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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Bindview Development 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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):
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5) Total fee paid:
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[ ] 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.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS
FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB
CONTROL NUMBER.
SEC 1913 (11-01)
(BINDVIEW LOGO)
BindView Development Corporation
Notice of 2003 Annual Meeting
Proxy Statement
2002 Annual Report on Form 10-K
CONTENTS
LETTER TO SHAREHOLDERS
NOTICE OF 2003
ANNUAL MEETING AND PROXY STATEMENT
2002 ANNUAL REPORT
ON FORM 10-K
Dear Shareholders, Customers, and Friends
The year 2002 was challenging for BindView, but it also contained the seeds of
optimism for the company's future. I am encouraged by the overall progress we
made in improving our operating efficiency and our sales and marketing
effectiveness in a difficult economic environment.
* * *
I am pleased to invite you to attend BindView Development Corporation's 2003
annual meeting of shareholders. The meeting will begin at 9:00 a.m. on Thursday,
August 21, 2003, at BindView's corporate offices, at 5151 San Felipe, Houston,
Texas 77056.
The formal notice of meeting, proxy statement, and annual report on Form 10-K,
all of which follow this letter, describe the matters which the shareholders
will consider and vote on at the meeting. We encourage you to read these
materials.
We have enclosed a proxy card so that you may grant your proxy to be voted as
you indicate. Your vote is important. PLEASE COMPLETE, SIGN, DATE, AND MAIL YOUR
PROXY CARD PROMPTLY, whether or not you plan to attend the annual meeting. If
you attend the meeting you may vote in person even if you have mailed a signed
and dated proxy.
The Board of Directors recommends that you approve the proposals described in
the proxy statement.
I look forward to seeing you at the meeting. Thank you for your continued
support.
/s/ Eric J. Pulaski
Eric J. Pulaski
Chairman, President, and
Chief Executive Officer
NOTICE OF 2003 ANNUAL MEETING AND PROXY STATEMENT
(BINDVIEW LOGO)
BINDVIEW DEVELOPMENT CORPORATION
5151 SAN FELIPE, 25TH FLOOR
HOUSTON, TEXAS 77056
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------
BindView Development Corporation will hold its 2003 annual meeting of
shareholders at 9:00 a.m. on Thursday, August 21, 2003, at BindView's corporate
offices located at 5151 San Felipe, Houston, Texas 77056.
At the meeting, the shareholders will:
o elect two directors;
o consider and vote on an amendment to the BindView Development
Corporation 1999 Employee Stock Purchase Plan increasing the aggregate
number of shares of BindView common stock available for issuance under
that plan by 1 million shares; and
o transact any other business that may properly come before the meeting.
By order of the Board of Directors,
/s/ D. C. Toedt III
D. C. Toedt III
Vice President, General Counsel,
and Secretary
Houston, Texas
July 21, 2003
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
BINDVIEW DEVELOPMENT CORPORATION
PROXY STATEMENT
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This proxy statement relates to the solicitation of proxies by the Board of
Directors of BindView Development Corporation for use at BindView's 2003 annual
meeting of shareholders or any adjournment(s) thereof. The meeting will be held
at 9:00 a.m. on Thursday, August 21, 2003, at BindView's corporate offices
located at 5151 San Felipe, Houston, Texas 77056.
You are entitled to vote at that meeting if you were a holder of record of
BindView's common stock at the close of business on July 15, 2003. On July 21,
2003, we began mailing to shareholders entitled to vote at the meeting a proxy
card along with our annual report including this proxy statement and our Report
on Form 10-K for the fiscal year ending December 31, 2002. On July 15, 2003,
there were 46,653,643 shares of BindView's common stock outstanding. Each share
of common stock entitles the holder to one vote on each matter considered at the
meeting.
Your proxy card will appoint Eric J. Pulaski and Edward L. Pierce as proxy
holders to vote your shares as you indicate. If you sign, date and return your
proxy card without specifying any voting instructions, the proxy holders will
vote your shares FOR the election of the director nominees named in this proxy
statement and as otherwise specified on the proxy card and FOR the amendment to
BindView's employee stock purchase plan (ESPP).
Signing, dating and returning your proxy card does not preclude you from
attending the meeting and voting in person. If you submit more than one proxy,
the latest-date proxy will automatically revoke your previous proxy. You may
revoke your proxy at any time before it is voted at the meeting by (i)
delivering a signed written revocation letter, dated later than the proxy, to
BindView, attention: D. C. Toedt; or (ii) attending the meeting and voting in
person or by proxy. Attending the meeting, however, will not automatically
revoke your proxy.
On the enclosed form of proxy, you may vote for or withhold authority to
vote for the director nominees listed in this proxy statement.
The Board expects the nominees named in this proxy statement to be available
for election. If the nominees are not available, and you have submitted a signed
and dated proxy card that does not withhold authority to vote for the nominees,
the proxy holders may vote your shares for a substitute nominee. We are not
aware of any matters to be brought before the meeting other than those described
in this proxy statement. If you sign, date and mail your proxy card, and any
other matters are properly brought before the meeting, the persons named in the
enclosed proxy will have discretionary authority to vote your shares regarding
such matters.
No business can be conducted at the meeting unless a majority of all
outstanding shares entitled to vote are either present at the meeting in person
or represented by proxy.
Representatives of Mellon Investor Services L.L.C., the transfer agent and
registrar for the common stock, will act as the independent inspector of
election.
Share information in this proxy statement gives effect to the one-for-one
stock dividend paid by BindView on February 17, 2000 (the "Stock Split"), unless
indicated otherwise.
PROPOSAL 1: ELECTION OF DIRECTORS
At the meeting, you the shareholders will elect the two Class II directors.
The Board is comprised of six directors divided into three classes, each class
being composed as equally in number as possible in accordance with BindView's
Amended and Restated Articles of Incorporation. The classes have staggered
three-year terms, with the term of one class expiring at each annual meeting of
shareholders.
The directors in Class II, whose terms expire at the meeting, are Armand S.
Shapiro and Edward L. Pierce. Messrs. Shapiro and Pierce are nominated to serve
in Class II for another term expiring at the 2006 annual meeting of
shareholders.
The directors in Class III are serving a term that expires at the 2004
annual meeting of shareholders.
The directors in Class I are serving terms that expire at the 2005 annual
meeting of shareholders.
Each of the two nominees who receive the most votes at the 2003 annual
meeting will be elected to the open directorships in Class II even if he
receives less than a majority of the votes cast. Abstentions and broker
non-votes will not be treated as a vote for or against any particular director
nominee and will not affect the outcome of the election.
<Table>
<Caption>
DIRECTOR
AGE POSITION SINCE
--- ----------------------------------------- --------
NOMINEES FOR CLASS II DIRECTORS
Armand S. Shapiro (a)(b) 62 Director 2001
Edward L. Pierce 46 Director; Senior Vice President and CFO 2001
CLASS III DIRECTORS
Peter T. Dameris (a)(b) 43 Director 2002
Eric J. Pulaski 40 Chairman of the Board, President, and CEO 1990
CLASS I DIRECTORS
Richard A. Hosley II (a)(c) 58 Director 1998
Robert D. Repass (b) 43 Director 2003
</Table>
- ----------
(a) Member of the Compensation Committee. Mr. Shapiro was appointed
to the Compensation Committee on February 21, 2002. Mr. Dameris
was appointed to the Compensation Committee on August 15, 2002.
(b) Member of the Audit Committee. Mr. Dameris was appointed to the
Audit Committee on August 15, 2002. Mr. Repass was appointed to
the Audit Committee and designated as its chairman on January
27, 2003.
(c) Mr. Hosley was a member of the Audit Committee in 2002 and in
2003 until he stepped down from that committee on January 27,
2003.
DIRECTORS AND NOMINEES
BACKGROUND OF DIRECTORS AND DIRECTOR NOMINEES
Peter T. Dameris has served as a director of BindView since August 2002. Mr.
Dameris is a private investor. He served as executive vice president and chief
operating officer of Quanta Services, a publicly traded infrastructure services
company, from February 2001 until October 31, 2002. From 1994 through September
2000, Mr. Dameris was employed by Metamor Worldwide Inc., a publicly traded IT
consulting company ("Metamor"), where he held a variety of positions including
chairman of the board and chief executive officer, executive vice president,
senior vice president of strategy and development, and general counsel.
Richard A. Hosley II has served as a director of BindView since January
1998. Since October 1990, Mr. Hosley has been a private investor. From 1980 to
1990, Mr. Hosley was employed by BMC, where he held a variety of positions
including vice president of sales and marketing, president, chief executive
officer and vice chairman.
Edward L. Pierce has served as BindView's senior vice president and chief
financial officer since May 1, 2001, and as a director since July 26, 2001.
Before joining BindView, Mr. Pierce was employed by Metamor from November 1994
until January 2001, most recently as executive vice president and chief
financial officer. He served as a director of Metamor from October 1999 until
Metamor's acquisition by PSINet Inc. in June 2000.
-2-
Eric J. Pulaski founded BindView in May 1990 and served as BindView's
chairman of the board, president and chief executive officer from its inception
until January 2000, at which time he became chairman of the board and chief
technology officer. He returned as president and chief executive officer in July
2001.
Robert D. Repass has served as a director of BindView since January 2003.
Since April 2002, Mr. Repass has been vice-president and chief financial officer
of Motion Computing, Inc. in Austin, Texas. From March 2000 to December 2001,
Mr. Repass was a partner with TL Ventures, a venture capital investment firm
with focus on funding early stage technology companies. From 1997 to March 2000,
Mr. Repass was a partner at PricewaterhouseCoopers LLP where he served as the
office managing partner for the Austin practice. Mr. Repass serves on the board
of directors and as chairman of the audit committee of Multimedia Games, Inc., a
publicly traded company that develops, implements, and supports high-speed
interactive gaming.
Armand S. Shapiro has served as a director of BindView since October 2001.
Mr. Shapiro has been the chairman of MessagePro, Inc., a Houston-based telephone
answering service company, since February 2002, where he served as chief
executive officer from February 2002 until January 2003. Mr. Shapiro is also the
chairman and chief executive officer of Garden Ridge Corporation, where he has
served as chairman since June 1990 and as chief executive officer since March
2003; he previously served as chief executive officer from June 1990 to June
1999. Mr. Shapiro serves as a senior advisor to Summit Capital Group, LLC, a
private equity investment firm, and as a director of SSP Holdings, Inc.
COMPENSATION OF DIRECTORS
We reimburse our directors for out-of-pocket expenses incurred in attending
Board meetings. In addition, non-employee directors receive $2,000 per meeting
for attending Board meetings in person and $1,000 per meeting for attending by
telephone, as well as $750 per meeting for attending committee meetings in
person and $500 per meeting for attending by telephone.
Our non-employee directors received initial- and annual grants of options to
acquire our common stock under our 1998 Non-Employee Directors Stock Option
Plan, as follows:
<Table>
<Caption>
EXERCISE
NAME NO. OPTIONED SHARES PRICE
- -------------- ---------------------- --------
Mr. Dameris Initial grant: 100,000 $0.95
Mr. Hosley Initial grant: 100,000 $1.92
Nov. 2002: 25,000 $0.99
Mr. Repass Initial grant: 100,000 $1.34
Mr. Shapiro Initial grant: 100,000 $0.99
Nov. 2002: 25,000 $0.99
</Table>
These options vest in installments over four years, except that they vest in
full if BindView is subject to a change in control (as defined in that plan) or
if the optionee dies or becomes disabled. The options expire ten years from the
date of grant or, if earlier, 90 days after the optionee ceases to be a director
or 12 months after the optionee's death.
MEETING ATTENDANCE
During 2002, the full Board met seven times; all directors attended, in
person or by telephone, at least 75% of all meetings held by the Board and by
the committees on which the directors served during the period of time that such
person served on the Board or on such committees.
INDEBTEDNESS OF DIRECTORS
Mr. Pierce is indebted to the Company in the amount of $788,000 plus accrued
interest, in the form of a full-recourse promissory note dated December 31,
2001, at 3% interest, due on or before April 30, 2005. The promissory note is in
payment, at fair market value, of 400,000 shares of the Company's restricted
common stock granted to Mr. Pierce on December 31, 2001. Payment of the note is
secured by a security interest in such shares. See also the note concerning Mr.
Pierce's compensation following the table under the heading "Summary of
Executive Com-
-3-
pensation" as well as the discussion under the heading "Employment Agreements
and Change of Control Agreements of Named Executive Officers."
COMMITTEES OF THE BOARD
The Board of Directors has no executive committee or nominating committee.
ADMINISTRATIVE COMMITTEE
The Board has an Administrative Committee to approve routine administrative
matters such as resolutions required by banks and other financial institutions
to open accounts. Mr. Pulaski and Mr. Pierce are the members of the
Administrative Committee. In 2002 the Administrative Committee acted by written
consent five times.
AUDIT COMMITTEE
The Board has an Audit Committee, for which the Board has adopted a written
charter, a copy of which was included in the proxy statement for BindView's 2001
annual meeting. The Audit Committee met eight times in 2002. The Audit Committee
recommends the independent public auditors appointed by the Board to audit our
financial statements and reviews issues raised by those auditors as to the scope
of their audit and their audit report, including any questions and
recommendations they may have relating to our internal accounting and auditing
procedures. In 2002, the Audit Committee was composed of Messrs. Bloom, Hosley,
and Shapiro until Mr. Bloom's resignation from the Board on August 1, 2002. Mr.
Dameris was appointed to the Audit Committee on August 15, 2002. Mr. Repass was
appointed to the Audit Committee on January 27, 2003, at which time Mr. Hosley
stepped down from the Audit Committee. Each of Messrs. Bloom, Dameris, Hosley,
Repass, and Shapiro are, or during their service were, independent directors as
defined by Rule 4200(a)(14) of the National Association of Securities Dealers
listing standards.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board, which is composed of three non-employee
directors, has furnished the following report.
The Audit Committee has reviewed and discussed with management BindView's
audited financial statements for the year 2002 audited by PricewaterhouseCoopers
LLP, BindView's principal independent public accountants, has discussed with the
independent accountants the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380), has received
the written disclosures and the letter from the independent accountants required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees) and has discussed with the independent accountants the
independent accountant's independence. Based on the foregoing reviews and
discussions, the Audit Committee has recommended to the Board that the company's
financial statements audited by PricewaterhouseCoopers LLP should be included in
BindView's annual report on Form 10-K for 2002.
AUDIT COMMITTEE:
Peter T. Dameris
Robert D. Repass (Chair)
Armand S. Shapiro
-4-
COMPENSATION COMMITTEE
The Compensation Committee approves the compensation to be paid to our
executive officers and to the members of the Board, as well as grants of stock
options and restricted stock awards to such individuals. The Compensation
Committee met eight times and acted by written consent once in 2002. In 2002,
the Compensation Committee was composed of Messrs. Bloom, Hosley, and Shapiro
until Mr. Bloom's resignation from the Board in August 2002. Mr. Dameris was
appointed to the Compensation Committee in August 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer or employee of
BindView or any of its subsidiaries during fiscal 2002. No executive officer of
BindView served during fiscal 2002 as a director or as a member of the
Compensation Committee of another entity, one of whose executive officers served
as a director or on the Compensation Committee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board, which is composed of non-employee
directors, has furnished the following report on executive compensation.
BindView's executive compensation program is designed to attract, motivate
and retain talented management personnel and to reward management for the
company's successful financial performance and for increasing shareholder value.
BindView's compensation program consists of three principal elements: base
salary, performance bonus and stock options. Together these elements comprise
total compensation value. The Compensation Committee believes that the total
compensation program for executives of BindView is competitive with the
compensation programs provided by other comparable companies.
Base Salary: The Compensation Committee periodically reviews base salaries
of executive officers, including the executive officers named in the "Summary of
Executive Compensation" discussion below. The factors considered in setting
salaries include (but are not necessarily limited to) salaries paid to persons
holding comparably-responsible positions at other similarly-situated companies;
the applicable cost of living; the company's overall financial performance; the
individual's past performance and potential with the company; and input from the
chief executive officer. The consideration of additional factors and the weight
given to any particular factor are within the discretion of the Compensation
Committee.
CEO Compensation: The base salary, bonus, and option grant for Eric J.
Pulaski in 2002 were based on his position, responsibility, level of experience,
and on his individual performance and BindView's performance. In April 2002, Mr.
Pulaski was granted options, under BindView's 1998 Omnibus Incentive Plan, to
purchase 100,000 shares of BindView's common stock at its fair market value on
the date of the grant ($1.545 per share); these options vest over four years.
Annual Performance Bonuses: Total compensation for executive officers also
includes cash bonuses in accordance with BindView's senior-executive bonus plan,
with the on-target amount for each incumbent executive officer being specified
in the executive officer's employment agreement with BindView, based on the same
factors as described above for executive-officer salaries. Only partial cash
bonus awards were paid in 2002, based on BindView's financial performance for
the fiscal year ended December 31, 2001.
Stock Options: Total compensation for executives also includes long term
incentives in the form of stock options, which are generally provided through
initial stock option grants at the date of hire and periodic additional stock
option grants. Stock options are instrumental in promoting the alignment of
long-term interests between BindView's management and shareholders because an
option holder realizes gains only if the stock price increases over the fair
market value at the date of grant. In determining the amount of option grants,
we evaluate the position of the employee, responsibility of the employee and
overall compensation package. All options are granted at a strike price of at
least fair market value at the date of grant. The long-term value realized by
management through option exercises is directly linked to the enhancement of
shareholder value.
-5-
Applicable Tax Code Provision. The compensation committee has reviewed the
potential consequences for BindView of Section 162(m) of the Internal Revenue
Code, which limits the tax deduction a company can claim for annual compensation
in excess of $1 million to certain executives. This limit did not affect
BindView in 2002. While the Company strives to ensure that it will be able to
deduct the compensation it pays, if compliance with Section 162(m) conflicts
with the Company's compensation philosophy, or with what is believed to be in
the best interests of the Company and its stockholders, the Company may conclude
that paying non-deductible compensation is more consistent with that philosophy
and in the Company's and stockholders' best interests.
COMPENSATION COMMITTEE:
Peter T. Dameris
Richard A. Hosley II
Armand S. Shapiro (Chair)
SPECIAL COMMITTEE ON EMPLOYEE OPTIONS
The Board has established a Special Committee on Employee Options to approve
the granting of stock options to non-executive-officer employees of the Company
and its subsidiaries. Eric J. Pulaski is the sole member of that committee. The
committee acted by written consent 28 times in 2002.
EXECUTIVE OFFICERS AND COMPENSATION
The following table shows the names, ages and titles of our executive
officers and certain other management personnel as of July 15, 2003. All our
executive officers hold office until their respective successors are duly
elected and qualified or their earlier resignation or removal.
<Table>
<Caption>
NAME AGE POSITION
- ---- --- ------------------------------------------------------------------
Eric J. Pulaski ............. 40 Chairman, President, and Chief Executive Officer
Edward L. Pierce ............ 46 Senior Vice President and Chief Financial Officer
Ronald E. Rosenthal ......... 51 Senior Vice President of Worldwide Marketing
Jeffrey E. Margolis *........ 41 Senior Vice President of Business Development
Gary S. Margolis ............ 38 Senior Vice President of Research and Development
and Chief Technology Officer
Kevin P. Cohn ............... 34 Vice President, Corporate Controller, and Chief Accounting Officer
David S. Flame .............. 40 Vice President, Americas Sales and Field Operations
David E. Lloyd .............. 56 Vice President, International Sales and Field Operations
D. C. Toedt III *............ 48 Vice President, General Counsel, and Secretary
</Table>
* Not an "executive officer" as defined in applicable SEC regulations.
For information regarding Mr. Pulaski's and Mr. Pierce's backgrounds, see
the discussion above under the heading "Background of Directors and Director
Nominees."
Ronald E. Rosenthal has been BindView's Senior Vice President of Worldwide
Marketing since November 2002. From 1997 to 2000, he served as vice president /
marketing for Harbinger Corporation in Atlanta before its acquisition by
Peregrine Systems, where he continued to serve as vice president / marketing on
multiple assignments through 2002. From 1991 to 1996, Mr. Rosenthal was vice
president / marketing for Scientific Software, Inc., in Atlanta.
Jeffrey E. Margolis joined BindView in March 1998; he currently serves as
Senior Vice President of Business Development. From October 1996 until joining
BindView, he worked in investment and merchant banking as a vice president of
GulfStar Group, Inc., an affiliate of International Bancshares Corporation. He
is the brother of Gary S. Margolis.
Gary S. Margolis has worked in software development at BindView since 1992;
he became Senior Vice President of Research and Development and Chief Technology
officer in July 2001. He is the brother of Jeffrey E. Margolis.
-6-
Kevin P. Cohn has been BindView's Vice President and Corporate Controller
since joining the company in May 2001; he was elected Chief Accounting Officer
in July 2001. From December 1997 until January 2001 he was employed by Metamor,
most recently as Vice President, Corporate Controller, and Chief Accounting
Officer. Before that, Mr. Cohn was employed by Ernst & Young LLP where he served
most recently as an Audit Manager.
David S. Flame has been BindView's Vice President, Americas Sales and Field
Operations since December 2002. From February 2002 to June 2002 he was employed
by Alphablox Corporation as senior vice president - worldwide sales and
services. From May 1995 to October 2001 he was employed by BMC Software, Inc.,
most recently as vice president-sales for the Americas Northeast and as vice
president-sales and operations for Latin America.
David E. Lloyd has been BindView's Vice President of International Sales and
Field Operations since November 2002. From 1996 to 2002 he was employed by
Visual Numerics Inc., a privately held company based in Houston, in various
executive capacities.
Kenneth D. Naumann was BindView's Vice President of Sales for the Americas
from 1999 until his resignation effective January 1, 2003. He joined BindView in
1993 and previously served as a sales representative, sales manager, and
director of sales.
D. C. Toedt III is BindView's Vice President, General Counsel, and
Secretary. From 1983 until joining BindView in October 1999, he was a practicing
attorney at Arnold, White & Durkee, P.C. (now Howrey Simon Arnold & White LLP),
first as an associate and later as a shareholder.
SUMMARY OF EXECUTIVE COMPENSATION
The following table summarizes compensation information for the "Named
Executive Officers," namely (i) each person serving as BindView's Chief
Executive Officer or acting in a similar capacity during the fiscal year ended
December 31, 2002; (ii) BindView's four most highly compensated executive
officers other than the CEO who were serving as executive officers at the end of
such fiscal year, excluding any executive officer, other than the CEO, whose
total annual salary and bonus did not exceed $100,000 for such fiscal year; and
(iii) up to two additional individuals for whom disclosure would have been
provided under clause (ii) but for the fact that the individual was not serving
as an executive officer of BindView at the end of such fiscal year.
<Table>
<Caption>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS(#)(1) COMPENSATION (2)
- ------------------------------------- ------ ------------ ------------ ---------- ------------- ----------------
Eric J. Pulaski (3) ................. 2002 $ 228,125 $ 162,500 -- 100,000 $ 5,500
Chairman & President & 2001 81,250 -- -- -- 2,438
Chief Executive Officer 2000 150,000 -- -- -- 5,250
Edward L. Pierce (4) ................ 2002 200,000 130,000 -- 130,000 5,500
Senior Vice President & 2001 133,333 -- -- -- 3,000
Chief Financial Officer
Gary S. Margolis (5) ................ 2002 165,570 89,232 -- 191,250 5,500
Senior Vice President of 2001 137,280 2,094 -- 50,000 4,181
Research & Development & 2000 133,320 6,250 -- 4,173
Chief Technology Officer
Kevin P. Cohn ....................... 2002 130,625 40,625 -- 50,000 5,138
Vice President, Corporate 2001 73,397 -- -- 100,000 1,875
Controller & Chief Accounting
Officer
William D. Miller (6) ............... 2002 115,353 115,869 -- 75,000 6,000
former Senior Vice President & 2001 191,667 46,936 -- 200,000 5,250
Chief Operating Officer 2000 102,993 104,464 -- 400,000 35,000
Kenneth D. Naumann (7) .............. 2002 196,009 50,000 -- 100,000 5,500
former Vice President of 2001 209,964 -- -- 100,000 5,250
Worldwide Sales 2000 238,537 43,007 -- -- 5,250
</Table>
(1) Gives effect to the Stock Split.
-7-
(2) "All other compensation" includes BindView's contributions to the BindView
Development Corporation 401(k) Profit Sharing Plan. See also the
supplemental notes for certain specific executives, below.
(3) Mr. Pulaski served as President and Chief Executive Officer until January
2000 and as Chairman and Chief Technology Officer from then until July 1,
2001, at which time he resumed the positions of President and Chief
Executive Officer upon Mr. Gardner's resignation. Mr. Pulaski voluntarily
took no salary or bonus in the second half of 2001.
(4) In May of 2001, the Company, under the terms of a restricted stock
agreement, issued 400,000 shares of restricted common stock to Mr. Pierce
at $2.61 per share (its fair market value as of that date) in exchange for
a full recourse, interest-bearing promissory note in the amount of
$1,044,000. The restricted common stock vests over a four-year period from
the date of issuance. At the same time, the Company also entered into an
employment agreement with Mr. Pierce which, among other things, required
the Company to pay Mr. Pierce a guaranteed signing bonus in installments
beginning with the first vesting date of the restricted common stock in
April 2002, in amounts corresponding to the principal and unpaid interest
associated with the price of the vesting shares. At December 31, 2001, the
May agreements were rescinded and new agreements were entered into
reflecting issuance of 400,000 shares to Mr. Pierce at $1.97 per share (its
fair market value as of that date) in exchange for a full recourse,
interest-bearing promissory note in the amount of $788,000, and lowering of
the guaranteed signing bonus in proportion to the reduction in proceeds to
the Company from the stock issuance. In 2002, pursuant to his employment
agreement, Mr. Pierce elected to defer payment of the signing-bonus
installments that came due during that year. See also the discussion below
under the heading "Employment Agreements of Named Executive Officers."
(5) Gary S. Margolis became chief technology officer in July 2001.
(6) Mr. Miller resigned effective in July 2002. For 2000, "all other
compensation" for Mr. Miller includes payments made by BindView on his
behalf in connection with his relocating to Houston, Texas, home of
BindView's corporate headquarters.
(7) Mr. Naumann resigned effective January 1, 2003.
OPTION GRANTS FOR FISCAL YEAR ENDED DECEMBER 31, 2002
This table shows information concerning individual grants of stock options
made during the year ended December 31, 2002, to each of the Named Executive
Officers.
<Table>
<Caption>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
PERCENT OF OF STOCK PRICE APPRECIATION
SHARES OF TOTAL OPTIONS FOR OPTION TERM(1)
COMMON STOCK GRANTED TO EXERCISE ----------------------------
UNDERLYING EMPLOYEES PRICE PER
NAME OPTIONS(#) DURING YEAR SHARE($) EXPIRATION 5%($) 10%($)
- ---------------------- -------------- ------------- ------------- ------------- ---------- ----------
Eric J. Pulaski ...... 100,000 3.2% 1.545 4/2012 97,164 246,233
Edward L. Pierce ..... 130,000 4.1% 1.545 4/2012 126,313 320,103
Gary S. Margolis ..... 130,000 4.1% 1.545 4/2012 126,313 320,103
Gary S. Margolis ..... 61,250 1.9% 1.01 11/2012 38,905 98,593
Kevin P. Cohn ........ 50,000 1.6% 1.545 4/2012 48,582 123,116
William D. Miller (2) 75,000 2.4% 1.545 7/2003 72,873 184,675
Kenneth D. Naumann (3) 100,000 3.2% 1.53 4/2012 96,220 243,842
</Table>
- ----------
(1) The potential realizable value of the options is based on an assumed
appreciation in the price of the common stock at a compounded annual rate
of 5% or 10% from the date the option was granted until the date the option
expires. The 5% and 10% appreciation rates are set forth in the Securities
and Exchange Commission's regulations. BindView does not represent that the
common stock will appreciate at these assumed rates.
(2) Mr. Miller resigned effective in July 2002.
-8-
(3) Mr. Naumann resigned effective January 1, 2003.
OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
This table shows all stock options exercised by the Named Executive Officers
during the fiscal year ended December 31, 2002, and the number and value of
options each held at fiscal year end.
<Table>
<Caption>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT "IN-THE-MONEY" OPTIONS AT
SHARES VALUE DECEMBER 31, 2002(#) DECEMBER 31, 2002($)(1)
ACQUIRED ON REALIZED ------------------------------ ------------------------------
EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
Eric J. Pulaski ......... -- -- -- 100,000 -- --
Kevin P. Cohn ........... -- -- 37,500 112,500 -- --
Gary S. Margolis ........ -- -- 178,750 242,500 -- 26,950
William D. Miller ....... -- -- 75,000 -- -- --
Kenneth D. Naumann ...... -- -- 215,841 237,783 -- --
Edward L. Pierce ........ -- -- -- 130,000 -- --
</Table>
- ----------
(1) The value of the unexercised "in-the-money" options equals the difference
between the option exercise price and the closing price of BindView stock
at fiscal year end, multiplied by the number of shares underlying the
options. The closing price of BindView stock on December 31, 2002, as
reported on the Nasdaq Stock Market, was $1.45.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AGREEMENTS OF NAMED EXECUTIVE
OFFICERS
Of the Named Executive Officers, we have or had employment agreements and
change-of-control agreements with Kevin P. Cohn, Gary S. Margolis, William D.
Miller, Eric J. Pulaski, and Edward L. Pierce.
Under the respective employment agreements between the aforementioned
individuals and BindView, each such individual is entitled to receive (i) a base
salary, plus (ii) contingent incentive bonus compensation based on achievement
of certain management objectives, including revenue and profitability targets,
in accordance with a plan approved by the Compensation Committee of the Board.
BindView may terminate such an individual's employment with or without cause,
and the individual may resign for any reason, in either case by written notice.
The employment agreements provide for different outcomes depending upon the
circumstances of the termination of employment or resignation. If the
individual's employment is terminated by BindView other than for cause or
disability or if the individual resigns for good reason (as defined in the
agreement), then the individual is entitled to a severance period of one year,
during which he continues to receive his base salary along with medical / health
benefits.
Under the respective change-of-control agreements between the aforementioned
individuals (except Mr. Miller) and BindView, each individual's options will
become fully vested in the event of a change of control (as defined in the
agreement), and the individual will be entitled to exercise any vested,
unexercised options for a period of 18 months after the date of termination of
employment. If, in connection with a change of control (as defined in the
agreement), the individual's employment is terminated other than for cause or he
resigns for good reason (as defined in the agreement), then the individual is
entitled to (i) all severance benefits provided in the employment agreement;
(ii) a special severance payment in an amount equal to the individual's annual
base salary; and (iii) continuation of insurance-related benefits for an
additional six months after the end of the time that such benefits are required
to be provided under the employment agreement. If any payment by BindView to the
individual would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code or any interest or penalties with respect to such excise
tax, then the individual is entitled to receive a gross-up payment, in an amount
such that, after payment by the individual of all taxes (including any interest
or penalties imposed with respect to such taxes), including any excise tax
imposed upon the gross-up payment, the individual retains an amount of the
gross-up payment equal to the excise tax imposed upon the payments.
-9-
Mr. Cohn's employment agreement provides for a base salary of $132,500 per
year. Mr. Margolis' employment agreement provides for a base salary of $175,000
per year. Mr. Miller's employment agreement provided for an annual base salary
of $150,000 per year. Mr. Pulaski's employment agreement provides for a base
salary of $225,000 per year.
Mr. Naumann's separation agreement provides for Mr. Naumann to continue to
receive his base salary of $175,000 through December 2003 and to receive a bonus
payment for 2002 in accordance with the 2002 executive bonus plan approved by
the Compensation Committee as described above. (Such bonus payment was made
January 31, 2003 in the amount of $32,812.50.)
Mr. Miller's separation agreement with BindView permits him to exercise his
vested stock options through July 15, 2003. (Mr. Miller exercised those options
in June 2003.)
Mr. Pierce's employment agreement provides for (a) an annual base salary of
$200,000; (b) a guaranteed signing bonus payable in installments, beginning in
April 2002, corresponding to the vesting dates of his 400,000-share restricted
stock award (see also the discussion of the associated promissory note in the
notes to the table under the heading "Summary of Executive Compensation"), but
deferrable at his option; (c) contingent incentive bonus compensation as
described above; and (d) a stock option grant no later than December 31, 2002.
(The stock option grant made pursuant to clause (d) was for 130,000 shares in
accordance with the criteria set forth in Mr. Pierce's employment agreement.) If
Mr. Pierce's employment is terminated by BindView other than for cause or
disability, or if he resigns for good reason (as defined in the agreement), then
he is entitled, in addition to the severance benefits described above for the
other Named Executive Officers, to a series of quarterly bonus payments equal to
an annual bonus of $200,000 (which he may opt to take in a present-value lump
sum discounted at 8% per annum interest). Mr. Pierce's restricted-stock
agreement with the Company requires him, before selling any of his vested
restricted shares, to make certain payments on the principal and interest of his
promissory note to the Company in payment of the purchase price of such shares,
in an amount determined by a schedule in the restricted-stock agreement.
(Continued on next page)
-10-
COMMON STOCK PERFORMANCE COMPARISONS
The following performance graph compares the performance of BindView's
common stock to the Nasdaq Stock Market (U.S.) Index and the Standard & Poor's
Computers (Software & Services) Index. The graph assumes an investment in
BindView's common stock and each index of $100 at June 30, 1998, in the case of
the indexes and at July 24, 1998, the effective date of BindView's initial
public offering, in the case of BindView stock, and that all dividends, if any,
were reinvested.
This graph is based on historical data and not necessarily indicative of
future performance. This graph shall not be deemed "soliciting material" nor
"filed" with the Securities and Exchange Commission nor subject to the
Regulations of 14A or 14C under the Exchange Act or subject to the liabilities
of Section 18 under the Exchange Act.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG BINDVIEW DEVELOPMENT CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P INTERNET SOFTWARE & SERVICES INDEX
(PERFORMANCE GRAPH)
<Table>
<Caption>
Cumulative Total Return
------------------------------------------------------------------------
7/24/98 12/98 12/99 12/00 12/01 12/02
BINDVIEW DEVELOPMENT CORPORATION 100.00 275.00 496.88 188.12 40.20 29.00
NASDAQ STOCK MARKET (U.S.) 100.00 117.24 217.44 131.20 104.08 71.96
S & P INTERNET SOFTWARE & SERVICES 100.00 100.00 189.91 61.26 42.17 38.87
</Table>
* $100 invested on 7/24/98 in stock or on 6/30/98 in index-including
reinvestment of dividends. Fiscal year ending December 31.
Copyright(C)2002 Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm
<Table>
<Caption>
Beginning
Transaction Closing No. Of Dividend Dividend Shares Ending Cum. Tot.
Date* Type Price** Shares*** per Share Paid Reinvested Shares Return
- --------- ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
24-Jul-98 Begin 5.000 20.00 20.000 100.00
31-Dec-98 Year End 13.750 20.00 20.000 275.00
31-Dec-99 Year End 24.844 20.00 20.000 496.88
31-Dec-00 Year End 9.406 20.00 20.000 188.12
31-Dec-01 Year End 2.010 20.00 20.000 40.20
31-Dec-02 End 1.450 20.00 20.000 29.00
</Table>
* Specified ending dates or ex-dividends dates.
** All Closing Prices and Dividends are adjusted for stock splits and stock
dividends.
***'Begin Shares' based on $100 investment.
-11-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of July 15, 2003 with respect
to (a) persons known to us to be beneficial owners of more than five percent
(5%) of the outstanding shares of BindView's common stock, (b) the Named
Executive Officers identified in the Summary of Executive Compensation appearing
elsewhere in this proxy statement and our directors and (c) all of our executive
officers and directors as a group. Unless otherwise noted, we believe that all
persons named in this table have sole voting and investment power with respect
to all shares of common stock beneficially owned by them.
<Table>
<Caption>
BENEFICIAL OWNER SHARES (1) PERCENTAGE(1)
- ---------------------------------------------------- ------------ ------------
Kevin P. Cohn (2) .................................. 65,625 *
Peter T. Dameris (3) ............................... 25,000 *
Richard A. Hosley II (4) ........................... 100,000 *
Gary S. Margolis (5) ............................... 290,572 *
William D. Miller (6) .............................. 86,898 *
Kenneth D. Naumann (7) ............................. -- *
Edward L. Pierce (8) ............................... 288,315 *
Eric J. Pulaski (9) ................................ 8,954,450 19.19%
Robert D. Repass ................................... -- *
Armand S. Shapiro (10) ............................. 43,750 *
All executive officers and directors as a group (11) 9,854,610 21.12%
</Table>
- ----------
* Less than 1%
(1) In accordance with the guidelines of the Securities and Exchange
Commission, each beneficial owner's percentage ownership is determined by
assuming that options held by such person and exercisable within 60 days
have been exercised. The numbers of shares and options held by persons
listed because of their status as Named Executive Officers, executive
officers, or directors are based on our option-grant records; on public
filings such as Form 3 and Form 4 filings; and (in the case of current
Named Executive Officers and directors) on information supplied by the
named persons.
(2) Mr. Cohn is a Named Executive Officer of the Company. His listed holdings
include 65,625 shares of common stock that would be issued if he were to
exercise outstanding vested options.
(3) Mr. Dameris is a director of the Company. His listed holdings include
25,000 shares of common stock that would be issued if he were to exercise
outstanding options that will vest within 60 days.
(4) Mr. Hosley is a director of the Company. His listed holdings include
100,000 shares of common stock that would be issued if he were to exercise
outstanding vested options.
(5) Gary Margolis is a Named Executive Officer of the Company. His listed
holdings include 236,250 shares of common stock that would be issued if he
were to exercise outstanding vested options.
(6) Mr. Miller is a Named Executive Officer of the Company who resigned
effective in July 2002. The information in the table above concerning Mr.
Miller's holdings is based on BindView's records of employee stock
purchases prior to his resignation and 75,000 shares of common stock issued
in connection with exercising vested options in June 2003.
(7) Mr. Naumann is a Named Executive Officer of the Company who resigned
effective January 1, 2003.
(8) Mr. Pierce is a director and a Named Executive Officer of the Company. His
listed holdings include 225,000 shares of restricted common stock that will
vest within 60 days and 40,625 shares of common stock that would be issued
if he were to exercise outstanding vested options.
-12-
(9) Mr. Pulaski is a director and a Named Executive Officer of the Company. His
listed holdings include 31,250 shares of common stock that would be issued
if he were to exercise outstanding vested options.
(10) Mr. Shapiro is a director of the Company. His listed holdings include
43,750 shares of common stock that would be issued if he were to exercise
outstanding vested options.
(11) See the above notes to this table. Includes an aggregate of 542,500 shares
of common stock that would be issued if option holders were to exercise
outstanding vested stock options.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Mr. Pierce is indebted to BindView as described above under the subheading
"Indebtedness of Directors."
PROPOSAL 2: TO APPROVE AN AMENDMENT TO INCREASE
THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER THE EMPLOYEE STOCK PURCHASE PLAN
The Board is recommending that the shareholders approve an amendment (the
"Plan Amendment") to the BindView Development Corporation 1999 Employee Stock
Purchase Plan, as previously amended through January 1, 2001 (the "Plan"). The
amendment increases the number of shares reserved for issuance under the Plan
from 1 million shares to 2 million shares. This represents approximately 4.3% of
the Company's common stock outstanding at July 15, 2003. The text of the Plan is
set forth in Annex A to this proxy statement; the text of the Plan Amendment is
set forth in Annex B to this proxy statement.
REASONS FOR THE PLAN AMENDMENT
We believe it is in BindView's best interests to attract and retain
experienced and knowledgeable employees and to increase the proprietary interest
of our employees in our long-term success. Under the Plan, we provide full-time
key employees, including officers, with additional incentives to increase
shareholder value.
The Plan provides that we can grant options to purchase common stock at a
discount to the lowest price at which the stock traded during a six-month
window, for cash, with a requirement that the purchase price be funded by
payroll deductions from each grantee's salary, with respect to a total of up to
1.0 million shares. Employees have purchased 0.8 million shares, resulting in an
aggregate cash investment in the Company by employees, through payroll
deduction, of approximately $2.1 million through December 31, 2002.
SUMMARY OF THE PLAN
The following summary does not purport to be a complete description of the
Plan and is qualified in its entirety by reference to the Plan.
The Board of Directors adopted the Plan in April 1999. The Plan provides for
the grant of options to all eligible employees to purchase shares of the
BindView's common stock. BindView currently has approximately 400 employees
eligible to participate in the Plan. Such options may be exercised on the last
day of the applicable offering period for which such options were granted and
only with funds accumulated through payroll deductions of between 1% and 10% of
an eligible employee's compensation. Except as may be otherwise determined by
the committee and announced to employees prior to an offering period, the
maximum number of shares of common stock for which each eligible employee may be
granted an option during an offering period will be determined by dividing
$12,500 (reduced proportionately for an offering period of less than six months)
by the fair market of value of a share of BindView's stock on the first day of
the offering period. The price to be paid for each share of common stock upon
exercise of an option shall be the lesser of (i) 85% of the fair market value on
the date of grant of the option or
-13-
(ii) 85% of the fair market value on the date of exercise. Eligible employees
include any employee working more than 20 hours per week. The Plan is
administered by a committee appointed by the Board of Directors.
Under the Plan, an aggregate of 2,000,000 shares of BindView's common stock
have been authorized and reserved for purchase pursuant to options granted to
eligible employees. The offering periods are six-month periods commencing on
February 1 and August 1. Payroll deductions are made throughout the offering
period for each participant.
FEDERAL TAX CONSEQUENCES
The Plan and a participant's right to make purchases under the Plan are
intended to qualify under the provisions of sections 421 and 423 of the Code.
Under these provisions, no income will be taxable to a participant until the
shares of stock purchased under the Plan are sold or otherwise disposed of.
Therefore, no taxable income is reportable by a participant either upon grant of
an option or upon the actual purchase of shares of stock on cash purchase date.
Upon the sale or other disposition of the shares of stock, a participant will
generally be subject to the tax. The amount and nature of the tax will depend
upon how long the participant holds the shares of BindView's stock.
If a participant sells or otherwise disposes of the shares (other than a
transfer to the participant's spouse or into joint ownership, if the participant
remains one of the joint owners) more than two years from the first day of the
offering period and more than one year from the date of the transfer of the
stock to the participant, then the participant will recognize ordinary income in
an amount equal to the lesser of:
o the excess of the fair market value as defined in the Plan ("Fair
Market Value") of the shares at the time of such sale or other disposition over
the purchase price, or
o an amount equal to 15% of the Fair Market Value of the shares as of
the first day of the offering period.
Any additional gain will be treated as long-term capital gain. If the
Fair Market Value of the stock at the time of the sale or disposition is less
than the purchase price, a participant will have a long-term capital loss. If
the shares are sold or otherwise disposed of before the expiration of this
holding period, the participant will recognize ordinary income equal to the
excess of the Fair Market Value of the shares on the date the shares are
purchased over the purchase price. Any additional gain or loss on such sale or
disposition will be long-term or short-term capital gain or loss, depending on
the holding period.
BindView is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent ordinary income is
recognized by a participant upon a sale or disposition of shares prior to the
expiration of the holding period described above.
At the time a participant's option is exercised or at the time the
participant disposes of some or all of the stock purchased under the Plan, the
participant must make adequate provision for our federal, state or other tax
withholding obligations, if any, which arise upon the exercise of the option or
the disposition of the stock. At any time, BindView may, but will not be
obligated to, withhold from the participants compensation the amount necessary
for us to meet applicable withholding obligations.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased under
the Plan. Reference should be made to the applicable provisions of the Code. In
addition, the summary does not discuss the tax consequences of a participant's
death or the income tax laws of any state or foreign country in which the
participant may reside.
-14-
NEW PLAN BENEFITS
BINDVIEW DEVELOPMENT CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN
<Table>
<Caption>
BENEFIT ($)
(difference between fair
market value and
participants' purchase
price at the date of
NAME AND POSITION PURCHASE PRICE ($) purchase) NUMBER OF UNITS
- ----------------------------------------- -------------------- ------------------------ --------------------
Eric J. Pulaski, chairman, president, and N/A N/A N/A
chief executive officer
Named Executive Officers as a group 10,625 16,874 9,615
Other executive officers as a group N/A N/A N/A
Employees other than executive officers, 487,315 564,283 480,464
as a group
Non-employee members of the Board of N/A N/A N/A
Directors
</Table>
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2002, with
respect to the Company's compensation plans under which equity securities are
authorized for issuance:
<Table>
<Caption>
(a) (b) (c)
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
UPON EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN(a))(3)
- ---------------------- -------------------- -------------------- --------------------------
Equity compensation
plans approved by 2,175,736 $5.36 5,010,560
security holders (1)
Equity compensation
plans not approved by 5,367,524 2.32 3,155,049
security holders (2)
-------------------- -------------------- -------------------------
Total 7,543,260 $3.20 8,165,609
</Table>
(1) 1998 Omnibus Plan
(2) Incentive Stock Option Plan, Nonqualified Stock Option Plan,
1997 Employee Stock Option Plan, Non-Employee Director Plan,
2000 Indian Stock Option Plan, 2000 Employee Incentive Plan,
International Employee Stock Option Plan, 1997 Entevo Stock
Plan, and 1998 Indian Stock Option Plan. See Note 9 to Financial
Statements included in Item 15 of BindView's Annual Report on
Form 10-K for the year ended December 31, 2002, for a
description of each of these plans.
(3) The Company also maintains an Employee Stock Purchase Plan (see
summary of plan above). The Company originally reserved
1,000,000 shares for issuance under this plan. As of December
31, 2002, there are 218,172 shares remaining available for
issuance.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PLAN
AMENDMENT. Approval of the Plan Amendment requires the vote of a majority of the
shares present at the meeting in per-
-15-
son or by proxy; abstentions will therefore count as a vote against the
proposal. Broker non-votes will not be treated as a vote for or against the
proposal and will not affect the outcome of the proposal.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as BindView's principal independent public
accountants for the 2002 fiscal year and are expected to be selected by the
Audit Committee to serve as BindView's principal independent public accounts for
the 2003 fiscal year. Representatives of PricewaterhouseCoopers LLP are expected
to attend the shareholder meeting, will have the opportunity to make a statement
if they so desire, and will be available to respond to appropriate questions.
AUDIT FEES
The aggregate fees billed for professional services rendered for the audit
of the company's annual financial statements, and for reviews of the financial
statements included in the company's Forms 10-Q, for the 2002 fiscal year, were
$280,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed for professional services described in paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X rendered by the company's principal
accountants for the fiscal year 2002.
ALL OTHER FEES
The aggregate fees billed for services rendered by the company's principal
accountants, other than for services otherwise covered under the subheadings
"Audit Fees" and "Financial Information Systems Design and Implementation Fees"
above, for fiscal year 2002 were $100,000.
COMPATIBILITY OF CERTAIN FEES WITH INDEPENDENT ACCOUNTANTS' INDEPENDENCE
The Audit Committee has considered whether the provision of services covered
under the subheadings "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" above is compatible with maintaining the company's
principal accountants' independence.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires BindView's
officers, directors and persons who own more than 10% of a registered class of
BindView's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required by the regulation to furnish BindView
with copies of all Section 16(a) reports they file.
Based on a review of Forms 3 and 4 and amendments thereto furnished to
BindView during the fiscal year ended December 31, 2002, BindView believes that
all such forms were timely filed during such fiscal year, except that Messrs.
Lloyd and Rosenthal were late in filing their respective Form 3 reports when
they joined the Company; Mr. Rosenthal was late in filing a Form 4 report of his
initial option grant; and Mr. Dameris was late in filing a Form 3 report when he
became a member of the Company's Board of Directors.
-16-
PROPOSALS FOR NEXT ANNUAL MEETING; OTHER MATTERS
Any proposals of holders of common stock intended to be presented at the
annual meeting of shareholders of BindView to be held in 2004 must be received
by BindView at its principal executive offices, 5151 San Felipe, 25th Floor,
Houston, Texas 77056, no later than March 28, 2004 to be included in the proxy
statement and form of proxy relating to that meeting.
BindView is paying the cost of this solicitation of proxies. In addition to
solicitation by use of the mails, the directors, officers or employees of
BindView may solicit the return of proxies by telephone, telecopy or in person.
# # #
-17-
ANNEX A
BINDVIEW DEVELOPMENT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
(As Amended by First Amendment Effective 1/1/01)
TABLE OF CONTENTS
<Table>
<Caption>
Section
ARTICLE I - PURPOSE, COMMITMENT AND INTENT
Purpose.......................................................................................................1.1
Share Commitment..............................................................................................1.2
Intent........................................................................................................1.3
Shareholder Approval..........................................................................................1.4
ARTICLE II - DEFINITIONS
Affiliate.....................................................................................................2.1
Beneficiary...................................................................................................2.2
Board of Directors............................................................................................2.3
Code..........................................................................................................2.4
Committee.....................................................................................................2.5
Company.......................................................................................................2.6
Compensation..................................................................................................2.7
Employee......................................................................................................2.8
Employer......................................................................................................2.9
Exercise Date................................................................................................2.10
Fair Market Value or FMV.....................................................................................2.11
Grant Date...................................................................................................2.12
Offering Period..............................................................................................2.13
Option.......................................................................................................2.14
Option Price.................................................................................................2.15
Participant..................................................................................................2.16
Plan.........................................................................................................2.17
Shares.......................................................................................................2.18
Stock........................................................................................................2.19
ARTICLE III - ELIGIBILITY
General Requirements..........................................................................................3.1
Limitations Upon Participation................................................................................3.2
ARTICLE IV - PARTICIPATION
Grant of Option...............................................................................................4.1
Payroll Deduction.............................................................................................4.2
Payroll Deductions Continuing.................................................................................4.3
Right to Stop Payroll Deductions..............................................................................4.4
Accounting for Funds..........................................................................................4.5
Employer's Use of Funds.......................................................................................4.6
</Table>
A-1
<Table>
ARTICLE V - IN SERVICE WITHDRAWAL, TERMINATION
OF EMPLOYMENT, RETIREMENT OR DEATH
In Service Withdrawal ........................................................................................5.1
Termination of Employment.....................................................................................5.2
Retirement for Age or Disability..............................................................................5.3
Death.........................................................................................................5.4
ARTICLE VI - EXERCISE OF OPTION
Purchase of Stock.............................................................................................6.1
Accounting for Stock..........................................................................................6.2
Issuance of Shares............................................................................................6.3
Restriction on Shares.........................................................................................6.4
ARTICLE VII - ADMINISTRATION
Appointment, Term of Service & Removal........................................................................7.1
Powers........................................................................................................7.2
Quorum and Majority Action....................................................................................7.3
Standard of Judicial Review of Committee Actions..............................................................7.4
ARTICLE VIII - ADOPTION OF PLAN BY OTHER EMPLOYER
Adoption Procedure............................................................................................8.1
No Joint Venture Implied......................................................................................8.2
ARTICLE IX - TERMINATION AND AMENDMENT OF THE PLAN
Termination...................................................................................................9.1
Amendment.....................................................................................................9.2
ARTICLE X - MISCELLANEOUS
Designation of Beneficiary...................................................................................10.1
Plan Not An Employment Contract..............................................................................10.2
All Participants' Rights are Equal...........................................................................10.3
Options Granted Are Not Transferable.........................................................................10.4
Voting of Stock..............................................................................................10.5
No Stockholder Rights........................................................................................10.6
Governmental Regulations.....................................................................................10.7
Notices......................................................................................................10.8
Indemnification of Committee.................................................................................10.9
Tax Withholding.............................................................................................10.10
Gender and Number...........................................................................................10.11
Severability................................................................................................10.12
Governing Law; Parties to Legal Actions.....................................................................10.13
</Table>
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ARTICLE I
Purpose, Commitment and Intent
1.1 Purpose. The purpose of this Plan is to provide Employees of the Company
and its Affiliates which adopt the Plan with an opportunity to purchase Stock of
the Company through offerings of options at a discount and thus develop a
stronger incentive to work for the continued success of the Company and the
Affiliates. Therefore, this Plan is available to all Employees of every Employer
upon their fulfilling the eligibility requirements of Section 3.1. Any Affiliate
may adopt the Plan with the approval of the Committee by fulfilling the
requirements of Section 8.1. This Plan is sponsored by the Company.
1.2 Share Commitment. The aggregate number of Shares authorized to be sold
pursuant to Options granted under this Plan is 500,000 Shares, subject to
adjustment as provided in this Section. Any Shares relating to Options that are
granted, but subsequently lapse, are canceled, or are otherwise not exercised by
the final date for exercise, shall be available for future grants of Options.
1.3 In the event of any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of Shares, or the like, as a result of
which shares shall be issued in respect of the outstanding Shares, or the Shares
shall be changed into the same or a different number of the same or another
class of stock, the total number of Shares authorized to be committed to this
Plan, the number of Shares subject to each outstanding Option and the Option
Price applicable to each Option shall be appropriately adjusted by the
Committee. Adjustments must be confirmed in writing by the auditors of the
Company to be fair and reasonable.
1.4 Intent. It is the intention of the Company to have the Plan qualify as
an "employee stock purchase plan" under section 423 of the Code. Therefore, the
provisions of the Plan are to be construed to govern participation in a manner
consistent with the requirements of section 423 of the Code.
1.5 Shareholder Approval. To be effective, this Plan must be approved by the
stockholders of each of the Employers within 12 months before or after the Plan
is approved by the board of directors of each Employer. The approval of
stockholders must comply with all applicable provisions of the corporate
charter, bylaws and applicable laws of the jurisdiction prescribing the method
and degree of stockholder approval required for the issuance of corporate stock
or options.
ARTICLE II
Definitions
The words and phrases defined in this Article shall have the meaning set out
in these definitions throughout this Plan, unless the context in which any word
or phrase appears reasonably requires a broader, narrower, or different meaning.
2.1 "Affiliate" means any parent corporation and any subsidiary corporation.
The term "parent corporation" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time of the
action or transaction, each of the corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain. The term "subsidiary
corporation" means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the time of the granting of
the Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
2.2 "Beneficiary" means the person who is entitled to receive amounts under
the Plan upon the death of a Participant.
2.3 "Board of Directors" means the board of directors of the Company.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 "Committee" means the committee, appointed by the Board of Directors of
the Company to administer the Plan, which shall be comprised solely of members
of the Board of Directors who qualify as non-employee directors as defined in
Rule 16b-3(b)(3) of the Securities Exchange Act of 1934, as amended.
2.6 "Company" means BindView Development Corporation, a Texas corporation.
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2.7 "Compensation" means the Employee's wages from the Company as defined in
section 3401(a) of the Code for purposes of Federal income tax withholding at
the source, reduced by all of the following items (even if includable in gross
income): reimbursements or other expense allowances, income from the exercise of
a nonqualified stock option, income resulting from a disqualifying disposition
from an incentive stock option or from this Plan, fringe benefits (cash and
non-cash), moving expenses, deferred compensation, and welfare benefits; and
modified by including elective contributions under a cafeteria plan described in
section 125 of the Code and elective contributions to any plan qualified under
section 401(k) of the Code.
2.8 "Employee" means any person who is a common law employee of the Company
excluding only those whose customary employment with the Company is 20 hours or
less per week.
2.9 "Employer" means the Company and each Affiliate which has adopted the
Plan as provided in Section 8.1 of the Plan.
2.10 "Exercise Date" means the last business day of the Offering Period,
which is the day that all Options that eligible Employees have elected to
exercise are to be exercised.
2.11 "Fair Market Value" or "FMV" of the Stock as of any date means the
average of the high and low sale prices of the Stock on that date (or if there
was no sale on a given date, the next preceding date on which there was a sale)
on the principal securities exchange on which the Stock is listed.
2.12 "Grant Date" means the first business day of the Offering Period, which
is the day the Committee grants all eligible Employees an Option under this
Plan.
2.13 "Offering Period" means the six month periods commencing on July 1 and
January 1 of each year. The initial offering period shall end December 31, 1999,
but may, at the discretion of the Committee, be for a period of less than six
months.
The Offering Period commencing January 1, 2001, shall be for a seven-month
period ending on July 31, 2001, and thereafter each Offering Period shall be for
a six-month period commencing on August 1 and February 1 of each year
2.14 "Option" means an option granted under this Plan to purchase shares of
Stock at the Option Price on the Exercise Date.
2.15 "Option Price" means the price to be paid for each Share upon exercise
of an Option, which shall be the lesser of (a) 85% of the FMV of a Share on the
Grant Date or (b) 85% of the FMV of a Share on the Exercise Date.
2.16 "Participant" means a person who is eligible to be granted an Option
under this Plan and who elects to have payroll deductions withheld under the
Plan for the purpose of exercising that Option on the Exercise Date.
2.17 "Plan" means the BindView Development Corporation 1999 Employee Stock
Purchase Plan, as set out in this document and as it may be amended from time to
time.
2.18 "Shares" means shares of Stock.
2.19 "Stock" means the Company's common stock, no par value.
ARTICLE III
Eligibility
3.1 General Requirements. Each Employee is eligible to participate in the
Plan for a given Offering Period if he is an Employee on the Grant Date, subject
to the limitations imposed in Section 3.2.
3.2 Limitations Upon Participation. Any provision of this Plan to the
contrary notwithstanding, no Employee shall be granted an Option:
(a) if, immediately after the grant, the Employee would own, including
all outstanding options which are still exercisable to purchase Stock, five
percent or more of the total combined voting power or value of all classes of
Stock of the Company or of any parent or subsidiary of the Company within the
meaning of sections 423 and 424 of the Code;
(b) which permits the Employee to purchase Stock under all employee
stock purchase plans, as defined in section 423 of the Code, of the Company and
all Affiliates at a rate which exceeds $25,000 in Fair Market Value of
A-4
the Stock (determined at the time the Option is granted) for each calendar year
in which the option granted to the Employee is outstanding at any time as
provided in sections 423 and 424 of the Code; or
(c) which permits the Employee rights to purchase Stock in excess of
the number of Shares set by the Committee if it deems such a restriction to be
appropriate.
ARTICLE IV
Participation
4.1 Grant and Exercise of Option. Effective as of the Grant Date the
Committee shall grant an Option to each Participant that shall be exercisable
only on the Exercise Date only through funds accumulated by the Employee through
payroll deductions made during the Offering Period together with any funds
remaining in the Participant's payroll deduction account at the beginning of the
Offering Period. Except as may be determined otherwise by the Committee and
announced to Employees prior to an Offering Period, the number of Shares
included in an Option deemed to have been granted to an Employee on the Grant
Date shall be determined by dividing $12,500 (reduced proportionately for an
Offering Period of less than six months and increased proportionately for an
Offering Period of more than six months) by the FMV of a Share of Stock on such
date.
4.2 Payroll Deduction. In order for an Employee to become eligible to
receive an Option granted for a given Offering Period, the Employee must
complete a payroll deduction form and file it with the Company no earlier than
30 nor later than 15 days prior to the beginning of the Offering Period. The
payroll deduction form shall permit a Participant to elect to have withheld from
his Compensation an amount no less than one percent, nor more than ten percent,
of his Compensation (only in whole percentages) taken pro rata from the
Compensation paid to him by the Company. Each payroll deduction shall begin on
the first pay period ending after the beginning of an Offering Period and shall
continue through the last pay period ending prior to the Exercise Date. No
Participant shall be permitted to begin payroll deductions at any other time. A
Participant may not make additional payments to his Plan account.
4.3 Payroll Deductions Continuing. A Participant's election to have payroll
deductions shall remain in effect for all ensuing Offering Periods until changed
by the Participant by filing an appropriate amended payroll deduction form not
earlier than 30 nor later than 15 days prior to the commencement of the Offering
Period for which it is to be effective.
4.4 Right to Stop Payroll Deductions. A Participant may discontinue payroll
deductions and his participation in the Plan as provided in Section 5.1, but no
other change can be made during an Offering Period and, specifically, a
Participant may not alter the rate of his payroll deductions for that Offering
Period.
4.5 Accounting for Funds. As of each payroll deduction period the Employer
shall cause to be credited to the Participant's payroll deduction account in a
ledger established for that purpose the funds withheld from and attributable to
the Employee's compensation for that period. No interest shall be credited to
the Participant's payroll deduction account at any time. The obligation of the
Employer to the Participant for this account shall be a general corporate
obligation and shall not be funded through a trust nor secured by any assets
which would cause the Participant to be other than a general creditor of the
Employer.
4.6 Employer's Use of Funds. All payroll deductions received or held by an
Employer may be used by the Employer for any corporate purposes and the Employer
shall not be obligated to segregate such payroll deductions.
ARTICLE V
In Service Withdrawal, Termination of Employment, Retirement or Death
5.1 In Service Withdrawal. A Participant may, at any time on or before 15
days prior to the Exercise Date, or such other date as shall be determined by
the Committee from time to time, elect to withdraw all funds then credited to
his payroll deduction account by giving written notice to his Employer in
accordance with the rules established by the Committee. All funds credited to
the Participant's payroll deduction account shall be paid to him as soon as
administratively feasible. The withdrawal election terminates the Participant's
right to exercise his Option on the Exercise Date and his entitlement to elect
any further payroll deductions for the then current Offering Period. Should the
Participant wish to participate in any given future Offering Period, the
Participant must file a new payroll deduction election within the time frame
required for participation for that Offering Period.
A-5
5.2 Termination of Employment. If a Participant's employment is terminated
for any reason other than retirement for age or disability prior to the Exercise
Date, the Option granted to the Participant for that Option Period shall lapse.
The Participant's payroll deduction account shall be returned to him as soon as
administratively feasible.
5.3 Retirement for Age or Disability. If a Participant retires for age or
disability under the then established rules of the Company, his Exercise Date
shall be the last day of the month prior to his retirement for age or
disability. At that time his Option shall be exercised in accordance with the
terms of the Plan. Then any funds remaining in his payroll deduction account
shall be returned to him as soon as administratively feasible.
5.4 Death. If a Participant dies before the Exercise Date, the Option
granted to the Participant for that Offering Period shall lapse. The
Participant's payroll deduction account shall be returned to him as soon as
administratively feasible. If the Participant dies after the Exercise Date, but
prior to the delivery of his certificate, the Stock shall be delivered to his
Beneficiary (or to his estate if he has no Beneficiary). If there is no
Beneficiary, the Stock shall be held in the Participant's account until the
representative of the estate has been appointed and provides such evidence as
may be required by the Committee before the certificate is delivered to the
proper party together with a check in the amount of any remaining funds in the
Participant's payroll deduction account.
ARTICLE 6
Exercise of Option
6.1 Purchase of Stock. On the Exercise Date of each Offering Period each
Participant's payroll deduction account shall be used to purchase the maximum
number of whole shares of Stock that can be purchased at the Option Price for
that Offering Period. Any funds remaining in a Participant's payroll deduction
account after the exercise of his Option for an Offering Period shall remain in
the Participant's account to be used in the ensuing Offering Period, together
with new payroll deductions, if any, for that Offering Period to exercise the
next succeeding Option which is to be exercised. If in any Offering Period the
total number of shares of Stock to be purchased by all Participants exceed the
number of shares of Stock committed to the Plan, then each Participant shall be
entitled to purchase only his pro rata portion of the shares of Stock remaining
available under the Plan based on the balances in each Participant's payroll
deduction account as of the Exercise Date. No fractional shares of Stock may be
purchased under this Plan. After the purchase of all shares of Stock available
on Exercise Date, all Options granted for the Offering Period to the extent not
used shall terminate.
6.2 Accounting for Stock. After the Exercise Date of each Offering Period a
report shall be given to each Participant stating the amount of his payroll
deduction account, the number of shares of Stock purchased and the applicable
Option Price.
6.3 Issuance of Shares. As soon as administratively feasible after the end
of the Offering Period the Committee shall advise the appropriate officer of the
Company that the terms of the Plan have been complied with and that it is
appropriate for the officer to cause to be issued the shares of Stock upon which
Options have been exercised under the Plan. The Committee may determine in its
discretion the manner of delivery of the shares of Stock purchased under the
Plan, which may be by electronic account entry into new or existing accounts,
delivery of certificates or any other means as the Committee, in its discretion,
deems appropriate. The Committee may, in its discretion, hold the certificate
for any shares of Stock or cause it to be legended in order to comply with the
securities laws of the applicable jurisdiction.
6.4 Restriction on Shares. A Participant shall be free to undertake a
disposition (as that term is defined in Section 424(c) of the Code) of the
shares in his account at any time, whether by sale, exchange, gift, or other
transfer of legal title, but in the absence of such a disposition of the shares,
the shares must remain in the Participant's account at the brokerage or other
financial services firm designated by the Committee until the holding period set
forth in Section 423(a) of the Code has been satisfied. With respect to Shares
for which such holding period has been satisfied, the Participant may direct
that those Shares be moved to another account of Participant's choosing or
request that a stock certificate be issued and delivered to him.
Notwithstanding anything to the contrary contained in this Plan, a
Participant shall not transfer or otherwise dispose of Stock in violation of the
Company's Insider Trading Policy.
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ARTICLE VII
Administration
7.1 Appointment, Term of Service & Removal. The Board of Directors shall
appoint a Committee to administer this Plan. The members shall serve until their
resignation, death or removal. Any member may resign at any time by mailing a
written resignation to the Board of Directors. Any member may be removed by the
Board of Directors, with or without cause. Vacancies may be filled by the Board
of Directors from time to time.
7.2 Powers. The Committee has the exclusive responsibility for the general
administration of the Plan, and has all powers necessary to accomplish that
purpose, including but not limited to the following rights, powers, and
authorities:
(a) to make rules for administering the Plan so long as they are not
inconsistent with the terms of the Plan;
(b) to construe all provisions of the Plan;
(c) to correct any defect, supply any omission, or reconcile any
inconsistency which may appear in the Plan;
(d) to select, employ, and compensate at any time any consultants,
accountants, attorneys, and other agents the Committee believes necessary or
advisable for the proper administration of the Plan;
(e) to determine all questions relating to eligibility, Fair Market
Value, Option Price and all other matters relating to benefits or Participants'
entitlement to benefits;
(f) to determine all controversies relating to the administration of
the Plan, including but not limited to any differences of opinion arising
between the Company and a Participant, and any questions it believes advisable
for the proper administration of the Plan; and
(g) to delegate any clerical or recordation duties of the Committee as
the Committee believes is advisable to properly administer the Plan.
7.3 Quorum and Majority Action. A majority of the Committee constitutes a
quorum for the transaction of business. The vote of a majority of the members
present at any meeting shall decide any question brought before that meeting. In
addition, the Committee may decide any question by a vote, taken without a
meeting, of a majority of its members via telephone, computer, fax or any other
media of communication.
7.4 Standard of Judicial Review of Committee Actions. The Committee has full
and absolute discretion in the exercise of each and every aspect of its
authority under the Plan. Notwithstanding anything to the contrary, any action
taken, or ruling or decision made, by the Committee in the exercise of any of
its powers and authorities under the Plan shall be final and conclusive as to
all parties other than the Company, including without limitation all
Participants and their Beneficiaries, regardless of whether the Committee or one
or more of its members may have an actual or potential conflict of interest with
respect to the subject matter of the action, ruling, or decision. No final
action, ruling, or decision of the Committee shall be subject to de novo review
in any judicial proceeding; and no final action, ruling, or decision of the
Committee may be set aside unless it is held to have been arbitrary and
capricious by a final judgment of a court having jurisdiction with respect to
the issue.
ARTICLE VIII
Adoption of Plan By Other Employers
8.1 Adoption Procedure. With the approval of the Committee, any Affiliate
may adopt this Plan by:
(a) a certified resolution or consent of the board of directors of the
adopting Affiliate or an executed adoption instrument (approved by the board of
directors of the adopting Affiliate) agreeing to be bound as an Affiliate by all
the terms, conditions and limitations of this Plan; and
(b) providing all information required by the Committee.
8.2 No Joint Venture Implied. The document which evidences the adoption of
the Plan by an Affiliate shall become a part of this Plan. However, neither the
adoption of this Plan by an Affiliate nor any act performed by it in relation to
this Plan shall create a joint venture or partnership relation between it and
the Company or any other Affiliate.
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ARTICLE IX
Termination and Amendment of the Plan
9.1 Termination. The Company may, by action of the Board of Directors,
terminate the Plan at any time and for any reason. The Plan shall automatically
terminate upon the purchase by Participants of all shares of Stock committed to
the Plan, unless the number of Shares committed to the Plan are increased by the
Board of Directors and approved by the shareholders of the Company. Upon
termination of the Plan, as soon as administratively feasible there shall be
refunded to each Participant the remaining funds in his payroll deduction
account, and there shall be forwarded to the Participants certificates for all
shares of Stock held under the Plan for the account of Participants. The
termination of this Plan shall not affect the current Options already
outstanding under the Plan to the extent there are Shares committed, unless the
Participants agree.
9.2 Amendment. The Board of Directors reserves the right to modify, alter or
amend the Plan at any time and from time to time to any extent that it deems
advisable, including, without limiting the generality of the foregoing, any
amendment deemed necessary to ensure compliance of the Plan with Section 423 of
the Code. The Board of Directors may suspend operation of the Plan for any
period as it may deem advisable. However, no amendment or suspension shall
operate to reduce any amounts previously allocated to a Participant's payroll
deduction account, to reduce a Participant's rights with respect to shares of
Stock previously purchased and held on his behalf under the Plan nor to affect
the current Option a Participant already has outstanding under the Plan without
the Participant's agreement. Any amendment changing the aggregate number of
Shares to be committed to the Plan or the class of employees eligible to receive
Options under the Plan must have stockholder approval as set forth in Section
1.4.
ARTICLE X
Miscellaneous
10.1 Designation of Beneficiary.
(a) A Participant may file a written designation of a Beneficiary who
is to receive any cash and Shares credited to the Participant's account under
the Plan. If a Participant is married and the designated Beneficiary is not the
Participant's spouse, written spousal consent shall be required for the
designation to be effective.
(b) A Participant may change his designation of a Beneficiary at any
time by written notice. If a Participant dies when he has not validly designated
a Beneficiary under the Plan, the Company shall deliver such Shares and cash to
the executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Shares and cash to the spouse
or to any one or more dependents or relatives of the Participant, or if no
spouse, dependent or relative is known to the Company, then to such other person
as the Company may designate.
10.2 Plan Not An Employment Contract. The adoption and maintenance of this
Plan is not a contract between the Company and its Employees which gives any
Employee the right to be retained in its employment. Likewise, it is not
intended to interfere with the rights of the Company to discharge any Employee
at any time or to interfere with the Employee's right to terminate his
employment at any time.
10.3 All Participants' Rights Are Equal. All Participants will have the same
rights and privileges under this Plan as are required by section 423 of the Code
and section 1.423-2(f) of the regulations promulgated under that section of the
Code.
10.4 Options Granted Are Not Transferable. No Option granted a Participant
under this Plan is transferable by the Participant otherwise than by will or the
laws of descent and distribution, and must be exercisable, during his lifetime,
only by him. In the event any Participant attempts to violate the terms of this
Section, any Option held by the Participant shall be terminated by the Company
and upon return to the Participant of the remaining funds in his payroll
deduction account, all of his rights under the Plan will terminate.
10.5 Voting of Stock. Shares of Stock held under the Plan for the account of
each Participant shall be voted by the holder of record of those shares in
accordance with the Participant's instructions.
10.6 No Stockholder Rights. No eligible Employee or Participant shall by
reason of participation in the Plan have any rights of a stockholder of the
Company until he acquires shares of Stock as provided in this Plan.
A-8
10.7 Governmental Regulations. The obligation to sell or deliver the shares
of Stock under this Plan is subject to the approval of all governmental
authorities required in connection with the authorization, purchase, issuance or
sale of that Stock.
10.8 Notices. All notices and other communication in connection with the
Plan shall be in the form specified by the Committee and shall be deemed to have
been duly given when sent to the Participant at his last known address or to his
designated personal representative or beneficiary, or to the Company or its
designated representative, as the case may be.
10.9 Indemnification of Committee. In addition to all other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with the
Plan or any Option granted under the Plan, and against all amounts paid in
settlement (provided the settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
action, suit or proceeding, except in relation to matters as to which it is
adjudged in the action, suit or proceeding, that the Committee member is liable
for gross negligence or willful misconduct in the performance of his duties.
10.10 Tax Withholding. At the time a Participant's Option is exercised or at
the time a Participant disposes of some or all of the Stock purchased under the
Plan, the Participant must make adequate provision for the Employer's federal,
state or other tax withholding obligations, if any, which arise upon the
exercise of the Option or the disposition of the Stock. At any time, the
Employer may, but shall not be obligated to, withhold from the Participant's
compensation the amount necessary for the Employer to meet applicable
withholding obligations.
10.11 Gender and Number. If the context requires it, words of one gender
when used in this Plan shall include the other genders, and words used in the
singular or plural shall include the other.
10.12 Severability. Each provision of this Plan may be severed. If any
provision is determined to be invalid or unenforceable, that determination shall
not affect the validity or enforceability of any other provision.
10.13 Governing Law; Parties to Legal Actions. The provisions of this Plan
shall be construed, administered, and governed under the laws of the State of
Texas and, to the extent applicable, by the securities, tax, employment and
other laws of the United States which are applicable to an employee stock
purchase plan.
# # #
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ANNEX B
SECOND AMENDMENT TO
BINDVIEW DEVELOPMENT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
Pursuant to authority reserved to the Board of Directors of BindView
Development Corporation (the "Company") in Article IX of the BindView
Development Corporation 1999 Employee Stock Purchase Plan, as amended (the
"Plan"), and subject to approval of the Company's shareholders, the Board of
Directors of the Company hereby amends the Plan as follows effective January 1,
2003:
The first sentence of Section 1.2 of the Plan is amended and restated to
read in its entirety as follows:
1.2 Share Commitment. The aggregate number of Shares authorized to
be sold pursuant to Options granted under this Plan is
2,000,000 Shares (taking into account the 2 for 1 stock split
in February 2000), subject to adjustment as provided in this
Section.
Approved as of the 27th day of January, 2003.
BINDVIEW DEVELOPMENT CORPORATION
BOARD OF DIRECTORS
<Table>
Eric J. Pulaski Edward L. Pierce
Chairman of the Board, President, and Chief Senior Vice President and Chief Financial
Executive Officer, BindView Development Officer, BindView Development Corporation
Corporation
Peter T. Dameris (1) (2) Robert D. Repass (1)
Former Chairman of the Board and Chief Vice-President and Chief Financial Officer,
Executive Officer, Metamor Worldwide Inc. Motion Computing, Inc.
Richard A. Hosley II (2) Armand S. Shapiro (1) (2)
Former President and Chief Executive Chairman and Chief Executive Officer,
Officer, BMC Software, Inc. Garden Ridge Corporation;
Chairman, MessagePro, Inc.
</Table>
(1) Audit Committee
(2) Compensation Committee
EXECUTIVE OFFICERS
<Table>
Eric J. Pulaski Gary S. Margolis
Chairman of the Board, President, Senior Vice President of Research and
and Chief Executive Officer Development and Chief Technology Officer
Kevin P. Cohn Edward L. Pierce
Vice President, Corporate Controller, Senior Vice President and Chief Financial Officer
and Chief Accounting Officer
David S. Flame Ronald E. Rosenthal
Vice President, Americas Sales Senior Vice President of Worldwide Marketing
and Field Operations
David E. Lloyd
Vice President, International Sales
and Field Operations
</Table>
ANNUAL MEETING OF STOCKHOLDERS BINDVIEW CORPORATE HEADQUARTERS
The annual meeting of stockholders 5151 San Felipe
will take place at BindView's corporate Houston, Texas 77056
headquarters, the address of which 713-561-4000
address is set forth at right. www.bindview.com
<Table>
Mark Here
(CONTINUED FROM OTHER SIDE) for Address
Change or [ ]
Comments
PLEASE SEE REVERSE SIDE
(1) ELECTION OF DIRECTORS:
FOR AGAINST ABSTAIN
FOR all nominees WITHHOLD (2) APPROVAL OF AMENDMENT TO INCREASE
listed (except as marked AUTHORITY THE NUMBER OF SHARES RESERVED FOR [ ] [ ] [ ]
to the contrary) to vote for all ISSUANCE UNDER THE EMPLOYEE STOCK
nominees listed PURCHASE PLAN.
[ ] [ ] IN THEIR DISCRETION, THE ABOVE-NAMED PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF AND UPON MATTERS INCIDENT TO THE CONDUCT OF THE
MEETING.
NOMINEES: (01) Armand S. Shapiro, (02) Edward L. Pierce
Withheld for the nominees you list below: (Write that
nominee's name in the space provided below.)
This proxy when properly executed will be voted in
- -------------------------------------------------------- the manner directed herein by the undersigned
shareholder. IF NO DIRECTION IS MADE THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES
NAMED IN ITEM 1, OR IF ONE OR BOTH NOMINEES BECOMES
UNAVAILABLE, FOR ANOTHER NOMINEE OR NOMINEES TO BE
SELECTED BY THE BOARD OF DIRECTORS, AND FOR APPROVAL
OF THE AMENDMENT REFERENCED IN ITEM 2.
Date_________________________________________, 2003.
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Signature of Shareholder(s)
Please sign your name exactly as it appears hereon.
Joint owners must each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give your full title as such.
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</Table>
BINDVIEW DEVELOPMENT CORPORATION
PROXY - ANNUAL MEETING OF SHAREHOLDERS
August 21, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock of BindView Development Corporation
("BVEW") hereby appoints Eric J. Pulaski and Edward L. Pierce, or either of
them, proxies of the undersigned with full power of substitution, to vote at the
Annual Meeting of Shareholders of BVEW to be held at 9:00 a.m. on Thursday,
August 21, 2003, at BVEW's corporate office located at 5151 San Felipe, Houston,
Texas 77056, and at any adjournment or postponement thereof, the number of votes
that the undersigned would be entitled to cast if personally present.
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
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