Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CHEYENNE SOFTWARE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CHEYENNE SOFTWARE, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
CHEYENNE SOFTWARE, INC.
3 Expressway Plaza
Roslyn Heights, New York 11577
_______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on December 14, 1995
______________________
To the Stockholders of
CHEYENNE SOFTWARE, INC.
PLEASE BE ADVISED that the 1995 Annual Meeting of Stockholders of
Cheyenne Software, Inc. (the "Company") will be held at the Company's
offices located at 2000 Marcus Avenue, Lake Success, New York 11042 on
December 14, 1995, at 10:00 a.m., New York time, for the following
purposes:
1. To elect five directors of the Company to hold office until the
next Annual Meeting of Stockholders or until their successors are duly
elected and qualified;
2. To ratify the appointment by the Board of Directors of KPMG Peat
Marwick LLP as independent auditors of the Company for the year ending June
30, 1996;
3. To approve and adopt amendments to the Company's 1987 Non-
Qualified Option Plan, as amended and restated (the "Non-Qualified Plan"),
to increase the aggregate number of shares of Common Stock which may be
issued upon the exercise of all options granted pursuant to the Non-
Qualified Plan from 4,237,500 shares to 5,587,500 shares and to impose a
grant limit under the Non-Qualified Plan;
4. To approve and adopt amendments to the Company's 1989 Incentive
Stock Option Plan, as amended and restated (the "Incentive Plan"), to
increase the aggregate number of shares of Common Stock which may be issued
upon the exercise of all options granted pursuant to the Incentive Plan
from 4,806,250 shares to 5,806,250 shares and to impose a grant limit under
the Incentive Plan; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on October 30,
1995 as the record date (the "Record Date") for the determination of the
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment(s) thereof. Only stockholders of record at the close of
business on the Record Date are entitled to notice of and to vote at the
Annual Meeting.
We cordially invite you to attend the Annual Meeting. Whether or not
you expect to attend the Annual Meeting in person, we urge you promptly to
mark, sign, date, and mail the enclosed form of proxy so that your shares
of Common Stock may be represented and voted in accordance with your wishes
and in order that the presence of a quorum may be assured at the Annual
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
ReiJane Huai, Chairman of the Board
Date: November 6, 1995
CHEYENNE SOFTWARE, INC.
3 Expressway Plaza
Roslyn Heights, New York 11577
______________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be Held on December 14, 1995
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Cheyenne Software, Inc. (the "Company") of
proxies to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on December 14, 1995, at 10:00 a.m., New York time, at
the Company's offices located at 2000 Marcus Avenue, Lake Success, New York
11042, and at any and all adjournment(s) thereof.
The solicitation will be by mail and the cost of such solicitation,
including reimbursement paid to brokerage firms and others for their
expenses in forwarding proxies and proxy statements to the beneficial
owners of the Company's common stock, will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by the
directors, officers, and employees of the Company by personal interview,
telephone, or telegram. Such directors, officers, and employees will not
be additionally compensated, but may be reimbursed for out-of-pocket
expenses incurred in connection with such solicitation.
The shares of common stock represented by each duly executed proxy
received by the Board of Directors before the Annual Meeting will be voted
at the Annual Meeting as specified in the proxy. A stockholder may
withhold authority to vote for all of the nominees by marking the
appropriate box on the accompanying proxy card or may withhold authority to
vote for an individual nominee by striking a line through such nominee's
name in the appropriate space on the accompanying proxy card. UNLESS
INSTRUCTIONS TO THE CONTRARY ARE GIVEN, EACH PROPERLY EXECUTED PROXY WILL
BE VOTED FOR (i) THE ELECTION OF DIRECTORS NAMED IN THIS PROXY STATEMENT
AND THE FORM OF PROXY, (ii) THE RATIFICATION OF THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS, (iii) THE APPROVAL
AND ADOPTION OF THE PROPOSED AMENDMENTS TO THE COMPANY'S 1987 NON-QUALIFIED
STOCK OPTION PLAN, AS AMENDED AND RESTATED (THE "NON-QUALIFIED PLAN"), AND
(iv) THE APPROVAL AND ADOPTION OF THE PROPOSED AMENDMENTS TO THE COMPANY'S
1989 INCENTIVE STOCK OPTION PLAN, AS AMENDED AND RESTATED (THE "INCENTIVE
PLAN"). Stockholders who execute proxies nevertheless retain the right to
revoke them at any time before they are voted by submitting new proxies
bearing a later date, by submitting written revocations to the named
proxies, or by attending the Annual Meeting and voting thereat.
This Proxy Statement, the accompanying form of proxy, and the Annual
Report to Stockholders are first being sent to stockholders on or about
November 9, 1995.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has designated October 30, 1995, as the
record date (the "Record Date") for determining the stockholders entitled
to notice of and to vote at the Annual Meeting. On the Record Date, the
total number of shares of common stock of the Company, par value $0.01 per
share (the "Common Stock"), outstanding and entitled to vote was 37,496,676
(excluding 2,035,000 shares of treasury stock). None of the Company's
5,000,000 authorized shares of preferred stock, $0.01 par value per share
(the "Preferred Stock"), have been issued. The holders of all outstanding
shares of Common Stock are entitled to one vote for each share of Common
Stock registered in their names on the books of the Company at the close of
business on the Record Date. The presence in person or by proxy of a
majority of the outstanding shares of the Common Stock entitled to vote at
the Annual Meeting will be necessary to constitute a quorum. Abstentions
and broker non-votes on any item will not be counted as voting in respect
of such item; they will be counted only for purposes of determining whether
a quorum is present at the Annual Meeting.
PRINCIPAL STOCKHOLDERS; SHARES HELD BY MANAGEMENT
The following table sets forth the number and percentage of
shares of Common Stock owned as of November 3, 1995, by (i) persons known
to hold more than five percent (5%) of the shares of outstanding Common
Stock, (ii) each director of the Company and each nominee for director,
(iii) each of the executive officers named in the Summary Compensation
Table, and (iv) all executive officers and directors of the Company as a
group. Each person named in the table has sole investment power and sole
voting power with respect to the shares of the Common Stock set forth
opposite such person's name, except as otherwise indicated.
Percentage of
Name and Address of Number of Shares Common Stock
Beneficial Owner Beneficially Owned(1)(3) Outstanding(2)(3)
- ---------------- ------------------------- -----------------
ReiJane Huai, Chairman of the Board,
President and Chief Executive Officer 470,313 (4) 1.24%
Rino Bergonzi, Director 19,375 (5) *
Richard F. Kramer, Director 84,375 (6) *
Bernard Rubien, Director 33,750 (7) *
Ginette Wachtel, Director 50,625 (8) *
Yuda Doron, Executive Vice President 60,500 (9) *
Alan Kaufman, Executive Vice President
and Secretary 125,000 (10 *
Elliot Levine, Executive Vice President,
Senior Financial Officer and Treasurer 284,000(11) *
James McNiel, Executive Vice President 158,750(12) *
Wellington Management Company 2,277,980(13) 6.07%
75 State Street
Boston, Massachusetts 02109
State of Wisconsin Investment Board 3,790,000(14) 10.10%
P.O. Box 7842
Madison, Wisconsin 53707
All executive officers and directors as a group
(11 persons) 1,286,688(15) 3.34%
- -------------------------------------------
(1) Includes shares of Common Stock issuable pursuant to options
exercisable within sixty (60) days from the date hereof.
2
(2) Based upon (i) 37,521,913 shares of Common Stock outstanding
(excluding 2,035,000 shares of treasury stock), plus, if appropriate
(ii) the number of shares of Common Stock which may be acquired by
the named person or by all persons included in the group pursuant to
the exercise of options exercisable within sixty (60) days from the
date hereof.
(3) All shares of Common Stock have been adjusted to reflect the 1992,
1993, and 1994 three-for-two stock splits paid in the form of 50%
stock dividends with respect to the issued and outstanding shares of
Common Stock (the "1992 Stock Split", "1993 Stock Split", and "1994
Stock Split", respectively). The 1992 Stock Split was paid on March
25, 1992 to stockholders of record at the close of business on March
3, 1992; the 1993 Stock Split was paid on April 8, 1993 to
stockholders of record at the close of business on March 12, 1993;
and the 1994 Stock Split was paid on March 29, 1994 to stockholders
of record at the close of business on March 1, 1994.
(4) Consists of 70,608 shares of Common Stock currently held by Mr.
Huai, 224,705 shares of Common Stock acquirable pursuant to the
exercise of incentive stock options granted under the Company's 1989
Incentive Stock Option Plan, as amended and restated (the "Incentive
Plan"), and 175,000 shares of Common Stock acquirable pursuant to
the exercise of non-qualified stock options granted under the
Company's 1987 Non-Qualified Option Plan, as amended and restated
(the "Non-Qualified Plan").
(5) Consists of 2,500 shares of Common Stock owned by the wife of Rino
Bergonzi and 16,875 shares of Common Stock acquirable pursuant to
the exercise of non-qualified stock options granted under the
Company's 1992 Stock Option Plan for Outside Directors. Mr.
Bergonzi disclaims beneficial ownership of the shares owned by his
wife.
(6) Consists of 33,750 shares of Common Stock currently held by Mr.
Kramer and 50,625 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's
1992 Stock Option Plan for Outside Directors.
(7) Consists of 33,750 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's
1992 Stock Option Plan for Outside Directors.
(8) Consists of 50,625 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's
1992 Stock Option Plan for Outside Directors.
(9) Consists of 500 shares of Common Stock owned by the wife of Yuda
Doron, and 60,000 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Non-
Qualified Plan. Mr. Doron disclaims beneficial ownership of the
shares owned by his wife.
(10) Consists of 125,000 shares of Common Stock acquirable pursuant to
the exercise of non-qualified stock options granted under the Non-
Qualified Plan.
(11) Consists of 131,500 shares of Common Stock currently held by Mr.
Levine, and 152,500 shares of Common Stock acquirable pursuant to
the exercise of non-qualified stock options granted under the Non-
Qualified Plan.
(12) Consists of 33,750 shares of Common Stock held by Mr. McNiel, and
125,000 shares of Common Stock acquirable pursuant to the exercise
of non-qualified stock options granted under the Non-Qualified Plan.
(13) According to the Schedule 13G, dated February 3, 1995, filed with
the Securities and Exchange Commission, Wellington Management
Company has shared dispositive power over 1,495,100 shares of Common
Stock and shared voting power over 2,277,980 shares of Common Stock.
(14) According to the Schedule 13G, dated February 13, 1995, filed with
the Securities and Exchange Commission, State of Wisconsin
Investment Board has sole dispositive power and sole voting power
over 3,790,000 shares of Common Stock.
3
(15) Includes an aggregate of 272,608 shares of Common Stock currently
held by certain executive officers and directors of the Company, and
1,014,080 shares of Common Stock acquirable pursuant to the exercise
of options.
* Less than 1%.
ELECTION OF DIRECTORS
Five directors are to be elected to serve until the next Annual
Meeting of stockholders and until their successors are elected and have
qualified. Directors shall be elected by stockholders holding a plurality
of the shares of Common Stock present at the Annual Meeting. It is the
intention of the persons named in the form of proxy, unless authority is
withheld, to vote the proxies given them FOR the election of all nominees
hereafter named. If any of such nominees is unable to or declines to
serve, the proxies will be voted for the election of the others so named
and may be voted for substitute nominees. The Board of Directors, however,
does not anticipate that this will occur.
The nominees for the Board of Directors are as follows:
RINO BERGONZI
REIJANE HUAI
RICHARD F. KRAMER
BERNARD RUBIEN
GINETTE WACHTEL
Each of the nominees is currently a member of the Board of
Directors, and has served continuously since he or she first became a
director. Information about all nominees is set forth under "Management -
Directors and Executive Officers."
Unless marked to the contrary, the shares of Common Stock
represented by the enclosed Proxy will be voted FOR the election of the
nominees named above as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
MANAGEMENT
Legal Proceedings
The Company and certain of its officers and directors are parties to the
following pending legal proceedings:
1) In re Cheyenne Software, Inc. Securities Litigation
---------------------------------------------------
Master File No. 94 Civ. 2771 (TCP)
On or about June 11, 1994, a securities fraud class action complaint,
entitled Bell v. Cheyenne Software, Inc., et al., was filed in the United
---------------------------------------
States District Court for the Eastern District of New York. The lawsuit
names as defendants the Company and several of its officers and directors.
In the following weeks, several other similar lawsuits were filed in the
Eastern District of New York. The actions allege securities fraud claims
under Sections 10(b) and 20 of the Securities Exchange Act of 1934, and
seek compensatory damages on behalf of all the shareholders who purchased
shares between approximately January 24, 1994 and approximately June 17,
1994, as well as attorneys' fees and costs. The gravamen of the actions is
that the Company and the individual defendants
4
made misrepresentations and omissions to the public, which caused the
Company's stock to be artificially inflated. The suits rely on what is
known as the "fraud on the market" theory of liability.
On July 20, 1994, the Court ordered that all of the actions be
consolidated under the caption of In re Cheyenne Software, Inc. Securities
----------------------------------------
Litigation. On March 8, 1995, plaintiffs filed an Amended Complaint. On
- ----------
March 23, 1995, plaintiffs served a Motion for Class Certification. The
Company has contested certain aspects of that Motion, and the Court has yet
to issue a ruling. On April 11, 1995, the Company served a Motion to
Dismiss certain of the claims alleged in the Amended Complaint. The Motion
to Dismiss is expected to be heard by March, 1996.
The defendants deny any and all liability and intend to vigorously
defend against the claims.
2) Rand v. Oxenhorn, et al.
------------------------
Delaware Chancery Court (New Castle County) No. 13583
On or about June 27, 1994, a shareholder derivative complaint, entitled
Rand v. Oxenhorn, et al., was filed in the Court of Chancery for the State
- ------------------------
of Delaware in and for New Castle County. The lawsuit, purportedly filed
derivatively on behalf of the Company, names as defendants eleven of its
present or former officers and directors. The complaint's factual
allegations are similar to those of In re Cheyenne Software, Inc.
-----------------------------
Securities Litigation described above. However, instead of securities
- ---------------------
fraud claims, the action alleges that the defendants breached their
fiduciary obligations to the Company. The suit seeks a variety of
compensatory damages as well as attorneys fees.
On August 19, 1994, the defendants filed a motion to dismiss on the
grounds that (1) the plaintiff failed to comply with the pleading and
demand requirements of a derivative action and (2) the pleadings fail to
state a claim upon which relief may be granted. On October 14, 1994, and
before defendants' motion to dismiss was ruled on, an amended complaint was
filed only naming as defendants six of the Company's officers or directors.
The Company filed a motion to dismiss the Amended Complaint on the same
grounds listed above on February 16, 1995.
The defendants deny any and all liability and intend to vigorously
defend against the claims.
3) SEC Formal Private Investigation
--------------------------------
On June 28, 1994, the Securities and Exchange Commission ("SEC")
commenced an informal inquiry into the Company. On or about April 14,
1995, the SEC advised the Company that it had issued a Formal Order of
Private Investigation of the Company. The Private Investigation is a
continuation of the informal inquiry. The Formal Order, among other
things, enables the SEC to utilize its subpoena powers to obtain relevant
information from third parties as well as the Company. The Private
Investigation relates to possible violations of federal securities laws.
The Company has been cooperating and will continue to cooperate fully with
the SEC.
4) JWANCO, Inc., et al. v. Cheyenne Software, Inc. et al.
------------------------------------------------------
California Superior Court (County of Alameda) No. H-183331-1
On or about May 2, 1995, plaintiffs JWANCO,Inc. (formerly known as Bit
Software, Inc.), Jonathan Wan, Yau Ki Chuck, Norman Chan, David Law and
David Wong filed an action in the Superior Court of California in and for
the County of Alameda against the Company, Cheyenne Communications, Inc., a
wholly owned subsidiary of the Company, and several of its officers,
directors and employees. The action alleges breach of contract, fraud,
wrongful termination, negligent infliction of emotional distress, and a
number of other related torts. The essence of the allegations is that the
defendants breached agreements and defrauded JWANCO, Inc., and the
individual plaintiffs in connection with the Company's acquisition of
certain assets and assumption of certain liabilities of Bit Software, Inc.
on May 19, 1994. These allegations are substantially similar to those In
--
re Cheyenne Software, Inc. Securities Litigation described above. In
- ------------------------------------------------
addition, the Complaint alleges, on behalf of plaintiff Jonathan Wan only,
wrongful termination and a variety of other causes of action relating to
the employment and termination of the employment of Jonathan Wan by
Cheyenne Communications. The defendants have removed the action to the
United
5
States District Court, and have moved to transfer it to New York.
Management of the Company, based on advice of outside legal counsel, does
not believe that the ultimate resolution of this lawsuit will have a
material adverse affect on the financial position or results of operations
of the Company.
Although no answer has yet been filed, the defendants deny any and all
liability and intend to vigorously defend against the claims.
5) PCPC v. Cheyenne Software, Inc.
-------------------------------
United States District Court (District of Delaware) Case No. 95-301 (SLR)
On May 19, 1995, Personal Computer Peripherals Corporation ("PCPC")
filed a lawsuit in the United States District Court for the District of
Delaware, Case No. 95-301(SLR), naming the Company, Legato Systems, Inc.,
Arcada Software, Artisoft, Palindrome (a subsidiary of Seagate) and
Symantec as defendants. PCPC alleges infringement of patent No. 5,135,065,
entitled "Backup Computer Program for Networks" issued to PCPC on July 21,
1992. PCPC is seeking an injunction against infringement of its patent,
treble damages, attorneys' fees and other damages. On July 10, 1995, the
Company answered the complaint and denied any and all liability. The
Company intends to vigorously defend against the claims. Management of the
Company, based on advice of outside legal counsel, does not believe that
the ultimate resolution of this lawsuit will have a material adverse affect
on the financial position or results of operations of the Company.
6
Directors and Executive Officers
The directors and executive officers of the Company, their ages, and
their positions and terms of office with the Company are set forth below.
The directors of the Company are elected to serve until the next Annual
Meeting of Stockholders and until their successors are elected and have
qualified.
Director
Name Age Position Since
- ---- --- -------- --------
ReiJane Huai(1)(5) 36 Chairman of the Board, President,
and Chief Executive Officer of
the Company 1993
Elliot Levine(5) 59 Executive Vice President, Senior
Financial Officer, and Treasurer
of the Company
Alan Kaufman(5) 57 Executive Vice President - Sales
and Secretary of the Company
James McNiel(5) 32 Executive Vice President - Business
Development
Yuda Doron(5) 43 Executive Vice President
Rino Bergonzi(1)(2) 51 Director of the Company 1994
Richard F. Kramer(2)(4) 51 Director of the Company 1987
Bernard Rubien(3)(4) 77 Director of the Company 1985
Ginette Wachtel(1)(3)(4) 60 Director of the Company 1987
- --------------------------------
(1) Member of the Executive Committee of the Company.
(2) Member of the Audit Committee of the Company.
(3) Member of the Compensation Committee of the Company.
(4) Member of the Option Committee of the Company.
(5) Elected as a director of Cheyenne Communications, Inc., the Company's
wholly-owned subsidiary ("Cheycomm"), on July 1, 1993.
ReiJane Huai became a director and President and Chief Executive Officer of
- ------------
the Company on October 7, 1993. He was elected Chairman of the Board of
Directors of the Company effective May 20, 1994. He served as Vice
President-Engineering of the Company from March 1990 through October 7,
1993. From August 1988 to March 1990, he served as a director of
engineering of the Company. From August 1987 to August 1988, he was a
systems engineer for AT&T Bell Laboratories. He served as manager of
research and development at the Company from June 1985 to August 1987.
Elliot Levine became Executive Vice President of the Company on October 7,
- -------------
1993. On July 1, 1993, he became the Treasurer of Cheycomm. He served as
a Vice President of the Company from March 1990 through October 7, 1993.
He has been Senior Financial Officer of the Company since March 1990 and
Treasurer of the Company since December 1991. From September 1989 to March
1990, he served as a consultant to the Company.
7
Alan Kaufman became Secretary of the Company in August 1988 and Executive
- ------------
Vice President - Sales on October 7, 1993. On July 1, 1993, he became the
Secretary of Cheycomm. He served as a Vice President of the Company from
February 1987 through October 7, 1993. From April 1986 to February 1987,
he served as director of marketing of the Company.
James McNiel became Executive Vice President-Business Development of the
- ------------
Company on October 7, 1993. From April 1, 1992 through October 7, 1993 he
served as a Vice President of the Company. From May 1990 to April 1992, he
was a director of marketing of the Company. From July 1989 to May 1990,
Mr. McNiel was manager of local area network applications ("LAN") marketing
and was responsible for all LAN product development and worldwide marketing
at Archive Corporation and Maynard Electronics.
Yuda Doron became Executive Vice President of the Company effective June 1,
- ----------
1995. He served as President of Cheycomm from July 1, 1993 through June 8,
1995. From April 5, 1993 to July 1, 1993, he served as a consultant to the
Company. From January 1993 to July 1993, Mr. Doron was a Vice President of
Business Development at Elron Corp. From July 1988 to December 1992, he
served as a division manager at Texas Instruments, Inc.
Richard F. Kramer has been a director of the Company since 1987. He is
- -----------------
Chief Executive Officer and Treasurer of FAXplus, Inc., a
telecommunications and computer products marketing company he founded in
1988. He also is President of Corporate Development, Inc., a marketing and
consulting firm he founded in 1987.
Rino Bergonzi was elected as a director of the Company by the Board of
- -------------
Directors on April 21, 1994. Mr. Bergonzi has been Vice President and
Division Executive of Corporate Information Technology Services at AT&T
since November, 1993. From 1985 to 1993, Mr. Bergonzi was Vice President
of United Parcel Service Information Services. In January 1995, he became
a director of Enteractive, Inc., a multimedia software company.
Bernard Rubien has been a director of the Company since June 1985.
- --------------
Ginette Wachtel has been a director of the Company since 1987. She served
- ---------------
as a Senior Vice President of Application Development of Marsh & McClennan,
Inc., an insurance brokerage firm and insurance holding company, through
September 30, 1993, and was an officer of such company since 1984. She
currently provides consulting services in the computer systems area.
The Board of Directors has a standing Audit Committee, a standing
Compensation Committee, a standing Executive Committee, and a standing
Option Committee. The Audit Committee reviews the Company's financial
accounting procedures, internal controls, and the reports of the Company's
independent auditors. The Audit Committee met twice in the fiscal year
ended June 30, 1995. The members of the Audit Committee are Mr. Kramer and
Mr. Bergonzi. The Compensation Committee makes recommendations to the
Board concerning compensation arrangements for directors, executive
officers, and certain other senior management of the Company. The
Compensation Committee met once in the fiscal year ended June 30, 1995.
The members of the Compensation Committee are Ms. Wachtel and Mr. Rubien.
The Executive Committee is authorized to exercise the powers of the Board
when the Board does not meet. The Executive Committee did not meet during
the fiscal year ended June 30, 1995. The members of the Executive
Committee are Ms. Wachtel, Mr. Bergonzi, and Mr. Huai. The Option
Committee administers the Company's Incentive Plan and Non-Qualified Plan.
The Option Committee met five times in the fiscal year ended June 30, 1995.
The Option Committee members are Mr. Kramer, Mr. Rubien, and Ms. Wachtel.
The Board of Directors held eleven meetings in the fiscal year
ended June 30, 1995. Each director attended at least seventy-five (75%)
percent of the aggregate of (i) the total number of meetings of the Board
of Directors plus (ii) the total number of meetings held by all committees
of the Board of Directors on which the director served.
8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows, for the three most recently ended fiscal
years, the compensation paid or accrued for those years to the Chief
Executive Officer of the Company and to each of the four most highly
compensated executive officers of the Company other than the Chief
Executive Officer whose aggregate annual salary and bonus paid in
compensation for services rendered in all the capacities in which they
served exceeded $100,000 for the Company's last fiscal year (the "Named
Executives"):
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------- ---------------------- --------
Name and Other Restricted All Other
Principal Annual Stock LTIP Compensation
Position Year Salary($) Bonus($) Compensation($)(8) Awards($) Options (9) Payouts($) ($) (10)
- -------- ---- --------- -------- ------------------- --------- --------- ---------- ------------
ReiJane Huai - Chairman, 1993 140,000 110,000 3,289,536 -0- 112,500 -0- 9,034
President, and Chief 1994 180,625 -0- 3,364,171 -0- 262,500 -0- 11,313
Executive Officer(1)(2) 1995 205,000 -0- -0- -0- 200,000 -0- 19,036
Elliot Levine - Executive Vice 1993 149,167 110,000 2,531,165 -0- 112,500 -0- 21,084
President, Senior Financial 1994 170,833 -0- 3,918,556 -0- 187,500 -0- 23,400
Officer and Treasurer(1)(3) 1995 180,000 -0- 418,996 -0- 100,000 -0- 23,281
Alan Kaufman - Executive 1993 135,000 110,000 2,288,843 -0- 168,750 -0- 5,879
Vice President - Marketing 1994 165,000 -0- 2,769,264 -0- 187,500 -0- 8,255
and Secretary(1)(4) 1995 180,000 -0- -0- -0- 100,000 -0- 8,090
James McNiel - Executive 1993 125,000 110,000 822,794 -0- -0- -0- 10,801
Vice President - 1994 159,375 -0- 704,243 -0- 187,500 -0- 8,936
Business Development(1)(5) 1995 180,000 -0- 401,468 -0- 100,000 -0- 8,310
Yuda Doron - Executive Vice 1993(7) 30,369 -0- -0- -0- -0- -0- 877
President(1)(6) 1994 125,000 -0- -0- -0- -0- -0- 4,694
1995 134,653 25,000 -0- -0- 240,000 -0- 7,822
- -------------------------------
(1) All of the executive employment agreements discussed herein
provide that the executive officers receive the fringe benefits generally
available to all employees of the Company and contain non-disclosure and
non-competition provisions for the benefit of the Company.
(2) On September 5, 1991, Mr. ReiJane Huai entered into a three-year
employment agreement with the Company to serve as Vice President-
Engineering. The agreement provides for a base annual salary of $140,000,
with increases of $5,000 per annum under certain circumstances, and for a
death benefit and severance payments equal to 50% of his current base
salary. On October 7, 1993, the term of Mr. Huai's agreement was extended
to September 5, 1997 and was further amended to provide that Mr. Huai shall
serve as President and Chief Executive Officer of the Company at a base
salary of $205,000 per annum. As amended, the agreement no longer provides
for $5,000 increases in base salary each year.
(3) On September 1, 1992, Mr. Elliot Levine entered into a three-year
employment agreement with the Company to serve as a Vice President, Senior
Financial Officer, and Treasurer of the Company. Mr. Levine's
9
agreement provides for a base annual salary of $150,000, with increases of
$10,000 per annum under certain circumstances. Mr. Levine's agreement
provides for a death benefit and severance provision equal to 100% of his
current base salary and provides for continuation of his spouse's major
medical insurance benefits for a period of five years after his death. Mr.
Levine also receives reimbursement in the amount of $12,000 per annum for
split dollar life insurance premiums and $8,000 per annum for automobile
expenses. On October 7, 1993, Mr. Levine's agreement was amended to
provide that Mr. Levine shall serve as Executive Vice President, Senior
Financial Officer, and Treasurer at a base salary of $180,000 per annum.
As amended, the agreement no longer provides for $10,000 increases in base
salary each year. On October 24, 1994, Mr. Levine's agreement was amended
to provide for $13,500 per annum in reimbursement to Mr. Levine for split
dollar life insurance premiums. On August 30, 1995, Mr. Levine's agreement
was amended to provide for (a) an extension of the employment term to
August 31, 1998, (b) $10,000 per annum in reimbursement to Mr. Levine for
automobile expenses, (c) a death benefit of 150% of his current base
salary, and (d) a continuation of his spouse's major medical insurance
benefits for a period of ten years after his death.
(4) Mr. Alan Kaufman entered into a three-year employment agreement
with the Company, effective January 1, 1993, to serve as a Vice President
and Secretary of the Company. The agreement provides for a base annual
salary of $140,000, with increases of $5,000 per annum under certain
circumstances. Mr. Kaufman's employment agreement contains a death benefit
and severance provision equal to 100% of his current base salary and
provides for continuation of his spouse's major medical insurance benefits
for a period of five years after his death. Mr. Kaufman also receives
reimbursement in an amount equal to a maximum of $8000 per annum for
automobile expenses. On October 7, 1993, Mr. Kaufman's agreement was
amended to provide that Mr. Kaufman shall serve as Executive Vice President
and Secretary of the Company at a base salary of $180,000 per annum. As
amended, the agreement no longer provides for $5,000 increases in base
salary each year.
(5) On May 4, 1992, Mr. James McNiel entered into an employment
agreement with the Company, expiring September 1, 1994, to serve as Vice
President of the Company. The agreement provides for a base salary of
$125,000 per annum, a death benefit equal to 100% of his current base
salary, a severance benefit equal to 30% of his current base salary and
reimbursement in the amount of $6000 per annum for automobile expenses. On
October 7, 1993, the term of Mr. McNiel's agreement was extended to
September 1, 1996 and was further amended to provide that Mr. McNiel shall
serve as Executive Vice President at a base salary of $180,000 per annum.
(6) On September 29, 1993, Mr. Yuda Doron entered into a three-year
employment agreement with Cheycomm, to serve as Cheycomm's President. The
agreement provided for a base salary of $125,000 per annum, a death and
disability benefit equal to up to 50% of his base salary, payments not to
exceed $1,708 per annum for a portion of life insurance policy premiums and
$3,723 per annum for a portion of disability policy premiums, and $3,600
per annum for automobile expenses. On June 8, 1995, Mr. Yuda Doron entered
into a new three-year employment agreement to serve as Executive Vice
President of the Company and General Manager of the Netware Division. The
agreement provides for a base salary of $180,000 per annum, a severance
provision equal to 100% of his current base salary, payments not to exceed
$2,562 per annum for a portion of life insurance policy premiums, and
$5,585 per annum for a portion of disability policy premiums. Mr. Doron
also receives reimbursement in the amount of $3,600 per annum for
automobile expenses.
(7) For the period commencing April 5, 1993 through June 30, 1993,
Mr. Yuda Doron served as a consultant to the Company.
(8) Includes information regarding value realized (market value on
date of exercise less exercise price) on stock options previously granted
under the Company's option plans and exercised during the three fiscal
years ended June 30, 1995 by the Named Executives.
(9) Prior to June 30, 1995, in connection with the Company's adoption
of a divisional structure, FAXserve and Bit products, which previously
formed the product line for Cheycomm, was consolidated with the Company's
operations.
10
In addition to the options set forth in the Summary Compensation
Table, (i) on September 29, 1993, Mr. Doron was granted in the aggregate
options to purchase up to 36,000 shares of the common stock of Cheycomm,
$0.01 par value per share (the "Cheycomm Stock"), subject to certain
conditions, and such options were convertible, under certain circumstances,
to non-qualified stock options of the Company, and (ii) each Named
Executive Officer (except for Mr. Doron), in his capacity as a director of
Cheycomm, was granted options to purchase 1,500 shares of Cheycomm Stock,
at an exercise price of $2.47 per share, and 1,500 shares of Cheycomm
Stock, at an exercise price of $12.81 per share, pursuant to Cheycomm's
1994 Stock Option Plan For Directors (the "Cheycomm Option Plan"). Prior
to June 30, 1995, the directors, including Mr. Doron, waived their rights
under the Cheycomm options.
(10) Includes car allowances, 401(k) matching contributions by the
Company, and miscellaneous perquisites. Car allowances for fiscal 1995 for
the Named Executives were as follows: Mr. Huai - $15,715, Mr. Levine -
$7,856, Mr. Kaufman - $6,780, Mr. McNiel - $6,000, and Mr. Doron - $3,600.
401(k) matching contributions for fiscal 1995 for the Named Executives were
as follows: Mr. Huai - $2,310, Mr. Levine - $2,310, Mr. Kaufman - $2,310,
Mr. McNiel - $2,310, and Mr. Doron - $2,323. Reimbursement for split
dollar life insurance premiums for fiscal 1995 for Mr. Levine - $13,115 and
Mr. Doron - $1,899.
Stock Option Grants
The following table sets forth information concerning the grant of
stock options made during the fiscal year ended June 30, 1995 to each of
the Named Executives:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------
Individual Grants(1)
- ------------------------------------------------------------------------
Percent of Potential Realizable Value
Total at Assumed Annual Rates
Options/ of Stock Price Appreciation
SARs For Option Term(2)
---------------------------
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------------------
ReiJane Huai 200,000 9.0% $12.75 May 8, 2002 $1,038,106 $2,419,229
Elliot Levine 100,000 4.5% $12.75 May 8, 2002 $519,053 $1,209,614
Alan Kaufman 100,000 4.5% $12.75 May 8, 2002 $519,053 $1,209,614
James McNiel 100,000 4.5% $12.75 May 8, 2002 $519,053 $1,209,614
Yuda Doron 240,000 10.7% $12.75 May 8, 2002 $1,245,727 $2,903,074
- ---------------
(1) The options in the table were granted on May 9, 1995 under the
Non-Qualified Plan and have exercise prices equal to the fair market value
of the Common Stock on the date of grant. The options become exercisable
in one-third increments on the first three anniversary dates, except for
the options granted to Yuda Doron which become exercisable in one-quarter
increments beginning on December 9, 1995 and then on the first three
anniversary dates. In addition to the options set forth in the table, each
Named Executive Officer (except for Mr. Doron), in his capacity as a
director of Cheycomm, was granted immediately exercisable options to
purchase 1,500 shares of Cheycomm Stock (each representing 16.7% of the
total number of Cheycomm options granted during the fiscal year), at an
exercise price of $12.81 per share. The options were granted on February
14, 1995. Prior to June 30, 1995, the directors of Cheycomm, including Mr.
Doron, waived their rights under the Cheycomm options.
11
(2) The potential realizable value assumes that the stock price
increases from the date of grant until the end of the option term (7 years)
at the annual rate of 5% and 10%. The assumed annual rates of appreciation
are computed in accordance with the rules and regulations of the Securities
and Exchange Commission. No assurance can be given that the annual rates
of appreciation assumed for the purposes of the table will be achieved, and
actual results may be lower or higher. The closing price of the Common
Stock on the American Stock Exchange on June 30, 1995 was $18.50.
Stock Option Exercises
The following table sets forth information concerning the exercise of
stock options during the fiscal year ended June 30, 1995 by each of the
Named Executives and the value of unexercised options at the fiscal year-
end:
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Value of Unexercised
Shares Number of Unexercised In-the-Money
Acquired Option/SARs at Option/SARs at
on Value FY-End (#) FY-End ($) (1)
---------------------------- ----------------------------
Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
----------- ----------- ----------- ------------- ------------ -------------
ReiJane Huai(2) 42,188 -0- 312,205 375,000 3,366,418 1,150,000
Elliot Levine(2) 61,000 418,996 115,000 225,000 501,669 575,000
Alan Kaufman(2) -0- -0- 62,500 225,000 -0- 575,000
James McNiel(2) 27,505 401,468 121,563 292,500 826,104 1,468,754
Yuda Doron -0- -0- -0- 240,000 -0- 1,380,000
- ---------------
(1) Based on the fair market value per share of the Common Stock at
year end, minus the exercise or base price on "in-the-money" options. The
closing price of the Common Stock on the American Stock Exchange on June
30, 1995 was $18.50.
(2) Each Named Executive Officer also previously owned currently
exercisable options to purchase shares of Cheycomm Stock. Prior to June
30, 1995, the directors of Cheycomm waived their rights under the Cheycomm
options. See footnote 9 to the Summary Compensation Table.
Compensation of Directors
Directors of the Company who are not employees of the Company received
a directors' fee of $4,000, plus expenses, for the period June 30, 1994
through March 31, 1995. Commencing April 1, 1995, such directors receive a
retainer fee of $10,000 per annum, payable in installments of $2,500 per
quarter, and a $1,000 fee for each Board of Director's meeting attended.
Directors do not receive any fee for attending meetings of committees of
the Board of Directors. The Company's 1992 Stock Option Plan for Outside
Directors provides for automatic annual grants of options for 16,875 shares
of Common Stock on each January 1 to directors who are not also employees
of the Company. All options granted under the 1992 Stock Option Plan for
Outside Directors are immediately exercisable, and the exercise price per
share of each option will be equal to the fair market value of the shares
of Common Stock on the date of grant.
12
Employment Contracts and Termination of Employment
and Change-In-Control Arrangements
The Company's employment agreements with the Named Executives are
described in the footnotes to the Summary Compensation Table on pages 9, 10
and 11 of this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 1995, the Compensation Committee
consisted of Ginette Wachtel and Bernard Rubien. During fiscal 1995, none
of the executive officers of the Company served on the board of directors
or on the Compensation Committee of any other entity, any of whose officers
served either on the Board of Directors or on the Compensation Committee of
the Company.
Board Compensation Committee Report on Executive Compensation
Introduction
The Compensation Committee of the Board of Directors (the "Committee")
is composed of non-employee directors, and is responsible for determining
and administering the Company's compensation policies for the remuneration
of the Company's senior management. The Committee annually evaluates
individual and corporate performance from both a short-term and long-term
perspective, and its recommendations regarding all members of senior
management are subject to the approval of the full Board of Directors.
Philosophy
The Company's executive compensation program is designed to reward and
retain highly-qualified executives, and to encourage the achievement of
business objectives and superior corporate performance. The program seeks
to foster a performance-oriented environment, to enhance management's long-
term focus on maximizing stockholder value through equity-based incentives,
and to adjust the variable portion of an executive's compensation based
upon corporate and individual performance. In determining an executive's
compensation, consideration is given to the employee's total compensation
package, overall corporate financial performance, and the employee's role
in attaining such results.
Components of Executive Compensation
Historically, the Company's executive employees have received cash-
based and equity-based compensation.
Cash-Based Compensation: Base salary represents the primary cash
component of an executive employee's compensation, and is determined by
evaluating the responsibilities associated with an employee's position at
the Company and the employee's overall level of experience. In addition,
the Committee, in its discretion, may award bonuses. However, the
Committee and the Board of Directors believe that the Company's management
and employees are best motivated through stock option awards rather than
through cash incentives.
Equity-Based Compensation: Equity-based compensation principally has
been in the form of stock options granted pursuant to the Incentive Plan
and the Non-Qualified Plan. The Committee believes that stock options
represent an important component of a well-balanced compensation program.
Because stock option awards provide value only in the event of share price
appreciation, stock options enhance management's focus on maximizing long-
term stockholder value. Stock options serve to align the interests of
executive officers closely with the stockholders
13
because of the direct benefit executive officers receive from improved
stock performance. Stock options provide a direct relationship between an
executive's compensation and the stockholders' interests. Option awards to
employees are based upon the evaluation of each employee's overall past and
expected future contributions to the success of the Company.
Compensation of the Chief Executive Officer
The philosophy and policies of the Compensation Committee generally
applicable to the Company's senior management are applicable to the Chief
Executive Officer.
Section 162(m)
It is the Company's policy to seek to qualify compensation paid to
executive officers for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The stockholders are being
asked to approve amendments to the Non-Qualified Plan and the Incentive
Plan that, among other things, bring the plans into compliance with Section
162(m). This section of the Code prohibits the Company from deducting
compensation to its Chief Executive Officer and its four other highest paid
executive officers that is in excess of $1,000,000 per individual in any
fiscal year, unless the compensation is "performance based". If the
stockholders approve the amendments, gains realized by the Chief Executive
Officer and the four other highest paid executive officers from the
exercise of stock options granted under the Non-Qualified Plan, and the
early disposition of stock received under the Incentive Plan, should not be
subject to the $1,000,000 limit. None of the Chief Executive Officer and
the four other highest paid executive officers had cash compensation in
excess of $1,000,000 for the fiscal year ended June 30, 1995.
Bernard Rubien
Ginette Wachtel
14
Comparative Stock Performance Graph
The following is a graph comparing the annual percentage change in the
cumulative total shareholder return of the Company's common stock with the
cumulative total returns of the S&P 500 Index and The Peer Group Weighted
Average Index for the Company's last five (5) fiscal years:
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CHEYENNE SOFTWAE INC.,
S&P 500 INDEX AND PEER GROUP INDEX
ASSUMES $100 INVESTED ON JUL. 01, 1990
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JUNE 30, 1995
Index Returns [6/30/90=100]
6/30/90 6/30/91 6/30/92 6/30/93 6/30/94 6/30/95
Cheyenne Software, Inc. 100.00 149.83 272.56 740.34 1,241.29 770.21
Peer Group Weighted Average 100.00 90.76 174.01 229.29 258.20 374.44
S&P 500 Comp-Ltd 100.00 98.88 118.19 131.82 143.25 155.99
The Peer Group is comprised of the following companies: Banyan
Systems, Inc., Computer Associates International, Inc., Informix Corp.,
Microsoft Corp., Novell, Inc., Oracle Systems Corp., Sterling Software,
Inc. and Symantec Corp.
15
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors,
and persons who own more than ten percent of a registered class of the
Company's equity securities (the "Ten Percent Stockholders"), to file
reports of ownership on Form 3 and reports of changes in ownership on Form
4 or Form 5 with the SEC. Executive officers, directors and the Ten
Percent Stockholders are required to furnish the Company with copies of
such reports. Based solely on its review of the copies of such Forms
received by the Company, or written representations that no other reports
were required, the Company believes that during the fiscal year ended June
30, 1995, the Company's executive officers, directors, and Ten Percent
Stockholders complied with all applicable Section 16(a) filing
requirements, except that Rino Bergonzi, a director of the Company, filed
his Form 4 approximately three months late, reporting the purchase of
shares by his wife.
SELECTION OF INDEPENDENT AUDITORS
It is proposed that the stockholders ratify the appointment of KPMG
Peat Marwick LLP as the independent auditors for the Company for the fiscal
year ending June 30, 1996. KPMG Peat Marwick LLP are independent auditors
who served the Company since June, 1991. Representatives of KPMG Peat
Marwick LLP are expected to attend the Annual Meeting, will have the
opportunity to make a statement, and will be available to respond to
appropriate questions from stockholders.
Unless marked to the contrary, the shares of Common Stock represented
by the enclosed Proxy will be voted FOR the ratification of the appointment
of KPMG Peat Marwick LLP as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY. APPROVAL OF STOCKHOLDERS HOLDING A MAJORITY OF
THE SHARES OF COMMON STOCK PRESENT AT THE ANNUAL MEETING IS REQUIRED FOR
RATIFICATION.
PROPOSALS TO AMEND THE NON-QUALIFIED PLAN
AND THE INCENTIVE PLAN
Increase in Shares
The Board believes the increases in the shares reserved for issuance
under the Non-Qualified Plan and Incentive Plan are in the best interests
of the Company for two reasons. First, the Board believes that the
increase will provide an adequate reserve of shares for issuance under the
Non-Qualified Plan and Incentive Plan, which is necessary to enable the
Company to compete successfully with other companies to attract and retain
valuable employees. Second, the Board believes that it is appropriate to
have options available for grant in connection with acquisitions that the
Company may make from time-to-time. The ability to make such grants may
enhance the Company's ability to structure offers to potential acquisition
targets.
16
Imposition of a Grant Limit.
Under recent legislation, the deductibility for federal income tax
purposes of compensation paid to the Company's Chief Executive Officer and
the four other most highly compensated executive officers who receive
salary and bonus in excess of $100,000 in a particular year is limited to
$1,000,000 per year per individual. For purposes of this legislation,
compensation expense attributable to stock options would be subject to this
limitation unless, among other things, the option plan under which the
options are granted includes a limit on the number of shares with respect
to which awards may be made to any one employee in a specified fiscal
period. Such a potential compensation expense deduction could arise, for
example upon the exercise by one of these executives of a nonstatutory
option, i.e., an option that is not an incentive stock option qualifying
for favorable tax treatment, or upon a disqualifying disposition of stock
received upon exercise of an incentive stock option.
Currently the Non-Qualified Plan and the Incentive Plan do not contain
any limits on the number of options that may be granted to an employee in a
fiscal year. In order to exclude compensation resulting from options
granted under the Company's Non-Qualified Plan and Incentive Plan from the
$1,000,000 limit on deductibility, the Board of Directors has approved an
amendment to the Option Plan which will place a 500,000 share limit on the
number of options that may be granted under the Non-Qualified Plan and
Incentive Plan to an employee in any fiscal year. This limit is subject to
appropriate adjustment in the case of stock splits, reverse stock splits
and the like. The purpose of this amendment, which is intended to comply
with Section 162(m) of the Code and the regulations thereunder, is to
preserve the Company's ability to deduct in full any compensation expense
related to stock options.
PROPOSAL TO AMEND THE NON-QUALIFIED PLAN
TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE
AND TO IMPOSE A GRANT LIMIT.
Background
- ----------
The Board of Directors of the Company is submitting to the
stockholders for their approval and for adoption amendments to the Non-
Qualified Plan. Such amendments were approved by the Board of Directors on
October 12, 1995; the adoption of such amendments is subject to and
contingent on the approval of stockholders holding a majority of the shares
of Common Stock present at the Annual Meeting. If the stockholders do not
approve and adopt the amendments to the Non-Qualified Plan, the plan will
remain in force in its present form. Approximately 100 employees are
eligible to participate in the Non-Qualified Plan.
Amendments to the Non-Qualified Plan
- ------------------------------------
On October 12, 1995, the Board of Directors adopted, subject to
stockholder approval, amendments to the Non-Qualified Plan increasing the
number of shares of Common Stock reserved for issuance thereunder from
4,237,500 shares to 5,587,500 shares, and placing a 500,000 share limit on
the number of options that may be granted under the Non-Qualified Plan to
an employee in any fiscal year.
Summary of the Non-Qualified Plan
- ---------------------------------
A description of the Non-Qualified Plan as currently in effect
follows. This summary is in all respects subject to the actual provisions
of the written plan document, a copy of which is available to any
stockholder upon written request to the Company.
Administration. The Non-Qualified Plan shall be administered by a
committee (the "NSO Committee") composed of either the entire Board of
Directors or a committee thereof appointed by the Board of Directors. The
17
NSO Committee shall be composed of not less than two (2) directors, and all
of the members of the NSO Committee shall be disinterested persons. As
defined in the Non-Qualified Plan, the term "disinterested person" shall
mean an administrator of the Non-Qualified Plan who, at any time within one
year prior to his/her service as an administrator of the Non-Qualified
Plan, has not received, and who, during the term of his/her service, will
not receive, a discretionary grant or award of stock options or stock
appreciation rights under the Non-Qualified Plan or any other plan or
practice of the Company or any of its affiliates. Any such person shall
otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect. Currently, the NSO Committee
is composed of Richard Kramer, Bernard Rubien, and Ginette Wachtel.
Subject to the express provisions of the Non-Qualified Plan, the NSO
Committee may interpret the Non-Qualified Plan, prescribe, amend, and
rescind rules and regulations relating to it, determine the terms and
provisions of the respective participants' agreements (which need not be
identical), and make such other determinations as it deems necessary or
advisable for the administration of the Non-Qualified Plan. The NSO
Committee shall also determine the number of shares to be subject to each
non-qualified stock option, the duration of each non-qualified stock
option, the exercise price (option price) of each non-qualified stock
option, the time or times within which (during the term of the non-
qualified stock options) all or portions of each non-qualified stock option
may be exercised, and whether cash, Common Stock, or other property may be
accepted in full or partial payment upon exercise of a non-qualified stock
option. In addition, the NSO Committee may have responsibilities in
addition to the administration of the Non-Qualified Plan.
Eligibility. Options may be granted under the Non-Qualified Plan to
key managerial employees of the Company or its affiliates and to
consultants to the Company. The NSO Committee shall determine, within the
limits of the express provisions of the Non-Qualified Plan, those persons
to whom, and the time or times at which, non-qualified stock options shall
be granted. In making such determinations, the NSO Committee may take into
account the nature of the services rendered by the person, his or her
present and potential contributions to the Company's success, and such
other factors as the NSO Committee, in its discretion, shall deem relevant.
Shares. The shares covered by the Non-Qualified Plan shall be Common
Stock, and may be either authorized but unissued shares or shares held in
the treasury of the Company. If the amendments to the Non-Qualified Plan
are approved, the total amount of Common Stock on which options could be
granted shall not exceed 5,587,500 shares, subject to adjustment in the
event of certain changes in the Company's capitalization, and options for
not more than 500,000 shares of Common Stock may be issued to any one
person in any calendar year.
Option Price. The option price for options granted under the Non-
Qualified Plan shall be not less than 100% of the fair market value of the
Common Stock at the time such option is granted, or such higher value to be
determined in accordance with the procedures established by the NSO
Committee. As of October 24, 1995, the fair market value of the Common
Stock was $18.50 per share.
Exercise of Options. The NSO Committee has complete discretion to
determine the period of time during which an option may be exercised with
respect to some or all of the shares of Common Stock subject to the option.
Currently, no option can be exercised more than seven years from the date
it was granted.
Method of Exercise. An option may be exercised by notifying to the
Company, in writing, as to the number of shares of Common Stock with
respect to which the option is being exercised, and tendering payment
therefor in cash or Common Stock.
Amendment and Termination of the Plan. No option may be granted after
August 17, 1997. The Board of Directors acting by a majority of its
members (exclusive of those members who are eligible to receive
non-qualified stock options) and without further action on the part of the
stockholders, from time to time, may alter, amend, or suspend the Non-
Qualified Plan or any non-qualified stock option granted thereunder or, at
any time, may terminate the Non-Qualified Plan; provided, however, the
Board may not (i) change the total number of shares
18
of Common Stock available for non-qualified stock options under the Non-
Qualified Plan, except as provided in Section 6 thereof, (ii) extend the
duration of the Non-Qualified Plan, (iii) increase the maximum term of any
non-qualified stock option, (iv) decrease the minimum option price or
otherwise materially increase the benefits accruing to participants under
the Non-Qualified Plan, or (v) materially modify the eligibility
requirements of the Non-Qualified Plan; and provided, further, no such
action shall materially and adversely affect any outstanding non-qualified
stock options without the consent of the respective optionees.
Federal Tax Consequences. Options granted under the Non-Qualified
Plan are intended to be non-qualified stock options for federal income tax
purposes. No taxable income results to an optionee upon the grant of such
stock options. Generally, Section 83 of the Code requires that upon
exercise of an option, the optionee recognizes ordinary income in an amount
equal to the difference between the option's exercise price and the fair
market value of the shares on the date of exercise. Such amount, subject
to certain limitations, is deductible as an expense by the Company for
federal income tax purposes. The ordinary income resulting from the
exercise of such options is subject to applicable withholding taxes.
Generally, any profit or loss on the subsequent disposition of such shares
shall be treated as a short-term or long-term capital gain or loss,
depending upon the holding period for the shares.
Under the changes made by the Securities and Exchange Commission to
the rules adopted under Section 16(b) of the Exchange Act, the exercise
(more than six months after the date of the issuance of the option) of an
"in-the-money" stock option is no longer deemed to be a purchase under
Section 16(b) of the Exchange Act. Accordingly, as long as a non-qualified
stock option has been held for more than six months from the date of the
grant, an optionee subject to Section 16 is now able to sell the underlying
shares immediately following the exercise of such an option without
triggering potential liability under that Section 16(b). If a non-
qualified option is exercised by a person subject to Section 16 less than
six months after the date of grant, the taxable event will be deferred
until the date which is six months after the date of grant unless the
optionee files an election to be taxed on the date of exercise.
Options Granted. During the fiscal year ended June 30, 1995, 740,000
options were granted under the Non-Qualified Plan to all current executive
officers of the Company, as a group; 78,300 options were granted under the
Non-Qualified Plan to employees of the Company (other than executive
officers); no options were granted under the Non-Qualified Plan to non-
employee directors; and none of the nominees for election as directors,
other than ReiJane Huai, were granted stock options under the Non-Qualified
Plan. Subsequent to the fiscal year ended June 30, 1995, 275,000 options
were granted under the Non-Qualified Plan to employees of the Company
(other than executive officers) and to consultants to the Company. With
regard to the options that have been previously granted under the Non-
Qualified Plan to the Named Executive Officers, see "Executive
Compensation- Stock Option Grants" at pages 11-12.
Options to be Granted. As of the date of this Proxy Statement there
has been no determination by the Option Committee regarding future stock
option awards under the Non-Qualified Plan. Accordingly, future awards are
not determinable.
Unless marked to the contrary, the shares of Common Stock represented
by the enclosed Proxy will be voted FOR the adoption and approval of the
amendments to the Non-Qualified Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ADOPTION AND APPROVAL OF THE AMENDMENTS TO THE NON-QUALIFIED PLAN.
19
PROPOSAL TO AMEND THE INCENTIVE PLAN TO
INCREASE THE NUMBER OF SHARES
AVAILABLE FOR ISSUANCE AND TO IMPOSE A GRANT LIMIT.
Background
- ----------
The Board of Directors of the Company is submitting to the
stockholders for their approval and for adoption amendments to the
Incentive Plan. Such amendments were approved by the Board of Directors on
October 12, 1995; the adoption of such amendments is subject to and
contingent on the approval of stockholders holding a majority of the shares
of Common Stock present at the Annual Meeting. If the stockholders do not
approve and adopt the amendments to the Incentive Plan, the plan will
remain in force in its present form. Approximately 700 employees are
eligible to participate in the Incentive Plan.
Amendments to the Incentive Plan
- --------------------------------
On October 12, 1995, the Board of Directors adopted, subject to
stockholder approval, amendments to the Incentive Plan increasing the
number of shares of Common Stock reserved for issuance thereunder from
4,806,250 shares to 5,806,250 shares, and placing a 500,000 share limit on
the number of options that may be granted under the Incentive Plan to an
employee in any fiscal year.
Summary of the Incentive Plan
- -----------------------------
A description of the Incentive Plan as currently in effect follows.
This summary is in all respects subject to the actual provisions of the
written plan document, a copy of which is available to any stockholder upon
written request to the Company.
Administration. The Incentive Plan shall be administered by an option
committee (the "ISO Committee") appointed by the Board of Directors and
consisting of two or more members of the Board. The Board, in its absolute
discretion, may select persons to serve on the ISO Committee who would be
"disinterested persons" within the meaning of Rule 16b-3, as amended from
time to time, under the Exchange Act. Any standing or other committee of
the Board of Directors which otherwise satisfies the requirements of the
ISO Committee may be authorized by the Board of Directors to serve as the
ISO Committee. Currently, the ISO Committee is composed of Richard Kramer,
Bernard Rubien, and Ginette Wachtel. The ISO Committee shall be authorized
(but only to the extent not contrary to the express provisions of the
Incentive Plan or to resolutions adopted by the Board of Directors) to
interpret the Incentive Plan, to prescribe, amend, and rescind rules and
regulations relating to the Incentive Plan, to determine the recipients,
form, and content of the incentive stock options to be granted under the
Incentive Plan, and to make other determinations which it deems necessary
or appropriate for the proper administration of the Incentive Plan, and
shall have and may exercise such other powers and authority as may be
delegated to it by the Board of Directors, from time to time. The
President or such other officers of the Company as the ISO Committee may
designate, or a Secretary of the ISO Committee designated by majority
resolution of the ISO Committee, shall execute such certificates, incentive
stock option agreements, and other documents as may be necessary to
evidence the decisions of the ISO Committee and/or implement and carry out
the Incentive Plan. The President or such other officers of the Company,
when so acting, shall be deemed to be acting solely in a ministerial
capacity, and the acts of such officers of the Company shall not be
construed as giving them any discretionary authority over the granting of
incentive stock options or the administration of the Incentive Plan.
Eligibility. Incentive stock options may be granted to any Employee
(as defined in the Incentive Plan) who, in the opinion of the ISO
Committee, has or is expected to make key contributions to the success of
the Company. An Employee who has been granted an incentive stock option or
any other options or rights under any other plan or otherwise, may, if
otherwise eligible, be granted additional incentive stock options.
20
Shares. The shares covered by the Incentive Plan shall be Common
Stock, and may be either authorized but unissued shares or shares held in
the treasury of the Company. If the amendments to the Incentive Plan are
approved, the total amount of stock on which options could be granted shall
not exceed 5,806,250 shares, subject to adjustment in the event of certain
changes in the Company's capitalization, and options for not more than
500,000 shares of Common Stock may be issued to any one person in any
calendar year.
Option Price. The option price for options granted under the
Incentive Plan will be 100% of the fair market value on the date the option
is granted. As of October 24, 1995, the fair market value of the Common
Stock was $18.50 per share. The exercise price of an option granted to an
optionee who owns more than 10% of the total combined voting power of all
classes of stock of the Company or of any of its parent or subsidiary
corporations at the time such option is granted shall not be less than 110%
of the fair market value of the underlying Common Stock.
Exercise of Options. The ISO Committee may determine the period of
time during which an option may be exercised. Currently, options cannot be
exercised more than seven years after the date they were granted. No
option may be exercised until the second anniversary of the date of grant
of such option. Not more than 25% of the underlying Common Stock may be
purchased prior to the third anniversary of the date of grant, and not more
than 50% of the underlying Common Stock (including underlying Common Stock
acquired prior to the third anniversary) may be acquired prior to the
fourth anniversary of the date of grant.
Method of Exercise. An option may be exercised by notifying the
Company, in writing, as to the number of shares of Common Stock with
respect to which the option is being exercised, and tendering payment
therefor in cash or Common Stock.
Amendment and Termination of the Plan. No option may be granted after
October 18, 1999. The Board may alter, suspend, or discontinue the
Incentive Plan, except that no action of the Board may increase (other than
as provided in paragraph 10 of the Incentive Plan) the maximum number of
shares of Common Stock subject to incentive stock options or available for
the grant of incentive stock options under the Incentive Plan, reduce the
applicable minimum exercise price, extend the maximum period within which
incentive stock options may be exercised under the Incentive Plan, or
change the designation of persons eligible to receive options under the
Incentive Plan, unless such action of the Board of Directors shall be
subject to approval or ratification by the stockholders of the Company. No
action of the Board of Directors, without the consent of the optionee,
shall impair any then outstanding option.
Federal Tax Consequences. Options granted under the Incentive Plan
are intended to qualify as incentive stock options for federal income tax
purposes. Generally, no taxable income results to an optionee upon either
the grant or exercise of an incentive stock option, although the difference
between the exercise price and the fair market value of the stock on the
date of exercise is an item of tax preference in computing the optionee's
alternative minimum tax liability, if any. If certain holding period
requirements are met, gain or loss on a subsequent sale of the stock by the
optionee is taxed at the capital gains rate. Generally, long-term capital
gains rates will apply to the optionee's full gain at the time of the sale
of the stock, provided that: (i) no disposition of the stock is made within
two years from the date of grant of the option nor within one year after
the acquisition of such stock, and (ii) the option is exercised prior to
the optionee's termination of employment (one year in the event of
disability).
A sale, exchange, gift or other transfer of legal title of stock
acquired pursuant to an incentive stock option within two years from the
date of grant or within one year after acquisition of the stock pursuant to
exercise of the option constitutes a disqualifying disposition. A
disqualifying disposition involving a sale or exchange produces taxable
income to the optionee and an income tax deduction to the Company in an
amount equal to the lesser of (i) the fair market value of the stock on the
date of exercise minus the option price, or (ii) the amount realized on
disposition minus the option price. Otherwise, generally, neither the
issuance nor the exercise of an incentive stock option nor the disposition
of the underlying stock produces a deduction for the Company. A
disqualifying
21
disposition as a result of a gift produces taxable income to the optionee
in an amount equal to the difference between the option price and the fair
market value of the stock on the date of exercise.
Options Granted. During the fiscal year ended June 30, 1995, none of
the directors, nominees for directors, Named Executive Officers, or
executive officers were granted options under the Incentive Plan; and
1,355,310 options were granted under the Incentive Plan to all employees of
the Company (other than executive officers) as a group. Subsequent to the
fiscal year ended June 30, 1995, 85,000 options were granted under the
Incentive Plan to executive officers of the Company, and 666,565 options
were granted under the Incentive Plan to all employees of the Company
(other than executive officers) as a group.
Options to be Granted. As of the date of this Proxy Statement, there
has been no determination by the Option Committee regarding future stock
option awards under the Incentive Plan. Accordingly, future awards are not
determinable.
Unless marked to the contrary, the shares of Common Stock represented
by the enclosed Proxy will be voted FOR the adoption and approval of the
amendments to the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ADOPTION AND APPROVAL OF THE AMENDMENTS TO THE INCENTIVE PLAN.
STOCKHOLDERS PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders wishing to present proposals to the 1996 Annual Meeting
and wishing to have their proposals presented in the proxy statement
distributed by the Board of Directors in connection with the 1996 Annual
Meeting must submit their proposals in writing, to the attention of the
Secretary of the Company, on or before June 30, 1996.
GENERAL
The Board of Directors knows of no other matters which are likely to
be brought before the Annual Meeting. However, if any other matters are
properly brought before the Annual Meeting, the persons named in the
enclosed proxy, or their substitutes, will vote thereon in accordance with
their judgment pursuant to the discretionary authority conferred by the
form of proxy.
BY ORDER OF THE BOARD OF DIRECTORS
REIJANE HUAI
Chairman of the Board
Roslyn Heights, New York
November 6, 1995
22
APPENDIX A
CHEYENNE SOFTWARE, INC.
-----------------------
1987 Non-Qualified Stock Option Plan
Originally Adopted August 17, 1987
Adopted by the Board of Directors,
As Amended and Restated, on October 12, 1995
--------------------------------------------
1. Purpose: The purpose of the Cheyenne Software, Inc. 1987 Non-
-------
Qualified Stock Option Plan (the "Plan") as hereinafter set forth, is to enable
Cheyenne Software, Inc. ("CSI"), a Delaware corporation, and its affiliated
companies (hereinafter referred to, individually and/or collectively, as the
"Corporation") to attract, retain, and reward key managerial employees and
consultants, by offering them an opportunity to have a greater proprietary
interest in and closer identity with the Corporation and with its financial
success. Options granted under the Plan are not intended to be qualified stock
options under Internal Revenue Code Sec. 422. Proceeds of cash or property
received by the Corporation from the sale of Common Stock of CSI pursuant to
options granted under the Plan will be used for general corporate purposes.
2. Administration.
--------------
(a) The plan shall be administered by the Board of Directors
(the "Board") of CSI, or a committee (the "Committee") appointed by the Board.
The Committee shall be composed of not fewer than two (2) directors, all of the
members of such Board, if such Board acts as administrator of the Plan, or
Committee shall be disinterested persons, as defined by the provisions of
subparagraph 2(b). The Committee may have responsibilities in addition to the
administration of the Plan. The Executive or Compensation Committee may be
designated as the Committee which administers the Plan. Subject to the express
provisions of the Plan, the
Committee may interpret the Plan, prescribe, amend and rescind rules and
regulations relating to it, determine the terms and provisions of respective
participants' agreements (which need not be identical) and make such other
determinations as it deems necessary or advisable for the administration of the
Plan. The decisions of the Committee on matters within their jurisdiction under
the Plan shall be conclusive and binding. No member of the Board or the
Committee shall be liable for any action taken or determination made in good
faith.
(b) The term "disinterested person" as used in this Plan, shall
mean an administrator of the Plan who has not at any time within one year prior
to his/her service as an administrator of the Plan received, and who will not
during the term of his/her service receive, a discretionary grant or award of a
stock option or stock appreciation rights under this Plan, or any other plan or
practice of CSI or any of its affiliates. Any such person shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the Securities Act
of 1934, as amended, as from time to time in effect and shall be an "outside
director" within the meaning of applicable Treasury Regulations proposed or
promulgated from time to time under Code Section 162(m).
3. Eligibility. Options may be granted under this Plan only to
-----------
key managerial employees of the Corporation or its affiliates and to consultants
to the Corporation. The Committee shall determine, within the limits of the
express provisions of the Plan, those key managerial employees and consultants
to whom, and the time or times at which, options shall be granted. The Commit-
tee shall also determine the number of shares to be subject to each option, the
duration of each option, the exercise price (option price) under each option,
which shall not be less than the fair market value of the Stock subject to such
option at the date of grant, the time or times within which (during the term
of the option) all or portions of each option may be exercised, and whether
cash, Common Stock, or other property may be accepted in full or partial
payment upon exercise of a stock option. In making such determinations, the
Committee
2
may take into account the nature of the services rendered by the employee or
consultant, his/her present and potential contributions to the Corporation's
success and such other factors as the Committee in its discretion shall deem
relevant.
4. Common Stock. Options may be granted for a number of shares not
------------
to exceed, in the aggregate, 5,587,500 shares of Common Stock, $0.01 par value,
of CSI, except as such number of shares shall be adjusted in accordance with the
provisions of Section 6 hereof. Such shares may be either authorized but
unissued shares or reacquired shares or other treasury shares. In the event
that any option granted under the Plan expires unexercised, or is surrendered by
a participant for cancellation, or is terminated or ceases to be exercisable for
any other reason without having been fully exercised prior to the end of the
period during which options may be granted under the Plan, the shares thereto-
fore subject to such option, or to the unexercised portion thereof, shall again
become available for new options to be granted under the Plan to any eligible
employee or consultant (including the holder of such former option) at an option
price determined in accordance with Section 5(a) hereof, which price may then be
greater or less than the option price of such former option.
5. Required Terms and Conditions of Options. The options granted
------------------------------------------
under the Plan shall be in such form and upon such terms and conditions as the
Committee shall from time to time determine subject to the provisions of the
Plan, including the following:
(a) Option Price. The option price of each option to purchase
------------
Common Stock shall not be less than the fair market value of the Common Stock
subject to such option at the time such option is granted, or at such higher
value to be determined in accordance with procedures established by the
Committee.
3
(b) Maximum Term and Maximum Number of Options Granted. No
--------------------------------------------------------
option shall be exercisable after the expiration of seven years from the
date it is granted, and not more than 500,000 Options may be granted under this
Plan to any optionee in any single calendar year.
(c) Installment Exercise Limitations. At the discretion of the
--------------------------------
Committee, options may become exercisable in such number of cumulative annual
installments as the Committee may establish.
(d) Termination of Option. In the event an optionee shall cease
---------------------
to be employed by the Corporation for any reason other than death, the optionee
shall have the right, subject to the provisions of Sections 5(b) and 6 hereof,
to exercise his option at any time within three months after such cessation of
employment, but only as to such number of shares as to which his option was
exercisable at the date of such cessation of employment. Notwithstanding the
provisions of the preceding sentence, (i) if cessation of employment occurs by
reason of the disability (within the meaning of Section 105(d)(4) of the
Internal Revenue Code), such three month period shall be extended to six months;
and (ii) if employment is terminated at the request of the Corporation for
substantial cause, the participant's right to exercise his option shall termi-
nate at the time notice of termination of employment is given by the Corporation
to such optionee. For purposes of this provision, substantial cause shall
include: (i) the commission of a criminal act against, or in derogation of the
interest of the Corporation, (ii) divulging confidential information about the
Corporation to the public; (iii) interference with the relationship between the
Corporation and any supplier, client, customer or similar person; or (iv) the
performance of any similar action that the Committee, in its sole discretion,
may deem to be sufficiently injurious to the interest of the Corporation to
constitute substantial cause for
4
termination. If a participant dies while in the employ of the Corporation or
its subsidiaries or within three months after cessation of such employment, his
estate, personal representative or the person that acquires his option by
bequest or inheritance or by reason of his death shall have the right, subject
to the provisions of Section 5(b) and 6 hereof, to exercise his option at any
time within six months from the date of his death, but only as to the number of
shares as to which his option was exercisable on the date of his death. In any
such event, unless so exercised within the period as aforesaid, the option shall
terminate at the expiration of said period. The time of cessation of employment
and whether an authorized leave of absence or absence on military or government
service shall constitute cessation of employment, for the purpose of the Plan,
shall be determined by the Committee.
(e) Method of Exercise. Options may be exercised by giving
------------------
written notice to the Treasurer of CSI, stating the number of shares of Common
Stock with respect to which the option is being exercised and tendering payment
therefor. Payment for Common Stock, whether in cash or other shares of Common
Stock shall be made in full at the time that an option, or any part thereof, is
exercised. Notwithstanding the foregoing, payment for Common Stock may not be
made with other shares of Common Stock acquired through previous exercise of a
stock option under this Plan if such Common Stock has not been held by the
participant at least six months from date of exercise.
6. Adjustments.
-----------
(a) The aggregate of shares of Common Stock with respect to
which options may be granted hereunder and the number of shares of Common Stock
subject to each outstanding option, may all be appropriately adjusted, as the
Committee may determine, for any
5
increase or decrease in the number of shares of issued Common Stock of CSI
resulting from a subdivision or consolidation of shares whether through reorga-
nization, payment of a share dividend or other increase or decrease in the
number of such shares outstanding effected without receipt of consideration by
CSI; provided, however, that no adjustment in the number of shares with respect
to which options may be granted under the Plan or in the number of shares
subject to outstanding options shall be made except in the event, and then only
to the extent, that such adjustment, together with all respective prior adjust-
ments which were not made as a result of this provision, involves a net change
of more than ten percent (i) from the number of shares of Common Stock with
respect to which options may be granted under the Plan or (ii) with respect to
each outstanding option, from the respective number of shares of Common Stock
subject thereto on the date of grant thereof.
(b) Subject to any required action by the stockholders, if CSI
shall be a party to a transaction involving a sale of substantially all its
assets, a merger or a consolidation, any option granted hereunder shall pertain
to and apply to the securities to which a holder of the number of shares of Com-
mon Stock subject to the option would have been entitled if he actually owned
the stock subject to the option immediately prior to the time any such transac-
tion became effective; provided, however, that all unexercised options under the
Plan may be cancelled by CSI as of the effective date of any such transaction,
by giving notice to the holders thereof of its intention to do so and by
permitting the exercise, during the 30-day period preceding the effective date
of such transaction of all partly or wholly unexercised options in full (without
regard to installment exercise limitations).
(c) In the case of dissolution of CSI, every option outstanding
6
hereunder shall terminate; provided, however that each option holder shall have
30 days' prior written notice of such event, during which time he shall have a
right to exercise his partly or wholly unexercised option (without regard to
installment exercise limitations).
(d) On the basis of information known to CSI, the Committee
shall make all determinations under this Section 6, including whether a transac-
tion involves a sale of substantially all CSI's assets; and all such determina-
tions shall be conclusive and binding.
7. Option Agreements. Each optionee shall agree to such terms and
-----------------
conditions in connection with the exercise of an option, including restrictions
on the disposition of the Common Stock acquired upon the exercise thereof, as
the Committee may deem appropriate. Option agreements need not be identical.
The certificates evidencing the shares of Common Stock acquired upon exercise of
an option may bear a legend referring to the terms and conditions contained in
the respective option agreement and the Plan, and CSI may place a stop transfer
order with its transfer agent against the transfer of such shares.
8. Certain Legal and Other Requirements.
------------------------------------
(a) The obligation of the Corporation to sell and deliver Common
Stock under options granted under the Plan shall be subject to all applicable
laws, regulations, rules and approvals, including, but not by way of limitation,
the effectiveness of a registration statement under the Securities Act of 1933,
or any state securities laws, if deemed necessary or appropriate by the Board,
of the Common Stock reserved for issuance upon exercise of options. Nothing
herein shall be construed to obligate the Corporation to effect any such
registration or qualification. The certificates evidencing the Common Stock
issued upon exercise of options may be legended to indicate a lack of such
registration or qualification. The Corporation may
7
require any optionee, as a condition of exercising his option, or at any time
thereafter, to represent in writing that he is acquiring (or has acquired) the
Common Stock for his own account and not with a view to distribution; notwith-
standing the foregoing, the Corporation's failure or refusal to request and/or
obtain such representation shall not be construed as a waiver of any provision
hereof.
(b) A participant shall have no rights as a stockholder with
respect to any shares covered by an option granted to, or exercised by, him
until the date of delivery of a stock certificate to him for such shares. No
adjustment other than pursuant to Section 6 hereof shall be made for dividends
or other rights for which the record date is prior to the date such stock
certificate is delivered.
9. Non-transferability. During the lifetime of an optionee, any
-------------------
option granted to him shall be exercisable only by him or by his guardian or
legal representative. No option shall be assignable or transferable, except by
will or by the laws of descent and distribution. The granting of an option
shall impose no obligation upon the employee to exercise such option or right.
10. No Contract of Employment. Neither the adoption of this Plan nor
-------------------------
the grant of any option shall be deemed to obligate the Corporation to continue
the employment of any optionee for any particular period, or to continue to
retain any consultant, nor shall the granting of an option constitute a request
or consent to postpone the retirement date of any employee.
11. Indemnification of Committee. In addition to such other rights
-----------------------------
of indemnification as they may have as Directors or as members of the Committee,
the members
8
of the Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding (or in connection
with any appeal therein) to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any option granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Corporation) or paid by them in satisfaction of a judgment in
any such action, suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such Committee
member is liable for gross negligence or misconduct in the performance of his
duties; provided that within 60 days after institution of any such action, suit
or proceeding, a Committee member shall, in writing, offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
12. Termination and Amendment of Plan. No options shall be granted
----------------------------------
under the Plan more than ten years after the date the Plan was adopted. The
Board, acting by a majority of its members, exclusive of Board members who are
eligible to receive options, without further action on the part of the stock-
holders, may from time to time alter, amend or suspend the Plan or any option
granted hereunder or may at any time terminate the Plan; provided, however, that
the Board may not (i) change the total number of shares of Common Stock avail-
able for options under the Plan, except as provided in Section 6 hereof, (ii)
extend the duration of the Plan, (iii) increase the maximum term of options,
(iv) decrease the minimum option price or otherwise materially increase the
benefits accruing to participants under the Plan, or (v) materially modify the
eligibility requirements of the Plan; and provided further, that no
9
such action shall materially and adversely affect any outstanding options
without the consent of the respective optionees.
13. Effective Date.
--------------
(a) The Plan shall become effective upon adoption by the Board;
provided, however, that it shall be submitted for approval by the holders of a
majority of the outstanding shares of Common Stock of the Corporation within
twelve months thereafter, and options made available prior to such stockholder
approval shall become null and void if such stockholder approval is not ob-
tained.
(b) The 1991 amendment to paragraph 4 of the Plan shall become
effective as of the date of stockholder approval and adoption of the Plan, as
amended and restated, with the exception of the amendments contained in subpara-
graphs 2(a) and 2(b), which provisions shall become effective as of September 1,
1992.
10
APPENDIX B
CHEYENNE SOFTWARE, INC.
1989 Incentive Stock Option Plan
Originally Adopted October 18, 1989
Adopted by the Board of Directors,
As Amended and Restated, on October 12, 1995
--------------------------------------------
1. Purpose of the Plan. This plan shall be known as the Cheyenne
--------------------
Software, Inc. 1989 Incentive Stock Option Plan (the "Plan" or the "ISOP" or
the "1989 ISOP"). The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility and to provide
additional incentives to the officers and other key employees of Cheyenne
Software Inc., a Delaware corporation (the "Company") and any present or
future Parent or Subsidiary of the Company to promote the success of the
Company. Pursuant to the Plan, such persons will be given the opportunity to
acquire common stock of the Company through the grant of incentive stock
options. This Plan and the Options to be granted hereunder are intended to be
"incentive stock options" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended.
2. Definitions. In addition to other terms defined elsewhere
-----------
herein, the following capitalized terms used herein have the following
definitions:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Option Committee of the Board, appointed by
the Board in accordance with Section 4 hereof.
"Common Stock" means the common stock, par value $.01 per share,
of
1
the Company.
"Company" means Cheyenne Software, Inc., and all present and
future Subsidiaries. "Continuous Status as an Employee" means the absence of
any interruption or termination of an individual's employment by, or status as
an officer or director of the Company, or any present or future Parent or
Subsidiary. In the case of an Employee on an approved leave of absence, the
Committee may, if it determines that to do so would be in the best interests of
the Company, provide in a specific case for the continuation of Options during
such leave of absence, such continuation to be on such terms and conditions as
the Committee determines to be appropriate.
"Employee" means any person (who may be an officer or a director
of the Company) employed by the Company (within the meaning of Section 3401(c)
of the Code and the regulations promulgated thereunder), or any successor
corporation by merger or consolidation, or employed by a Subsidiary.
"ISO" means an Option.
"Option" means an option granted pursuant to the Plan. Each
Option shall be evidenced by a stock option agreement or certificate, which may
be in the form of a letter.
"Optionee" means an Employee to whom an Option has been granted.
"Option Committee" means the Option Committee of the Board,
appointed by the Board in accordance with Section 4 hereof.
"Parent" means any present or future corporation which would be a
"parent corporation" as defined in Subsections (e) and (g) of Code Section 424.
When the context requires, such determination shall be made as if the Company
were the employer corporation.
2
"Plan" means the Cheyenne Software, Inc. 1989 Incentive Stock
Option Plan.
"Share" means one share of Common Stock, adjusted if applicable
in accordance with Section 6 of the Plan.
"Subsidiary" shall mean any present or future corporation which
would be a "subsidiary corporation" as defined in Subsections (f) and (g) of
Code Section 424. When the context requires, such determination shall be made
as if the Company were the employer corporation.
"Underlying Stock" shall mean the Shares of Common Stock subject
to an Option.
3. Shares Subject to the Plan. Except as otherwise required by the
---------------------------
provisions of paragraph 9 hereof, the aggregate number of Shares which may be
issued upon the exercise of all Options pursuant to the Plan shall not exceed
5,806,250 Shares, unless adjusted in accordance with paragraph 8. Such Shares
may be either authorized but unissued Shares or treasury shares. If an Option
shall expire without having been exercised in full, the unpurchased Underlying
Shares which were subject thereto shall, unless the Plan shall theretofore have
been terminated, again be available for issuance under the Plan.
4. Administration.
--------------
(a) The Plan shall be administered by an option committee (the
"Option Committee" or the "Committee") appointed by the Board and consisting of
two or more members of the Board; the Board, in its absolute discretion, may
select persons to serve on the Committee who would be "disinterested persons".
The term "disinterested person", as used in
3
this Plan, shall mean an administrator of the Plan who has not at any time
within one year prior to his/her service as administrator of the Plan received,
and who will not during the term of his/her service receive a discretionary
grant or award of a stock option or stock appreciation rights under this Plan or
any other plan or practice of the Company or any of its affiliates. Any such
person shall otherwise comply with the requirements of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended, as from time to time in
effect and shall be an "outside director" within the meaning of applicable
Treasury Regulations proposed or promulgated under Code Section 162(m). Any
standing or other committee of the Board which otherwise satisfies the
requirements of the Option Committee may be authorized by the Board to serve as
the Option Committee, whether or not the name of such committee includes the
term "Option Committee".
(b) The Committee shall be authorized (but only to the extent
not contrary to the express provisions of the Plan or to resolutions adopted by
the Board) to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the recipients, form, and content
of Options to be granted under the Plan, and to make other determinations which
it deems necessary or appropriate for the proper administration of the Plan, and
shall have and may exercise such other powers and authority as may be delegated
to it by the Board from time to time. A majority of the entire Committee shall
constitute a quorum, and the action of a majority of the Committee members
present at any meeting at which a quorum is present shall be the action of the
Committee. All decisions, determinations, and interpretations of the Committee
shall be final and conclusive on all persons affected thereby and shall be
consistent with Code Section 422.
(c) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
thereunder.
4
(d) The President or such other officers of the Company as the
Committee may designate, or a Secretary of the Committee designated by majority
resolution of the Committee, shall execute such certificates, option agreements
and other documents as may be necessary to evidence the decisions of the
Committee and/or implement and carry out the Plan. The President or other
officers of the Company, when so acting, shall be deemed to be acting solely in
a ministerial capacity, and the acts of such officers of the Company shall not
be construed as giving them any discretionary authority over the granting of
Options or the administration of the Plan.
5. Eligibility. Options may be granted to any Employee who, in the
-----------
opinion of the Committee, has or is expected to make key contributions to the
success of the Company. An Employee who has been granted an Option or any other
options or rights, under any other plan or otherwise, may, if otherwise eligi-
ble, be granted additional Options.
6. Terms and Conditions of Options. Options granted pursuant to the
-------------------------------
Plan shall be evidenced by written agreements in such form as the Committee from
time to time shall determine, which agreements shall comply with and be subject
to the following terms and conditions:
(a) Option Price. The price per share at which any Incentive
------------
Stock Option granted under the Plan may be exercised shall not be less than the
fair market value (determined in good faith by the Committee on a basis consis-
tent with the provisions of Section 422 of the Code) of the Underlying Stock at
the time such Option is granted. The exercise price of an Option granted to an
Optionee who owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the
5
Company, or of any of its Parent or Subsidiary corporations, at the time such
Option is granted shall not be less than 110% of the fair market value of the
Underlying Stock at the time the Option is granted. No Option may be granted at
a price per share which is less than the par value of the Underlying Stock.
(b) Option Term. The term of each Option shall be established
-----------
by the Committee, but shall not in any event exceed seven (7) years from the
date of grant of the Option.
(c) Nontransferability of Options. Options shall by their terms
-----------------------------
not be transferable except by will or by the laws of descent and distribution
and shall be exercisable during an Optionee's lifetime only by the Optionee.
(d) Time of Exercise. No option may be exercised until the
-----------------
second (2nd) anniversary of the date of grant. Not more than 25% of the
Underlying Stock may be purchased prior to the third (3rd) anniversary of the
date of grant, and not more than 50% of the Underlying Stock (including Underly-
ing Stock acquired prior to the 3rd anniversary) may be acquired prior to the
fourth (4th) anniversary of the date of grant.
(e) Maximum Number of Options to Any Employee. The maximum
---------------------------------------------
number of options that may be granted under this Plan to any Employee in any
calendar year shall be 500,000.
(f) Other Provisions. The Option agreements authorized under
-----------------
the Plan shall contain such other provisions not inconsistent with the terms of
the Plan, including, without limitation, restrictions upon the exercise of the
Option, as the Committee shall deem advisable. Options may contain other terms
or restrictions as determined by the Committee in its discretion.
7. Exercise of Options.
-------------------
(a) Procedure for Exercise. Options may be exercised in whole
-----------------------
or in part by written notice, delivered by hand or mailed by prepaid registered
or certified mail,
6
addressed to the President or Secretary of the Company or the Secretary of the
Committee, at the Company's executive offices, which notice shall specify the
date the Option to be exercised was granted and the number of whole Shares to
which such exercise applies. No Option may be exercised to any extent until all
conditions set forth in the Plan and in such Option shall have been satisfied.
(b) Payment. Payment for all Shares purchased by the exercise
-------
of an Option shall be made in cash or by delivery of Shares owned by the
Optionee having an aggregate fair market value on the date of exercise equal to
the aggregate exercise price of the portion of the Option being exercised.
Payment shall be made at the time that an Option or any part thereof is exer-
cised, and no Shares shall be issued until full payment therefor has been made.
No Optionee shall, as such, have any rights as a stockholder of the Company.
(c) Holding Period of Shares Acquired Under Incentive Stock
------------------------------------------------------------
Options. The Committee shall advise each holder of an Option that (i) in order
- -------
for such Option to be treated as an incentive stock option under the Code, the
Shares acquired upon exercise of such Option must not be disposed of until a
date which is at least two years after the date such Option was granted and at
least one year after the date such Shares were acquired by such Optionee, and
that (ii) without written notice, delivered by hand or mailed by prepaid
registered or certified mail, addressed to the President or Secretary of the
Company or the Secretary of the Committee at the Company's executive offices, no
Optionee may dispose of Shares acquired pursuant to the exercise of an Option
within the aforesaid two or one-year periods.
(d) Termination of Employment of an Optionee.
----------------------------------------
(i) Subject to the provisions of subparagraphs (ii)
through (v)
7
of this paragraph 7(d), if an Optionee's employment with the Company
or a Parent or Subsidiary terminates for any reason, with or without
cause, any Option granted to him shall terminate on the date his
employment terminates.
(ii) Subject to the provisions of subparagraph (iv) of
this paragraph 7(d), if an Optionee dies while in the employ of the
Company or a Parent or Subsidiary, or on approved leave of absence,
his Option may be exercised within three (3) months after his death by
the executor or administrator of the estate of the Optionee or by the
person to whom the Option shall pass by will or by the laws of descent
and distribution, but only to the extent the Optionee was entitled to
exercise the Option on the date of his death. The Company may require
such executor or any other person claiming to be entitled to exercise
the Option pursuant to this subparagraph to furnish such proof of his
or her authority, including a bond or indemnity agreement, as the
Company may reasonably require. The cost of any such bond shall be
the responsibility of the persons seeking to exercise the Options.
(iii) Subject to the provisions of subparagraph (iv) of this
paragraph 7(d), if an Optionee's termination of employment with the
Company and its Parent or Subsidiary shall be by reason of his perma-
nent and total disability (within the meaning of Section 422(c)(6) of
the Code), any Option shall terminate upon the expiration of twelve
(12) months after the date on which the Optionee's employment is
terminated, and may be exercised by a conservator, guardian or other
fiduciary ("Legal Representative") duly appointed to act on behalf of
the
8
Optionee. The Company may require such Legal Representative to
furnish such proof of his or her authority, including a bond or
indemnity agreement, as the Company may reasonably require. The cost
of any such bond shall be the responsibility of the persons seeking to
exercise the Options.
(iv) Notwithstanding the provisions of subparagraphs (ii) and
(iii) of this paragraph 7(d) or any other provisions of this Plan, in
no event may an Option be exercised by anyone after five (5) years
from the date it was granted.
(v) Nothing in the Plan or in any Option shall confer upon any
Optionee the right to continue in the employ of the Company or any
Parent or Subsidiary or interfere in any way with the right of the
Company or such Parent or Subsidiary to terminate the employment of an
Optionee at any time. The Committee's determination that an Optione-
e's employment has terminated and the date thereof shall be final and
conclusive on all persons affected thereby.
8. Changes in Capital. If the outstanding Common Stock subject to
------------------
the Plan shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, recapitalization, merger, consoli-
dation or other corporate reorganization in which the Company is the surviving
corporation, the number and kind of shares subject to this Plan and the option
prices shall be appropriately and equitably adjusted so as to maintain the
option price thereof. In the event of a dissolution or liquidation of the
Company or a merger, consolidation, sale of all or substantially all of its
assets, or other corporate reorganization in which the Company is not the
surviving corporation, or any merger in which the Company is the surviving
corporation but the holders of the Common Stock receive securities of another
9
corporation, any outstanding options hereunder shall terminate, provided that
each Optionee shall, in such event, if no provision has been made for a substi-
tution pursuant to the following sentence, have the right immediately prior to
such dissolution, liquidation, merger, consolidation, sale of assets or reorga-
nization in which the Company is the surviving corporation but the holders of
its Common Stock receive securities of another corporation, to exercise any
unexpired option in whole or in part without regard to the date on which the
option otherwise would be first exercisable. Nothing herein contained shall
prevent the substitution of a new option by the surviving corporation. The
existence of the Plan or options hereunder shall not in any way prevent any
transaction described herein and no holder of an option shall have the right to
prevent any such transaction.
9. Time of Granting Options. The date of grant of an Option under
-------------------------
the Plan shall, for all purposes, be the date specified in such grant. Notice
shall be given to each Employee to whom an Option has been granted within a
reasonable time after the date of such grant.
10. Effective Date, Approval of Stockholders.
----------------------------------------
(a) The Plan shall become effective immediately upon adoption by
the Board, subject to the approval by the stockholders of the Company within 12
months after the adoption of the Plan by the Board. The Plan shall continue in
effect for a term of 10 years from the date the Plan is adopted by the Board.
(b) The 1991 amendment to paragraph 3 of the Plan shall become
effective as of the date of stockholder approval and adoption of the Plan, as
amended and restated, with the exception of the amendments contained in subpara-
graph 4(a), which provisions
10
shall become effective as of September 1, 1992.
11. Modification of Options. At any time and from time to time the
-----------------------
Board may authorize the Committee to direct execution of an instrument providing
for the modification, extension, or renewal of any outstanding Option; provid-
ed, however, that no such modification, extension, or renewal shall confer on
the Optionee any right or benefit which could not then be conferred on him by
the grant of a new Option nor shall it impair such Option without the consent of
the Optionee.
12. Amendment and Termination of the Plan. The Board may alter,
----------------------------------------
suspend, or discontinue the Plan, except that no action of the Board may
increase (other than as provided in paragraph 10 hereof) the maximum number of
Shares subject to Options or available for the grant of Options under the Plan,
reduce the applicable minimum exercise price, extend the maximum period within
which Options may be exercised under the Plan, or change the designation of
persons eligible to receive Options under the Plan, unless such action of the
Board shall be subject to approval or ratification by the stockholders of the
Company. No action of the Board shall, without the consent of the Optionee,
impair any then outstanding Option.
13. Conditions Upon Issuance of Shares. No Shares shall be delivered
----------------------------------
pursuant to the exercise of any Option unless the delivery of such Shares shall
comply (in the opinion of counsel to the Company) with all relevant provisions
of law, including, without limitation, the Securities Act of 1933, as amended,
the rules and regulations promulgated thereunder, any applicable state securi-
ties laws, and the requirements of any stock exchange upon which the Common
Stock may then be listed. As a condition to the exercise of an Option, the
Company may require the exercising Optionee to make such written representations
and
11
warranties as may be necessary to assure the availability of an exemption from
any registration requirements of federal or state securities laws. Certifi-
cates representing Shares issued upon the exercise of any Option may bear a
legend restricting transfer of the Shares except in compliance with Federal and
State securities statutes or an exemption therefrom, if available; failure of
any certificates to contain such a legend shall not constitute a waiver by the
Company of any such registration requirements. The Company, in its discretion,
may require any Optionee to bear (i) his or her proportionate share of the
Company's costs of the registration of his Underlying Shares under the Securi-
ties Act of 1933, as amended (the "Act") or any other federal or state securi-
ties laws, or (ii) the Company's cost of obtaining the opinion of its legal
counsel (not in excess of $500 per transaction for sales effected prior to
January 1, 1994, nor in excess of $1,000 per transaction thereafter) as to the
availability of any exemption from the Act or any other applicable federal or
state securities laws. The foregoing shall not be construed to obligate the
Company to effect any registration under the Act or other securities laws.
14. Gender and Number.
-----------------
(a) The use of any gender herein shall be construed to include
all other genders, unless the context clearly indicates that less than all the
genders is intended.
(b) The use of the singular or of the plural herein shall be
construed to include both the singular and the plural, unless the context
clearly indicates that only the singular or only the plural is intended.
12
CHEYENNE SOFTWARE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--DECEMBER 14, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned constitutes and appoints ReiJane Huai and Alan Kaufman, and
each of them, proxies of the undersigned, with power of substitution to each, to
represent and vote all shares of common stock of Cheyenne Software, Inc. (the
"Company"), $0.01 par value per share (the "Common Stock"), which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company, to be held on December 14, 1995, and all
adjournments thereof, as follows:
*1. To vote upon the election of each of the following nominees to the Board
of Directors, as indicated:
FOR all nominees listed below (except as marked to the contrary). / /
WITHHOLD AUTHORITY to vote for all nominees listed below. / /
Rino Bergonzi, ReiJane Huai, Richard F. Kramer, Bernard Rubien, Ginette
Wachtel
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME ABOVE.)
*2. To ratify the appointment by the Board of Directors of KPMG Peat Marwick
LLP as the independent auditors of the Company for the year ending June 30,
1996.
/ / FOR / / AGAINST / / ABSTAIN
*3. To approve and adopt amendments to the Company's 1987 Non-Qualified Stock
Option Plan, as amended and restated (the "Non-Qualified Plan"), to increase the
aggregate number of shares of Common Stock which may be issued upon the exercise
of all options granted pursuant to the Non-Qualified Plan from 4,237,500 shares
to 5,587,500 shares and to impose a grant limit under the Non-Qualified Plan.
/ / FOR / / AGAINST / / ABSTAIN
*4. To approve and adopt amendments to the Company's 1989 Incentive Stock
Option Plan, as amended and restated (the "Incentive Plan"), to increase the
aggregate number of shares of Common Stock which may be issued upon the exercise
of all options granted pursuant to the Incentive Plan from 4,806,250 shares to
5,806,250 shares and to impose a grant limit under the Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
5. To vote upon such other matters as may properly come before the meeting,
in the discretion of the proxies named herein.
* THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED
ABOVE BY THE STOCKHOLDER. IN THE ABSENCE OF SUCH DIRECTION, THE SHARES OF
COMMON STOCK WILL BE VOTED FOR THE MATTERS SET FORTH IN ITEMS 1 THROUGH 4.
Receipt of the Notice of Annual Meeting, Proxy Statement, and Annual Report to
Stockholders is hereby acknowledged.
Date:________________________ , 1995
____________________________________
____________________________________
____________________________________
Signature of Stockholders
PLEASE SIGN AS NAME APPEARS HEREON.
IF SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN OR
OTHER FIDUCIARY, PLEASE GIVE YOUR
FULL TITLE AS IT APPEARS. IF SHARES OF
COMMON STOCK ARE HELD JOINTLY, EACH
NAMED STOCKHOLDER SHOULD SIGN.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY.