SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended.
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for use of the Commission only (as permitted by Rule 14a-
6(e)(2)
Computron Software, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
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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:
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(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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COMPUTRON SOFTWARE, INC.
PROXY STATEMENT
Amendment No. 1
May 15, 1996
This Proxy Statement is furnished to stockholders of record of
Computron Software, Inc. (the "Company") as of May 13, 1996 in connection with
the solicitation of proxies by the Board of Directors of the Company (the "Board
of Directors" or "Board") for use at the Annual Meeting of Stockholders to be
held on June 12, 1996 (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at the
meeting or any adjournment thereof in accordance with instructions thereon, or
if no instructions are given, will be voted "FOR" the election of the named
nominees as Directors of the Company and "FOR" the ratification of Arthur
Andersen LLP, Independent Public Accountants, as auditors of the Company and
will be voted in accordance with the best judgment of the persons appointed as
proxies with respect to other matters which properly come before the Annual
Meeting. Any person giving a proxy may revoke it by written notice to the
Company at any time prior to exercise of the proxy. In addition, although mere
attendance at the Annual Meeting will not revoke the proxy, a stockholder who
attends the meeting may withdraw his or her proxy and vote in person.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual
Meeting. Abstentions will be counted in tabulations of the votes cast on each
of the proposals presented at the Annual Meeting, whereas broker non-votes will
not be counted for purposes of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the
proxy solicitation materials), including the Annual Report on Form 10-K with the
financial statements of the Company for the fiscal year ended December 31, 1995,
is being distributed concurrently herewith to stockholders.
The mailing address of the principal executive offices of the Company
is 301 Route 17 North, Rutherford, New Jersey 07070. This Proxy Statement and
the accompanying form of proxy are being mailed to the stockholders of the
Company on or about May 31, 1996.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock,
par value $0.01 per share (the "Common Stock"). At the Annual Meeting, each
stockholder of record at the close of business on May 13, 1996 will be entitled
to one vote for each share of Common Stock owned on that date as to each matter
presented at the Annual Meeting. On May 13, 1996, 20,771,939 shares of Common
Stock were outstanding. A list of stockholders eligible to vote at the Annual
Meeting will be available for inspection at the Annual Meeting and for a period
of ten days prior to the Annual Meeting during regular business hours at the
principal executive offices of the Company at the address specified above.
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying
form of proxy intend to vote at the Annual Meeting for the election of the five
nominees named below as Directors of the Company to serve until the next Annual
Meeting or until their successors are duly elected and qualified. If any
nominee is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominees.
The Board of Directors does not currently anticipate that any nominee will be
unable to be a candidate for election.
The Board of Directors currently has five members, all of whom are
nominees for re-election.
The affirmative vote of a plurality of the Company's outstanding
Common Stock represented and voting at the Annual Meeting is required to elect
the Directors.
Information Regarding Nominees for Election as Directors
The Board of Directors currently has five members. The following
information with respect to the principal occupation or employment, other
affiliations and business experience of each nominee during the last five years
has been furnished to the Company by such nominee. Except as indicated, each of
the nominees has had the same principal occupation for the last five years.
Andreas Typaldos, 50, a founder of the Company, has been Chief Executive
Officer and Chairman of the Board of Directors since the Company's formation in
1978 and was also the President until October 1994. Prior to founding the
Company, Mr. A. Typaldos was the principal architect and manager of the MISTER
WIZARD computer system of the AT&T Corp./New York Telephone Co.
Elias Typaldos, 45, a founder of the Company, has been Vice President,
Research and Development and a director since the Company's formation in 1978.
Gennaro Vendome, 49, a founder of the Company, has been Vice President,
Enterprise Sales and a director since the Company's formation in 1978. Mr.
Vendome was Treasurer of the Company from 1981 until 1991 and Secretary of the
Company from 1982 until 1991. Prior to joining the Company, Mr. Vendome was a
project leader of the MISTER WIZARD computer system of the AT&T Corp./New York
Telephone Co.
Gregory Kopchinsky, 45, has been a director since 1994. Mr. Kopchinsky is a
partner of the venture capital partnership Canaan Partners, which through its
affiliates is a principal stockholder of the Company. Mr. Kopchinsky joined
Canaan Partners as a General Partner in 1990. From 1984 to 1990, he was a Vice
President at J. P. Morgan with principal responsibility for private debt and
equity financings. Prior to joining J. P. Morgan, Mr. Kopchinsky was an attorney
with Davis Polk & Wardwell specializing in complex financing transactions.
Robert Migliorino, 46, has been a director since 1991. Mr. Migliorino is a
founding partner of the venture capital partnership Canaan Partners, which
through its affiliates is a principal stockholder of the Company. Prior to
establishing Canaan Partners in 1987, he spent 15 years with General Electric
Co. in their Drive Systems, Industrial Control, Power Delivery, Information
Services and Venture Capital businesses.
All of the current members of the Company's Board of Directors were elected
to the Board of Directors in accordance with certain provisions of a voting
agreement and the Company's Certificate of Incorporation. These provisions
terminated upon completion of the Company's initial public offering in August
1995. Two of the seats on the Company's Board of Directors are currently vacant.
Mr. A. Typaldos and Mr. E. Typaldos are brothers.
Committees of the Board
The Audit Committee of the Board of Directors reviews, acts on and
reports to the Board of Directors with respect to various auditing and
accounting matters, including the selection of the Company's auditors, the scope
of the annual audits, fees to be paid to the auditors, the performance of the
Company's auditors and the accounting practices of the Company. Mr. Kopchinsky
and Mr. Migliorino are the only members of the Audit Committee.
The Compensation Committee of the Board of Directors determines the
salaries and incentive compensation of the officers of the Company and provides
recommendations for the salaries and incentive compensation of the other
employees and the consultants of the Company. The Compensation Committee also
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administers various incentive compensation, stock and benefit plans. Mr.
Kopchinsky and Mr. Migliorino are the only members of the Compensation
Committee.
Attendance at Board and Committee Meetings
During fiscal year 1995, the Board of Directors held two formal
meetings. During fiscal year 1995, each Director attended all meetings of the
Board of Directors. The Compensation Committee held one meeting during fiscal
year 1995. The Audit Committee held one meeting during fiscal year 1995. In
addition to such formal meetings, the Board of Directors and the Audit and
Compensation Committees meet frequently on an informal basis.
Compliance with Reporting Requirements
Under the securities laws of the United States, the Company's
Directors, executive officers, and any persons holding more than ten percent of
the Company's Common Stock are required to report their ownership of the
Company's Common Stock and any changes in that ownership to the Securities and
Exchange Commission and the Nasdaq National Market Surveillance Department.
Specific due dates for these reports have been established and the Company is
required to report in this Proxy Statement any failure to file by these dates
during fiscal year 1995. Based solely on its review of such forms received by
it from such persons for their fiscal year 1995 transactions, the Company
believes that all filing requirements applicable to such officers, directors and
greater than ten percent beneficial owners were complied with, except that Mr.
Yonker, the Chief Financial Officer of the Company, did not timely file his Form
3.
Compensation of Directors
Cash Compensation. Directors do not receive a fee for attending Board
of Directors or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties as Directors of the Company.
Stock Option Grant. Under the Company's 1995 Stock Option Plan (the
"1995 Plan"), each non-employee Director first elected or appointed to the Board
of Directors after the initial public offering of the Company's Common Stock
will automatically be granted an option for 15,000 shares of Common Stock on the
date of his or her election or appointment to the Board of Directors, provided
such individual has not previously been in the employ of the Company. In
addition, at each annual meeting of stockholders, each individual with at least
six months of service on the Board of Directors who will continue to serve as a
non-employee Director following the meeting will automatically be granted an
option for 3,000 shares of Common Stock, whether or not such individual has been
in the prior employ of the Company or joined the Board of Directors prior to the
effective date of the 1995 Plan. Each option granted under the automatic grant
program will have an exercise price equal to 100% of the fair market value of
the Common Stock on the automatic grant date and a maximum term of ten years,
subject to earlier termination upon the optionee's cessation of Board of
Director service. Each automatic option will be immediately exercisable;
however, any shares purchased upon exercise of the option will be subject to
repurchase by the Company should the optionee's service as a non-employee
Director cease prior to vesting in the shares. The initial 15,000 share grant
will vest in successive equal annual installments over the optionee's initial
four-year period of service on the Board of Directors. Each additional 3,000
share grant will vest upon the optionee's completion of one year of service on
the Board of Directors, as measured from the grant date. However, each
outstanding option will immediately vest upon (i) certain changes in the
ownership or control of the Company or (ii) the death or disability of the
optionee while serving on the Board of Directors. Messrs. Kopchinsky and
Migliorino have declined the grant of any such options pursuant to the 1995 Plan
in connection with the 1996 annual meeting of shareholders.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The executive officers of the Company on March 31, 1996 were as
follows:
Name Age Position
- ---- --- --------
Andreas Typaldos . . . . . . . . 50 Chief Executive Officer and
Chairman of the Board
Joseph Esposito. . . . . . . . . 43 President, Worldwide Operations
Richard Yonker . . . . . . . . . 48 Vice President, Chief Financial
Officer, Treasurer and Secretary
Elias Typaldos . . . . . . . . . 45 Vice President, Research and
. . . . . . . . . Development and Director
Gennaro Vendome . . . . . . . . . 49 Vice President, Enterprise Sales
and Director
William Simmons . . . . . . . . . 49 Vice President, Client Services,
Worldwide
Alex Plavocos . . . . . . . . . 49 Vice President, Marketing
Carl Rosenberg . . . . . . . . . 45 Vice President, Sales
Information Concerning Executive Officers Who Are Not Directors
Joseph Esposito joined the Company as President, Worldwide Operations in
October 1994. From July 1991 to September 1994, Mr. Esposito held various senior
management positions at Ross Systems, Inc., a software company, most recently as
Vice President of Client Services. From 1979 to July 1991, Mr. Esposito held
various senior management positions with Wang, which produces computing
equipment, related peripheral devices and workflow/image management software.
Richard Yonker joined the Company as Vice President, Chief Financial
Officer, Treasurer and Secretary in December 1995. Prior to joining the
Company, Mr. Yonker was Senior Vice President and Chief Financial Officer of
Asyst Technologies, a semiconductor capital equipment company. From December
1992 to April 1994, Mr. Yonker was Vice President, Finance and Information
Systems at the ASK Group, a software company. From 1981 to November 1992, Mr.
Yonker held various international positions at Digital Equipment Corporation,
including Europe-Finance Director.
William Simmons joined the Company in May 1995 as Vice President, Client
Services, Worldwide. Mr. Simmons was the Vice President of Business Development
at Nationar, a financial services organization, from November 1993 to May 1995.
Mr. Simmons served in various capacities, including President and Chief
Operating Officer, at Metering Services Incorporated ("MSI"), a software
integrator working with the utility and communication industries, from 1987 to
November 1993. Prior to joining MSI, Mr. Simmons held a number of sales, sales
management, training and development positions at Xerox Corp. and Wang.
Alex Plavocos joined the Company in June 1994 as Vice President, Marketing.
From July 1991 to June 1994, Mr. Plavocos was Director of Corporate Marketing
for Information Builders Inc., a software company. Mr. Plavocos held various
marketing positions with Applied Data Research/Computer Associates, a software
company, from November 1983 to June 1991.
Carl Rosenberg joined the Company in May 1994 as Vice President, North
American Sales. From January 1990 to May 1994, Mr. Rosenberg was Vice President
and General Manager of the UNIX division of Information Builders Inc.
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Summary Compensation Table
The following table sets forth the annual and long-term compensation
paid by the Company during fiscal years 1994 and 1995 to the Chief Executive
Officer and President and the other executive officers of the Company whose
total compensation during fiscal year 1995 exceeded $100,000 (collectively, the
"Named Executive Officers"):
Long-Term
Annual Compensation Compensation(1)
Other Securities
Annual Underlying All Other
Name and Principal Position Fiscal Year Salary Bonus Compensation(2) Options Compensation
--------------------------- ----------- ------ ----- --------------- ----------- ------------
Andreas Typaldos . . . . . 1994 $468,976(3) $0 $0 60,000 $13,188(4)
Chief Executive Officer 1995 453,600 0 0 0 9,854(4)
Elias Typaldos . . . . . . 1994 273,771(5) 0 0 15,000 8,511(6)
Vice President, Research 1995 288,581 0 0 0 7,694(6)
and Development
Gennaro Vendome . . . . . . 1994 166,920 0 37,799(7) 15,000 12,330(8)
Vice President, Enterprise 1995 166,919 0 48,772(7) 0 5,684(8)
Sales
Joseph Esposito(4) . . . . 1994 50,000 0 0 180,000 0
President, Worldwide 1995 200,000 62,500 0 0 1,833(10)
Operations
Carl Rosenberg(11) . . . . 1994 87,589 0 18,769(12) 45,000 708(13)
Vice President, North 1995 141,250 14,695 28,750(12) 0 2,271(13)
American Sales
____________________
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payments during
1994.
(2) Other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted the lesser of $50,000
or 10% of the total annual salary and bonus for the Named Executive Officer
for the year.
(3) Includes $56,700 of deferred compensation earned in 1994 and paid in 1995.
(4) Includes for 1994 and 1995, respectively, matching contributions to the
Company's 401(k) plan in the amount of $2,310 and $2,310, premiums on life
and disability insurance for the benefit of the Named Executive Officer in
the amounts of $9,381 and $7,544, and interest paid by the Company in 1994
on behalf of the Named Executive Officer for a loan against insurance in
the amount of $1,497.
(5) Includes $16,371 of deferred compensation earned in 1994 but paid in 1995.
(6) Includes for 1994 and 1995, respectively, matching contributions to the
Company's 401(k) plan in the amount of $2,310 and $2,310 and premiums on
life and disability insurance for the benefit of the Named Executive
Officer in the amounts of $6,201 and $5,384, respectively.
(7) Represents commissions earned in 1994 and 1995.
(8) Includes for 1994 and 1995, respectively, matching contributions to the
Company's 401(k) plan in the amount of $2,310 and $0, premiums on life and
disability insurance for the benefit of the Named Executive Officer in the
amounts of $6,857 and $5,684, respectively, and interest paid by the
Company on behalf of the Named Executive Officer for a loan against
insurance in the amount of $3,163 in 1994.
(9) Mr. Esposito joined the Company in October 1994.
(10) Represents a matching contribution to the Company's 401(k) plan.
(11) Mr. Rosenberg joined the Company in May 1994.
(12) Represents an advance on future commissions.
(13) Represents a matching contribution to the Company's 401(k) plan.
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1995 Stock Option Plan
The 1995 Plan was adopted by the Board of Directors and approved by the
stockholders in June 1995. A summary of the plan is set forth in Appendix A
hereto. The information is being provided in accordance with applicable
requirements of the Federal securities laws in order to assure that the 1995
Plan will qualify under Rule 16b-3 of the Securities and Exchange Commission and
thereby provide the Company's executive officers and members of the Board of
Directors with certain exemptions from the short-swing liability provisions of
the Federal securities laws for their transactions under the 1995 Plan.
Option/SAR Grants in Last Fiscal Year
No stock options or appreciation rights were granted to the Named Executive
Officers during fiscal year 1995.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information with respect to the Named
Executive Officers regarding stock option holdings as of December 31, 1995. No
stock options were exercised by such persons in fiscal year 1995. No stock
appreciation rights were exercised by any Named Executive Officer during fiscal
year 1995 and no stock appreciation rights were outstanding as of December 31,
1995.
Net Values of Unexercised
Number of Unexercised Options In-the-Money Options(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Andreas Typaldos . 15,000 45,000 $ 241,500 $ 724,500
Elias Typaldos . . 3,750 11,250 60,375 181,125
Gennaro Vendome . . 3,750 11,250 60,375 181,125
Joseph Esposito . . 45,000 135,000 724,500 2,173,500
Carl Rosenberg . . 11,250 33,750 181,125 543,375
________________________
(1) Based on the fair market value of the Company's Common Stock at the end of
1995, $18.00 per share, less the exercise price payable for such shares.
Employment Agreements
The Company entered into employment agreements with Andreas Typaldos, Elias
Typaldos and Gennaro Vendome, each of which expires on December 31, 1996, unless
earlier terminated. Mr. A. Typaldos' agreement provides that the Company will
employ Mr. A. Typaldos as Chief Executive Officer and will pay Mr. A. Typaldos
an annual salary of $336,000, subject to cost of living adjustments. Mr. A.
Typaldos is also eligible for additional salary increases and bonuses if
approved by a two-thirds majority of the Board of Directors.
Under his employment agreement, the Company may terminate Mr. A. Typaldos'
employment for cause, without liability beyond the payment of wages to the date
of discharge, and may terminate Mr. A. Typaldos' employment for any other reason
and continue to (i) pay his salary, in annual installments, for the greater of
three years or the remaining term of the employment agreement and (ii) continue
his benefits for eighteen months from the date of discharge. The Company is also
obligated to pay Mr. A. Typaldos severance compensation in the event he
terminates employment for "good cause" as defined in the employment agreement,
which includes a failure to reelect him as a director of the Company. Mr. A.
Typaldos' employment agreement
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also provides for severance compensation in the event of death and the
maintenance of key-person life insurance. See "--Key-Person Life Insurance."
Mr. E. Typaldos' agreement provides that the Company will employ Mr. E.
Typaldos as Vice President and will pay Mr. E. Typaldos an annual salary of
$234,000 per year, subject to cost of living adjustments. Mr. E. Typaldos is
also eligible for additional salary increases and bonuses if approved by a two-
thirds majority of the Board of Directors.
Under his employment agreement, the Company may terminate Mr. E. Typaldos'
employment for cause, without liability beyond the payment of wages to the date
of discharge, and may terminate Mr. E. Typaldos' employment for any other reason
and continue to (i) pay his salary and bonus, in annual installments, for the
greater of two years or the remaining term of the employment agreement and (ii)
continue his benefits for eighteen months from the date of discharge. Mr. E.
Typaldos' employment agreement also provides for severance compensation in the
event of death and the maintenance of key-person life insurance. See "--Key-
Person Life Insurance."
Mr. Vendome's agreement provides that the Company will employ Mr. Vendome as
Vice President and will pay Mr. Vendome an annual salary of $156,000 per year,
subject to cost of living adjustments and commissions of up to $60,000 per year.
Mr. Vendome is also eligible for additional salary increases and bonuses if
approved by a two-thirds majority of the Board of Directors.
Under his employment agreement, the Company may terminate Mr. Vendome's
employment for cause, without liability beyond the payment of wages to the date
of discharge, or may terminate Mr. Vendome's employment for any other reason and
continue to (i) pay his salary, in annual installments, for the greater of two
years or the remaining term of the employment agreement and (ii) continue his
benefits for eighteen months from the date of discharge. Mr. Vendome's
employment agreement also provides for severance compensation in the event of
death and the maintenance of key-person life insurance. See "--Key-Person Life
Insurance."
The Company has a severance agreement with Joseph Esposito, President of the
Company, providing for severance payments of $10,000 a month for twelve months
from the date of termination.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee consists of Gregory Kopchinsky and
Robert Migliorino.
401(k) Plan
The Company participates in a tax-qualified employee savings and retirement
plan (the "401(k) Plan") which covers all of the Company's employees with three
months of service who are at least 21 years of age. Pursuant to the 401(k) Plan,
employees may elect to reduce their current compensation by up to the
statutorily prescribed annual limit and have the amount of such reduction
contributed to the 401(k) Plan. The 401(k) Plan requires matching contributions
by the Company on behalf of all participants in the 401(k) Plan. In 1995, the
Company made matching contributions in the amount of 25% of the first six
percent contributed by each employee. The 401(k) Plan is intended to qualify
under Section 401 of the Internal Revenue Code of 1986, as amended, so that
contributions by employees or by the Company to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company, if any, will be
deductible by the Company when made. The trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in a number
of investment options.
Key-Person Life Insurance
The Company maintains a $3.3 million life insurance policy on the life of
Andreas Typaldos with the Company the beneficiary of $2.15 million and Mr. A.
Typaldos' spouse the beneficiary of the other $1.15 million. The Company
maintains a life insurance policy in the amount of $3.0 million on the life of
Elias Typaldos with the Company the beneficiary of $2.0 million and Mr. E.
Typaldos' spouse the beneficiary of the
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other $1.0 million. The Company maintains a life insurance policy in the amount
of $2.6 million on the life of Gennaro Vendome with the Company the beneficiary
of $1.8 million and Mr. Vendome's spouse the beneficiary of the remaining $0.8
million.
Limitation of Liability and Indemnification Matters
The Company's Certificate of Incorporation provides that, except to the
extent prohibited by the Delaware General Corporation Law, its directors shall
not be personally liable to the Company or its stockholders for monetary damages
for any breach of fiduciary duty as directors of the Company. Under Delaware
law, the directors have a fiduciary duty to the Company which is not eliminated
by this provision of the Certificate of Incorporation and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available. In addition, each director will continue
to be subject to liability under Delaware law for breach of the director's duty
of loyalty to the Company for acts or omissions which are found by a court of
competent jurisdiction to be not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are prohibited by Delaware law. This
provision also does not affect the directors' responsibilities under any other
laws, such as the Federal securities laws or state or Federal environmental
laws. In addition the Company has obtained liability insurance for its officers
and directors.
The Certificate of Incorporation also provides that the Company shall
indemnify, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law, all of its present and former officers and directors,
and any party agreeing to serve as an officer, director or trustee of any entity
at the Company's request, in connection with any civil or criminal proceeding
threatened or instituted against such party by reason of actions or omissions
while serving in such capacity. Indemnification by the Company includes payment
of expenses in defense of the indemnified party in advance of any proceeding or
final disposition thereof. The rights to indemnification provided in this
provision do not preclude the exercise of any other indemnification rights by
any party pursuant to any law, agreement or vote of the stockholders or the
disinterested directors of the Company.
Section 145 of the Delaware General Corporation Law generally allows the
Company to indemnify the parties described in the preceding paragraph for all
expenses, judgments, fines and amounts in settlement actually paid and
reasonably incurred in connection with any proceedings so long as such party
acted in good faith and in a manner reasonably believed to be in or not opposed
to the Company's best interests and, with respect to any criminal proceedings,
if such party had no reasonable cause to believe his or her conduct to be
unlawful. Indemnification may only be made by the Company if the applicable
standard of conduct set forth in Section 145 has been met by the indemnified
party upon a determination made (1) by the Board of Directors by a majority vote
of a quorum of directors who are not parties to such proceedings, or (2) if such
a quorum is not obtainable or if directed by a quorum of disinterested
directors, by independent legal counsel in a written opinion, or (3) by the
stockholders.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The Compensation Committee also is
responsible for the administration of the Company's 1995 Option Plan under which
option grants may be made to executive officers. The Compensation Committee has
reviewed and is in accord with the compensation paid to executive officers in
fiscal year 1995.
General Compensation Policy. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive officer's
compensation contingent upon the Company's performance as well as upon such
executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
Factors. The principal factors which the Compensation Committee considered
with respect to each executive officer's compensation package for fiscal year
1995 are summarized below. The Compensation Committee may, however, in its
discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
- Base Salary. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
without the industry and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to individual, as
the Compensation Committee deems appropriate.
From time to time, the Compensation Committee may advocate cash bonuses when
such bonuses are deemed to be in the best interest of the Company.
- Long-Term Incentive Compensation. Long-term incentives are provided
through grants of stock options. The grants are designed to align the interests
of each executive officer with those of the stockholders and provide each
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the Company. Each option grant
allows the individual to acquire shares of the Company's Common Stock at a fixed
price per share (generally, the market price on the grant date) over a specified
period of time (up to ten years). Each option generally becomes exercisable in
installments over a five-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option grant will
provide a return to the executive officer only if the executive officer remains
employed by the Company during the vesting period, and then only if the market
price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the executive
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term and the individual's personal
performance in recent periods. The Compensation Committee also considers the
number of unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that individual. However, the
Compensation Committee does not adhere to any specific guidelines as to the
relative option holdings of the Company's executive officers. There were no
stock options granted to executive officers in fiscal year 1995.
- 9 -
CEO Compensation. In advising the Board of Directors with respect to the
compensation payable to the Company's Chief Executive Officer, the Compensation
Committee seeks to achieve two objectives: (i) establish a level of base salary
competitive with that paid by companies within the industry which are of
comparable size to the Company and by companies outside of the industry with
which the Company competes for executive talent and (ii) make a significant
percentage of the total compensation package contingent upon the Company's
performance and stock price appreciation.
The suggested base salary established for Mr. Typaldos on the basis of the
foregoing criteria was intended to provide a level of stability and certainty
each year. Accordingly, this element of compensation was not affected to any
significant degree by Company performance factors.
Compliance with Internal Revenue Code Section 162(m). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive officers
which is not considered to be performance based. Compensation which does
qualify as performance-based compensation will not have to be taken into account
for purposes of this limitation. The 1995 Plan contains certain provisions
which are intended to assure that any compensation deemed paid in connection
with the exercise of stock options granted under that plan with an exercise
price equal to the market price of the option shares on the grant date will
qualify as performance-based compensation.
The Compensation Committee does not expect that the compensation to be paid
to the Company's executive officers for the 1996 fiscal year will exceed the $1
million limit per officer. Accordingly, until final Treasury regulations are
issued with respect to the new $1 million limitation, the Committee will defer
any decision on whether or not to restructure one or more components of the
compensation paid to the executive officers so as to qualify those components as
performance-based compensation that will not be subject to the $1 million
limitation.
THE COMPENSATION COMMITTEE
Gregory Kopchinsky
Robert Migliorino
May 15, 1996
- 10 -
PERFORMANCE GRAPH
Set forth below is a table comparing the annual percentage change in the
Company's cumulative total stockholder return on its Common Stock from August
24, 1995 (the date public trading of the Company's stock commenced) to the last
day of the Company's last completed fiscal year (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the excess of the Company's share price
at the end over the price at the beginning of the measurement period, by (ii)
the share price at the beginning of the measurement period) with the cumulative
total return so calculated of the Nasdaq Stock Market-US Index and a stock index
comprised of companies in a line of business similar to the Company during the
same period.
Comparison of 4 Month Cumulative Total Return1 Among
Computron Software, Inc., The Nasdaq Stock Market (US) Index
and The Hambrecht & Quist Computer Software Index
7/95 8/24/95 8/95 9/95 10/95 11/95 12/95
---- ------- ---- ---- ----- ----- -----
Computron Software, $100 $109 $ 99 $ 97 $ 87 $103
Inc.
Nasdaq Stock Market $100 100 102 104 104 106 106
(US) Index
Hambrecht & Quist 100 100 100 103 105 106 103
(1) $100 invested on 8/24/95 in Computron Software, Inc. Common Stock and on
7/31/95 in The Nasdaq Stock Market (US) Index and The Hambrecht & Quist
Computer Software Index including reinvestment of dividends. Fiscal year
ending December 31, 1995.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made by
the Company under those statutes, the preceding Compensation Committee Report on
Executive Compensation and the Company Stock Performance Graph will not be
incorporated by reference into any of those prior filings, nor will such report
or graph be incorporated by reference into any future filings made by the
Company under those statutes.
- 11 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 13, 1996 by (i) each Director
and nominee for Director, (ii) each of the Named Executive Officers, (iii) each
person known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock and (iv) all executive officers and Directors as a group.
The information concerning beneficial owners of more than 5% of the Company's
Common Stock is based solely on filings with the Securities and Exchange
Commission on Schedules 13(D), 13(G) and on Forms 3, 4 and 5.
Number of Shares of Percentage of
Common Stock Beneficially Shares
Owned(1) Outstanding(1)
Name and Address of
-------------------
Beneficial Owner
----------------
Funds controlled by Canaan
Partners . . . . . . . . 3,230,360(2) 15.6%
105 Rowayton Avenue
Rowayton, CT 06853
Andreas Typaldos . . . . . 5,740,584(3) 27.7
Elias Typaldos . . . . . . 3,353,924(4) 16.1
Joseph Esposito . . . . . . 45,000(5) *
Gennaro Vendome . . . . . . 1,636,497(6) 7.9
Carl Rosenberg . . . . . . 22,500(5) *
Gregory Kopchinsky . . . . 3,230,360(7) 15.6
Canaan Partners
105 Rowayton Avenue
Rowayton, CT 06853
Robert Migliorino . . . . . 3,230,360(8) 15.6
Canaan Partners
105 Rowayton Avenue
Rowayton, CT 06853
All current directors and
executive officers as a
group (8 persons) . . . . . 14,061,678(9) 67.3
________________________
* Represents beneficial ownership of less than one percent of the Common
Stock.
(1) Applicable percentage of ownership as of May 13, 1996 is based upon
20,771,939 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to
shares. Gives effect to the shares of Common Stock issuable within 60
days of May 13, 1996 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date.
(2) Includes (i) 2,884,714 shares of Common Stock held by Canaan Offshore and
(ii) 345,646 shares of Common Stock held by Canaan L.P.
(3) Includes (i) 755,504 shares owned by The Andreas Typaldos GRAT dated
9/29/93, (ii) 11,047 shares owned by Renee Typaldos, Mr. Typaldos' wife,
(iii) 755,504 shares owned by The Renee Typaldos GRAT dated 9/29/93, (iv)
229,846 shares held by the Andreas Typaldos Family Partnership, (v) 350,000
shares
- 12 -
held by the Andreas Typaldos Charitable Remainder Annuity Trust, and (vi)
30,000 shares of Common Stock which may be purchased within 60 days of May
13, 1996.
(4) Includes (i) 374,205 shares owned by The Elias Typaldos GRAT dated
10/13/94, (ii) 379,251 shares owned by The Judith Typaldos GRAT dated
10/13/94, (iii) 147,750 shares held by the Elias Typaldos Family
Partnership, (iv) 287,500 shares held by the Elias Typaldos Charitable
Remainder Annuity Trust, and (v) 7,500 shares of Common Stock which may be
purchased within 60 days of May 13, 1996 upon the exercise of stock options.
(5) Consists of shares of Common Stock which may be purchased within 60 days of
May 13, 1996 upon the exercise of stock options.
(6) Includes (i) 237,249 shares held by The Gennaro Vendome GRAT dated
1/24/95, (ii) 240,704 shares held by The Carol Vendome GRAT dated 1/24/95,
(iii) 5,656 shares held by Carol Vendome as custodian for Laura Vendome,
(iv) 109,096 shares held by the Vendome Family Partnership, (v) 827,234
shares held by the 227-231 East 21st St., LLC, a New York limited liability
company, (vi) 160,000 shares held by the Vendome Charitable Remainder
Annuity Trust and (vii) 7,500 shares of Common Stock which may be purchased
ithin 60 days of May 13, 1996 upon the exercise of stock options.
(7) Includes (i) 2,884,714 shares of Common Stock held by Canaan Offshore and
(ii) 345,646 shares of Common Stock held by Canaan L.P. Mr. Kopchinsky is a
general partner of Canaan Partners, the general partner of each of these
entities. In such capacity, Mr. Kopchinsky may be deemed to be the
beneficial owner of such shares, although he disclaims such beneficial
ownership except to the extent of his pecuniary interest, if any.
(8) Includes (i) 2,884,714 shares of Common Stock held by Canaan Offshore and
(ii) 345,646 shares of Common Stock held by Canaan L.P. Mr. Migliorino is a
general partner of Canaan Partners, the general partner of each of these
entities. In such capacity, Mr. Migliorino may be deemed to be the
beneficial owner of such shares, although he disclaims such beneficial
ownership except of his pecuniary interest, if any.
(9) Includes 115,313 shares of Common Stock which may be purchased within 60
days of May 13, 1996 upon the exercise of stock options. Also includes (i)
2,884,714 shares of Common Stock held by Canaan Offshore and (ii) 345,646
shares of Common Stock held by Canaan, L.P. Mr. Kopchinsky and Mr.
Migliorino are general partners of Canaan Partners, the general partner of
each of these entities. In such capacity, Mr. Kopchinsky and Mr. Migliorino
may be deemed to be the beneficial owner of such shares, although they each
disclaim such beneficial ownership except of their pecuniary interest, if
any.
- 13 -
CERTAIN TRANSACTIONS
In June 1995, the Company entered into a severance agreement with Philip
Levine, who resigned as Chief Financial Officer of the Company. The agreement
provides for the payment to Mr. Levine of his salary for a period of six months
and the continuation of certain benefits for a period of one year from the date
of his resignation.
For information regarding employment agreements and severance agreements
with executive officers, see "Executive Compensation and Other Information -
Employment Agreements."
The Company pays the premiums for certain life insurance policies for which
the spouses of certain executive officers are the beneficiaries. See "Management
- - Key-Person Life Insurance."
- 14 -
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Arthur Andersen LLP, independent public accountants and auditors of
the Company since 1986, as auditors of the Company to serve for the fiscal year
ending December 31, 1996, subject to the ratification of such appointment by the
stockholders at the Annual Meeting. A majority of the votes of the outstanding
shares of Common Stock is required to ratify the appointment of the auditors. A
representative of Arthur Andersen LLP will attend the Annual Meeting of
Stockholders with the opportunity to make a statement if he or she so desires
and will also be available to answer inquiries.
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission, stockholder proposals intended for presentation at the 1997 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than January 17, 1997 if such proposals are to be considered for inclusion
in the Company's Proxy Statement.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
meeting other than those set forth above. If any other matters properly come
before the meeting, the persons named in the enclosed form of proxy will vote
the shares represented by proxies in accordance with their best judgment on such
matters.
Proxies will be solicited by mail and may also be solicited in person or by
telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
By Order of the Board of Directors
Andreas Typaldos
Chief Executive Officer and
Chairman of the Board
Rutherford, New Jersey
May 15, 1996
- 15 -
COMPUTRON SOFTWARE, INC.
APPENDIX A
INFORMATION ON 1995 STOCK OPTION PLAN
================================================================================
The 1995 Stock Option Plan (the "Option Plan"), pursuant to which
1,500,000 shares of Common Stock have been reserved for issuance, was adopted by
the Board of Directors in June 1995 and subsequently approved by the Company's
stockholders as the successor to the Company's Stock Option Plan (the
"Predecessor Plan"). The Option Plan became effective in connection with the
initial public offering of the Common Stock (the "Effective Date"). All options
outstanding under the Predecessor Plan on the Effective Date were incorporated
into the Option Plan and no further option grants will be made under the
Predecessor Plan after such date.
The following is a summary of the principal features of the Option
Plan. The summary, however, does not purport to be a complete description of all
the provisions of the Option Plan. Any stockholder of the Company who wishes to
obtain a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's principal executive offices in Rutherford,
New Jersey. The information is provided in accordance with the applicable
requirements of the Federal securities laws in order to assure that the Option
Plan will qualify under Rule 16b-3 of the Securities and Exchange Commission and
thereby provide the Company's executive officers and members of the Board of
Directors with certain exemptions from the short-swing liability provisions of
the Federal securities laws for their transactions under the Option Plan.
Equity Incentive Programs
The Option Plan contains two separate equity incentive programs: (i) a
Discretionary Option Grant Program and (ii) an Automatic Option Grant Program.
The principal features of these programs are described below. The Option Plan
(other than the Automatic Option Grant Program) is administered by the
Compensation Committee of the Board. This committee (the "Plan Administrator")
has complete discretion (subject to the provisions of the Option Plan) to
authorize option grants under the Discretionary Option Grant Program. However,
all grants under the Automatic Option Grant Program will be made in strict
compliance with the provisions of that program, and no administrative discretion
will be exercised by the Plan Administrator with respect to the grants made
thereunder.
Share Reserve
A total of 1,500,000 shares of Common Stock has been reserved for
issuance over the term of the Option Plan. This reserve is comprised of the
number of shares of Common Stock which remained available for issuance under the
Predecessor Plan as of the Effective Date and an additional increase of 375,000
shares. In no event may any one participant in the Option Plan be granted stock
options and separately exercisable stock appreciation rights for more than
450,000 shares in the aggregate over the term of the Option Plan.
In the event any change is made to the outstanding shares of Common
Stock by reason of any recapitalization, stock dividend, stock split,
combination of shares, exchange of shares or other change in corporate structure
effected without the Company's receipt of consideration, appropriate adjustments
will be made to the securities issuable (in the aggregate and to each
participant) under the Option Plan and to the securities and exercise price
under each outstanding option.
Eligibility
Officers and other employees of the Company and its parent or
subsidiaries (whether now existing or subsequently established), non-employee
members of the Board (other than those serving as members of the Compensation
Committee) and the board of directors of its parent or subsidiaries and
consultants and independent advisors of the Company and its parent and
subsidiaries are eligible to participate in the Discretionary Option Grant
Program. Non-employee members of the Board (including members of the
Compensation Committee) are also eligible to participate in the Automatic Option
Grant Program.
As of May 13, 1996, approximately 8 executive officers, 486 other
employees and no non-employee Board members were eligible to participate in the
Option Plan, and two non-employee Board members were eligible to participate in
the Automatic Option Grant Program.
Valuation
The fair market value per share of Common Stock on any relevant date
under the Option Plan will be the closing selling price per share on that date
on the Nasdaq National Market. On May 13, 1996, the closing selling price per
share was $5.125.
Amendment and Termination
The Board may amend or modify the Option Plan in any or all respects
whatsoever subject to any required stockholder approval. The Board may terminate
the Option Plan at any time, and the Option Plan will in all events terminate on
June 15, 2005.
Discretionary Option Grant Program
Options may be granted under the Discretionary Option Grant Program at
an exercise price per share not less than eighty-five percent (85%) of fair
market value per share of Common Stock on the option grant date. No granted
option will have a term in excess of ten years.
Upon cessation of service, the optionee will have a limited period of
time in which to exercise any outstanding option to the extent such option is
exercisable for vested shares. The Plan Administrator will have complete
discretion to extend the period following the optionee's cessation of service
during which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.
The Plan Administrator is authorized to issue two types of stock
appreciation rights in connection with option grants made under the
Discretionary Option Grant Program:
Tandem stock appreciation rights provide the holders with the
---------------------------------
right to surrender their options for an appreciation distribution from
the Company equal in amount to the excess of (a) the fair market value
of the vested shares of Common Stock subject to the surrendered option
over (b) the aggregate exercise price payable for such shares. Such
appreciation distribution may, at the discretion of the Plan
Administrator, be made in cash or in shares of Common Stock.
Limited stock appreciation rights may be granted to officers of
----------------------------------
the Company as part of their option grants. Any option with such a
limited stock appreciation right in effect for at least six (6) months
may be surrendered to the Company upon the successful completion of a
hostile take-over of the Company. In return for the surrendered
option, the officer will be entitled to a cash distribution from the
Company in an amount per surrendered option share equal to the excess
of (a) the take-over price per share over (b) the exercise price
payable for such share.
The Plan Administrator has the authority to effect the cancellation of
outstanding options under the Discretionary Option Grant Program which have
exercise prices in excess of the then current market price of Common Stock and
to issue replacement options with an exercise price based on the market price of
Common Stock at the time of the new grant.
Automatic Option Grant Program
Under the Automatic Option Grant Program, each individual who first
becomes a non-employee Board member on or after the Effective Date will
automatically be granted at that time an option grant for 15,000
A-2
shares of Common Stock, provided such individual has not previously been in the
Company's employ. In addition, on the date of each Annual Stockholders Meeting,
beginning with the 1996 Annual Meeting, each individual who received an initial
15,000-share option grant and who is to continue to serve as a non-employee
Board member after such meeting will automatically be granted an option to
purchase 3,000 shares of Common Stock, provided such individual has served as a
non-employee Board member for at least six months. There will be no limit on the
number of such 3,000-share options which any one non-employee Board member may
receive over the period of Board service.
Each option will have an exercise price per share equal to 100% of the
fair market value per share of Common Stock on the option grant date and a
maximum term of ten years measured from the option grant date.
Each option will be immediately exercisable for all the option shares,
but any purchased shares will be subject to repurchase by the Company, at the
exercise price paid per share, upon the optionee's cessation of Board service.
Each initial option grant will vest (and the Company's repurchase rights will
lapse) in four equal annual installments over the optionee's period of Board
service, with the first such installment to vest upon the completion of one year
of Board service measured from the option grant date. Each annual option grant
will vest (and the Company's repurchase rights will lapse) upon the completion
of one year of Board service measured from the option grant date.
The shares subject to each automatic option grant will immediately
vest upon the optionee's death or permanent disability or an acquisition of the
Company by merger or asset sale or a hostile change in control of the Company
(whether by successful tender offer for more than 50% of the outstanding voting
stock or by proxy contest for the election of Board members). In addition, upon
the successful completion of a hostile take-over, each automatic option grant
which has been outstanding for at least six months may be surrendered to the
Company for a cash distribution per surrendered option share in an amount equal
to the excess of (a) the take-over price per share over (b) the exercise price
payable for such share.
General Provisions
Acceleration
In the event that the Company is acquired by merger or asset sale,
each outstanding option under the Discretionary Option Grant Program which is
not to be assumed by the successor corporation or replaced with a comparable
option to purchase shares of the capital stock of the successor corporation will
automatically accelerate in full. Any options assumed or replaced in connection
with such acquisition will be subject to immediate acceleration in the event the
individual's service is subsequently terminated within 18 months following the
acquisition. The Plan Administrator has the discretion to provide for the
acceleration of all outstanding options under the Discretionary Grant Program
upon a hostile change in control of the Company (whether by successful tender
offer for more than 50% of the outstanding voting stock or by proxy contest for
the election of Board members) or upon the termination of the individual's
service within 18 months following the change in control.
Outstanding stock options under the Predecessor Plan which were
incorporated into the Option Plan do not contain any provisions relating to an
acquisition of the Company or to a hostile change in control of the Company.
However, the Plan Administrator has the authority to extend the acceleration
provisions of the Option Plan to any or all stock options incorporated from the
Predecessor Plan.
Financial Assistance
The Plan Administrator may permit one or more optionees to pay the
exercise price of outstanding options under the Option Plan by delivering a
promissory note payable in installments. The Plan Administrator will determine
the terms of any such promissory note. However, the maximum amount of financing
provided any optionee may not exceed the cash consideration payable for the
issued shares plus all applicable taxes incurred in
A-3
connection with the acquisition of the shares. Any such promissory note may be
subject to forgiveness in whole or in part, at the discretion of the Plan
Administrator, over the optionee's period of service.
Special Tax Election
The Plan Administrator may provide one or more holders of options with
the right to have the Company withhold a portion of the shares otherwise
issuable to such individuals in satisfaction of the tax liability incurred by
such individuals in connection with the exercise of those options.
Alternatively, the Plan Administrator may allow such individuals to deliver
previously acquired shares of Common Stock in payment of such tax liability.
A-4
Stock Awards
The table below shows, as to each of the Company's executive officers
named in the Summary Compensation Table and the various indicated individuals
and groups, the number of shares of Common Stock subject to options granted
between January 1, 1995 and April 30, 1996 under the predecessor Stock Option
Plan and the Option Plan together with the weighted average exercise price
payable per share.
OPTION TRANSACTIONS
Weighted
Number of Average
Option Exercise
Name Shares Price
Andreas Typaldos
Chief Executive Officer and 0 -
Chairman of the Board of
Directors
Elias Typaldos
Vice President, Research & 0 -
Development and Director
Gennaro Vendome
Vice President, Enterprise 0 -
Sales and Director
Joseph Esposito
President, Worldwide 0 -
Operations
Carl Rosenberg
Vice President, North 0 -
American Sales
All current executive
officers as a group 0 -
(5 persons)
Gregory Kopchinsky
0 -
Robert Migliorino
0 -
All non-employee directors as
a group 0 -
(2 persons)
All employees, including
current officers who are not
executive officers as a group 127,650 $13.00
(88 persons)
A-5
Federal Income Tax Consequences
Option Grants
Options granted under the Option Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Internal Revenue
Code or non-statutory options which are not intended to meet such requirements.
The Federal income tax treatment for the two types of options differs as
follows:
Incentive Options. No taxable income is recognized by the optionee at
-----------------
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise disposed
of. For Federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. A qualifying disposition occurs if the sale
or other disposition is made after the optionee has held the shares for more
than two years after the option grant date and more than one year after the
exercise date. If either of these two holding periods is not satisfied, then a
disqualifying disposition will result.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction, for the
taxable year in which such disposition occurs, equal to the excess of (i) the
fair market value of such shares on the option exercise date over (ii) the
exercise price paid for the shares. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the purchased
shares.
Non-Statutory Options. No taxable income is recognized by an optionee
---------------------
upon the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
Stock Appreciation Rights
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
the appreciation distribution for the taxable year in which the ordinary income
is recognized by the optionee.
Accounting Treatment
Option grants with exercise prices less than the fair market value of
the shares on the grant or issue date will result in a compensation expense to
the Company's earnings equal to the difference between the exercise price and
the fair market value of the shares on the grant date. Such expense will be
accruable by the Company
A-6
over the period that the option shares are to vest. Option grants at 100% of
fair market value will not result in any charge to the Company's earnings but
the Company must disclose, in pro-forma statements to the Company's financial
statements, the impact those options would have upon the Company's reported
earnings were the value of those options at the time of grant treated as
compensation expense. Whether or not granted at a discount, the number of
outstanding options may be a factor in determining the Company's earnings per
share on a fully-diluted basis.
Should one or more optionees be granted stock appreciation rights
which have no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to the
Company's earnings.
A-7
New Plan Benefits
The following table sets forth certain information regarding the
options expected to be granted under the Automatic Option Grant Program on the
date of the 1996 Annual Meeting at an exercise price per share equal to the
closing selling price per share of Common Stock on that date on the Nasdaq
National Market provided the individuals are to continue to serve as Board
members after the meeting.
Weighted
Number of Average
Name Option Shares Exercise Price
All non-employee directors as a group
(2 persons) 0 --
All employees, including current officers who
are not executive officers as a group
(0 persons) 0 --
A-8
(Form of Proxy)
COMPUTRON SOFTWARE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - June 12, 1996
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of Computron Software, Inc. hereby appoints Andreas
Typaldos, Chief Executive Officer and Richard Yonker, Chief Financial Officer
and Vice President and each of them, with full power of substitution, proxies
to vote the shares of stock which the undersigned could vote if personally
present at the Annual Meeting of Stockholders of Computron Software, Inc. to
be held at the Meadowlands Hilton, 2 Harmon Plaza, Secaucus, New Jersey 07094,
telephone number (201) 348-6900 on June 12, 1996, at 2:00 P.M. (eastern
standard time), or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees below
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name in the space provided below.
Director Nominees: 1. Andreas Typaldos; 2. Elias Typaldos; 3. Gennaro Vendome;
4. Gregory Kopchinsky; and 5. Robert Migliorino
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2. RATIFICATION OF ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to ratify the selection of Arthur Andersen LLP, independent public
accountants, as auditors of the Company as described in the Proxy Statement.
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
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THE PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2.
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Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder should
sign. Executors, administrators, trustees, etc. should use full title and, if
more than one, all should sign. If the stockholder is a corporation, please
sign full corporate name by an authorized officer. If the stockholder is a
partnership, please sign full partnership name by an authorized person.
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Signature(s) of Stockholder
Dated:_______________________