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 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
<Table>
[ ] Confidential, for Use of the Commission
Check the appropriate box: Only (as permitted by Rule 14a-6(e)(2))
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
</Table>
CAMINUS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
EXPLANATORY NOTE
The following revised definitive proxy statement is being filed solely to
correct typographical errors relating to the shares authorized under the 1999
Employee Stock Purchase Plan in connection with the proposed increase.
CAMINUS CORPORATION
825 THIRD AVENUE
28TH FLOOR
NEW YORK, NEW YORK 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON WEDNESDAY, APRIL 24, 2002
The Annual Meeting of Stockholders of Caminus Corporation, a Delaware
corporation (the "Company"), will be held at The Penn Club, 30 West 44th Street,
New York, New York, on Wednesday, April 24, 2002, at 10:00 a.m., local time, to
consider and act upon the following matters:
1. To elect two Class III Directors to serve for the ensuing three years.
2. To approve an amendment to the Company's 1999 Stock Incentive Plan,
increasing from 1,218,943 to 1,418,943 the number of shares of Common
Stock of the Company authorized for issuance under such plan.
3. To approve an amendment to the Company's 1999 Employee Stock Purchase
Plan, increasing from 95,238 to 595,238 the number of shares of Common
Stock of the Company authorized for issuance under such plan.
4. To ratify the selection by the Board of Directors of KPMG LLP as the
Company's independent auditors for the year ending December 31, 2002.
5. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Stockholders of record at the close of business on March 8, 2002 will be
entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof. A list of the Company's stockholders is open for
examination to any stockholder at the principal executive offices of the Company
at the address set forth above, and will be available at the Annual Meeting.
Copies of the Company's 2001 Annual Report to Stockholders and its Annual
Report on Form 10-K for the year ended December 31, 2001, which reports contain
information of interest to stockholders, accompany this Notice and the enclosed
Proxy Statement.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
DAVID M. STONER
President and Chief Executive Officer
New York, New York
March 15, 2002
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY IS MAILED IN THE UNITED STATES.
CAMINUS CORPORATION
825 THIRD AVENUE
28TH FLOOR
NEW YORK, NEW YORK 10022
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, APRIL 24, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
Caminus Corporation, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held at The Penn Club, 30 West 44th Street,
New York, New York, on Wednesday, April 24, 2002 at 10:00 a.m., local time, and
at any adjournment or adjournments of the meeting (the "Annual Meeting"). All
proxies will be voted in accordance with the stockholders' instructions, and if
no choice is specified, the proxies will be voted in favor of the matters set
forth in the accompanying Notice of Meeting. Any proxy may be revoked by a
stockholder at any time before its exercise by delivery of written revocation or
a subsequently dated proxy to the Secretary of the Company or by voting in
person at the Annual Meeting. Attendance at the Annual Meeting will not itself
be deemed to revoke a proxy unless the stockholder gives affirmative notice at
the Annual Meeting that the stockholder intends to revoke the proxy and vote in
person.
At the close of business on March 8, 2002, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there were
outstanding and entitled to vote an aggregate of 17,996,934 shares of Common
Stock of the Company, $0.01 par value per share (the "Common Stock"). Holders of
shares of Common Stock are entitled to one vote per share as to all matters
submitted to the stockholders at the Annual Meeting.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY, THE
COMPANY'S 2001 ANNUAL REPORT TO STOCKHOLDERS AND THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001 ARE FIRST BEING SENT OR GIVEN TO
STOCKHOLDERS ON OR ABOUT MARCH 25, 2002. THE COMPANY WILL, UPON WRITTEN REQUEST
OF ANY STOCKHOLDER AND THE PAYMENT OF AN APPROPRIATE PROCESSING FEE, FURNISH
COPIES OF THE EXHIBITS TO ITS ANNUAL REPORT ON FORM 10-K. PLEASE ADDRESS ALL
SUCH REQUESTS TO THE COMPANY, 825 THIRD AVENUE, 28TH FLOOR, NEW YORK, NEW YORK
10022, ATTENTION: SECRETARY.
VOTES REQUIRED
Under the Company's Amended and Restated By-laws, the holders of a majority
of the shares of the capital stock of the Company issued and outstanding and
entitled to vote at the Annual Meeting, present in person, present by means of
remote communication in a manner, if any, authorized by the Board of Directors
in its sole discretion or represented by proxy (including shares which abstain
or do not vote with respect to one or more of the matters presented for
stockholder approval) shall constitute a quorum for the transaction of business
at the Annual Meeting. A quorum, once established at the Annual Meeting, shall
not be broken by the withdrawal of enough votes to leave less than a quorum.
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of a majority of the shares of
capital stock present or represented by proxy at the Annual Meeting and voting
on the matter is required for the approval of the amendment to the Company's
1999 Stock Incentive Plan, for the approval of the amendment to the Company's
1999 Employee Stock Purchase Plan and for the ratification of the appointment of
KPMG LLP as the Company's independent auditors for the current fiscal year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be voted in favor of such matter, and will also not be counted
as votes cast or shares voting on such matter. Accordingly, abstentions and
"broker non-votes" will have no effect on the voting on the matters to be voted
on at the Annual Meeting, each of which requires the affirmative vote of either
a plurality or a majority of the votes cast or shares voting on the matter.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information, as of February 28, 2002
(except as otherwise specified), with respect to the beneficial ownership of the
Common Stock by:
- each person known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock;
- each director and nominee for director of the Company;
- the Chief Executive Officer and the four other most highly compensated
executive officers who were serving as executive officers on December 31,
2001 (the "Named Executive Officers"); and
- all executive officers, directors and nominees for director of the
Company as a group.
<Table>
<Caption>
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(2)
- ---------------- --------------------- --------------
5% STOCKHOLDERS
OCM Principal Opportunities Fund, L.P.(3)................... 3,856,157 21.4%
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
Christopher S. Brothers(3).................................. 3,856,157 21.4%
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
Altra Energy Technologies, Inc.............................. 1,975,000 11.0%
1221 Lamar, Suite 950
Houston, TX 77010
Pilgrim Baxter & Associates, Ltd.(4)........................ 1,186,200 6.6%
1400 Liberty Ridge Drive
Wayne, PA 19087
Arbor Capital Management, LLC(4)............................ 983,100 5.5%
One Financial Plaza
120 South Sixth Street
Suite 1000
Minneapolis, MN 55402
Brian J. Scanlan(5)(6)...................................... 974,235 5.4%
c/o Caminus Corporation
825 Third Avenue, 28th Floor
New York, NY 10022
ZAK Associates, Inc.(6)..................................... 946,375 5.3%
c/o Caminus Corporation
825 Third Avenue, 28th Floor
New York, NY 10022
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Anthony H. Bloom(7)......................................... 707,629 3.9%
Nigel L. Evans.............................................. 537,180 3.0%
Lawrence D. Gilson(8)(9).................................... 428,218 2.4%
Richard K. Landers(8)(9).................................... 428,218 2.4%
David M. Stoner(10)......................................... 361,889 2.0%
John A. Andrus(11).......................................... 31,401 *
Clare M. J. Spottiswoode(12)................................ 2,083 *
Joseph P. Dwyer............................................. 0 *
All directors and executive officers as a group (10
persons)(13).............................................. 6,898,792 38.2%
</Table>
- ---------------
* Less than 1%
2
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares. Unless otherwise indicated, each person listed above has sole
voting and investment power with respect to the shares listed. For purposes
of this table, each person is deemed to beneficially own any shares subject
to stock options, warrants or other securities convertible into Common
Stock, held by such person which are currently exercisable or convertible,
or exercisable or convertible within 60 days after February 28, 2002.
(2) Number of shares deemed outstanding includes 17,994,493 shares issued and
outstanding as of February 28, 2002, plus any shares subject to stock
options, warrants or other securities convertible into Common Stock, held
by the referenced beneficial owner(s).
(3) Includes 3,852,140 shares of Common Stock held by OCM Principal
Opportunities Fund, L.P. (the "Fund"). Oaktree Capital Management, LLC
("Oaktree"), a registered investment adviser under the Investment Advisers
Act of 1940, has voting and dispositive power over the shares held by the
Fund as general partner of the Fund. Christopher S. Brothers is a managing
director of Oaktree. Although Oaktree may be deemed to beneficially own
such shares for purposes of Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Oaktree disclaims beneficial
ownership of such shares except to the extent of its pecuniary interest
therein. To the extent that Mr. Brothers participates in the process to
vote or dispose of such shares, he may be deemed under certain
circumstances for purposes of Section 13 of the Exchange Act to be the
beneficial owner of such shares of Common Stock. Mr. Brothers disclaims
beneficial ownership of such shares, except to the extent of any pecuniary
interest therein. Also includes 4,017 shares of Common Stock issuable upon
the exercise of an option granted to Mr. Brothers as a director of the
Company. Any proceeds from the sale of shares issuable upon exercise of the
option are for the benefit of the Fund. Each of Oaktree and Mr. Brothers
disclaims beneficial ownership of the shares issuable upon exercise of such
option, except to the extent of any pecuniary interest therein.
(4) Based solely upon information contained in stockholder's publicly available
filing on Schedule 13G.
(5) Includes 946,375 shares of Common Stock held by ZAK Associates, Inc., which
is an entity that is directly owned by Brian J. Scanlan and Cynthia Chang.
Mr. Scanlan and Ms. Chang are husband and wife and share voting and
dispositive power over the shares of Common Stock owned by ZAK Associates,
Inc. Also includes 20,208 shares which are owned jointly by Mr. Scanlan and
Ms. Chang and 7,652 shares that are owned by Ms. Chang.
(6) Includes 149,900 shares of Common Stock pledged by ZAK Associates, Inc. to
an affiliate of Banc of America Securities LLC to secure a forward sale
contract that matures on February 28, 2005.
(7) Includes 703,612 shares of Common Stock held by RIT Capital Partners plc
("RIT"). Anthony H. Bloom, a former director of RIT, provides investment
advice to RIT and may be deemed to beneficially own the shares held by RIT.
Mr. Bloom disclaims beneficial ownership of such shares, except to the
extent of any pecuniary interest therein. Also includes 4,017 shares of
Common Stock issuable upon the exercise of stock options.
(8) Includes 8,034 shares of Common Stock issuable upon the exercise of stock
options, of which 4,017 are issuable upon the exercise of options granted
to Lawrence D. Gilson as a director and 4,017 shares are issuable upon the
exercise of options granted to Richard K. Landers as a director. Any
proceeds from the sale of shares issuable upon the exercise of options
granted to Messrs. Gilson and Landers are for the benefit of GFI, as
defined below. Each of Messrs. Gilson and Landers disclaims beneficial
ownership of the shares issuable upon the exercise of such options, except
to the extent of any pecuniary interest therein.
(9) Includes 420,184 shares owned by GFI Two LLC (together with its affiliated
entities, "GFI"). GFI has pledged (a) 150,000 of such shares to an
affiliate of Banc of America Securities LLC to secure a forward sale
contract that matures on June 20, 2003 and (b) 112,400 of such shares to an
affiliate of Banc of America Securities LLC to secure a forward sale
contract that matures on February 28, 2005. Lawrence D. Gilson is Chairman
of GFI, and Richard K. Landers is a principal of GFI. To the extent that
Messrs. Gilson and Landers participate in the process to vote or dispose of
such shares, Messrs. Gilson and Landers may be deemed to beneficially own
the shares held by GFI. Each of
3
Messrs. Gilson and Landers disclaims beneficial ownership of such shares,
except to the extent of his direct pecuniary interest therein.
(10) Includes (a) 25,000 shares of Common Stock pledged by David M. Stoner and
Diane B. Stoner to an affiliate of Banc of America Securities LLC to secure
a forward sale contract that matures on August 22, 2004 and (b) 68,200
shares of Common Stock pledged by David M. Stoner and Diane B. Stoner to an
affiliate of Banc of America Securities LLC to secure a forward sale
contract that matures on February 28, 2005.
(11) Includes 30,175 shares of Common Stock issuable upon the exercise of stock
options.
(12) Consists of 2,083 shares of Common Stock issuable upon the exercise of
stock options.
(13) Includes an aggregate of 48,326 shares of Common Stock issuable upon the
exercise of stock options.
4
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors is classified into three classes, with members of
each class holding office for staggered three-year terms. At each annual meeting
of stockholders, a class of directors will be elected for a three-year term to
succeed the directors of the same class whose terms are then expiring. The terms
of the Class I, Class II and Class III directors expire upon the election and
qualification of successor directors at the annual meetings of stockholders to
be held in 2003, 2004 and 2002, respectively.
Unless the proxy is marked otherwise, the persons named in the enclosed
proxy will vote to elect, as Class III directors, Christopher S. Brothers and
David M. Stoner to serve for the ensuing three-year term. All of the nominees
are currently Class III directors of the Company. Each of the nominees has
indicated his willingness to serve, if elected, but if either should be unable
or unwilling to serve, proxies may be voted for a substitute nominee designated
by the Board. The Board has no reason to believe that either of the nominees
will be unable to serve if elected.
DIRECTORS AND NOMINEES
For each member of the Board whose term of office as a director continues
after the Annual Meeting, including those who are nominees for election as Class
III directors, there follows information given by each concerning his or her
name and age, his or her positions with the Company, his or her principal
occupation and business experience during the past five years, the names of the
other organizations for which he or she serves as a director and the year during
which he or she first became a director of the Company. There are no familial
relationships among any of the directors, nominees for director and executive
officers, except that Messrs. Gilson and Stoner are brothers-in-law.
NOMINEES FOR CLASS III DIRECTORS
(TERMS EXPIRE AT THE 2005 ANNUAL MEETING)
CHRISTOPHER S. BROTHERS, 36, has served as a director of the Company since
May 1998. Mr. Brothers is a managing director of Oaktree Capital Management,
LLC, a registered investment adviser under the Investment Advisers Act of 1940.
Prior to joining Oaktree Capital Management, LLC in 1996, Mr. Brothers worked at
the New York headquarters of Salomon Brothers Inc, an investment bank, where he
served as a vice president in the mergers and acquisitions group. Prior to 1992,
Mr. Brothers was a manager in the valuation services group of
PricewaterhouseCoopers LLP, an accounting firm. Mr. Brothers serves on the
boards of directors of each of Cherokee International LLC, National Mobile
Television, Inc., Power Measurement, Inc. and Xantrex Technology, Inc.
DAVID M. STONER, 60, has served as the Company's president and chief
executive officer and as a director since October 1998. From April 1997 to
October 1998, Mr. Stoner served as president and chief operating officer at SS&C
Technologies, Inc., a provider of asset management software to the financial
services industry. From August 1995 to September 1996, Mr. Stoner was president
and chief operating officer of The Dodge Group, Inc., a software company
providing PC-based general ledger systems. From December 1987 to August 1995,
Mr. Stoner served as executive vice president, worldwide operations at Marcam
Corporation, an international provider of enterprise applications and services.
CLASS I DIRECTORS
(TERMS EXPIRE AT THE 2003 ANNUAL MEETING)
ANTHONY H. BLOOM, 63, has served as a director of the Company since May
1998. Mr. Bloom is an international investor now based in London. Prior to his
relocation to London in July 1988, he lived in South Africa where he was the
chairman and chief executive of The Premier Group, a multi-billion dollar
conglomerate involved in agribusiness, retail and consumer products, and a
member of the boards of directors of Barclays Bank, Liberty Life Assurance and
South African Breweries. After moving to the United Kingdom in 1988, he served
as a member of the board of directors of RIT Capital Partners plc, a publicly
traded, London-based investment company chaired by Lord Rothschild, and as
Deputy Chairman of Sketchley plc.
5
Mr. Bloom presently provides investment advice to RIT Capital Partners and is
chairman of Cine-UK Ltd. Mr. Bloom is also a director of each of Cherokee
International LLC, Power Measurement, Inc., Rio Narcea Gold Mines Ltd., Xantrex
Technology, Inc., Afri-Can Marine Minerals Corp. and Rockridge Consolidated Ltd.
RICHARD K. LANDERS, 54, has served as a director of the Company since May
1998. Mr. Landers is a principal of GFI Energy Ventures LLC and a founder of
each GFI affiliated entity established since 1995. From 1986 to 1995, he was a
partner of Venture Associates and of Arthur Andersen LLP following that firm's
acquisition of Venture Associates. From 1979 to 1986, Mr. Landers held senior
planning strategy positions in Los Angeles and Washington, D.C. with Southern
California Gas Company and its holding company, Pacific Enterprises. Before
joining Southern California Gas, Mr. Landers served as a foreign service officer
in the U.S. State Department with special responsibilities for international
energy matters. He is also a director of each of LODESTAR Corporation and
RealEnergy, Inc.
CLARE M.J. SPOTTISWOODE, 48, has served as a director of the Company since
December 2000. From April 1999 to April 2000, Ms. Spottiswoode was a partner of
PA Consulting Group, a management, systems and technology consulting firm. From
November 1998 to March 1999, she served as senior vice president of Azurix, a
global water services company. From 1993 to 1998, Ms. Spottiswoode served as
director general of Gas Supply, the United Kingdom's gas regulator. In 1984, she
founded, and until 1990 was chairman and chief executive of, Spottiswoode and
Spottiswoode, a microcomputer software company targeted at the financial and
corporate sectors. Ms. Spottiswoode serves as chairman of the board of each of
Economatters, H2GO and Homebill and as a director of each of Advanced Technology
Ltd., British Energy and Gerard Energy Ventures. Ms. Spottiswoode was made a
commander of the British Empire in 1999.
CLASS II DIRECTORS
(TERMS EXPIRE AT THE 2004 ANNUAL MEETING)
NIGEL L. EVANS, 48, has served as the Company's executive vice president
and head of Global Energy Market Strategy since January 2002 and as a director
since May 1998. From November 2000 to January 2002, Dr. Evans served as the
Company's executive vice president and director of European operations. Dr.
Evans served as the Company's senior vice president and director of European
operations from May 1998 to November 2000. From 1985 to May 1998, Dr. Evans
served as chairman and chief executive officer of Caminus Energy Limited, a
European strategic consultancy acquired by the Company in May 1998.
LAWRENCE D. GILSON, 53, has served as chairman of the board of directors of
the Company since May 1998. Mr. Gilson is Chairman of GFI Energy Ventures LLC
and founded this and all other GFI affiliated entities since 1995. GFI is a fund
manager with an exclusive energy focus. He previously founded and was president
of Venture Associates, a leading energy industry consulting firm, from 1985 to
1995. When he and his partners sold Venture Associates to Arthur Andersen LLP in
a two-stage transaction in 1990 and 1992, Mr. Gilson also became worldwide head
of Arthur Andersen's utility consulting practice. Prior to founding Venture
Associates, Mr. Gilson served as a member of the White House staff from 1977
through 1979 and then as vice president for corporate development and government
affairs of Amtrak, a passenger rail company, from 1979 to 1983. He is also board
chair of Power Measurement, Inc.
BRIAN J. SCANLAN, 39, has served as the Company's executive vice president,
future products since July 2001 and as a director since May 1998. From November
2000 to July 2001, Mr. Scanlan served as executive vice president, chief
technology officer of the Company. Mr. Scanlan served as the Company's senior
vice president and chief technology officer from January 1999 to November 2000.
From May 1998 to December 1998, Mr. Scanlan served as president of Zai*Net
Software, L.P., and, from 1987 to May 1998, he served as president of Zai*Net
Software, Inc., a software firm and the Company's predecessor.
6
BOARD AND COMMITTEE MEETINGS
The Board of Directors met six times during 2001. Each director attended at
least 75% of the aggregate of the number of Board meetings and the number of
meetings held by all committees on which he or she then served.
The Board has an Audit Committee, which reviews the results and scope of
the audit and other services provided by the Company's independent public
accountants. The Audit Committee met four times during 2001. The current Audit
Committee members are Messrs. Bloom, Brothers and Landers.
The Board has a Compensation Committee which establishes the compensation
policies applicable to the Company's executive officers and administers and
grants stock options pursuant to the Company's stock plans. The Compensation
Committee met five times during 2001. The current members of the Compensation
Committee are Ms. Spottiswoode and Messrs. Bloom and Brothers.
The Board has no nominating committee.
DIRECTOR COMPENSATION
The Company reimburses directors for reasonable out-of-pocket expenses
incurred in attending meetings of the Board of Directors and any meetings of its
committees. Each non-employee director is paid $1,500 for attendance at each
meeting of the Board of Directors or for each telephonic meeting of the Board in
which he or she participates. Each non-employee director is further entitled to
$1,500 for each meeting of a committee of the Board attended by the director
which is held on a day other than the day of, or the day before or after, the
date of any meeting of the full Board of Directors. Other directors are not
entitled to compensation in their capacities as directors. The Company may, in
its discretion, grant stock options and other equity awards to its non-employee
directors from time to time under its stock plans.
On February 8, 2001, Ms. Spottiswoode received an option under the
Company's 1999 Stock Incentive Plan to purchase 7,143 shares of Common Stock at
an exercise price of $20.13 per share. The option vests as to 25% of the
original number of shares on the first anniversary of the date of grant, and as
to 75% of the original number of shares in 36 equal monthly installments each
month thereafter. See "Proposal 2 -- Amendment to 1999 Stock Incentive Plan" for
a description of the 1999 Stock Incentive Plan and "Certain Relationships and
Related Transactions" for additional information.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth certain information with respect to the
total compensation of each of the Named Executive Officers for the three years
ended December 31, 2001. The total compensation paid or accrued below includes
compensation paid or accrued by Caminus LLC and Zai*Net Software, Inc. for
fiscal year 1999 and Caminus Limited for fiscal years 1999 through 2001. In
accordance with the rules of the Securities and Exchange Commission, the
compensation set forth in the table below does not include medical, group life
or other benefits which are available to all of the Company's salaried
employees, and perquisites and other benefits, securities or property which do
not exceed the lesser of $50,000 or 10% of the person's salary and bonus shown
in the table. In the table below, columns required by the regulations of the
Securities and Exchange Commission have been omitted where no information was
required to be disclosed under those columns.
7
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION(2)
- --------------------------- ---- -------- ---------- ------------ ------------ ---------------
David M. Stoner.............. 2001 $350,000 $ 250,000 $ -- 100,000 $ --
President and Chief 2000 250,000 2,726,677(3) 1,112,500(4) -- --
Executive Officer 1999 250,000 125,000 -- -- --
Nigel L. Evans(5)(6)......... 2001 279,036 -- -- 100,000 9,894
Executive Vice President 2000 248,148 236,497 -- -- 16,429
and Head of Global Energy 1999 330,000 162,000 -- -- 16,563
Market Strategy
John A. Andrus(7)............ 2001 204,133 195,000 -- 250,000 1,000
Executive Vice President
and Chief Operating Officer
Brian J. Scanlan............. 2001 250,223 -- -- 100,000 1,000
Executive Vice President, 2000 180,000 41,161 -- -- --
Future Products 1999 162,500 32,542 -- -- --
Joseph P. Dwyer(8)........... 2001 194,792 125,000 -- 160,000 1,000
Executive Vice President
and Chief Financial Officer
</Table>
- ---------------
(1) Represents the number of shares covered by options to purchase shares of
Common Stock granted during the respective year. The Company has never
granted stock appreciation rights.
(2) Unless otherwise noted, the amounts in this column represent 401(k) match
contributions paid by the Company.
(3) Mr. Stoner's bonus for the year 2000 includes (a) an award of 160,209 shares
of Common Stock at a value of $2,563,344, or $16.00 per share on the date of
grant, and (b) $163,333 for services rendered during 2000.
(4) Represents the outstanding balance of a loan from the Company to Mr. Stoner,
which was forgiven by the Company in February 2000 in connection with the
Company's initial public offering.
(5) Dr. Evans' compensation in U.S. dollars is based on an exchange ratio of
approximately $1.62, $1.49 and $1.45 per L1 as of December 31, 1999, 2000
and 2001, respectively.
(6) The amounts in the "All Other Compensation" column represent Caminus
Limited's contributions to Dr. Evans' personal pension plan.
(7) Mr. Andrus became an executive officer in December 2001 when he was promoted
to the positions of Executive Vice President and Chief Operating Officer.
(8) Mr. Dwyer joined the Company in April 2001.
8
OPTION GRANTS
The following table contains information concerning stock option grants
made in 2001 to each of the Named Executive Officers. The per share exercise
price of all options described below represents the fair market value of the
Company's Common Stock on the grant date.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------------------- AT ASSUMED ANNUAL RATES
PERCENT OF OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION FOR OPTION
SECURITIES GRANTED TO EXERCISE TERM(3)
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR SHARE(2) DATE 5% 10%
- ---- ------------------ ------------- --------- ---------- ------------ ------------
David M. Stoner...... 100,000 6.3% $24.71 5/7/11 $1,554,000 $3,938,000
Nigel L. Evans....... 100,000 6.3 24.71 5/7/11 1,554,000 3,938,000
John A. Andrus....... 200,000 12.6 24.71 5/7/11 3,108,000 7,876,000
50,000 3.2 20.13 2/8/11 525,000 1,604,000
Brian J. Scanlan..... 100,000 6.3 24.71 5/7/11 1,554,000 3,938,000
Joseph P. Dwyer...... 160,000 10.1 24.71 5/7/11 2,486,400 6,300,800
</Table>
- ---------------
(1) Each option vests as to 25% of the original number of shares on the first
anniversary of the date of grant, and as to 75% of the original number of
shares in 36 equal monthly installments each month thereafter. Other than
Mr. Andrus' option to purchase 50,000 shares of Common Stock, which was
granted on February 8, 2001, all of the options listed above were granted on
May 7, 2001.
(2) Represents the closing price of the Common Stock on the Nasdaq National
Market on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. Actual gains, if any, on stock option exercises will depend
on the future performance of the Common Stock and the date on which the
options are exercised. There can be no assurance that the rates of
appreciation assumed in this table can be achieved or that the amounts
reflected will be received by the option holder.
9
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table summarizes certain information regarding stock options
exercised during 2001 and the number and value of unexercised stock options held
as of December 31, 2001 by each of the Named Executive Officers. No stock
appreciation rights were exercised during 2001 by the Named Executive Officers
or were outstanding at year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
SHARES ACQUIRED VALUE -------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ----------- -------------------------- -------------------------
David M. Stoner......... 0 $ 0 0/100,000 $0/$0
Nigel L. Evans.......... 0 0 0/100,000 0/0
John A. Andrus.......... 18,200 289,563 9,948/272,575 174,488/539,466
Brian J. Scanlan........ 0 0 0/100,000 0/0
Joseph P. Dwyer......... 0 0 0/160,000 0/0
</Table>
- ---------------
(1) Represents the difference between the aggregate fair market value of the
underlying shares of Common Stock on the date of exercise and the aggregate
exercise price.
(2) Based on the aggregate fair market value of the underlying shares of Common
Stock on December 31, 2001 ($23.00 per share), as reported on the Nasdaq
National Market, less the aggregate option exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January through May 2001, Messrs. Bloom, Brothers and Landers served
as members of the Compensation Committee. In May 2001, Ms. Spottiswoode replaced
Mr. Landers. No executive officer of the Company has served as a director or
member of the compensation committee or other committee serving an equivalent
function of any other entity whose executive officers served as a director or
member of the Company's Compensation Committee. During 2001, the Compensation
Committee determined the compensation of the Company's executive officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MR. STONER'S EMPLOYMENT AGREEMENT
On October 21, 1998, the Company entered into an employment agreement with
David M. Stoner, which terminated on October 21, 2001. The Company has not
entered into a new employment agreement with Mr. Stoner. Mr. Stoner currently
receives a base salary of $400,000 per year and received a bonus of $125,000,
$163,333 and $250,000 for services rendered during 1999, 2000 and 2001,
respectively. In 2000, Mr. Stoner also received an award of 160,209 shares of
Common Stock and the forgiveness of outstanding indebtedness including accrued
interest, which equaled $1,112,500, in accordance with Mr. Stoner's employment
agreement and a loan agreement between Mr. Stoner and the Company. Mr. Stoner's
eligibility for bonuses is determined by the Board of Directors.
On May 7, 2001, Mr. Stoner was granted an option under the Company's 1999
Stock Incentive Plan to purchase 100,000 shares of Common Stock at an exercise
price of $24.71 per share. His option will vest as to 25% of the shares on May
7, 2002 and in 36 equal monthly installments each month thereafter.
Mr. Stoner's agreement contained a confidentiality provision which survived
termination of the employment agreement for so long as Mr. Stoner retains
confidential or proprietary information of the Company. Mr. Stoner's agreement
further provided that Mr. Stoner may not work for, or hold 5% or more of the
10
outstanding capital stock of, a publicly traded corporation which is a competing
business anywhere in the world for one year after the conclusion of his
employment. A competing business is one that develops and markets (1) software
or consulting advisory services used to analyze or influence client and industry
decisions regarding energy pricing, investments, regulatory policy and financial
and strategic planning for clients in the natural gas, crude oil, refined
products, electric power and utility industries and (2) software or related
products or services which otherwise facilitate transactions or other
participation in competitive energy markets.
OTHER EMPLOYMENT ARRANGEMENTS
On May 12, 1998, Caminus Limited, the Company's wholly owned subsidiary,
entered into a service agreement with Dr. Nigel L. Evans, which was amended on
January 14, 2000 and terminated on May 5, 2001. The Company has not entered into
a new employment agreement with Dr. Evans. Dr. Evans currently receives a base
salary of L200,000 per year and received a one-time bonus of L158,723 ($253,957
on February 29, 2000, the date of the award) after the closing of the Company's
initial public offering. Dr. Evans did not receive a bonus for services rendered
during 2001. On May 7, 2001, however, Dr. Evans was granted an option under the
Company's 1999 Stock Incentive Plan to purchase 100,000 shares of Common Stock
at an exercise price of $24.71 per share. His option will vest as to 25% of the
shares on May 7, 2002 and in 36 equal monthly installments each month
thereafter.
Dr. Evans' service agreement contained a confidentiality provision which
survived termination of the agreement and further provided that he may not
directly or indirectly act as an employee or consultant for, or hold more than a
5% investment in any class of securities quoted on a stock exchange in, a
competing business for one year after the date of termination of Dr. Evans'
employment. A competing business is one that develops and markets consulting
advisory services used to analyze or influence client and industry decisions
regarding energy pricing, investments, regulatory policy and financial and
strategic planning for clients in the natural gas, crude oil, refined products,
electric power and utility industries. On May 12, 1998, Dr. Evans also entered
into a covenant not to compete with Caminus Limited, which extends his
obligations not to compete for two years after termination of Dr. Evans'
employment in certain circumstances.
On May 12, 1998, Zai*Net Software, L.P., which was the Company's
majority-owned subsidiary at the time, entered into an employment agreement with
Brian J. Scanlan, which was amended November 8, 1999. In March 1999, the Company
assumed the employment agreement when Zai*Net Software, L.P. was merged into the
Company. Mr. Scanlan's agreement terminated on May 12, 2001. The Company has not
entered into a new employment agreement with Mr. Scanlan. Mr. Scanlan currently
receives a base salary of $287,900 per year and is eligible to participate in
the Company's bonus pool. Mr. Scanlan received a bonus of $41,161 for services
rendered during 2000. Mr. Scanlan did not receive a bonus for services rendered
during 2001. On May 7, 2001, however, Mr. Scanlan was granted an option under
the Company's 1999 Stock Incentive Plan to purchase 100,000 shares of Common
Stock at an exercise price of $24.71 per share. His option will vest as to 25%
of the shares on May 7, 2002 and in 36 equal monthly installments each month
thereafter.
Mr. Scanlan is also a party to a covenant not to compete, dated May 12,
1998, which contains a confidentiality provision and further provides that he
may not perform services for, or hold 5% or more of the outstanding capital
stock of a publicly traded corporation in, a competing business other than on
behalf of the Company or its affiliates anywhere in the world for the greater of
(1) three and one-half years from the date of the agreement or (2) two years
after the date of termination of Mr. Scanlan's employment. A competing business
is one that develops and markets consulting advisory services used to analyze or
influence client and industry decisions regarding energy pricing, investments,
regulatory policy and financial and strategic planning for clients in the
natural gas, crude oil, refined products, electric power and utility industries.
On April 10, 2001, the Company entered into an employment letter with
Joseph P. Dwyer, the Company's Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary. Under the terms of his employment
letter, Mr. Dwyer receives a base salary of $275,000 annually. Mr. Dwyer was
eligible to receive a bonus for services rendered during 2001 of up to $181,250,
depending upon achievement
11
of his bonus plan objectives, which were based on pro forma earnings per share
benchmarks. Mr. Dwyer received a bonus of $125,000 for 2001, which was paid in
two installments: $62,500 was paid upon commencement of his employment and
$62,500 was paid on February 15, 2002. Under his employment letter, Mr. Dwyer is
also guaranteed a minimum bonus of $62,500 for 2002, and a minimum bonus
potential of $150,000 for 2002. Mr. Dwyer received the guaranteed minimum of
$62,500 on February 15, 2002 with the remainder of his bonus for 2002 to be paid
after the end of the fiscal year.
Pursuant to his employment letter, on May 7, 2001, Mr. Dwyer was granted a
non-statutory option to purchase 160,000 shares of Common Stock at an exercise
price of $24.71 per share. This option was granted as an inducement essential
for Mr. Dwyer to enter into his employment arrangement with the Company. His
option will vest as to 25% of the shares on May 7, 2002 and in 36 equal monthly
installments each month thereafter. Mr. Dwyer's option will immediately vest in
full and become exercisable upon a change of control of the Company.
If Caminus terminates Mr. Dwyer's employment without cause, or if Mr. Dwyer
resigns for good reason or within three months after a change in control of the
Company, Mr. Dwyer will receive his base salary and any guaranteed portion of
his bonus and healthcare benefits for one year after his termination date. If
the Company terminates Mr. Dwyer's employment within the first year of his
employment without cause or for good reason, the first 25% of his option will
immediately vest and become exercisable.
John A. Andrus currently receives a base salary of $300,000 per year and is
eligible to participate in the Company's bonus pool. Mr. Andrus received a bonus
of $195,000 for services rendered during 2001. On February 8, 2001, Mr. Andrus
was granted an option under the Company's 1999 Stock Incentive Plan to purchase
50,000 shares of Common Stock at an exercise price of $20.13 per share. On May
7, 2001, Mr. Andrus was granted an option under the Company's 2001 Non-Officer
Employee Stock Incentive Plan to purchase 200,000 shares of Common Stock at an
exercise price of $24.71 per share. Both options will vest as to 25% of the
shares on the first anniversary of the date of grant and in 36 equal monthly
installments each month thereafter. Mr. Andrus' options will immediately vest in
full and become exercisable upon a change of control of the Company.
ALTRA ENERGY TECHNOLOGIES, INC.
On November 20, 2001, the Company purchased all of the outstanding shares
of capital stock of Altra Software Services, Inc. from Altra Energy
Technologies, Inc. ("Altra"). In consideration for the purchase of such shares,
the Company issued 1,975,000 shares of its Common Stock to Altra and paid
$24,946,520 in cash. The cash portion of the purchase price was paid for in part
from the proceeds of a $15,000,000 credit arrangement with Blue Ridge
Investments, LLC, an affiliate of Banc of America Securities LLC, and in part
from proceeds from the Company's initial public offering. The Company's
management and Board of Directors were primarily responsible for negotiating the
terms of the purchase agreement. In determining the purchase price, the Company
considered the expected synergies of the acquisition, including product
development expertise and the ability to cross-sell software and services.
Pursuant to an escrow agreement between the Company and Altra, 587,097
shares will be held in escrow to satisfy indemnification obligations of Altra
until early 2003, 58,065 shares will be held in escrow until the resolution of
certain litigation involving Altra Software Services, Inc. and 348,387 shares
will be held in escrow until the final adjustment to the purchase price is
determined in accordance with the stock purchase agreement between the Company
and Altra.
Pursuant to a registration rights agreement between the Company and Altra,
the Company agreed to register the 1,975,000 shares of its Common Stock with the
Securities and Exchange Commission by May 19, 2002. That number will be reduced
by the number of shares sold by Altra in a secondary offering by the
12
Company. However, under the registration rights agreement, as recently amended,
all such shares issued to Altra are subject to a lock-up, which prohibits Altra
from transferring such shares except as follows:
- During the three-month period beginning on August 20, 2002, it may
transfer up to two-thirds of the shares originally issued to it; and
- After November 20, 2002, it may transfer all such shares.
In addition, all of the shares issued to Altra are subject to a lock-up
with the underwriters of the Company's March 2002 follow-on offering. Under this
lock-up, subject to certain exceptions, Altra has agreed not to sell or dispose
of any of its shares for 90 days after the effective date of the registration
statement relating to the Company's follow-on offering.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by reporting persons
of the Company ("Reporting Persons") pursuant to Section 16(a) of the Exchange
Act, or written representations from certain Reporting Persons that no Form 5
filing was required for such person, the Company believes that during 2001 all
filings required to be made by its Reporting Persons were timely made in
accordance with the requirements of the Exchange Act, with the exception of Mr.
Scanlan, who filed a late Form 4 in January 2002 to report the exercise of an
option in July 2001 by his wife, Cynthia Chang.
13
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for establishing the compensation of, and the
compensation policies with respect to, the Company's executive officers,
including the Company's Chief Executive Officer, and administering and granting
stock options pursuant to the Company's stock plans. From January through May
2001, Messrs. Bloom, Brothers and Landers served as members of the Compensation
Committee. In May, Ms. Spottiswoode replaced Mr. Landers as Chair of the
Compensation Committee. The Compensation Committee currently consists of Ms.
Spottiswoode and Messrs. Bloom and Brothers.
The objectives of the Company's executive compensation program are to:
- Attract and retain key executives critical to the long-term success of
the Company;
- Align the interests of executive officers with the interests of
stockholders and the success of the Company; and
- Recognize and reward individual performance and responsibility.
To achieve these objectives, the Compensation Committee has adopted a mix
among the compensation elements of salary, cash bonus and in many cases, stock
options.
COMPENSATION PROGRAM
Base Salary. The Compensation Committee sets the base salaries for all
executive officers, including the Chief Executive Officer. In determining
appropriate base salaries, the Compensation Committee considers a variety of
factors, including: external competitiveness, the roles and responsibilities of
the individual, the internal equity of compensation relationships, the
contributions of the individual to the Company's success and the individual's
overall compensation package. A specific factor considered for incoming
executives is the salary that the executive receives in his present position. In
addition, the Compensation Committee consults surveys and other data points from
the external marketplace, some of which reflect comparable executive salaries in
general and some of which are specific to the technology and software
industries. The Compensation Committee also considers recommendations made by
Mr. Stoner, the Company's Chief Executive Officer.
Annual Cash Incentive Opportunities. The Company believes that executive
compensation should be a function of the success and profitability of the
business. As such, the Compensation Committee establishes a bonus pool for the
Company each year and allocates the pool among the senior management team,
executives and key personnel. The amount of available funds in the pool is based
on total revenues in order to align the bonus pool to the interests of the
stockholders. Individual incentive awards are linked to the achievement of
revenue and net income goals by the Company and/or specific business units and
the achievement by the executives of certain objectives that have been assigned
based on discussions with the Chief Executive Officer.
Long-Term Stock Based Incentives. The Compensation Committee also believes
that it is essential for executive officers to have the perspective and
motivation of stockholders. As such, from time to time the Compensation
Committee grants stock options to executive officers and other employees under
the Company's 1999 Stock Incentive Plan. In determining actual awards, the
Compensation Committee considers the externally competitive market, the
contributions of the recipient to the success of the Company, and the need to
retain the recipient over time. All executive officers, including the Chief
Executive Officer, are eligible to receive awards under the 1999 Stock Incentive
Plan.
2001 COMPENSATION
Base Salary. Mr. Stoner, the Company's Chief Executive Officer and
President, was party to an employment agreement, dated October 21, 1998, that
set his annual base salary at $250,000. In May 2001, Mr. Stoner's base salary
was increased to $400,000 per year and on October 21, 2001, Mr. Stoner's
14
employment agreement terminated. The Company has not entered into a new
employment agreement with Mr. Stoner. In setting Mr. Stoner's original salary,
the Compensation Committee considered the salary Mr. Stoner earned at his prior
position and his overall compensation package at the Company and referred to
compensation studies for chief executive officers for comparable companies. The
factors that the Compensation Committee considered in setting Mr. Stoner's
increased salary included his overall compensation package and the salaries that
chief executive officers of comparable companies in similar industries receive.
In addition, the Compensation Committee considered a salary amount that will
have motivational and retention value.
Dr. Evans and Mr. Scanlan were also parties to employment agreements that
set their original annual base salaries at L200,000 and $150,000, respectively.
Effective January 31, 2000, the Compensation Committee amended Dr. Evans'
employment agreement to adjust his annual base salary to L163,500 ($264,870 as
of January 31, 2000). On November 8, 1999, the Compensation Committee amended
Mr. Scanlan's employment agreement to increase his annual base salary to
$175,000. During 2000, the Compensation Committee further reviewed Mr. Scanlan's
employment agreement and, effective July 1, 2000, increased his annual base
salary to $185,000. On May 5, 2001, Dr. Evans' employment agreement terminated
and on May 12, 2001, Mr. Scanlan's employment agreement terminated. The Company
has not entered into new employment agreements with either executive officer. In
May 2001, Dr. Evans' base salary was increased to L200,000 ($288,000 as of May
1, 2001, the date of increase) per year and Mr. Scanlan's base salary was
increased to $287,900 per year. The increases for Dr. Evans and Mr. Scanlan were
based upon responsibility levels, contributions to the success of the Company
and base salaries of executives in comparable companies. In addition, the
Compensation Committee considered a salary amount that has motivational and
retention value.
Mr. Dwyer is a party to an employment letter dated April 10, 2001, which
sets his annual base salary at $275,000 per year. In April 2001 the Company set
Mr. Andrus' annual base salary at $200,000 per year. Subsequently, in May 2001
and January 2002, Mr. Andrus' salary was increased to $206,200 and then to
$300,000, based upon increased responsibility levels regarding license and
services revenues, contributions to the success of the Company, base salaries of
executives in comparable companies and motivational and retention
considerations.
Annual Cash Incentive Opportunities. For services rendered during fiscal
year 2001, Mr. Stoner received a bonus of $250,000. The Compensation Committee
based this amount on the Company's performance relative to the established
budget and relative to the performance of certain strategic initiatives. The
Compensation Committee believes Mr. Stoner's bonus is reflective of the strong
leadership he provides for the Company and the senior management team. For
fiscal year 2001, Messrs. Dwyer and Andrus received a bonus of $125,000 and
$195,000, respectively. The annual cash incentives paid to the Company's
executive officers, excluding the Chief Executive Officer, were based on
recommendations made by Mr. Stoner and were tied to the Company's performance.
In addition, Mr. Dwyer's bonus was based on the achievement of certain pro forma
earnings per share benchmarks set forth in his employment letter and Mr. Andrus'
bonus was based on the achievement of license revenue and services revenue
budgets. Although Dr. Evans and Mr. Scanlan did not receive bonuses for services
rendered during fiscal year 2001, each of them received long-term compensation
in the form of an option grant, as described below.
Long-Term Stock Based Incentives. On February 8, 2001, Mr. Andrus received
an option grant for 50,000 shares under the Company's 1999 Stock Incentive Plan.
In addition, on May 7, 2001, Messrs. Stoner, Scanlan, Dwyer and Andrus and Dr.
Evans each received an option grant for 100,000, 100,000, 160,000, 200,000 and
100,000 shares, respectively. The option grants to Messrs. Stoner, Scanlan and
Dr. Evans were granted under the Company's 1999 Stock Incentive Plan. The option
grant to Mr. Andrus, who was not an executive officer of the Company at the time
of grant, was issued under the 2001 Non-Officer Employee Stock Incentive Plan,
and the option grant to Mr. Dwyer was issued outside of the Company's stock
incentive plans as an inducement essential for Mr. Dwyer to enter into his
employment arrangement with the Company. All of the options vest as to 25% of
the shares on the first anniversary of the date of grant and in 36 equal monthly
installments each month thereafter.
15
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for certain
compensation in excess of $1,000,000 paid to the Company's chief executive
officer and four other most highly compensated executive officers. Certain
compensation, including qualified performance-based compensation, will not be
subject to the deduction limit if certain requirements are met. The Compensation
Committee reviews the potential effects of Section 162(m) periodically and
generally seeks to structure the long-term stock-based incentive compensation
granted to its executive officers in a manner that is intended to avoid the
disallowance of deductions under Section 162(m) of the Code. Nevertheless, there
can be no assurance that compensation attributable to awards granted under the
Company's plans will be treated as qualified performance-based compensation
under Section 162(m). However, the Compensation Committee reserves the right to
use its judgment to authorize compensation payments that may be subject to the
limit when the Compensation Committee believes such payments are appropriate and
in the best interests of the Company and its stockholders. For instance, the
options awarded to Messrs. Andrus and Dwyer in 2001 were outside the Company's
1999 Stock Incentive Plan and do not comply with the exemptions of Section
162(m).
While the Compensation Committee does not currently intend to qualify its
annual cash incentive awards as a performance-based plan, it will continue to
monitor the impact of Section 162(m) on the Company.
Respectfully submitted by the Compensation Committee of the Board of
Directors of Caminus Corporation:
Clare M.J. Spottiswoode (Chair)
Christopher S. Brothers
Anthony H. Bloom
16
REPORT OF AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors is composed of three members
and acts under a written charter first adopted and approved on May 2, 2000. The
members of the Audit Committee currently are Anthony Bloom, Christopher Brothers
(Chairman) and Richard Landers. Each of the members of the Audit Committee is
independent, as defined by its charter and the rules of the Nasdaq Stock Market,
with the exception of Richard K. Landers. Mr. Landers is a principal of GFI,
which received a $1,300,000 fee from the Company in February 2000 in connection
with the provision of strategic advice, as well as financial, tax and general
administrative services, to the Company. However, the Board of Directors
determined at its meeting in May 2001, that, based upon his financial experience
and background, including his tenure at GFI, Venture Associates and Arthur
Andersen LLP, Mr. Landers' membership on the Audit Committee is required by the
best interests of the Company and its stockholders.
Management of the Company is responsible for the Company's internal
controls, the financial reporting process and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent auditors are responsible for
performing an independent audit of the Company's financial statements in
accordance with generally accepted auditing standards and to issue a report on
those financial statements. The Audit Committee is responsible for monitoring
and reviewing these processes. As appropriate, the Audit Committee reviews,
evaluates and discusses the following matters with the Company's management,
independent auditors and internal accounting and financial and auditing
personnel:
- the plan for, and the independent auditors' report on, each audit of the
Company's annual financial statements;
- the plan for, and the independent auditors' presentation on, each
quarterly review of the Company's financial statements;
- the Company's financial disclosure documents, including all financial
statements and reports filed with the Securities and Exchange Commission
or sent to stockholders;
- management's selection, application and disclosure of critical accounting
policies;
- changes in the Company's accounting practices, principles, controls or
methodologies;
- significant developments or changes in accounting rules applicable to the
Company; and
- the adequacy of the Company's internal controls and accounting and
financial personnel.
It is not the Audit Committee's duty or responsibility to conduct auditing
or accounting reviews. The Audit Committee has relied, without independent
verification, on management's representation that the financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States of America and on the
representations of the Company's independent auditors, KPMG LLP, included in
their report on the Company's financial statements. The Audit Committee's
oversight does not provide it with an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or policies, or appropriate internal controls and procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's deliberations and discussions
with management and KPMG LLP do not assure that the Company's financial
statements are presented in accordance with generally accepted accounting
principles, that the audit of the Company's financial statements has been
carried out in accordance with generally accepted auditing standards or that the
Company's outside auditors are, in fact, independent of the Company and
management.
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended 2001 and discussed these financial statements with the
Company's management and the independent auditors. The Audit Committee also
reviewed and discussed the audited financial statements and the matters required
17
by Statement on Auditing Standards 61 (Communication with Audit Committees) with
KPMG LLP. SAS 61 requires KPMG LLP to discuss with the Company's Audit
Committee, among other things, the following:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
- disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The Company's independent auditors also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), which requires
auditors annually to disclose in writing all relationships that in the auditors'
professional opinion may reasonably be thought to bear on independence, confirm
their perceived independence and engage in a discussion of independence. In
addition, the Audit Committee discussed with the independent auditors their
independence from the Company. The Audit Committee also considered whether the
independent auditors' provision of certain other, non-audit related services to
the Company was compatible with maintaining such auditors' independence. See
"Proposal 4 -- Ratification of Selection of Independent Auditors."
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001.
Respectfully submitted by the Audit Committee of the Board of Directors of
Caminus Corporation:
Christopher S. Brothers (Chairman)
Anthony H. Bloom
Richard K. Landers
18
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Common Stock, for the period from January 28, 2000 through December 31, 2001,
with the cumulative return on (1) the Nasdaq Composite Index and (2) the Nasdaq
Computer and Data Processing Index. The comparison assumes the investment of
$100 on January 28, 2000 in the Common Stock and in each of the indices and, in
each case, assumes reinvestment of all dividends. Prior to January 28, 2000, the
Common Stock was not registered under the Exchange Act.
[STOCK PERFORMANCE GRAPH INSERTED HERE]
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
JANUARY 28, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
2000 2000 2000 2001 2001
- ---------------------------------------------------------------------------------------------------
Caminus Corporation $100.00 $ 127.27 $120.78 $140.10 $119.48
Nasdaq Composite Index 100.00 102.08 63.21 55.58 50.18
Nasdaq Computer and Data
Processing Index 100.00 90.53 51.84 49.63 44.88
</Table>
19
PROPOSAL 2 -- AMENDMENT TO 1999 STOCK INCENTIVE PLAN
On February 12, 2002, the Board of Directors adopted resolutions to approve
an amendment (the "1999 Plan Amendment") to the 1999 Stock Incentive Plan, as
amended (the "1999 Plan"), to increase the number of shares of Common Stock
authorized for issuance thereunder from 1,218,943 shares to 1,418,943 shares.
The Board adopted the 1999 Plan Amendment because the number of shares
currently available under the 1999 Plan is insufficient to satisfy the Company's
incentive compensation needs. The Board believes that continued grants of stock
options, as well as grants of restricted stock and other stock-based awards,
will be an important element in attracting and retaining key employees who are
expected to contribute to the Company's growth and success.
As of February 28, 2002, options to purchase an aggregate of 1,101,401
shares of the Common Stock at a weighted average price per share of $21.21 were
outstanding under the 1999 Plan.
SUMMARY OF THE 1999 PLAN
The following is a summary of the material provisions of the 1999 Plan.
Description of Awards. The 1999 Plan provides for the grant of incentive
stock options intended to qualify under Section 422 of the Code ("incentive
stock options"), options not intended to qualify as incentive stock options
("non-statutory stock options"), restricted stock awards and other stock-based
awards, including the grant of shares based upon certain conditions, the grant
of securities convertible into Common Stock and the grant of stock appreciation
rights. Generally, awards under the 1999 Plan are not assignable or transferable
except by will or the laws of descent and distribution.
Incentive Stock Options and Non-Statutory Stock Options. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to other terms and conditions as are
specified in connection with the option grant. Subject to the limitations
described below, options may be granted at an exercise price which may be less
than, equal to or greater than the fair market value of the Common Stock on the
date of grant. Under present law, however, incentive stock options and options
intended to qualify as performance-based compensation under Section 162(m) of
the Code may not be granted at an exercise price less than the fair market value
of the Common Stock on the date of grant (or less than 110% of the fair market
value in the case of incentive stock options granted to optionees holding more
than 10% of the total combined voting power of the Company or its parent or
subsidiary corporations). Payment for Common Stock upon exercise of incentive
stock options and non-statutory stock options may be made:
- in cash or by check, payable to the order of the Company;
- except as the Board of Directors may, in its sole discretion, otherwise
provide in an option agreement, by
- delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds
to pay the exercise price, or
- delivery by the participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly
to the Company cash or a check sufficient to pay the exercise price;
- by delivery of shares of Common Stock owned by the participant valued at
their fair market value as determined by (or in a manner approved by) the
Board in good faith, provided
- such payment is then permitted under applicable law, and
- such Common Stock was owned by the participant at least six months
prior to such delivery;
- to the extent permitted by the Board, in its sole discretion by
20
- delivery of a promissory note of the participant to the Company on
terms determined by the Board, or
- payment of such other lawful consideration as the Board may determine;
or
- by any combination of the above permitted forms of payment.
Restricted Stock Awards. Restricted stock awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that the conditions specified by the Board in
the applicable awards are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such awards.
Other Stock-Based Awards. Under the 1999 Plan, the Board of Directors has
the right to grant other awards based upon the Common Stock having such terms
and conditions as the Board may determine, including the grant of shares based
upon certain conditions, the grant of securities convertible into Common Stock
and the grant of stock appreciation rights.
Eligibility to Receive Awards. All employees, officers, directors,
consultants and advisors (and any individuals who have accepted an offer for
employment) of the Company and its subsidiary corporations are eligible to be
granted options, restricted stock awards or other stock-based awards under the
1999 Plan. Under present law, however, incentive stock options may be granted
only to employees. The maximum number of shares with respect to which awards may
be granted to any participant under the 1999 Plan may not exceed 450,000 shares
per calendar year.
As of February 28, 2002, the Company had approximately 518 employees and
five non-employee directors, all of whom were eligible to participate in the
1999 Plan. The number of individuals receiving awards varies from year to year
depending on various factors, such as the number of promotions and the Company's
hiring needs during the year, and thus the Company cannot now determine future
award recipients. From the initial adoption of the 1999 Plan through February
28, 2002, the following persons and groups received options to purchase the
number of shares listed below.
<Table>
<Caption>
WEIGHTED AVERAGE TOTAL SHARES SUBJECT
NAME OF INDIVIDUAL TITLE/POSITION EXERCISE PRICE TO OPTION GRANTS
- ------------------ --------------------------- ---------------- --------------------
David M. Stoner................... President and Chief $24.71 100,000
Executive Officer;
Nominee for Class III
Director
Nigel L. Evans.................... Executive Vice President $24.71 100,000
and Head of Global Energy
Market Strategy
John A. Andrus.................... Executive Vice President $20.13 50,000
and Chief Operating Officer
Brian J. Scanlan.................. Executive Vice President, $24.71 100,000
Future Products
Joseph P. Dwyer................... Executive Vice President NA 0
and Chief Financial Officer
Christopher S. Brothers........... Nominee for Class III $16.00 7,143(1)
Director
All current executive officers, as
a group......................... NA $24.06 350,000
All current directors who are not
executive officers, as a NA
group........................... $16.83 35,715
All employees who are not
executive officers, as a NA
group........................... $19.48 958,191
</Table>
- ---------------
(1) Any proceeds from the sale of shares issuable upon exercise of the option
held by Mr. Brothers are for the benefit of OCM Principal Opportunities
Fund, L.P.
21
On March 8, 2002, the last reported sale price of the Common Stock on the
Nasdaq National Market was $21.36 per share.
Administration. The 1999 Plan is administered by the Board of Directors.
The Board has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the 1999 Plan and to interpret the
provisions of the 1999 Plan. Pursuant to the terms of the 1999 Plan, the Board
may delegate authority under the 1999 Plan to one or more Board committees, and
subject to certain limitations, to one or more executive officers of the
Company.
Subject to the provisions of the 1999 Plan and applicable law, the Board,
or, upon the Board's delegation, one or more of the Company's executive officers
or one or more committees or subcommittees of the Board, has the authority to
select the persons to whom awards are granted and determine the terms of each
award, including:
- the number of shares of Common Stock covered by options and the dates
upon which such options become exercisable;
- the exercise price of options;
- the duration of options; and
- the number of shares of Common Stock subject to any restricted stock or
other stock-based awards and the terms and conditions of such awards,
including conditions for repurchase, issue price and repurchase price.
The Board may amend, modify or terminate any outstanding award, including
but not limited to, substituting therefor another award of the same or a
different type, changing the date of exercise or realization, and converting an
incentive stock option into a non-statutory stock option, provided that the
participant's consent to such an action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the participant. The Board may also at any time
accelerate the date on which an option, restricted stock award or a stock-based
award becomes exercisable, becomes free of its restrictions or conditions or
becomes realizable, as the case may be.
The Board is required to make appropriate adjustments in connection with
the 1999 Plan and any outstanding awards thereunder to reflect any stock split,
reverse stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event. If any award expires or is terminated, surrendered, canceled or
forfeited, the unused shares of Common Stock covered by such award will again be
available for grant under the 1999 Plan subject, however, in the case of
incentive stock options to any limitations under the Code. In the event of a
merger, liquidation or other Acquisition Event (as defined in the 1999 Plan),
the Board is authorized to provide for outstanding options or other stock-based
awards to be assumed or substituted for by the acquiror. If the acquirer refuses
to assume or substitute for outstanding options, they will accelerate, becoming
fully exercisable and free of restrictions, prior to consummation of the
Acquisition Event. In addition, following an Acquisition Event, under some
circumstances, an assumed or substituted award will accelerate if the employment
of its holder with the acquirer is terminated within one year of the Acquisition
Event.
Amendment or Termination. No award may be made under the 1999 Plan after
September 29, 2009, but the vesting and effectiveness of awards previously
granted may extend beyond that date. The Board may at any time amend, suspend or
terminate the 1999 Plan, except that no award granted after an amendment of the
1999 Plan and designated as subject to Section 162(m) of the Code by the Board
shall become exercisable, realizable or vested to the extent the amendment was
required to grant such award, unless and until such amendment shall have been
approved by the Company's stockholders.
22
FEDERAL INCOME TAX CONSEQUENCES
The following generally summarizes the United States federal income tax
consequences that generally will arise with respect to awards granted under the
1999 Plan. This summary is based on the tax laws in effect as of the date of
this proxy statement. Changes to these laws could alter the tax consequences
described below.
Incentive Stock Options. A participant will not have income upon the grant
of an incentive stock option. Also, except as described below, a participant
will not have income upon exercise of an incentive stock option if the
participant has been employed by the Company or its corporate parent or
majority-owned corporate subsidiary at all times beginning with the option grant
date and ending three months before the date the participant exercises the
option. If the participant has not been so employed during that time, then the
participant will be taxed as described below under "Nonstatutory Stock Options."
The exercise of an incentive stock option may subject the participant to the
alternative minimum tax.
A participant will have income upon the sale of the stock acquired under an
incentive stock option at a profit (if sales proceeds exceed the exercise
price). The type of income will depend on when the participant sells the stock.
If a participant sells the stock more than two years after the option was
granted and more than one year after the option was exercised, then all of the
profit will be long-term capital gain. If a participant sells the stock prior to
satisfying these waiting periods, then the participant will have engaged in a
disqualifying disposition and a portion of the profit will be ordinary
compensation income and a portion may be capital gain. This capital gain will be
long-term if the participant has held the stock for more than one year and
otherwise will be short-term. If a participant sells the stock at a loss (sales
proceeds are less than the exercise price), then the loss will be a capital
loss. This capital loss will be long-term if the participant held the stock for
more than one year and otherwise will be short-term.
Nonstatutory Stock Options. A participant will not have income upon the
grant of a nonstatutory stock option. A participant will have compensation
income upon the exercise of a nonstatutory stock option equal to the value of
the stock on the day the participant exercised the option less the exercise
price. Upon sale of the stock, the participant will have capital gain or loss
equal to the difference between the sales proceeds and the value of the stock on
the day the option was exercised. This capital gain or loss will be long-term if
the participant has held the stock for more than one year and otherwise will be
short-term.
Restricted Stock. A participant will not have income upon the grant of
restricted stock unless an election under Section 83(b) of the Code is made
within 30 days of the date of grant. If a timely 83(b) election is made, then a
participant will have compensation income equal to the value of the stock less
the purchase price. When the stock is sold, the participant will have capital
gain or loss equal to the difference between the sales proceeds and the value of
the stock on the date of grant. If the participant does not make an 83(b)
election, then when the stock vests the participant will have compensation
income equal to the value of the stock on the vesting date less the purchase
price. When the stock is sold, the participant will have capital gain or loss
equal to the sales proceeds less the value of the stock on the vesting date. Any
capital gain or loss will be long-term if the participant held the stock for
more than one year and otherwise will be short-term.
Tax Consequences to the Company. There will be no tax consequences to the
Company except that the Company will be entitled to a deduction when a
participant has compensation income. Any such deduction will be subject to the
limitations of Section 162(m) of the Code.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 1999 PLAN
AMENDMENT IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE FOR THIS PROPOSAL.
23
PROPOSAL 3 -- AMENDMENT TO 1999 EMPLOYEE STOCK PURCHASE PLAN
On October 30, 2001, the Board of Directors adopted resolutions to approve
an amendment (the "1999 ESPP Amendment") to the 1999 Employee Stock Purchase
Plan, as amended (the "1999 ESPP"), to increase the number of shares of Common
Stock authorized for issuance thereunder from 95,238 shares to 595,238 shares.
The Board adopted the 1999 ESPP Amendment because the number of shares
currently available under the 1999 ESPP is insufficient to satisfy the expected
2002 share requirements thereunder. The Board believes that the continued
ability of the Company's employees to purchase shares under the 1999 ESPP will
be an important element in attracting and retaining key employees who are
expected to contribute to the Company's growth and success.
SUMMARY OF THE 1999 ESPP
The following is a summary of the material provisions of the 1999 ESPP.
Administration. The 1999 ESPP qualifies as an "employee stock purchase
plan" under Section 423 of the Code. The 1999 ESPP permits employees of the
Company or any designated subsidiary of the Company to purchase shares of the
Company's Common Stock in a series of one or more offerings. During each
offering, participants will accrue funds in an account through payroll
deductions. At the end of the offering, the funds will be applied to the
purchase of Common Stock. The 1999 ESPP is administered by the Board of
Directors, or a committee appointed by the Board, which specifies the date on
which an offering will begin. An offering period generally extends for six
months; however, the Board may, in its discretion, choose an offering period of
12 months or less for any offering. The Board has the authority to make rules
and regulations for the administration of the 1999 ESPP and its interpretations
and decisions are final and conclusive.
Eligibility. With certain limited exceptions in the case of employees who
hold a significant amount of stock of the Company or any parent or subsidiary
corporation as defined in Section 423(b)(3), and including stock attributed by
the application of Section 424(d) of the Code, all employees of the Company,
including directors of the Company who are also employees, and all employees of
any designated subsidiaries of the Company, are eligible to participate in the
1999 ESPP, provided that:
- they are customarily employed by the Company or a designated subsidiary
for more than 20 hours per week and for more than five months in a
calendar year;
- they have been employed by the Company or a designated subsidiary of the
Company for at least three months prior to participation; and
- they are employees of the Company or a designated subsidiary of the
Company on the first day of the applicable offering period.
As of February 28, 2002, the Company had approximately 481 employees
eligible to participate in the 1999 ESPP. Because each employee's participation
in the 1999 ESPP is purely voluntary, the future benefits under the 1999 ESPP
are not yet determinable. From the initial adoption of the 1999 ESPP through
February 28, 2002, the following persons and groups purchased the number of
shares of Common Stock listed below.
<Table>
<Caption>
WEIGHTED AVERAGE TOTAL SHARES
NAME OF INDIVIDUAL TITLE/POSITION PURCHASE PRICE PURCHASED
- ------------------ -------------- ---------------- ------------
David M. Stoner..................... President and Chief Executive NA 0
Officer; Nominee for Class III
Director
Nigel L. Evans...................... Executive Vice President and NA 0
Head of Global Energy Market
Strategy
John A. Andrus(1)................... Executive Vice President and $16.02 1,307
Chief Operating Officer
</Table>
24
<Table>
<Caption>
WEIGHTED AVERAGE TOTAL SHARES
NAME OF INDIVIDUAL TITLE/POSITION PURCHASE PRICE PURCHASED
- ------------------ -------------- ---------------- ------------
Brian J. Scanlan.................... Executive Vice President, NA 0
Future Products
Joseph P. Dwyer..................... Executive Vice President and NA 0
Chief Financial Officer
Christopher S. Brothers(2).......... Nominee for Class III Director NA NA
All current executive officers, as a
group............................. NA $16.02 1,307
All current directors who are not
executive officers, as a group.... NA NA 0
All employees who are not executive
officers, as a group.............. NA $15.89 110,430
</Table>
- ---------------
(1) Mr. Andrus is participating in the current plan period and is eligible to
purchase an undeterminable number of shares of Common Stock on July 31,
2002, which is the end of the current plan period.
(2) Directors who are not employees of the Company are not eligible to
participate in the 1999 ESPP.
On March 8, 2002, the last reported sale price of the Common Stock on the
Nasdaq National Market was $21.36 per share.
Participation, Purchase of Shares and Purchase Price. Participation in the
1999 ESPP is voluntary. An eligible employee may participate in the 1999 ESPP by
filing with the Company a completed payroll deduction authorization form on or
before the applicable offering commencement date authorizing the Company to
deduct not more than 10% of his compensation during the offering period. The
participant is then deemed to have been granted an option on the applicable
offering commencement date to purchase on the last business day of the plan
period the largest number of whole shares of Common Stock that does not exceed
the number that is obtained by dividing (A) the product of $2,083 and the number
of whole months in such offering period by (B) the closing price of the Common
Stock on the applicable offering commencement date. The purchase price for each
share purchased will be 85% of the lesser of the closing price per share of the
Common Stock on the first business day of an offering period or the last
business day of such period, whichever is lower.
If the employee continues to be a participant in the 1999 ESPP on the last
business day of a plan period, he will be deemed to have exercised his option at
the purchase price on that date and will be deemed to have purchased from the
Company the number of full shares of Common Stock reserved for purposes of the
1999 ESPP that his accumulated payroll deductions on that date will pay for, up
to the maximum number determined in the manner set forth above.
No employee may be granted an option under the 1999 ESPP if, immediately
after the grant, the employee would own stock and/or hold outstanding options to
purchase stock possessing 5% or more of the total voting power or value of all
classes of stock of the Company or any parent or subsidiary corporations. In
addition, no employee may be granted an option under the 1999 ESPP which would
give the employee the right to purchase stock under all of the stock purchase
plans of the Company and its parent or subsidiary corporations at a rate that
exceeds $25,000 of the fair market value of such stock (determined at the time
the option is granted) for each calendar year in which the option is outstanding
at any time.
Deduction Changes and Withdrawal of Funds. A participant may decrease or
discontinue payroll deductions once during any plan period by filing a new
payroll deduction authorization form. However, a participant may not increase
his payroll deduction during a plan period. A participant may also at any time
prior to the close of business on the last business day in a plan period and for
any reason permanently draw out the balance accumulated in his account and
thereby withdraw from participation in the offering. Partial withdrawals are not
permitted, and an employee may not begin participation again during the
remainder of the plan period. The employee may participate in any subsequent
offering in accordance with the terms and conditions established by the Board.
25
Rights on Retirement, Death or Termination of Employment. If a participant
ceases to be employed by the Company or a designated subsidiary of the Company
for any reason, the payroll deductions credited to his account will be returned
to him or, in the event of his death, paid to his beneficiary or estate.
Rights Not Transferable. A participant may not transfer rights under the
1999 ESPP other than by will or the laws of descent and distribution, and rights
are exercisable during the participant's lifetime only by the participant. In
its sole discretion, the Board may provide that shares of Common Stock issuable
upon the exercise of an option may not be sold, assigned, transferred, pledged
or otherwise encumbered by the participant for a period of up to 180 days from
the exercise date of the applicable plan period; provided, however, that all
participants exercising options during such plan period shall be subject to the
same lock-up provisions; and provided further, however, that the Company provide
all participants in such plan period with written notice of the lock-up
provisions at least 10 days prior to the exercise date of such plan period.
Merger. If the Company merges or consolidates with another corporation and
the holders of the capital stock of the Company immediately prior to the merger
or consolidation continue to hold at least 80% of the voting power of the
capital stock of the surviving corporation, then the holder of each option
outstanding under the 1999 ESPP will be entitled to receive at the next offering
termination date upon exercise of the option for each share as to which the
option will be exercised, the securities or property which a holder of one share
of Common Stock would have been entitled to receive at the time of the merger or
consolidation, and the Board will take such steps in connection with the merger
or consolidation to make any adjustments under the 1999 ESPP as the Board deems
equitable.
In the event of a merger or consolidation of the Company other than one
described in the immediately preceding sentence, or a sale of all or
substantially all of the Company's assets while unexercised options remain
outstanding under the 1999 ESPP, then:
- after the effective date of such transaction, each holder of an
outstanding option will be entitled, upon exercise of such option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to
the terms of such transaction;
- all outstanding options may be cancelled by the Board as of a date prior
to the effective date of any transaction and all payroll deductions shall
be paid out to the participants in the 1999 ESPP; or
- all outstanding options may be cancelled by the Board as of the effective
date of any such transaction, provided that notice of such cancellation
will be given to each holder of an option, and each holder of an option
will have the right to exercise such option in full based on payroll
deductions then credited to his account as of a date determined by the
Board, which date may not be less than 10 days preceding the effective
date of such transaction.
Amendment and Termination. The Board may amend the 1999 ESPP at any time
in any respect and may terminate the 1999 ESPP at any time. Upon termination of
the 1999 ESPP, all amounts in the accounts of participants will be promptly
refunded.
FEDERAL INCOME TAX CONSEQUENCES
The following generally summarizes the United States federal income tax
consequences that will arise with respect to participation in the 1999 ESPP and
with respect to the sale of Common Stock acquired under the 1999 ESPP. This
summary is based on the tax laws in effect as of the date of this proxy
statement. Changes to these laws could alter the tax consequences described
below.
Tax Consequences to Participants. A participant will not have income upon
enrolling in the 1999 ESPP or upon purchasing stock at the end of an offering.
A participant may have both compensation income and capital gain income if
the participant sells stock that was acquired under the 1999 ESPP at a profit
(if sales proceeds exceed the purchase price). The amount of each type of income
will depend on when the participant sells the stock. If the participant sells
the stock more than two years after the commencement of the offering during
which the stock was purchased and more
26
than one year after the date that the participant purchased the stock, then the
participant will have compensation income equal to the lesser of:
- 15% of the value of the stock on the day the offering commenced; and
- the participant's profit.
Any excess profit will be long-term capital gain.
If the participant sells the stock prior to satisfying these waiting
periods, then he or she will have engaged in a disqualifying disposition. Upon a
disqualifying disposition, the participant will have compensation income equal
to the value of the stock on the day he or she purchased the stock less the
purchase price. If the participant's profit exceeds the compensation income,
then the excess profit will be capital gain. This capital gain will be long-term
if the participant has held the stock for more than one year and otherwise will
be short-term.
If the participant sells the stock at a loss (if sales proceeds are less
than the purchase price), then the loss will be a long-term capital loss. This
capital loss will be long-term if the participant has held the stock for more
than one year and otherwise will be short-term.
Tax Consequences to Participants if the Company's Stockholders Do Not
Approve the Amendment to the 1999 ESPP. Any increase in the aggregate number of
shares which may be issued under the 1999 ESPP (other than an increase merely
reflecting certain changes in capitalization) is treated as the adoption of a
new plan requiring stockholder approval within 12 months of such adoption. In
order for the 1999 ESPP to continue to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code, the Company's stockholders
must approve the increase in the number of shares authorized for issuance under
the plan from 95,238 to 595,238 shares. If the Company's stockholders do not
approve the amendment, the participant will have the following tax consequences.
Options granted under the 1999 ESPP will be treated as nonstatutory stock
options. The participant generally will recognize ordinary compensation income
upon the exercise of the option in an amount equal to the excess of the fair
market value of the Common Stock acquired through the exercise of the option on
the exercise date over the purchase price.
The participant will have a tax basis for such shares of Common Stock equal
to the purchase price plus any income recognized upon the exercise of the
option. Upon selling the shares, the participant generally will recognize
capital gain or loss in an amount equal to the difference between the sale price
of the shares and the tax basis in the shares. This capital gain or loss will be
a long-term capital gain or loss if the participant has held the shares for more
than one year prior to the date of the sale and will be a short-term capital
gain or loss if the participant has held the shares for a shorter period.
Tax Consequences to the Company. There will be no tax consequences to the
Company except that the Company will be entitled to a deduction when a
participant has compensation income. Any such deduction will be subject to the
limitations of Section 162(m) of the Code.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 1999 ESPP
AMENDMENT IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE FOR THIS PROPOSAL.
27
PROPOSAL 4 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, at the recommendation of the Audit Committee, has
selected the firm of KPMG LLP as the Company's independent auditors for the
current fiscal year. KPMG LLP replaced PricewaterhouseCoopers LLP ("PWC"), whom
the Board voted to dismiss on May 19, 2000, at the recommendation of the Audit
Committee. PWC acted as the Company's certifying auditors for the period from
inception (April 29, 1998) through December 31, 1998 and for the year ended
December 31, 1999. Neither of the PWC reports on the Company's financial
statements for such periods contained an adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles.
During fiscal years 1998 and 1999 and the subsequent interim period prior
to PWC's dismissal, there was no disagreement with PWC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement if not resolved to their satisfaction,
would have caused the auditors to make reference to the subject matter of the
disagreement in connection with any report issued by them.
On June 8, 2000, the Company engaged KPMG LLP to act as the Company's
independent auditors. During 1998 and 1999 and the subsequent interim period
prior to engaging KPMG LLP, the Company did not consult with KPMG LLP regarding
(i) the application of accounting principles to a specified transaction, either
completed or proposed, (ii) the type of audit opinion that might be rendered on
the Company's financial statements, or (iii) any subject matter of a
disagreement or reportable event with the Company's former auditors.
Audit Fees. KPMG LLP billed the Company an aggregate of $155,000 in fees
for professional services rendered in connection with the audit of the Company's
financial statements for the most recent fiscal year and the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001.
Financial Information Systems Design and Implementation Fees. KPMG LLP did
not bill the Company for any professional services rendered to the Company and
its affiliates for the fiscal year ended 2001 in connection with financial
information systems design or implementation, the operation of the Company's
information system or the management of its local area network.
All Other Fees. KPMG LLP billed the Company an aggregate of $141,000 in
other audit-related fees for services rendered to the Company and its affiliates
for the fiscal year ended 2001. These fees related principally to an audit of a
business acquired during the year and reviews of registration statements and
issuances of consents.
Although stockholder approval of the Board's selection of KPMG LLP is not
required by law, the Board believes that it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board will reconsider its selection of KPMG LLP.
Representatives of KPMG LLP are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS BELIEVES THAT THE RATIFICATION OF KPMG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR 2002 IS IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR THIS PROPOSAL.
28
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Any proposal that a stockholder of the Company wishes to be considered for
inclusion in the Company's proxy statement and proxy card for the 2003 Annual
Meeting of Stockholders (the "2003 Annual Meeting") must be received by the
Secretary of the Company at its offices, 825 Third Avenue, 28th Floor, New York,
New York 10022, by November 25, 2002.
If a stockholder of the Company wishes to present a proposal before the
2003 Annual Meeting, but does not wish to have the proposal considered for
inclusion in the Company's proxy statement and proxy card, such stockholder must
also give written notice so that it is delivered to, or mailed and received by,
the Secretary of the Company at the principal executive offices of the Company
not less than 70 days nor more than 90 days prior to April 24, 2003; provided,
however, that in the event that the date of the 2003 Annual Meeting is advanced
by more than 20 days, or delayed by more than 70 days, from April 24, 2003,
notice by the stockholder must be so delivered or received not earlier than the
90th day prior to such annual meeting and not later than the close of business
on the later of the 70th day prior to such annual meeting or the 10th day
following the day on which notice of the date of such annual meeting was mailed
or public disclosure of the date of such annual meeting was made, whichever
occurs first. If a stockholder fails to provide timely notice of a proposal to
be presented at the 2003 Annual Meeting, the proxies designated by the Board
will have discretionary authority to vote on any such proposal.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating
in the practice of "householding" proxy statements and annual reports. This
means that only one copy of the Company's proxy statement or annual report may
have been sent to multiple stockholders in your household. The Company will
promptly deliver a separate copy of either document to you if you call or write
Caminus Corporation at the following address or phone number: 825 Third Avenue,
28th Floor, New York, New York 10022, 212-515-3600. If you want to receive
separate copies of the annual report and proxy statement in the future, you
should contact your bank, broker or other nominee record holder, or you may
contact the Company at the above address and phone number.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telecopy, telegraph and personal interviews. In addition, the Company retains
the right to engage outside agencies to assist in the solicitation of proxies
for the Annual Meeting. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and, as required by law, the Company will, at their request, reimburse them for
their out-of-pocket expenses in this regard.
By Order of the Board of Directors,
DAVID M. STONER
President and Chief Executive Officer
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION IS APPRECIATED. STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING MAY VOTE
THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
March 15, 2002
29
Appendix A
CAMINUS CORPORATION
1999 STOCK INCENTIVE PLAN
1. Purpose
The purpose of this 1999 Stock Incentive Plan (the "Plan") of Caminus
Corporation, a Delaware corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any of the
Company's present or future subsidiary corporations as defined in Section 424(f)
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant."
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will be
administered by the Board of Directors of the Company (the "Board"). The Board
shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. All decisions by the Board shall be
made in the Board's sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Award. No director
or person acting pursuant to the authority delegated by the Board shall be
liable for any action or determination relating to or under the Plan made in
good faith.
(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). All references in
the Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the
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extent that the Board's powers or authority under the Plan have been delegated
to such Committee or executive officer.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 8, Awards
may be made under the Plan for up to 502,312 shares of common stock, $0.01 par
value per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 8,
for Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of
Common Stock with respect to which an Award may be granted to any Participant
under the Plan shall be 450,000 per calendar year. The per-Participant limit
described in this Section 4(b) shall be construed and applied consistently with
Section 162(m) of the Code ("Section 162(m)").
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option."
(b) Incentive Stock Options. An Option that the Board intends to be
an "incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise
price at the time each Option is granted and specify it in the applicable
option agreement.
(d) Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) Exercise of Option. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
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(f) Payment Upon Exercise. Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the
Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;
(3) when the Common Stock is registered under the Exchange
Act, by delivery of shares of Common Stock owned by the Participant valued at
their fair market value as determined by (or in a manner approved by) the Board
in good faith ("Fair Market Value"), provided (i) such method of payment is then
permitted under applicable law and (ii) such Common Stock was owned by the
Participant at least six months prior to such delivery;
(4) to the extent permitted by the Board, in its sole
discretion by (i) delivery of a promissory note of the Participant to the
Company on terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or
(5) by any combination of the above permitted forms of
payment.
6. Restricted Stock
(a) Grants. The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. Other Stock-Based Awards
The Board shall have the right to grant other Awards based upon the Common
Stock having
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such terms and conditions as the Board may determine, including the grant of
shares based upon certain conditions, the grant of securities convertible into
Common Stock and the grant of stock appreciation rights.
8. Adjustments for Changes in Common Stock and Certain Other Events
(a) Changes in Capitalization. In the event of any stock split,
reverse stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
(b) Liquidation or Dissolution. In the event of a proposed
liquidation or dissolution of the Company, the Board shall upon written notice
(including electronic notice) to the Participants provide that all then
unexercised Options will (i) become exercisable in full as of a specified time
at least 10 business days prior to the effective date of such liquidation or
dissolution and (ii) terminate effective upon such liquidation or dissolution,
except to the extent exercised before such effective date. The Board may specify
the effect of a liquidation or dissolution on any Restricted Stock Award or
other Award granted under the Plan at the time of the grant of such Award.
(c) Acquisition Events
(1) Definition. An "Acquisition Event" shall mean: (a) any
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 60% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; (b) any sale of all
or substantially all of the assets of the Company; (c) the complete liquidation
of the Company; or (d) the acquisition of "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) of securities of the Company representing 60%
or more of the combined voting power of the Company's then outstanding
securities (other than through an acquisition of securities directly from the
Company) by any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any entity owned
directly or indirectly by the stockholders of the Company in substantially the
same proportion as their ownership of stock of the Company
(2) Consequences of an Acquisition Event on Options. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that all
outstanding Options shall be assumed, or
-4-
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof). For purposes hereof, an Option shall be
considered to be assumed if, following consummation of the Acquisition Event,
the Option confers the right to purchase, for each share of Common Stock subject
to the Option immediately prior to the consummation of the Acquisition Event,
the consideration (whether cash, securities or other property) received as a
result of the Acquisition Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the Acquisition Event
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a result
of the Acquisition Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in fair market value to the per share consideration received
by holders of outstanding shares of Common Stock as a result of the Acquisition
Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, then the Board shall, upon written notice (including
electronic notice) to the Participants, provide that all then unexercised
Options will become exercisable in full as of a specified time prior to the
Acquisition Event and will terminate immediately prior to the consummation of
such Acquisition Event, except to the extent exercised by the Participants
before the consummation of such Acquisition Event; provided, however, that in
the event of an Acquisition Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share of
Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition
Price"), then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and that each Participant
shall receive, in exchange therefor, a cash payment equal to the amount (if any)
by which (A) the Acquisition Price multiplied by the number of shares of Common
Stock subject to such outstanding Options (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such Options.
(3) Consequences of an Acquisition Event on Restricted Stock
Awards. Upon the occurrence of an Acquisition Event, the repurchase and other
rights of the Company under each outstanding Restricted Stock Award shall be
assumed or substituted by and shall inure to the benefit of the Company's
successor and shall apply to the cash, securities or other property which the
Common Stock was converted into or exchanged for pursuant to such Acquisition
Event in the same manner and to the same extent as they applied to the Common
Stock subject to such Restricted Stock Award.
(4) Consequences of an Acquisition Event on Other Awards. The
Board shall specify the effect of an Acquisition Event on any other Award
granted under the Plan at the time of the grant of such Award.
(5) Consequences of Certain Terminations After an Acquisition
Event. Each Option, Restricted Stock Award or other Award assumed or substituted
pursuant to this Section 8(c) shall include a provision to the effect that such
Option, Restricted Stock Award or other Award shall become immediately
exercisable (or vested) in full if, on or prior to the first anniversary
-5-
of the Acquisition Event, the Participant terminates his or her employment for
Good Reason or is terminated without Cause by the surviving or acquiring
corporation. "Good Reason" shall mean any significant diminution in the
Participant's title, authority or responsibilities from and after such
Acquisition Event or any reduction in the annual cash compensation payable to
the Participant from and after such Acquisition Event. "Cause" shall mean any
willful misconduct by the Participant which affects the business reputation of
the Company or willful failure by the Participant to perform his or her material
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the
Participant and the Company). The Participant shall be considered to have been
discharged for "Cause" if the Company determines, within 30 days after the
Participant's resignation, that discharge for Cause was warranted.
9. Non-Competition
(a) Non-Competition. As a condition to the issuance of Awards and
shares of Common Stock issuable upon exercise of Awards (together with the
Awards, "Securities") pursuant to the Plan, and as a means reasonably designed
to protect the intellectual property, confidential and proprietary information
of the Company, as long as the Participant owns Securities, the Participant will
not, without the prior written consent of the Company based upon approval from
the Board (or any successor entity of the Company), anywhere in the world,
directly or indirectly, engage in, assist (financially or otherwise), associate
with, or perform services (other than on behalf of the Company or any of its
affiliates) in the Company Business, including, without limitation, whether such
engagement, assistance, association or performance is as an individual,
principal, officer, director, proprietor, employee, partner, stockholder or
other investor (other than as a holder of less than five percent (5%) of the
outstanding capital stock of a publicly traded corporation), creditor,
guarantor, consultant, advisor, agent, sales representative or other
participant, or otherwise permit his name to be used or employed with any such
business. "Company Business" shall mean the business of the Company, including,
without limitation, the business of developing, licensing, installing and
maintaining commodities trading and risk management software and providing
consulting and support services substantially related to such software
activities to the foreign exchange, natural gas, crude oil, refined products and
electric power industries.
(b) Non-Interference. As long as a Participant owns Securities, no
Participant shall, without the prior written consent of the Company, directly,
indirectly or as an agent on behalf of or in conjunction with any person, firm,
partnership, corporation or other entity, (a) hire, solicit, encourage the
resignation of, or in any other manner seek to engage or employ any person who
is then, or within the prior twelve (12) months has been, an employee of the
Company or its affiliates, whether or not for compensation and whether as an
officer, covenantor, consultant, advisor, independent sales representative,
independent contractor or participant, or (b) except as may be appropriate to
perform such Participant's employment duties for the Company, contact, solicit,
service or otherwise have any dealings related to Company Business with any
person or entity with whom the Company or its affiliates has a former, current
or prospective business relationship or who is or was at any time during his
employment with the Company (including any predecessor or successor entity) a
customer or client of the Company or its affiliates, or a prospective customer
or client to which the Company or its affiliates has made a written or oral
business proposal.
-6-
(c) Effect of Violation. In the event of a violation by a
Participant of the provisions of this Section 9, then all Options held by such
Participant shall be immediately null and void and non-exercisable, and the
Company shall have the right, at any time after such event, to repurchase any
shares of Common Stock issued in connection with Option exercises or other
Awards ("Award Shares") owned by such Participant for an amount equal to the
lesser of (i) the Fair Market Value of the Award Shares repurchased as of the
date of such violation, and (ii) the price paid by the Participant for such
Award Shares.
10. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced by a written
instrument in such form as the Board shall determine, it being understood that
an electronic form of Award shall be deemed to be a written instrument for
purposes of the Plan. Each Award may contain terms and conditions in addition to
those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on
an Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall
-7-
be required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the Plan until (i)
all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free of restrictions in full or in part or that any other
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
11. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective
on the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders to the extent
stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board
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or (ii) the date the Plan was approved by the Company's stockholders, but Awards
previously granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).
(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
Approved by the Board of Directors
on September 30, 1999
Approved by the Stockholders
on September 30, 1999
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CAMINUS CORPORATION
AMENDMENT NO. 1
TO
1999 STOCK INCENTIVE PLAN
Section 4(a) of the 1999 Stock Incentive Plan (the "Plan") of Caminus
Corporation, a Delaware corporation, is hereby amended to increase from 502,312
to 1,218,943 the number of shares of Common Stock, $0.01 par value per share,
authorized for issuance under the Plan.
Except to the extent amended hereby, the Plan is in all respects hereby
ratified and confirmed and shall continue in full force and effect.
Adopted by the Board of Directors on
November 2, 2000 and February 8, 2001.
Approved by the Stockholders on May 2, 2001.
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CAMINUS CORPORATION
AMENDMENT NO. 2
TO
1999 STOCK INCENTIVE PLAN
Section 4(a) of the 1999 Stock Incentive Plan (the "Plan") of Caminus
Corporation, a Delaware corporation, is hereby amended to increase from
1,218,943 to 1,418,943 the number of shares of Common Stock, $0.01 par value per
share, authorized for issuance under the Plan.
Except to the extent amended hereby, the Plan is in all respects hereby
ratified and confirmed and shall continue in full force and effect.
Adopted by the Board of Directors on
February 12, 2002.
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Appendix B
CAMINUS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide eligible employees of Caminus
Corporation, a Delaware corporation (the "Company"), and certain of its
subsidiaries with opportunities to purchase shares of the Company's common
stock, $0.01 par value per share (the "Common Stock"). Ninety-five thousand, two
hundred thirty-eight (95,238) shares of Common Stock in the aggregate have been
approved for this purpose. This Plan is intended to qualify as an "employee
stock purchase plan" as defined in Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder, and
shall be interpreted consistent therewith.
1. Administration. The Plan will be administered by the Board or by a
Committee appointed by the Board (the "Committee"). The Board or the Committee
has authority to make rules and regulations for the administration of the Plan
and its interpretation and decisions with regard thereto shall be final and
conclusive.
2. Eligibility. All employees of the Company, including Directors who
are employees, and all employees of any subsidiary of the Company (as defined in
Section 424(f) of the Code) designated by the Board or the Committee from time
to time (a "Designated Subsidiary"), are eligible to participate in any one or
more of the offerings of Options (as defined in Section 9) to purchase Common
Stock under the Plan provided that:
(a) they are customarily employed by the Company or a Designated
Subsidiary for more than 20 hours a week and for more than five months in
a calendar year; and
(b) they have been employed by the Company or a Designated
Subsidiary for at least three months prior to enrolling in the Plan;
provided, however, that, with respect to the first Plan Period (as defined
below), they have been employed by the Company or a Designated Subsidiary
since December 31, 1999; and
(c) they are employees of the Company or a Designated Subsidiary on
the first day of the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary. For
purposes of the preceding sentence, the attribution rules
of Section 424(d) of the Code shall apply in determining the stock ownership of
an employee, and all stock which the employee has a contractual right to
purchase shall be treated as stock owned by the employee.
3. Offerings. The Company will make one or more offerings ("Offerings")
to employees to purchase stock under this Plan. Offerings will begin on such
date or dates as may be established by the Board or the Committee from time to
time (the "Offering Commencement Dates"). Each Offering Commencement Date will
begin a six-month period (a "Plan Period") during which payroll deductions will
be made and held for the purchase of Common Stock at the end of the Plan Period.
The Board or the Committee may, at its discretion, choose a different Plan
Period of twelve (12) months or less for its Offerings.
4. Participation. An employee eligible on the Offering Commencement
Date of any Offering may participate in such Offering by completing and
forwarding a payroll deduction authorization form to the employee's appropriate
payroll office on or before the applicable Offering Commencement Date, as
determined by the Board or the Committee from time to time. The form will
authorize a regular payroll deduction from the Compensation received by the
employee during the Plan Period. Unless an employee files a new form or
withdraws from the Plan, his deductions and purchases will continue at the same
rate for future Offerings under the Plan as long as the Plan remains in effect.
The term "Compensation" means the amount of money reportable on the employee's
Federal Income Tax Withholding Statement, excluding overtime, shift premium,
allowances and reimbursements for expenses such as relocation allowances for
travel expenses, income or gains on the exercise of Company stock options or
stock appreciation rights, and similar items, whether or not shown on the
employee's Federal Income Tax Withholding Statement, but including, in the case
of salespersons, sales commissions to the extent determined by the Board or the
Committee.
5. Deductions. The Company will maintain payroll deduction accounts for
all participating employees. With respect to any Offering made under this Plan,
an employee may authorize a payroll deduction, as set forth below, from the
Compensation he or she receives during the Plan Period or such shorter period
during which deductions from payroll are made. Payroll deductions may be at the
rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of Compensation with any
change in compensation during the Plan Period to result in an automatic
corresponding change in the dollar amount withheld.
No employee may be granted an Option (as defined in Section 9) which
permits his rights to purchase Common Stock under this Plan and any other
employee stock purchase plan (as defined in Section 423(b) of the Code) of the
Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of the
fair market value of such Common Stock (determined at the Offering Commencement
Date of the Plan Period) for each calendar year in which the Option is
outstanding at any time.
6. Deduction Changes. An employee may decrease or discontinue his
payroll deduction once during any Plan Period, by filing a new payroll deduction
authorization form.
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However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be paid on any employee accounts,
except to the extent that the Board or the Committee, in its sole discretion,
elects to credit employee accounts with interest at such per annum rate as it
may from time to time determine.
8. Withdrawal of Funds. An employee may at any time prior to the close
of business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee.
9. Purchase of Shares. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, the largest number of whole shares of Common Stock of the Company
as does not exceed the number of shares determined by multiplying $2,083 by the
number of full months in the Plan Period and dividing the result by the closing
price (as defined below) on the Offering Commencement Date of such Plan Period.
The purchase price for each share purchased will be 85% of the closing
price of the Common Stock on (i) the first business day of such Plan Period or
(ii) the Exercise Date, whichever closing price shall be less. Such closing
price shall be (a) the closing price on any national securities exchange on
which the Common Stock is listed, (b) the closing price of the Common Stock on
the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
The Wall Street Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (a) and (b) above shall be
the reported price for the next preceding day on which sales were made.
Notwithstanding the foregoing, in the event the first business day of a Plan
Period is the effective date of the Registration Statement on Form S-1 relating
to the Company's initial public offering of Common Stock, the closing price for
such first business day shall be deemed to be the initial public offering price
of the Common Stock.
Each employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at the Option Price
on such date and shall be deemed to have purchased from the Company the number
of full shares of Common Stock reserved for the purpose of the Plan that his
accumulated payroll deductions on such date will pay for, but not in excess of
the maximum number determined in the manner set forth above.
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Any balance remaining in an employee's payroll deduction account at the
end of a Plan Period will be automatically refunded to the employee, except that
any balance which is less than the purchase price of one share of Common Stock
will be carried forward into the employee's payroll deduction account for the
following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. Issuance of Certificates. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship, or (in the Company's sole discretion) in the name
of a brokerage firm, bank or other nominee holder designated by the employee.
The Company may, in its sole discretion and in compliance with applicable laws,
authorize the use of book entry registration of shares in lieu of issuing stock
certificates.
11. Rights on Retirement, Death or Termination of Employment. In the
event of a participating employee's termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be taken from any pay
due and owing to an employee and the balance in the employee's account shall be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purposes of this Plan.
12. Optionees Not Stockholders. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
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13. Transferability; Lock-up. Rights under this Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during the employee's lifetime
only by the employee. The Board or the Committee, in its sole discretion, may
provide that shares of Common Stock issuable upon the exercise of an Option may
not be sold, assigned, transferred, pledged or otherwise encumbered by the
employee for a period of up to 180 days from the Exercise Date of the applicable
Plan Period (the "Lock-up Provisions"); provided, however, that all participants
exercising Options during such Plan Period shall be subject to the same Lock-up
Provisions; and provided further, however, that the Company shall provide all
participants in such Plan Period with written notice (including electronic
notice) of the Lock-up Provisions at least 10 days prior to the Exercise Date of
such Plan Period.
14. Application of Funds. All funds received or held by the Company
under this Plan may be combined with other corporate funds and may be used for
any corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In the event
of a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for this Plan, and the
share limitation set forth in Section 9, shall be increased proportionately, and
such other adjustment shall be made as may be deemed equitable by the Board or
the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. Merger. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 80%
by voting power of the capital stock of the surviving corporation ("Continuity
of Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such merger or consolidation, and the Board or the Committee
shall take such steps in connection with such merger or consolidation as the
Board or the Committee shall deem necessary to assure that the provisions of
Section 15 shall thereafter be applicable, as nearly as reasonably may be, in
relation to the said securities or property as to which such holder of such
Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the
-5-
effective date of any such transaction and all payroll deductions shall be paid
out to the participating employees; or (c) all outstanding Options may be
cancelled by the Board or the Committee as of the effective date of any such
transaction, provided that notice (including electronic notice) of such
cancellation shall be given to each holder of an Option, and each holder of an
Option shall have the right to exercise such Option in full based on payroll
deductions then credited to his account as of a date determined by the Board or
the Committee, which date shall not be less than ten (10) days preceding the
effective date of such transaction.
17. Amendment of the Plan. The Board may at any time, and from time to
time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the stockholders of the Company is required by Section 423 of
the Code, such amendment shall not be effected without such approval, and (b) in
no event may any amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
18. Insufficient Shares. In the event that the total number of shares of
Common Stock specified in elections to be purchased under any Offering plus the
number of shares purchased under previous Offerings under this Plan exceeds the
maximum number of shares issuable under this Plan, the Board or the Committee
will allot the shares then available on a pro rata basis.
19. Termination of the Plan. This Plan may be terminated at any time by
the Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. Governmental Regulations. The Company's obligation to sell and
deliver Common Stock under this Plan is subject to listing on a national stock
exchange or quotation on the Nasdaq National Market (to the extent the Common
Stock is then so listed or quoted) and the approval of all governmental
authorities required in connection with the authorization, issuance or sale of
such stock.
21. Governing Law. The Plan shall be governed by Delaware law except to
the extent that such law is preempted by federal law.
22. Issuance of Shares. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.
23. Notification upon Sale of Shares. Each employee agrees, by entering
the Plan, to promptly give the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the Option pursuant to which such shares were purchased.
24. Effective Date and Approval of Shareholders. The Plan shall take
effect upon the effectiveness of the Company's registration statement under the
Securities Act of 1933, as amended, relating to the Company's initial public
offering of Common Stock, subject to
-6-
approval by the stockholders of the Company as required by Section 423 of the
Code, which approval must occur within twelve months of the adoption of the Plan
by the Board.
Adopted by the Board of Directors
on September 30, 1999
Approved by the stockholders
on September 30, 1999
-7-
CAMINUS CORPORATION
AMENDMENT NO. 1
TO
1999 EMPLOYEE STOCK PURCHASE PLAN
Section 17 of the 1999 Employee Stock Purchase Plan (the "Plan") of
Caminus Corporation, a Delaware corporation, is hereby amended and restated in
its entirety as follows:
"Amendment of the Plan. The Board may at any time, and from time to time,
amend this Plan in any respect."
Except to the extent amended hereby, the Plan is in all respects hereby
ratified and confirmed and shall continue in full force and effect.
Approved by the Board of Directors on
October 30, 2001.
CAMINUS CORPORATION
AMENDMENT NO. 2
TO
1999 EMPLOYEE STOCK PURCHASE PLAN
The second sentence of the first paragraph of the 1999 Employee Stock
Purchase Plan (the "Plan") of Caminus Corporation, a Delaware corporation, is
hereby amended and restated in its entirety as follows:
"Five hundred ninety-five thousand, two hundred thirty-eight (595,238)
shares of Common Stock in the aggregate have been approved for this purpose."
Except to the extent amended hereby, the Plan is in all respects hereby
ratified and confirmed and shall continue in full force and effect.
Approved by the Board of Directors on
October 30, 2001.
Appendix C
CAMINUS CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 2002
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
AND SHOULD BE RETURNED AS SOON AS POSSIBLE
The undersigned, having received notice of the Annual Meeting of Stockholders
and the Board of Directors' proxy statement therefor, and revoking all prior
proxies, hereby appoint(s) David M. Stoner, Lawrence D. Gilson and Joseph P.
Dwyer, and each of them, attorneys or attorney of the undersigned (with full
power of substitution in them and each of them) for and in the name(s) of the
undersigned to attend the Annual Meeting of Stockholders of CAMINUS CORPORATION
(the "Company") to be held on Wednesday, April 24, 2002, at 10:00 a.m., at The
Penn Club, 30 West 44th Street, New York, NY, and any adjournments thereof, and
there to vote and act upon the following matters proposed by the Company in
respect of all shares of stock of the Company which the undersigned may be
entitled to vote or act upon, with all the powers the undersigned would possess
if personally present. None of the following proposals is conditioned upon the
approval of any other proposal.
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournments thereof. The shares
represented by this proxy will be voted as directed by the undersigned. IF NO
DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR PROPOSAL, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF
DIRECTORS. Attendance of the undersigned at the meeting or at any adjournment
thereof will not be deemed to revoke this proxy unless the undersigned shall
revoke this proxy in writing.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES
SHALL VOTE "FOR" EACH OF THE DIRECTOR NOMINEES AND "FOR" EACH OF PROPOSALS 2, 3
AND 4.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
[x] Please mark your votes as in this example using dark ink only.
1. To elect the following two nominees for Class III Director to serve for
the ensuing three years:
Nominees:
Christopher S. Brothers [ ] FOR BOTH [ ] WITHHOLD
David M. Stoner NOMINEES AUTHORITY
(EXCEPT AS MARKED FOR BOTH
BELOW) NOMINEES
(Instruction: To withhold a vote for an individual nominee, write the name
of such nominee in the space provided below. Your shares will be voted for
the remaining nominee.)
---------------------------------
2. To approve an amendment to the Company's 1999 Stock Incentive Plan,
increasing the number of shares of the Company's Common Stock authorized
for issuance thereunder from 1,218,943 to 1,418,943 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Company's 1999 Employee Stock Purchase
Plan, increasing the number of shares of the Company's Common Stock
authorized for issuance thereunder from 95,238 to 595,238 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE.
A VOTE "FOR" EACH OF THE DIRECTOR NOMINEES AND A VOTE "FOR" EACH OF
PROPOSALS 2, 3 AND 4 ARE RECOMMENDED BY THE BOARD OF DIRECTORS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT
THEREOF.
MARK HERE MARK HERE IF YOU
FOR ADDRESS [ ] PLAN TO ATTEND THE [ ]
CHANGE AND MEETING
NOTE AT LEFT
Dated: ________________________, 2002
___________________________________
Signature
___________________________________
Signature if held jointly
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY
JOINT OWNERS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY AUTHORIZED OFFICER, GIVING
FULL TITLE. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON, GIVING FULL TITLE.