and (iii) 154,089 shares subject to stock options
held by Mr. Janicki's spouse that are exercisable within 60 days of
February 28, 2001. Of the shares beneficially owned by Mr. Janicki and
his spouse, 177,881 are currently subject to a right of repurchase.
(8) Includes 119,861 shares held by Pangaea Partners, L.P. and 8,178
shares held by Mr. Semmel's spouse. Mr. Semmel, one of our directors,
is the sole general partner of Pangaea Partners, L.P. Mr. Semmel
disclaims beneficial ownership of all shares held by Pangaea Partners,
L.P. except to the extent of his pecuniary interest therein.
(9) Includes 30,000 shares subject to stock options held by Mr. Holland
that are exercisable within 60 days of February 28, 2001, all of which
are currently subject to a right of repurchase.
(10) Consists of 33,334 shares subject to stock options held by Mr. White
that are exercisable within 60 days of February 28, 2001, all of which
are currently subject to a right of repurchase.
(11) Consists of 30,000 shares subject to stock options currently held by
Mr. Bouman that are exercisable within 60 days of February 28, 2001,
all of which are currently subject to a right of repurchase.
(12) Includes 1,000 shares held by Mr. Pollard's minor child. Also,
includes 125,130 shares subject to stock options held by Mr. Pollard
that are exercisable within 60 days of February 28, 2000. Of the
shares beneficially owned by Mr. Pollard, 48,618 are currently subject
to a right of repurchase.
(13) Includes 153,540 shares subject to stock options held by Ms. Luce that
are exercisable within 60 days of February 28, 2001, all of which are
currently subject to a right of repurchase.
11
(14) Includes 640,016 shares subject to stock options held by Mr. Sack that
are exercisable within 60 days of February 28, 2001. Of the shares
beneficially owned by Mr. Sack, 489,208 are subject to a right of
repurchase as of February 28, 2001.
(15) Includes 259,416 shares subject to stock options held by Mr.
Etherington that are exercisable within 60 days of February 28, 2001.
Of the shares beneficially owned by Mr. Etherington, 228,812 are
currently subject to a right of repurchase.
(16) Includes 669,622 shares subject to stock options held by Mr. Holmes
that are exercisable within 60 days of February 28, 2001, all of which
are currently subject to a right of repurchase.
(17) Includes 3,391,906 shares subject to stock options that are
exercisable within 60 days of February 28, 2001. Of the shares
beneficially owned by all directors and executive officers as a group,
1,960,310 are currently subject to a right of repurchase.
COMPENSATION COMMITTEE REPORT
Responsibilities and Composition of the Committee
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for (i) establishing compensation programs designed
to attract, motivate and retain key executives responsible for the Company's
success; (ii) administering and maintaining such programs in a manner that will
benefit the long-term interests of the Company and its stockholders; and (iii)
determining the compensation of the Company's Chief Executive Officer. The
Committee is composed of two directors, currently Mr. Holland and Mr. Thornton.
Neither of these directors has ever served as an employee of the Company.
This report describes the philosophy that underlies the cash and
equity-based components of the Company's executive compensation program. It also
describes the details of each element of the program, as well as the rationale
for compensation paid to the Company's Chief Executive Officer and its executive
officers in general.
For the 2000 fiscal year, the process used by the Committee in
determining executive officer compensation levels was based on the subjective
judgment of the Committee. Although the recommendations of the Company's Chief
Executive Officer were considered, the Committee made the final compensation
decisions concerning each officer.
Compensation Philosophy and Objectives
The Committee believes that the Company's executive officer
compensation should be determined according to a competitive framework and based
on overall financial results, individual contributions and teamwork that help
build value for the Company's stockholders. Within this overall philosophy, the
Committee bases the compensation program on the following principles:
. Compensation levels for executive officers are benchmarked to the
outside market, using published industry data relevant to the
officers' positions. Compensation decisions are made by referring to
information regarding two groups of companies: companies with which
the Company is expected to compete for executive talent; and companies
within the industry groups with which the Company can expect to
compete for investors.
. The total compensation opportunity is targeted to the middle-range of
these companies; incremental amounts may be earned above or below that
level depending upon corporate and individual performance. The
Committee considers it essential to the vitality of the Company that
the total compensation opportunity for executive officers remains
competitive with similar companies in order to attract and retain the
talent needed to manage and build the Company's business.
. Compensation is tied to performance. A significant part of the total
compensation opportunity is at risk, to be earned only if specific
goals are met.
12
. Incentive compensation is designed to reinforce the achievement of
both short-and long-term corporate objectives.
Compensation of Executive Officers Generally
The Company's executive compensation program is designed to link
executive pay to Company performance and to provide an incentive to executives
to manage the Company with a principal view to enhancing stockholder value.
Generally, the Company's executive compensation program makes a
significant portion of each executive's cash compensation contingent upon growth
and improvement in the Company's results of operations, with the potential to
earn exceptional rewards for exceptional performance. More specifically, the
program is designed to provide compensation for meeting and exceeding internal
goals and to provide incentives to increase the market value of the Company's
Common Stock. The program also is designed to attract and retain talented
executives who are essential to the Company's long-term success within a highly
competitive industry that demands unique talents, skills and capabilities.
Compensation criteria are evaluated annually to ensure they are
appropriate and consistent with the business objectives that are important in
meeting the Company's earnings per share, operating profit and revenue goals and
in enhancing stockholder value. The Company's executive compensation policies
and programs are intended to (i) provide rewards contingent upon Company and
individual performance, (ii) link executive compensation to sustainable
increases in stockholder value, (iii) promote teamwork among executives and
other Company employees, (iv) effect retention of a strong management team, and
(v) encourage personal and professional development and growth.
The primary components of the Company's executive compensation program
are salary, performance bonuses and stock options.
Base Salary. The Committee reviews the salary of each of its executive
officers annually. The Committee's review takes into consideration the Company's
earnings per share, operating profits and revenue and the duties and performance
of each executive. In making salary recommendations or decisions, the Committee
exercises its discretion and judgment based on the foregoing criteria, without
applying a specific formula to determine the weight of each factor considered.
The Committee also considers equity and fairness when comparing base salaries of
executives.
Incentive Bonuses. The Company has established a bonus system for
executive officers based on certain financial performance criteria, including
revenue growth, profitability and percentage performance compared to established
targets. Executive officers can earn bonuses targeted between 45% and 70% of
their respective base salaries. The bonus payable, if any, is contingent upon
the attainment of objectives determined by the Committee. Other senior managers
have similar bonus arrangements.
Stock Options and Equity Compensation. The Committee believes that
granting stock options and other forms of equity compensation to executive
officers and other key employees is an important method of enhancing long-term
profitability and stockholder value. The Committee views its Long-Term Incentive
Plan as a vehicle to attract and retain experienced employees and to align the
employee's economic incentives with those of the Company's stockholders. Under
the Long-Term Incentive Plan, the Committee may grant options and other forms of
equity compensation to executive officers who are expected to contribute
materially to the Company's future success. In determining the size of stock
option and other equity grants, the Committee focuses primarily on the Company's
performance and the perceived role of each executive in accomplishing such
performance objectives, as well as the satisfaction of individual performance
objectives.
The Committee intends to continue using stock options and other forms
of equity compensation as the primary long-term incentive for the Company's
executive officers. Because they generally provide rewards to executives only to
the extent the Company's stock price increases after the options or other equity
awards are granted, the Committee feels that stock options and other equity
awards granted under the Long-Term Incentive
13
Plan are an appropriate means to provide executives with incentives that closely
align their interests with those of stockholders and thereby encourage them to
promote the ongoing success of the Company.
Policy on Deductibility of Compensation
It is the responsibility of the Committee to address the provisions of
Section 162(m) of the Internal Revenue Code which, except in the case of
"performance-based compensation" and certain other types of compensation, limits
to $1,000,000 the amount of the Company's federal income tax deduction for
compensation paid to the Chief Executive Officer and the other four most highly
paid executive officers. In that regard, the Committee must determine whether
any actions with respect to Section 162(m) should be taken by the Company. At
this time, the Committee has determined that the Section 162(m) deduction
limitation does not apply because the Company falls within the extended reliance
period for corporations that become publicly held in connection with an initial
public offering. The Committee will continue to monitor the reliance period and
will take appropriate action when it is warranted in the future.
Chief Executive Officer Compensation
The Chief Executive Officer's salary, bonus and long-term awards
follow the policies set forth above. For the 2000 fiscal year, Mr. Janicki's
base salary was $198,750. Mr. Janicki earned a bonus in the amount of $153,457
in 2000. He also received $2,625 in profit sharing and/or matching contributions
under the Company's 401(k) Plan and an additional $2,885 as payment in lieu of
accrued vacation time.
The foregoing report has been approved by all of the members of the
Committee.
THE COMPENSATION COMMITTEE
Royce J. Holland
John D. Thornton
14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Neither of the members of the Compensation Committee is currently or
has been, at any time since the formation of the Company, an officer or employee
of the Company. No executive officer serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee.
15
Report of the Audit Committee
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board of Directors. Management has the primary responsibility
for the financial statements and the reporting process. The Company's
independent auditors are responsible for expressing an opinion on the conformity
of our audited financial statements to generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board No. 1 (Independence Discussions with Audit Committees) and discussed with
them their independence from the Company and its management.
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 financial statements be included in the Company'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
John D. Thornton
Barry F. Eggers
Audit Fees
The aggregate fees billed to the Company for professional
services rendered for the audit of the annual financial statements for the
fiscal year ending December 31, 2000 and the reviews of the financial statements
included in the Company's reports on Form 10-Q for the fiscal year ending
December 31, 2000 were $130,000.
Financial Information Systems Design and Implementation Fees
In the fiscal year ending December 31, 2000, the Company did not incur
fees billed for professional services relating to financial information systems
design and implementation.
All Other Fees
In the fiscal year ending December 31, 2000, the aggregate fees billed
for all other services rendered by the principal accountant were $255,036,
relating primarily to tax services.
The Audit Committee has considered whether the provision of
the services covered under "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" is compatible with maintaining the
principal accountant's independence.
16
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder
return on the Company's Common Stock between November 18, 1999 and December 31,
2000 with the cumulative total return of the Nasdaq National Market Composite
Index and the Morgan Stanley High Tech Index (the "MS High Tech Index") over the
same period. This graph assumes an investment of $100.00 on November 18, 1999 in
the Company's Common Stock, in the Nasdaq National Market Composite Index and
the MS High Tech Index, and assumes the reinvestment of dividends, if any.
The comparisons shown in the graph below are based upon historical
data. The Company cautions that the stock price performance shown in the graph
below is not indicative of, nor intended to forecast, the potential future
performance of the Company's Common Stock. Information used in the graph was
obtained from Morgan Stanley Dean Witter, a source believed to be reliable, but
the Company is not responsible for any errors or omissions in such information.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG METASOLV SOFTWARE, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE MORGAN STANLEY HIGH TECH INDEX
[PERFORMANCE GRAPH]
*$100 INVESTED ON 11/18/99 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
11/18/99 12/31/99 03/31/00 06/30/00 09/29/00 12/29/00
-------- -------- -------- -------- -------- --------
MetaSolv, Inc. $100.00 $430.26 $310.86 $231.58 $215.13 $48.03
Nasdaq National 100.00 121.58 136.62 118.49 109.73 73.81
Market Composite
Index
Morgan Stanley High 100.00 117.60 135.63 129.75 121.48 85.34
Tech Index
The Company effected its initial public offering of its Common Stock on
November 17, 1999 and trading of the Company's Common Stock commenced on
November 18, 1999. The price to the public on November 18, 1999 was $19 per
share.
Notwithstanding anything to the contrary set forth in any of the
Company's previous or future filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate
17
this Proxy Statement or future filings made by the Company under those statutes,
the Compensation Committee Report and Stock Performance Graph shall not be
deemed filed with the Securities and Exchange Commission and shall not be deemed
incorporated by reference into any of those prior filings or into any future
filings made by the Company under those statutes.
18
MANAGEMENT COMPENSATION`
General
The following table sets forth all compensation awarded or earned by
the Company's Chief Executive Officer and the four other most highly paid
executive officers during the last three fiscal years (the "Named Executive
Officers"):
Summary Compensation Table
Long-Term
Annual Compensation Compensation
-------------------------------------- -----------------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options (#) Compensation(1)
- ------------------------------------- -------- ----------- --------- -------------- -------------- -----------------
James P. Janicki.................... 2000 $198,750 153,457 $ 2,885(2) $ 0 $ 2,625
Chief Executive Officer 1999 183,750 100,328 0 200,000 6,290
1998 139,375 86,610 0 200,000 6,290
Sidney V. Sack...................... 2000 190,313 110,599 0 0 2,625
Former Chief Operating Officer 1999 129,792 72,683 140,141(3) 800,000 6,290
1998 0 0 34,348(3) 0 0
Glenn A. Etherington................ 2000 179,438 100,965 0 55,000 2,625
Chief Financial Officer 1999 89,798 50,287 68,750(4) 320,000 0
1998 0 0 0 0 0
Joseph W. Pollard................... 2000 178,125 119,236 0 47,500 0
Vice President - Sales 1999 158,125 98,828 0 120,000 6,290
1998 110,000 82,516 0 0 6,290
Eleanor M. Luce..................... 2000 169,650 95,554 0 47,250 2,625
Vice President - Services 1999 134,077 75,083 0 320,000 6,290
1998 0 0 0 0 0
______________
(1) Represents contributions made by the Company to all of our Named
Executive Officers under our 401(k)/ profit sharing plan.
(2) Represents payment in lieu of accrued vacation time.
(3) Represents consulting fees and reimbursable expenses in the amount of
$34,348 in 1998, and $67,224 in 1999, paid to Mr. Sack while Mr. Sack
performed services as a consultant for the Company prior to his
employment, and a one-time signing/relocation bonus during 1999 in the
amount of $72,917. Mr. Sack retired as Chief Operating Officer effective
January 1, 2001 and retired from the Company as an employee effective
March 2, 2001.
(4) Represents relocation expenses reimbursed by the Company.
19
Executive Option Grants
The following table contains information concerning the stock option
grants made to each of the Named Executive Officers in 2000.
Option Grants in Fiscal 2000
Individual Grants
------------------------------------------------------------ Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Number of Percentage of for Option Term(3)
Securities Total Options -----------------------------
Underlying Granted to Exercise
Options Employees in Price Per Expiration
Name Granted(1) Fiscal 2000(2) Share Date 5% 10%
- ---------------------------- -------------- ----------------- ----------- ------------ -------------- -------------
James P. Janicki........ - - - - - -
Sidney V. Sack.......... - - - - - -
Glenn A. Etherington.... 30,000 2.0% $44.00 8/3/05 $830,141 $2,103,740
25,000 1.7% 19.938 11/6/05 313,473 794,401
Joseph W. Pollard....... 30,000 2.0% 44.00 8/3/05 830,141 2,103,740
17,500 1.2% 19.938 11/6/05 219,431 556,081
Eleanor M. Luce......... 30,000 2.0% 44.00 8/3/05 830,141 2,103,740
17,250 1.2% 19.938 11/6/05 216,296 548,137
______________________
(1) Generally, most of the shares under the options listed in the table
are immediately exercisable, but are subject to repurchase by the
Company at the original exercise price paid per share upon the
optionee's cessation of service prior to vesting in such shares. The
repurchase right lapses and the optionee vests in 25% of the option
shares upon completion of 12 months of service from the vesting start
date, and in the balance in a series of equal annual installments over
the next three years of service. Normally, any option shares that are
not immediately exercisable will vest and become exercisable as to 25%
of the stock upon completion of 12 months of service from the vesting
start date, with the balance vesting in a series of equal annual
installments over the next three years of service. The option shares
will vest upon the dissolution or liquidation of the Company, or on
certain reorganizations where there is no plan to convert or exchange
the options into option shares of the surviving entity, unless the
Company's repurchase right with respect to the unvested option shares
is transferred to the acquiring entity. Each of the options has a
five-year term, subject to earlier termination in the event of the
optionee's cessation of service with the Company.
(2) Based upon options to purchase an aggregate of 1,493,665 shares of
Common Stock granted to employees of the Company in 2000 under the
Long-Term Incentive Plan.
(3) The potential realizable value is calculated based on the term of the
option at the time of grant (five years). Annual stock price
appreciation of 5% and 10% is assumed pursuant to rules promulgated by
the Securities and Exchange Commission and does not represent the
Company's prediction of its stock price performance. The potential
realizable values at 5% and 10% appreciation are calculated by
assuming that the estimated fair market value on the date of grant
appreciates at the indicated rate for the entire term of the option
and that the option is exercised at the exercise price and sold on the
last day of its term at the appreciated price.
Option Exercises and Holdings
The following table sets forth information concerning stock options
exercised by the Named Executive Officers during 2000, as well as the value of
unexercised options held by such persons on December 31, 2000. The values for
in-the-money options (which represent the positive spread between the exercise
price of any existing stock options and $9.125 per share, the closing price of
the Common Stock as reported by the Nasdaq National Market on December 29, 2000)
also are included.
20
Aggregate Option Exercises in Fiscal 2000
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares December 31, 2000(2) December 31, 2000
Acquired ---------------------------- ---------------------------
Upon Value
Name Exercise Realized(1) Vested Unvested Vested Unvested
- --------------------- ---------- ----------- --------- -------- ----------- ----------
James P. Janicki......... 209,500 $13,005,755 1,110,500 280,000 $9,420,545 $1,514,962
Sidney V. Sack........... 50,400 2,724,392 82,204 640,000 450,067 3,504,000
Glenn A. Etherington..... 6,000 52,728 36,604 305,000 200,407 1,368,750
Joseph W. Pollard........ 83,488 5,997,149 - 252,012 0 1,490,983
Eleanor M. Luce.......... 28,570 2,344,540 - 303,250 0 1,440,000
____________________
(1) Calculated as the difference between the fair market value of the
Company's Common Stock at the time of the option exercise and the
exercise price.
(2) Some of the unvested options are immediately exercisable, but any
shares purchased under those options will be subject to repurchase by
the Company, at the original exercise price paid per share, upon the
optionee's cessation of service with the Company, before vesting in
such shares. For those immediately exercisable options, the heading
"Vested" refers to shares no longer subject to repurchase; the heading
"Unvested" refers to shares subject to repurchase as of December 31,
2000. Those option shares that are not immediately exercisable will
vest and typically become exercisable as to 25% of the stock upon
completion of 12 months of service from the vesting start date, with
the balance vesting in a series of equal annual installments over the
next three years of service.
Termination and Change of Control Arrangements
Glenn A. Etherington, Joseph W. Pollard and Eleanor M. Luce received
options in 2000 to purchase shares of the Company's Common Stock. Under the
terms of their respective option agreements, they will be entitled to certain
accelerated vesting if their employment is terminated, other than for cause,
after a change of control. In the event their employment terminates after a
change of control occurs, they will immediately vest in all shares that
otherwise would have vested during the twenty-four months following the date
their employment terminates.
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Certificate of Incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty as
directors, except to the extent otherwise required by the DGCL. Such limitation
of liability does not affect the availability of equitable remedies such as
injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by Delaware law,
including in circumstances in which indemnification is otherwise discretionary
under Delaware law. The Company has also entered into indemnification agreements
with its officers and directors containing provisions that may require the
Company, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers and to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified.
Mr. Royce Holland, a director of the Company, is Chairman of the Board,
CEO and a 5% stockholder of Allegiance Telecom, a customer of the Company.
Purchases by Allegiance from the Company in fiscal year 2000 accounted for
$521,616 in revenue to the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The members of the Company's Board of Directors, the executive officers
of the Company and persons who hold more than 10% of the Company's outstanding
Common Stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which require them to file reports
disclosing their ownership of the Company's Common Stock and their transactions
in such Common Stock. Based upon the copies of Section 16(a) reports that the
Company received from such persons for their 2000 fiscal year transactions in
the Common Stock and their Common Stock holdings, the Company believes that all
reporting requirements under Section 16(a) for such fiscal year were met in a
timely manner by its executive officers, Board of Directors members and greater
than ten-percent stockholders.
FORM 10-K
THE COMPANY WILL MAIL TO YOU WITHOUT CHARGE, UPON WRITTEN REQUEST, A
COPY OF ITS FORM 10-K REPORT FOR 2000. REQUESTS SHOULD BE SENT TO METASOLV,
INC., 5560 TENNYSON PARKWAY, PLANO, TEXAS 75024, ATTN: JONATHAN K. HUSTIS,
GENERAL COUNSEL.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Stockholder proposals that are intended to be presented at the 2002
Annual Meeting that are eligible for inclusion in the Company's proxy statement
and related proxy materials for that meeting under the applicable rules of the
Securities and Exchange Commission must be received in writing by the Company's
Secretary not later than December 22, 2001 in order to be included. Such
stockholder proposals should be addressed to MetaSolv, Inc., 5560 Tennyson
Parkway, Plano, Texas 75024, Attn: Jonathan K. Hustis, Corporate Secretary.
22
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the Annual Meeting. However, if other matters do properly
come before the Annual Meeting or any adjournments or postponements thereof, the
Board of Directors intends that the persons named in the proxies will vote upon
such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Jonathan K. Hustis
__________________________________________
Jonathan K. Hustis
Vice President--Business Services, General
Counsel and Corporate Secretary
Plano, Texas
April 21, 2001
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF
YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU
MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
23
APPENDIX A
----------
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
METASOLV SOFTWARE, INC.
a Delaware corporation
(Pursuant to Sections 228, 242 and 245
of the Delaware General Corporation Law)
MetaSolv Software, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "General Corporation Law")
DOES HEREBY CERTIFY:
FIRST: That this corporation was originally incorporated on July 6, 1992,
pursuant to the General Corporation Law. The Corporation was originally
incorporated as Omnicase, Inc.
SECOND: That the Board of Directors thrice duly adopted resolutions
proposing to amend and restate the Certificate of Incorporation of this
corporation, declaring each such amendment and restatement to be advisable and
in the best interests of this corporation and its stockholders, and authorizing
the appropriate officers of this corporation to solicit the consent of the
stockholders therefor.
THIRD: That the Board of Directors duly adopted resolutions proposing to
amend the Certificate of Incorporation of this corporation pursuant to Section
251(g) of the General Corporation Law, declaring such amendment to be advisable
and in the best interests of this corporation and its stockholders.
FOURTH: That the Board of Directors duly adopted a resolution proposing to
restate and integrate the Third Amended and Restated Certificate of
Incorporation of this corporation and other amendments to the Certificate of
Incorporation, declaring said restatement and integration to be advisable and in
the best interests of this corporation and its stockholders.
FIFTH: That the Board of Directors duly adopted a resolution proposing to
amend and restate the Fourth Restated Certificate of Incorporation of this
corporation in its entirety, declaring said amendment and restatement to be
advisable and in the best interests of this corporation and its stockholders.
The Board of Directors' resolution setting forth the proposed Fifth Amended and
Restated Certificate of Incorporation is as follows:
"RESOLVED, that the Fourth Restated Certificate of Incorporation of this
corporation, as heretofore amended, be amended and restated in its entirety as
follows:
ARTICLE I
The name of the corporation is MetaSolv Software, Inc. (the "Corporation").
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
A-1
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue one class of stock, to be designated
common stock ("Common Stock"). The number of shares of Common Stock authorized
to be issued is One Thousand (1,000), par value $.005 per share.
ARTICLE V
Except as otherwise provided in this Fifth Amended and Restated Certificate
of Incorporation, in furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE VI
The number of directors of the Corporation shall be fixed from time to time
by a bylaw or amendment thereof duly adopted by the Board of Directors.
The Board of Directors shall be and is divided into three classes, Class I,
Class II and Class III. Such classes shall be as nearly equal in number of
directors as possible. Each director shall serve for a term ending on the third
annual meeting following the annual meeting at which such director was elected;
provided, however, that the directors first elected to Class I shall serve for a
term ending on the annual meeting next following the end of fiscal year 1999,
the directors first elected to Class II shall serve for a term ending on the
second annual meeting next following the end of fiscal year 1999, and the
directors first elected to Class III shall serve for a term ending on the third
annual meeting next following the end of fiscal year 1999. The foregoing
notwithstanding, each director shall serve until such director's successor shall
have been duly elected and qualified, unless such director shall resign, become
disqualified, disabled or shall otherwise be removed.
At each annual election, directors chosen to succeed those whose terms then
expire shall be of the same class as the directors they succeed, unless by
reason of any intervening changes in the authorized number of directors, the
Board shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, in the event of any change in the authorized
number of directors each director then continuing to serve as such shall
nevertheless continue as a director of the class of which the director is a
member until the expiration of the director's current term, or the director's
prior death, resignation or removal. If any newly created directorship may,
consistently with the rule that the three classes shall be as nearly equal in
number of directors as possible, be allocated to either class, the Board shall
allocate it to that of the available class whose term of office is due to expire
at the earliest date following such allocation.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws of
the Corporation shall so provide.
ARTICLE VIII
Except as otherwise provided in this Fifth Amended and Restated Certificate
of Incorporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of the stockholders of the Corporation, and may not be effected by any consent
in writing of such stockholders.
A-2
ARTICLE IX
An officer or director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as an officer or director, except for liability (i) for any breach of the
officer's or director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
officer or director derived any improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the stockholders of this
Article to authorize corporate action further eliminating or limiting the
personal liability of officers and directors then the liability of an officer or
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article IX
by the stockholders of the Corporation shall not adversely affect any right or
protection of an officer or director of the Corporation existing at the time of,
or increase the liability of any officer of director of this Corporation with
respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
ARTICLE X
In addition to any vote of the holders of any class or series of the stock
of this Corporation required by law or by this Fifth Amended and Restated
Certificate of Incorporation, the affirmative vote of the holders of a majority
of the voting power of all of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend or repeal the provisions
of Article I, Article II, Article III and Article IV of this Fifth Amended and
Restated Certificate of Incorporation. Notwithstanding any other provision of
this Fifth Amended and Restated Certificate of Incorporation or any provision of
law which might otherwise permit a lesser vote or no vote, but in addition to
any vote of the holders of any class or series of the stock of this Corporation
required by law or by this Fifth Amended and Restated Certificate of
Incorporation, the affirmative vote of the holders of at least seventy-five
percent (75%) of the voting power of all of the then outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to amend or
repeal any provision of this Fifth Amended and Restated Certificate of
Incorporation not specified in the preceding sentence.
* * * *
SIXTH: The foregoing Fifth Amended and Restated Certificate of
Incorporation has been duly adopted by the Corporation's Board of Directors in
accordance with the applicable provisions of Section 245 of the General
Corporation Law of the State of Delaware.
SEVENTH: That the stockholders of this corporation, holding in the
aggregate at least seventy-five percent (75%) of the voting power of all of the
then outstanding shares of the capital stock of the corporation approved and
ratified the amendment and restatement in its entirety of the Fourth Restated
Certificate of Incorporation of this corporation.
EIGHTH: The foregoing Fifth Amended and Restated Certificate of
Incorporation shall be effective as of 12:02 a.m., Eastern Standard Time, on
_______, 2001.
A-3
IN WITNESS WHEREOF, the undersigned has signed this Fifth Amended and
Restated Certificate of Incorporation this ___day of _______________, 2001.
------------------------------
James P. Janicki
Chief Executive Officer
A-4
APPENDIX B
----------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
METASOLV, INC.
MetaSolv, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), hereby certifies as follows:
The name of the Corporation is MetaSolv, Inc. The original Certificate
of Incorporation was filed with the Delaware Secretary of State on December 19,
2000 (the "Original Certificate of Incorporation").
This Amended and Restated Certificate of Incorporation was duly adopted
by vote of the stockholders in accordance with the applicable provisions of
Sections 228, 242 and 245 of the Delaware General Corporation Law.
This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Original Certificate of Incorporation to read
in its entirety, as follows:
ARTICLE I
The name of the corporation is MetaSolv, Inc.
ARTICLE II
The address of the registered office of this corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of stock, to be
designated common stock ("Common Stock") and preferred stock ("Preferred
Stock"). The number of shares of Common Stock authorized to be issued is One
Hundred Million (100,000,000), par value $.005 per share, and the number of
shares of Preferred Stock authorized to be issued is Ten Million (10,000,000),
par value $.01 per share.
The Preferred Stock may be issued from time to time in one or more
series, without further stockholder approval. The Board of Directors is hereby
authorized, in the resolution or resolutions adopted by the Board of Directors
providing for the issue of any wholly unissued series of Preferred Stock, within
the limitations and restrictions stated in this Certificate, to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or
prices, and the liquidation preferences of any wholly unissued series of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or any of them, and to increase or decrease the number of
shares of any series subsequent to the issue of shares of that series, but not
below the number of shares of such series then outstanding. In case the number
of shares of any series shall be so decreased, the shares constituting such
decrease
B-1
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
ARTICLE V
The name and mailing address of the sole incorporator is as follows:
Name Mailing Address
---- ---------------
Clarence B. Brown III 5560 Tennyson Parkway
Plano, Texas 75024
ARTICLE VI
Except as otherwise provided in this Amended and Restated Certificate
of Incorporation, in furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE VII
The number of directors of the Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors.
The Board of Directors shall be and is divided into three classes,
Class I, Class II and Class III. Such classes shall be as nearly equal in number
of directors as possible. Each director shall serve for a term ending on the
third annual meeting following the annual meeting at which such director was
elected; provided, however, that the directors first elected to Class I shall
serve for a term ending on the annual meeting next following the end of fiscal
year 1999, the directors first elected to Class II shall serve for a term ending
on the second annual meeting next following the end of fiscal year 1999, and the
directors first elected to Class III shall serve for a term ending on the third
annual meeting next following the end of fiscal year 1999. The foregoing
notwithstanding, each director shall serve until such director's successor shall
have been duly elected and qualified, unless such director shall resign, become
disqualified, disabled or shall otherwise be removed.
At each annual election, directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed, unless by
reason of any intervening changes in the authorized number of directors, the
Board shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors each director then continuing to serve as such
shall nevertheless continue as a director of the class of which the director is
a member until the expiration of the director's current term, or the director's
prior death, resignation or removal. If any newly created directorship may,
consistently with the rule that the three classes shall be as nearly equal in
number of directors as possible, be allocated to either class, the Board shall
allocate it to that of the available class whose term of office is due to expire
at the earliest date following such allocation.
The number of directors constituting the initial board of directors is
seven (7) and the names and classes of such directors until such directors'
successors shall be elected and qualified, are:
Name Class
---- -----
Lawrence J. Bouman II
Barry F. Eggers II
B-2
Royce J. Holland I
James P. Janicki III
David R. Semmel I
John Thornton III
John White III
ARTICLE VIII
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE IX
Except as otherwise provided in this Amended and Restated Certificate
of Incorporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of the stockholders of the Corporation, and may not be effected by any consent
in writing of such stockholders.
ARTICLE X
An officer or director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as an officer or director, except for liability (i) for any
breach of the officer's or director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
officer or director derived any improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the stockholders of this
Article to authorize corporate action further eliminating or limiting the
personal liability of officers and directors then the liability of an officer or
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article
X by the stockholders of the Corporation shall not adversely affect any right or
protection of an officer or director of the Corporation existing at the time of,
or increase the liability of any officer of director of this Corporation with
respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
ARTICLE XI
In addition to any vote of the holders of any class or series of the
stock of this Corporation required by law or by this Amended and Restated
Certificate of Incorporation, the affirmative vote of the holders of a majority
of the voting power of all of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend or repeal the provisions
of this Amended and Restated Certificate of Incorporation, except to the extent
a greater vote is required by this Amended and Restated Certificate of
Incorporation or any provision of law. Notwithstanding any other provisions of
this Amended and Restated Certificate of Incorporation or any provision of law
that might otherwise permit a lesser or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital
stock of the Corporation required by law or by this Amended and Restated
Certificate of Incorporation, the affirmative vote of the holders of not less
than seventy-five percent of the outstanding shares of capital stock of the
Corporation then entitled to vote upon the election of directors, voting
together as a single class, shall be required to amend or repeal, or to adopt
any provision inconsistent with, Article VI, Article VII, Article IX, or this
Article XI of this Amended and Restated Certificate of Incorporation.
B-3
IN WITNESS WHEREOF, the undersigned has signed this Amended and
Restated Certificate of Incorporation this ___ day of ____________, 2001.
------------------------------
James P. Janicki
Chief Executive Officer
B-4
APPENDIX C
----------
Charter of the Audit Committee of the Board of Directors
--------------------------------------------------------
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
. Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting, and legal compliance.
. Monitor the independence and performance of the Company's
independent auditors.
. Provide an avenue of communication among the independent
auditors, 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 auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other consultants or
experts it deems necessary in the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the NASD, and
any other exchange on which the Company authorizes its securities to
be traded. The Audit Committee shall initially be comprised of two or
more directors as determined by the Board, each of whom shall be
independent nonexecutive directors, free from any relationship that
would interfere with the exercise of his or her independent judgment.
As of June 1, 2001 or earlier, there shall be not less than three
members of the Audit Committee. All members of the Committee shall
have a basic understanding of finance and accounting and be able to
read and understand fundamental financial statements. At least one
member of the Committee shall have sufficient employment experience in
accounting or finance, professional certification, or other experience
or background that provides that member with financial expertise and
sophistication.
Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated or present, the Board may designate
a Chair.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Committee should meet
privately in executive session at least annually with management, the
independent auditors, and as a committee to discuss any matters that
the Committee or each of these groups believe should be discussed. In
addition, the Committee, or at least its Chair, should communicate
with management and the independent auditors quarterly to review the
Company's financial statements and significant findings based upon the
auditors limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
-----------------
1. Review and reassess the adequacy of this Charter annually.
Certify in writing the adequacy of this Charter and its
implementation annually, as required by the NASD and any other
exchange on which the Company authorizes its securities to be
traded. Submit the charter to the Board of Directors for approval
and have the document published at least every three years in
accordance with SEC regulations.
C-1
2. Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices, and judgments.
3. In consultation with the management and the independent auditors, consider
the integrity of the Company's financial reporting process and controls.
Discuss significant financial risk exposures and the steps management has
taken to monitor, control, and report such exposures. Review significant
findings prepared by the independent auditors together with management's
responses.
4. Review with financial management and the independent auditors the company's
quarterly financial results prior to the release of earnings and/or the
company's quarterly financial statements prior to filing or distribution.
Discuss with financial management and the independent auditors the quality
of the Company's significant accounting principles as applied in the
Company's financial reporting for the period. Discuss any significant
changes to the Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61 (see
item 9). The Chair of the Committee may represent the entire Audit
Committee for purposes of this review.
Independent Auditors
- --------------------
5. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant. The Board of
Directors shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent auditors (or to
nominate the independent auditors to be proposed for shareholder approval
in any proxy statement).
6. The Audit Committee will approve the fees and other significant
compensation to be paid to the independent auditors.
7. On an annual basis, the Committee shall require the independent auditors to
provide a formal written statement delineating all relationships between
the auditors and the Company, consistent with applicable accounting
standards. The Committee shall review and discuss with the independent
auditors all significant relationships they have with the Company that
could impair the auditors' independence or objectivity.
8. The Committee shall review the independent auditors' audit plan -discuss
scope, staffing, locations, reliance upon management, and general audit
approach.
9. Prior to releasing the year-end earnings, the Committee shall discuss the
results of the audit with the independent auditors. Discuss with the
independent auditors and with management certain matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
10. The Committee shall consider the independent auditor's judgments about the
quality and appropriateness of the Company's accounting principles as
applied in its financial reporting.
Legal Compliance
- ----------------
11. On at least an annual basis, the Committee shall review with the Company's
counsel, any legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from regulators or
governmental agencies.
C-2
Other Audit Committee Responsibilities
- --------------------------------------
12. Annually prepare a report to shareholders as required by the Securities and
Exchange Commission. The report should be included in the Company's annual
proxy statement.
13. Perform any other activities consistent with this Charter, the Company's
by-laws, and governing law, as the Committee or the Board deems necessary
or appropriate.
14. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
C-3
PROXY METASOLV, INC. PROXY
5560 Tennyson Parkway, Plano, Texas 75024
This Proxy is Solicited on Behalf of the Board of Directors of MetaSolv, Inc.
for the Annual Meeting of Stockholders to be held May 22, 2001
The undersigned holder of Common Stock, par value $.005, of MetaSolv, Inc.
(the "Company") hereby appoints Jonathan K. Hustis and Glenn A. Etherington, or
either of them, proxies for the undersigned, each with full power of
substitution, to represent and to vote as specified in this Proxy all Common
Stock of the Company that the undersigned stockholder would be entitled to vote
if personally present at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Tuesday, May 22, 2001 at 10:00 a.m. local time, at the
Company's headquarters located at 5560 Tennyson Parkway, Plano, Texas 75024, and
at any adjournments or postponements of the Annual Meeting. The undersigned
stockholder hereby revokes any proxy or proxies heretofore executed for such
matters.
This proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTORS (AS SET FORTH IN PROPOSAL 1), FOR
PROPOSAL 2, FOR PROPOSAL 3, AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. The undersigned stockholder
may revoke this proxy at any time before it is voted by delivering to the
Corporate Secretary of the Company either a written revocation of the proxy or a
duly executed proxy bearing a later date, or by appearing at the Annual Meeting
and voting in person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
DIRECTORS (AS SET FORTH IN PROPOSAL 1), "FOR" PROPOSAL 2 AND "FOR" PROPOSAL 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE. If you receive more than one proxy card, please sign and return
ALL cards in the enclosed envelope.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(Reverse)
METASOLV, INC.
[X] Please mark votes
as in this example
1. To elect the following directors to serve for a term 2. To amend the Fourth FOR AGAINST ABSTAIN
ending upon the 2004 Annual Meeting of Stockholders or Restated Certificate of [_] [_] [_]
until their successors are elected and qualified: Incorporation of MetaSolv
Software, Inc. to eliminate
Nominees: Lawrence J. Bouman and the provision relating to
Section 251(g) of the DGCL
Thomas Curtis Holmes, Jr.
FOR WITHHELD For all nominees, except
for nominees written below.
[_] [_] [_]
_________________________
Nominee exception(s).
3. To amend the Certificate of Incorporation of the Company to provide
for simple majority approval for most modifications to the Certificate of
Incorporation
FOR AGAINST ABSTAIN
[_] [_] [_]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement.
Signature: __________________________ Signature (if held jointly): _____________
Date: ____________________, 2001
Please date and sign exactly as your name(s) is (are) shown on the share
certificate(s) to which the Proxy applies. When shares are held as joint
tenants, both should sign. When signing as an executor, administrator, trustee,
guardian, attorney-in fact or other fiduciary, please give full title as such.
When signing as a corporation, please sign in full corporate name by President
or other authorized officer. When signing as a partnership, please sign in
partnership name by an authorized person.