EXHIBIT (a)(3)
CAMINUS CORPORATION 825 Third Avenue
New York, New York 10022
Tel: (212) 515-3600
Fax: (212) 893-8747
October 28, 2002
Dear Caminus Employee:
Caminus Corporation (the "Company") recognizes that, as a result of
recent difficult market conditions, many of the stock options granted to date
under the Company's stock option plans may not currently be providing the
performance incentives for our valued employees that were intended. In order to
align performance incentives with equity participation, we are pleased to
announce that the Company is offering you the opportunity to exchange your
currently outstanding options (vested and unvested) that have an exercise price
per share greater than $10.00 for new options.
The new options will be granted on one of the first five trading days,
in the Company's sole discretion, that is at least six months and one day after
the date of cancellation of the existing options. The number of shares covered
by each new option will be equal to the number of shares covered by the old
option that was exchanged for such new option, subject to adjustments for any
stock splits, stock dividends and other events affecting our capital structure
that occur before the grant date of the new option.
Each new option will have an exercise price equal to the closing sale
price of our common stock as reported on the Nasdaq National Market (or such
other amount that is determined by our Board of Directors to be the fair market
value) on the date on which the new option is granted. With respect to vesting,
for each old option that is exchanged for a new option:
- - 75% of the shares under the new option will have a new vesting schedule,
pursuant to which such shares will vest as follows: (1) 25% of such shares
will vest on the six month anniversary of the new grant date, and (2) the
remaining shares will vest in 36 equal monthly installments on the same day
of the month as the new grant date commencing in the 7th month following the
new grant date; and
- - 25% of the shares under the new option will be fully vested on the new grant
date.
Notwithstanding whether any old option tendered for exchange is a
non-qualified stock option or an incentive stock option, the Company will grant
the new option issued in exchange for such old option as either a non-qualified
stock option or an incentive stock option, in its sole discretion.
You may tender (surrender) all or some of your eligible options to the
Company in exchange for new options; however, you must tender the full option
grant with respect to any options that you tender. In addition, if you choose to
participate in the exchange offer, then you must tender all options that were
granted to you during the six months immediately prior to the expiration date of
the exchange offer, currently expected to be November 26, 2002, even if such
options have an exercise price less than or equal to $10.00 per share. In other
words, if you choose to tender any option grant for exchange, then you must also
tender all options with a grant date on or after May 26, 2002
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(assuming that the expiration date of the exchange offer is November 26, 2002)
even if any of those options have an exercise price less than or equal to $10.00
per share.
You also have the right to choose not to tender any of your options.
To give you a sense of how the exchange offer will work, here are a few
examples:
- If you hold one option to purchase 1,000 shares of our common stock
at an exercise price of $20.00 per share and another option to
purchase 500 shares of common stock at an exercise price of $12.00
per share, then you may tender none, one or both of these options,
but you may not tender an option for less than the full number of
shares of common stock subject to the original option. In other
words, in this example, you could not tender only 750 shares of your
1,000-share option.
- If you were granted an option to purchase 1,000 shares of our common
stock at an exercise price of $20.00 per share before May 26, 2002
(assuming that the expiration date of the Offer is November 26,
2002), and you were granted an option to purchase 500 shares of our
common stock at an exercise price of $5.00 per share on or after May
26, 2002, then you may tender none or both of the options, but you
may not tender only one of the two options.
- If you tender an option to purchase 1,600 shares of common stock and
it is cancelled on November 26, 2002, then, assuming that you are
granted a new option on May 27, 2003, the new option granted to you
on that date will be for a total of 1,600 shares. As to 75% of the
new option (1,200 shares), 300 shares will vest on November 27,
2003, and the remaining 900 shares will vest in 36 equal monthly
installments at the rate of 25 shares per month beginning on
December 27, 2003. As to 25% of the new option (300 shares), all 300
shares will be fully vested on May 27, 2003.
We realize that in connection with the exchange offer, we are asking you
to review a significant number of documents. It may seem to you that our
documentation and process is unnecessary, duplicative or overwhelming. However,
all of our communications and our documentation have been prepared to ensure
compliance with U.S. securities laws and have been structured in a manner that
is intended to be clear to you. We do encourage you, for your benefit as well as
for our own, to carefully review all of the materials provided and to review
your decision carefully.
The documents that you have received are:
- the Offer to Exchange, which sets forth the terms of the Company's
offer to exchange options and includes a helpful summary in the
front;
- a Letter of Transmittal, which you will need to complete and return
to us before the deadline on November 26, 2002, should you choose to
participate in the exchange offer; and
- a Notice of Withdrawal, which you will need to complete and return
to us before the deadline on November 26, 2002, if you have already
returned a Letter of Transmittal but then change your mind and no
longer wish to participate in the exchange offer.
If you choose to participate in the exchange offer, you will need to
return a completed Letter of Transmittal to us no later than 5:00 p.m., Eastern
Standard Time, on November 26, 2002. This
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means that you will be able to return a Letter of Transmittal at any time before
5:00 p.m., Eastern Standard Time, on November 26, 2002; however, any Letters of
Transmittal received by us after 5:00 p.m., Eastern Standard Time, on November
26, 2002, will not be accepted.
The important dates to remember are:
DATE EVENT
- ---------------------------------------------- ---------------------------------------------
October 28 through November 26, 2002 Step 1: Review the enclosed
documents Step 2: Return the
Letter of Transmittal to the
Human Resources Department
representative indicated at the
end of this document should you
choose to participate
in the offer
- ---------------------------------------------- ---------------------------------------------
November 26, 2002 Last day to return your Letter of
Transmittal (or Notice of Withdrawal) to
the Human Resources representative (by 5:00
p.m., Eastern Standard Time)
- ---------------------------------------------- ---------------------------------------------
November 26, 2002 Cancellation of options accepted for
exchange (after 5:00 p.m., Eastern
Standard Time)
- ---------------------------------------------- ---------------------------------------------
One of the First Five Trading Days After
May 26, 2003 New options granted
- ---------------------------------------------- ---------------------------------------------
Please note that neither the Company nor the Board of Directors makes
any recommendation as to whether or not you should participate in the exchange
offer. You must make your own decision whether or not to participate. Should you
choose not to participate, no further action is required of you.
If you have any questions about the exchange offer, please contact the
Human Resources Department representative listed at the end of this document,
after "Frequently Asked Questions."
Sincerely,
William P. Lyons
President and Chief Executive Officer
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FREQUENTLY ASKED QUESTIONS OF
OUR STOCK OPTION EXCHANGE OFFER
TO PARTICIPATE, YOUR RESPONSE IS NEEDED BY
5:00 P.M., EASTERN STANDARD TIME,
ON NOVEMBER 26, 2002
To participate in the exchange offer, you must complete and sign and
date the Letter of Transmittal and return it to the Human Resources Department
representative for the exchange offer by 5:00 p.m., Eastern Standard Time, on
November 26, 2002. This means that you will be able to return a Letter of
Transmittal at any time before 5:00 p.m., Eastern Standard Time, on November 26,
2002; however, any Letters of Transmittal received by us after 5:00 p.m.,
Eastern Standard Time, on November 26, 2002, will not be accepted. If you have
any questions, please contact the Human Resources Department representative
listed at the end of this document.
The following summary addresses some of the principal questions that you
may have regarding our exchange offer. Please read the Offer to Exchange and the
Letter of Transmittal as well, because the information in this summary is not
complete.
WHO CAN PARTICIPATE? Current employees of Caminus or its subsidiaries
with outstanding options that have an exercise price greater than $10.00 per
share and that were granted under the following plans or agreements
(collectively, the "Plans"):
- Caminus LLC 1998 Stock Incentive Plan,
- Caminus Corporation 1999 Stock Incentive Plan,
- Caminus Corporation 2001 Non-Officer Employee Stock Incentive Plan,
and
- Certain Nonstatutory Stock Option Agreements.
The Chief Executive Officer and members of the Board of Directors of
Caminus are not eligible to participate in the exchange offer.
DO I HAVE TO TENDER ALL MY OPTIONS? No. You may tender some, all or none
of your eligible options. However, if you choose to tender an option in the
exchange offer, then you must tender the full number of shares subject to that
option. In addition, if you choose to participate in the exchange offer, then
you must tender all options that were granted to you during the six months
immediately prior to the expiration date of the exchange offer, currently
expected to be November 26, 2002, even if such options have an exercise price
less than or equal to $10.00 per share. In other words, if you choose to tender
any option grant for exchange, then you must also tender all options with a
grant date on or after May 26, 2002 (assuming that the expiration date of the
exchange offer is November 26, 2002), even if any of those options have an
exercise price less than or equal to $10.00 per share.
HOW MANY NEW OPTIONS WILL I RECEIVE? We will grant to you new options
covering the same number of shares of common stock subject to your old options
(subject to adjustment for any stock splits, stock dividends and other events
affecting our capital structure that occur before the grant date of the new
options). New options will be granted under the 1999 Plan, the 2001 Plan or a
nonplan stock option agreement, as to be determined by Caminus in its sole
discretion.
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WHEN WILL I RECEIVE MY NEW OPTIONS? We will grant you new options on one
of the first five trading days, in our sole discretion, that is at least six
months and one day following the date on which we cancel the exchanged options.
We expect that, after the close of business on the date the exchange offer
expires, we will cancel the options accepted for exchange. If the exchange offer
expires on November 26, 2002, as currently planned, we expect that the new
options will be granted on one of the first five trading days after May 26,
2003.
WHAT WILL BE THE EXERCISE PRICE OF THE NEW OPTIONS? Each new option will
have an exercise price equal to the closing price of our common stock as
reported on the Nasdaq National Market (or such other amount that is determined
by the Board of Directors to be the fair market value) on the date on which we
grant the new options.
WHEN WILL THE NEW OPTIONS VEST? For each old option that is exchanged
in the exchange offer for a new option:
- - 75% of the shares under the new option will have a new vesting schedule,
pursuant to which such shares will vest as follows: (1) 25% of such shares
will vest on the six month anniversary of the new grant date, and (2) the
remaining shares will vest in 36 equal monthly installments on the same day
of the month as the new grant date commencing in the 7th month following the
new grant date; and
- - 25% of the shares under the new option will be fully vested on the new grant
date.
IF MY OLD OPTIONS ARE NON-QUALIFIED STOCK OPTIONS, WILL MY NEW OPTIONS
BE NON-QUALIFIED STOCK OPTIONS? IF MY OLD OPTIONS ARE INCENTIVE STOCK OPTIONS,
WILL MY NEW OPTIONS BE INCENTIVE STOCK OPTIONS?
Notwithstanding whether the old option that you tender for exchange is a
non-qualified stock option or an incentive stock option, we will grant the new
option issued in exchange for such old option as either a non-qualified stock
option or an incentive stock option, in our sole discretion.
For instance, if the old option that you tender for exchange is a
non-qualified stock option exercisable for 1,000 shares of common stock, then we
will decide, in our sole discretion, whether your new option will be a
non-qualified stock option exercisable for 1,000 shares of common stock or an
incentive stock option exercisable for 1,000 shares of common stock. Likewise,
if the old option that you tender for exchange is an incentive stock option
exercisable for 1,000 shares of common stock, then we will decide, in our sole
discretion, whether your new option will be an incentive stock option
exercisable for 1,000 shares of common stock or a non-qualified stock option
exercisable for 1,000 shares of common stock.
WILL I RECEIVE ANY NEW OPTIONS IF I TENDER MY OLD OPTIONS BUT AM
TERMINATED BEFORE THE EXCHANGE OFFER EXPIRES? If you tender your options and,
for any reason, your employment with Caminus or one of its subsidiaries
terminates before the exchange offer expires, then you can withdraw your
tendered options before the expiration of the exchange offer. You may be able to
exercise them for a period of time after your termination, as specified in your
option grant document. If you do not withdraw your tender on a timely basis, or
if you withdraw your tender but do not exercise your options within the
specified time, if applicable, then you will forfeit those options.
WHAT WILL HAPPEN IF I AM TERMINATED AFTER THE EXCHANGE OFFER EXPIRES BUT
BEFORE THE NEW OPTIONS ARE GRANTED? If you tender your options, then to receive
a grant of new options, you must remain an employee of Caminus or one of its
subsidiaries from the date on which you
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tender your options through the date on which we grant the new options. If, for
any reason, you are not one of our employees from the date on which you tender
your options through the date on which we grant the new options, then you will
not receive any new options or any other consideration in exchange for your
tendered options. This means that if your employment terminates for any reason,
then you will not receive anything for the options that you tendered and we
cancelled.
WHAT WILL HAPPEN IF A CHANGE IN CONTROL OF CAMINUS OCCURS DURING THE
PERIOD AFTER I HAVE TENDERED MY OPTIONS BUT BEFORE NEW OPTIONS HAVE BEEN
GRANTED?
Our Board of Directors has a duty to consider alternatives for
maximizing stockholder value, and we cannot ignore the possibility that a
transaction could be proposed that our stockholders or our Board of Directors
believes is in the best interests of Caminus and our stockholders. Prior to the
expiration of the exchange offer, we reserve the right to terminate the exchange
offer upon the occurrence of certain events, including if a tender or exchange
offer with respect to some or all of our common stock or a merger acquisition
proposal for us is proposed, announced or made by another person or entity or is
publicly disclosed.
If we are acquired during the period between the date of our acceptance
of the tendered options and the date on which the new options are to be granted,
then the acquiror will be obligated to honor our contractual obligation to grant
the new options. Such new options granted by the acquiror would have similar
terms as the new options that we would have granted without a change in control.
However, depending on the terms of the acquisition, the new options granted to
you may entitle you to purchase shares of stock of the acquiror. The new options
may be less valuable than the options you would have received without a change
in control.
WHAT HAPPENS TO MY OPTIONS IF I DECIDE TO PARTICIPATE IN THE EXCHANGE
OFFER? If you decide to participate, then all options that we accept for
exchange will be cancelled, and you will have no further right or interest in
those options, whether vested or unvested.
WHAT HAPPENS IF I DECIDE NOT TO PARTICIPATE IN THE EXCHANGE OFFER? If
you do not participate, then you will keep your current options (with the same
exercise price and vesting schedule) and will not receive any new options under
the exchange offer.
CAN I CHANGE MY MIND? Yes. If you turn in a Letter of Transmittal,
you can change your mind by delivering a Notice of Withdrawal of Tender to us
before the exchange offer expires, which is currently scheduled for 5:00 p.m.,
Eastern Standard Time, on November 26, 2002.
WHAT IS THE TAX TREATMENT OF THE EXCHANGE OFFER? We believe that you
will not be required under current U.S. tax law to recognize income for federal
income tax purposes at the time of the exchange. Furthermore, on the date of
grant of the new options, we believe that you will not be required under current
U.S. tax law to recognize income for federal income tax purposes. Note that if
you reside or work in a different country, then you may be subject to different
tax consequences if you exchange your options in the exchange offer. We
recommend that you consult with your own tax advisor to determine the tax
consequences of the exchange offer.
WHAT DOES THE COMPANY RECOMMEND THAT I DO? Although our Board of
Directors has approved the exchange offer, neither we nor our Board of Directors
makes any recommendation as to whether or not you should tender your options for
exchange. You must make your own decision whether or not to tender your options.
For questions regarding tax implications or other investment-related questions,
you should talk to your own legal, investment and/or tax advisors.
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WHY HAVE I RECEIVED SO MANY DOCUMENTS? We have provided you with a
significant number of documents, each of which is in satisfaction of our legal
and disclosure obligations. We recommend that you take the time to review the
enclosed materials before making any decision with regard to the exchange offer.
Human Resources Department Representative for the Exchange Offer:
Attention: Stephanie Shaw
Caminus Corporation
825 Third Avenue
New York, New York 10022
Tel: (212) 515-3600
Fax: (212) 893-8747
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