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SCHEDULE 14A INFORMATION
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 ss.240.14a-11(c) or ss.240.14a-12
CONCENTRA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously by written 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CONCENTRA CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 29, 1997
You are hereby notified that the annual meeting of stockholders (the
"Annual Meeting") of Concentra Corporation (the "Company") will be held on
August 29, 1997 at 1:00 p.m. at the Renaissance Bedford Hotel, 44 Middlesex
Turnpike, Bedford, Massachusetts 01730, for the following purposes:
1. To elect two (2) directors for a term of three years.
2. To approve the adoption by the Board of Directors of an
amendment to the Company's 1993 Stock Plan (the "1993 Stock
Plan") to increase by 250,000 the number of shares of Common
Stock authorized for issuance under the 1993 Stock Plan.
3. To ratify the action of the Board of Directors in appointing
Coopers & Lybrand L.L.P. as the Company's auditors for the 1998
fiscal year.
4. To consider and act upon such other business as may properly
come before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 25, 1997
as the record date for the Annual Meeting. Only stockholders on the record date
are entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof.
By order of the Board of Directors,
WILLIAM E. KELLY,
SECRETARY
July 31, 1997
IMPORTANT: IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE OF ADDITIONAL
PROXY SOLICITATION, PLEASE MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING PERSONALLY. YOUR COOPERATION IS
GREATLY APPRECIATED.
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CONCENTRA CORPORATION
EXECUTIVE OFFICES
21 North Avenue
Burlington, Massachusetts 01803
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This proxy statement and the accompanying proxy card are being mailed by
Concentra Corporation (the "Company") to the holders of record of the Company's
outstanding shares of Common Stock, $.00001 par value ("Common Stock"),
commencing on or about July 31, 1997. The accompanying proxy is solicited by the
Board of Directors of the Company for use at the annual meeting of stockholders
to be held on August 29, 1997 (the "Annual Meeting") and at any adjournment or
adjournments thereof. The cost of solicitation of proxies will be borne by the
Company. Directors, officers and employees may assist in the solicitation of
proxies by mail, telephone, telegraph, telefax, telex, in person or otherwise,
without additional compensation.
When a proxy is returned, prior to or at the Annual Meeting, properly
signed, the shares represented thereby will be voted by the proxies named in
accordance with the stockholder's instructions indicated on the proxy card. You
are urged to specify your choices on the enclosed proxy card. If the proxy is
signed and returned without specifying choices, the shares will be voted FOR the
election of directors as set forth in this Proxy Statement, FOR approval of the
amendment to the 1993 Stock Plan, FOR ratification of the appointment of Coopers
& Lybrand, L.L.P. as the Company's auditors for the upcoming fiscal year, and in
the discretion of the proxies as to other matters that may properly come before
the Annual Meeting. Sending in a proxy will not affect a stockholder's right to
attend the Annual Meeting and vote in person. A proxy may be revoked by notice
in writing delivered to the Secretary of the Company at any time prior to its
use, by a written revocation submitted to the Secretary of the Company at the
Annual Meeting, by a duly-executed proxy bearing a later date, or by voting in
person by ballot at the Annual Meeting. A stockholder's attendance at the Annual
Meeting will not by itself revoke a proxy.
VOTING SECURITIES AND RECORD DATE
The only outstanding class of stock of the Company is its Common Stock.
Each share of Common Stock is entitled to one vote per share. The Board of
Directors has fixed July 25, 1997 as the record date for the Annual Meeting.
Only stockholders of record on the record date are entitled to notice of and to
vote at the Annual Meeting and any adjournment or adjournments thereof. On July
25, 1997, there were issued and outstanding 5,539,117 shares of Common Stock.
The Company's Restated Certificate of Incorporation and Restated By-laws
provide that a quorum shall consist of the representation in person or by proxy
at the Annual Meeting of stockholders entitled to vote fifty-one percent (51%)
of the votes that are entitled to be cast at the Annual Meeting. The election of
directors is by plurality of the votes cast at the Annual Meeting either in
person or by proxy. The approval of a majority of the votes properly cast at the
Annual Meeting, either in person or by proxy, is required for the adoption of
the proposal to approve of the amendment to the 1993 Stock Plan and for the
approval of any other business which may properly be brought before the Annual
Meeting or any adjournment thereof.
With regard to the election of directors, votes may be left blank, cast
in favor or withheld; votes that are left blank will be counted in favor of the
election of the directors named on the proxy. Votes that are withheld will have
the effect of a negative vote. Abstentions may be specified on all proposals
other than the election of directors and will be counted as present for purposes
of the proposal on which the abstention is noted. Because the proposal to
approve of the amendment to the 1993 Stock Plan requires the approval of a
majority of the votes properly cast at the Annual Meeting, either in person or
by proxy, abstentions will have the effect of a negative vote. Broker non-votes
will not be counted in determining a quorum for, or the outcome of, any
proposal.
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PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of July 25, 1997
with respect to the voting securities of the Company owned by (1) any person
(including any "group" as that term is defined in section 13(d)(3) of the
Securities Exchange Act of 1934) who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of a class of voting
securities of the Company, (2) each director or nominee for director of the
Company, (3) each of the executive officers named in the Summary Compensation
Table, and (4) all directors and executive officers of the Company as a group.
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of any
voting securities of the Company if he or she has or shares voting power or
investment power with respect to such securities or has the right to acquire
beneficial ownership thereof at any time within 60 days of July 25, 1997. As
used herein "voting power" is the power to vote or direct the voting of shares,
and "investment power" is the power to dispose of or direct the disposition of
shares. Except as indicated in the notes following the table below, each person
named has sole voting and investment power with respect to the shares listed as
being beneficially owned by such person.
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF COMMON
BENEFICIAL OWNER BENEFICIALLY OWNED STOCK OUTSTANDING(1)
---------------- ------------------ --------------------
San Giorgio S.A. 957,972 17.3%
100 Rue de Paris
91300 Massy, France
Lawrence W. Rosenfeld (2) 636,256 11.2%
c/o Concentra Corporation
21 North Avenue
Burlington, MA 01803
Stephen J. Cucchiaro (3) 90,749 1.6%
Peter T. Lanell (4) 67,377 1.2%
David I. Lemont (5) 43,333 *
A. William Berkman Jr. (6) 17,728 *
Vincenzo Cannatelli (7) 12,273 *
Alberto de Benedictis (8) 8,637 *
William E. Kelly (9) 8,637 *
Garreth P. Evans (9) 31,351 *
Robert E. Phillips (10) 25,971 *
All directors and executive 956,956 16.1%
officers as a group (12 persons) (11)
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* Less than one percent (1%)
(1) Shares of Common Stock issuable pursuant to options currently
exercisable or exercisable on, before or within 60 days of July 25, 1997
("Currently Exercisable Options") are deemed outstanding for the purpose
of computing the percentage of the class owned by the person holding
such options, but are not deemed outstanding for purposes of computing
the percentage owned by any other person.
(2) Includes (i) 161,251 shares issuable pursuant to Currently Exercisable
Options, and (ii) 14,546 shares held by trusts for the benefit of Mr.
Rosenfeld's children. Mr. Rosenfeld disclaims beneficial ownership of
the shares held by such trusts.
(3) Includes 23,182 shares issuable pursuant to Currently Exercisable
Options.
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(4) Includes 65,752 shares issuable pursuant to Currently Exercisable
Options.
(5) Includes 42,518 shares issuable pursuant to Currently Exercisable
Options.
(6) Excludes shares held by Toyo Corporation, as to which shares Mr. Berkman
disclaims beneficial ownership. Includes 17,728 shares issuable pursuant
to Currently Exercisable Options.
(7) Excludes shares held by San Giorgio S.A., as to which shares Mr.
Cannatelli disclaims beneficial ownership. Includes 12,273 shares
issuable pursuant to Currently Exercisable Options.
(8) Excludes shares held by San Giorgio S.A., as to which shares Mr. de
Benedictis disclaims beneficial ownership. Includes 8,637 shares
issuable pursuant to Currently Exercisable Options.
(9) All such shares are issuable pursuant to Currently Exercisable Options.
(10) Includes 25,490 shares issuable pursuant to Currently Exercisable
Options.
(11) Excludes (i) shares held by Toyo Corporation (of which Mr. Berkman is an
affiliate), and (ii) shares held by San Giorgio S.A. (of which Mr.
Cannatelli and Mr. de Benedictis are affiliates). Shares owned include
409,895 shares issuable pursuant to Currently Exercisable Options. Mr.
Berkman disclaims beneficial ownership of shares held by Toyo
Corporation. Messrs. Cannatelli and de Benedictis disclaim beneficial
ownership of shares held by San Giorgio S.A.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and persons who own more than 10% of the outstanding Common
Stock of the Company to file with the Securities and Exchange Commission ("SEC")
and the Nasdaq Stock Market reports of ownership and changes in ownership of
voting securities of the Company and to furnish copies of such reports to the
Company. Based solely on review of the copies of such reports furnished to the
Company or written representations from certain persons that no reports were
required for those persons, the Company believes that all Section 16(a) filing
requirements were satisfied during the fiscal year ended March 31, 1997, except
that through inadvertence, (i) David I. Lemont failed to file Form 4s reporting
(a) his exercise of options in November 1996 by December 10, 1996, (b) his
purchase of shares of Common Stock under the Company's Employee Stock Purchase
Plan in September 1996 by October 10, 1996, and (c) his purchase of shares of
Common Stock under the Company's Employee Stock Purchase Plan in March 1997 by
April 10, 1997. These transactions were reported on Mr. Lemont's Form 5 for the
fiscal year ended March 31, 1997; (ii) Alex N. Braverman failed to file a Form 4
reporting his purchase of shares of Common Stock under the Company's Employee
Stock Purchase Plan in March 1997 by April 10, 1997. This transaction was
reported on Mr. Braverman's Form 5 for the fiscal year ended March 31, 1997;
(iii) Peter T. Lanell failed to file a Form 4 reporting his purchase of shares
of Common Stock under the Company's Employee Stock Purchase Plan in March 1997
by April 10, 1997. This transaction was reported on Mr. Lanell's Form 5 for the
fiscal year ended March 31, 1997; (iv) Noreen H. Brochu failed to file Form 4s
reporting (a) her exercise of options in June 1996 by July 10, 1996 and (b) her
exercise of options in December 1996 by January 10, 1997. These transactions
were reported on Ms. Brochu's Form 5 for the fiscal year ended March 31, 1997;
and (v) Robert E. Phillips failed to file Form 4s reporting (a) his purchase of
shares of Common Stock under the Company's Employee Stock Purchase Plan in
September 1996 by October 10, 1996 and (b) his purchase of shares of Common
Stock under the Company's Employee Stock Purchase Plan in March 1997 by April
10, 1997. These transaction were reported on Mr. Phillips' Form 5 for the fiscal
year ended March 31, 1997.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered
terms in accordance with the Company's Restated Certificate of Incorporation.
The Board of Directors has determined that the number of directors constituting
the full board of directors shall be six. The terms of two of the present
directors expire this year and each has been nominated for re-election to a term
of three years expiring in 2000.
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Proxies are solicited in favor of the nominees named below and it is
intended that the proxies will be voted for the two nominees unless otherwise
specified. Approval of the nominees requires the affirmative vote of a majority
of the votes cast by the holders of the outstanding shares of Common Stock. In
the event that any of the nominees should become unable or unwilling to serve as
a director, it is intended that the proxies will be voted for the election of
such other person, if any, as shall be designated by the board of directors. It
is not anticipated that any of the nominees will be unable or unwilling to serve
as a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
The following are summaries of the background and business experience
and descriptions of the principal occupations of the nominees and directors
continuing in office.
NOMINEES FOR ELECTION:
Name Age Present Principal Employer
---- --- and Business Experience
-----------------------
Stephen J. Cucchiaro 45 Mr. Cucchiaro has been a director of the
Company since March 1993 and is President of
Windward Capital, Inc., an investment
management firm. From March 1993 until March
1994, Mr. Cucchiaro was President of the
Company and, following his resignation as
President, he directed special projects for
the Company until he left in September 1994
to found Windward Capital. From April 1992
to March 1993, he was the Company's
Executive Vice President, Chief Operating
Officer and Chief Financial Officer. From
October 1987 until December 1989, Mr.
Cucchiaro was employed by Lotus Development
Corporation as General Manager of that
company's Communications and Specialty
Software divisions. Mr. Cucchiaro was
President of Datext, Inc., a company he
co-founded, from June 1984 until it was
acquired by Lotus Development Corporation in
October 1987.
Vincenzo Cannatelli 44 Mr. Cannatelli has been Vice Chairman of the
Board of Directors of the Company and
Chairman of its Executive Committee since
June 1993. Mr. Cannatelli is the Managing
Director and Chief Executive Officer of
Elsag Bailey Process Automation N.V., a
company listed on the New York Stock
Exchange. He has been Group Executive Vice
President of the Elsag Bailey Group of
companies, a division of Finmeccanica, since
1992. Elsag Bailey Process Automation N.V.
is owned in the majority by Finmeccanica.
From 1989 to 1990, Mr. Cannatelli was
Executive Vice President of Elsag Bailey
Inc. Prior to 1989, he served in several
executive positions at STET and in the Elsag
Bailey Group.
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DIRECTORS WHOSE TERMS EXPIRE IN 1998:
Name Age Present Principal Employer
---- --- and Business Experience
-----------------------
Lawrence W. Rosenfeld 44 Mr. Rosenfeld, a founder of the Company, has
been Chief Executive Officer and a director
since the Company's inception in 1984,
Chairman of the Board of Directors since
March 1993 and President from inception
through March 1993 and again since July
1994. From 1982 to 1984, Mr. Rosenfeld was
an independent CAD/CAM consultant. From 1974
to 1981, Mr. Rosenfeld was employed in
various positions at Hood Sailmakers, Inc.
Alberto de Benedictis 45 Mr. de Benedictis has been a director of the
Company since June 1993. He has been with
Finmeccanica in various positions for over
ten years. He is currently Senior Vice
President of Finmeccanica for Corporate
Development. Mr. de Benedictis serves on the
Board of Directors of a number of affiliates
of Finmeccanica, including Elsag Bailey
Process Automation N.V., a company listed on
the New York Stock Exchange, Union Switch
and Signal, Inc., a company traded on the
Nasdaq National Market.
DIRECTORS WHOSE TERMS EXPIRE IN 1999:
Name Age Present Principal Employer
---- --- and Business Experience
-----------------------
A. William Berkman, Jr. 54 Mr. Berkman has been a director of the
Company since August 1989. Mr. Berkman works
as an independent consultant and, since
1986, has served as a consultant to Toyo
Corporation, a publicly- held Japanese
trading company. Mr. Berkman is also the
Chief Executive Officer of Biomation
Corporation, a manufacturer of logic
analysis systems, Chairman of the Board of
Embedded Performance, Inc., a manufacturer
of emulators and software for RISC
microprocessors, and President of Toyo U.S.
Holdings, Inc., a wholly owned subsidiary of
Toyo Corporation.
William E. Kelly 45 Mr. Kelly has been a director of the Company
since June 1993. He has served as Secretary
from the Company's incorporation in 1984
(except for the period from June 1993 to
September 1993). Mr. Kelly was a partner in
the law firm of Cuddy Bixby in Boston from
1988 until December 1994. Since January
1995, Mr. Kelly has been a partner in the
Boston law firm of Peabody & Arnold.
Each director holds office until that director's successor has been
elected and qualified. The Company's Board of Directors is divided into three
classes. Messrs. Cucchiaro and Cannatelli serve in the class whose term expires
in 1997; Messrs. Rosenfeld and de Benedictis serve in the class whose term
expires in 1998; and Messrs. Berkman and Kelly serve in the class whose term
expires in 1999. Upon expiration of the term of each class of directors,
directors comprising such class will be elected for a three-year term at the
annual meeting of stockholders in the year in which such term expires.
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There are no family relationships among any of the executive officers
or directors of the Company.
The current directors of the Company were initially nominated and
elected in accordance with certain provisions of a shareholders' agreement which
terminated upon the closing of the Company's initial public offering in February
1995.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met four times during the fiscal year ended
March 31, 1997. The Board of Directors has standing Audit and Compensation
Committees. The Board has no nominating committee. All of the directors attended
75% or more of the meetings of the Board and of the Board committee meetings
which they were entitled to attend.
The Compensation Committee, which currently consists of Messrs.
Berkman, de Benedictis and Kelly, reviews the Company's compensation philosophy
and programs and exercises authority with respect to the payment of compensation
to directors and officers and the administration of the stock incentive plans of
the Company. The Compensation Committee met six times during the fiscal year
ended March 31, 1997.
The Audit Committee, which consists of Messrs. Berkman, Cannatelli and
Cucchiaro, recommends the selection of and confers with the Company's
independent accountants regarding the scope and adequacy of annual audits;
reviews reports from the independent accountants; and meets with such
independent accountants and with the Company's financial personnel to review the
adequacy of the Company's accounting principles, financial controls and
policies. The Audit Committee met three times during the fiscal year ended March
31, 1997.
DIRECTOR COMPENSATION
Directors of the Company do not receive compensation for their services
as directors, but non-employee directors are reimbursed for expenses incurred in
connection with attendance at Board of Directors and Committee meetings.
On June 18, 1993, in connection with their election to the Board of
Directors, Messrs. Berkman, de Benedictis and Kelly were each granted
non-qualified options under the Company's 1987 Stock Plan to purchase 4,546
shares of Common Stock and Mr. Cannatelli was granted a non-qualified option
under such plan to purchase 9,091 shares of Common Stock. The exercise price of
all such options is $4.13 per share and all such options are subject to vesting
on an annual basis over five years.
Under the Company's 1994 Directors Stock Option Plan, each non-employee
director (excluding directors who decline the grant of options in writing) is
granted an option for the purchase of 2,500 shares of Common Stock on the first
day of each fiscal year during which such a person serves as a member of the
Board of Directors. The date of the first grant of options under the 1994
Directors Stock Option Plan was April 1, 1996.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid by the Company
during the fiscal year ended March 31, 1997 to those persons who were employed
during the fiscal year ended March 31, 1997 as (i) the Chief Executive Officer
and (ii) the four most highly paid executive officers, other than the Chief
Executive Officer, whose annual compensation exceeded $100,000 (collectively,
the "Named Executive Officers"):
YEAR ANNUAL COMPENSATION LONG TERM COMPENSATION(1)
---- ------------------- -------------------------
COMMISSIONS AWARDS AND ALL OTHER
AND OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION SALARY($) BONUSES($) OTHER(2) (# OF SHARES) $
Lawrence W. Rosenfeld 1997 200,000 156,692 -- 40,000 --
Chairman of the Board, 1996 200,000 27,500 -- 81,250 --
President and Chief 1995 200,000 75,000 -- -- --
Executive Officer
David I. Lemont 1997 180,000 77,152 -- 24,000 --
Senior Vice President and 1996 175,000 29,700 -- 34,063 --
Chief Operating Officer 1995 87,500 27,000 -- 69,546 --
Garreth P. Evans 1997 160,650 71,989 69,899(3) 15,000 --
Senior Vice President, 1996 153,676 32,611 58,926(3) 19,000 --
Business Units Aerospace 1995 123,690 31,136 42,726(4) 54,546 --
and Automotive
Peter T. Lanell 1997 145,000 121,778 -- 15,000 --
Vice President, Business 1996 132,000 51,810 -- 20,000 --
Units Industrial Products 1995 132,000 85,885 -- 9,091 --
and High Technology
Robert E. Phillips 1997 110,000 30,071 -- 12,500 --
Vice President, Engineering 1996 100,000 18,173 -- 15,000 --
1995 86,250 27,050 -- -- --
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(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during
the fiscal year ended March 31, 1997.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser
of $50,000 or 10% of the total of annual salary and bonus for the
executive officer for such year.
(3) Mr. Evans' other compensation includes payments for an automobile,
benefits and pension arrangements.
(4) Mr. Evans' other compensation included payments for relocation expenses
relating to Mr. Evans' residence in the United Kingdom, benefits and
pension arrangements.
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OPTION GRANTS
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended March 31, 1997 to the Named
Executive Officers:
OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS(1)
------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM (2)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED 1997 SHARE ($) DATE 5%($) 10%($)
Lawrence W. Rosenfeld 40,000 (3) 9.1% 4.875 4/3/06 122,634 310,780
David I. Lemont 24,000 (4) 5.4% 4.875 4/3/06 73,581 186,468
Garreth P. Evans 15,000 (5) 3.4% 4.875 4/3/06 45,988 116,542
Peter T. Lanell 15,000 (6) 3.4% 4.875 4/3/06 45,988 116,542
Robert E. Phillips 12,500 (7) 2.8% 4.875 4/3/06 38,323 97,119
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(1) All options were granted at an exercise price equal to market value on
the date of grant. The market value of the Common Stock is determined by
the closing price of the Common Stock on the Nasdaq National Market.
(2) The 5% and 10% assumed annual compound rates of stock price appreciation
for a period of ten years are mandated by rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future Common Stock prices.
(3) So long as Mr. Rosenfeld remains an employee of the Company, options for
the purchase of 10,000 shares of Common Stock became exercisable on April
4, 1997 and options for the purchase of 10,000 shares of Common Stock
will become exercisable on each of April 4, 1998, 1999 and 2000.
(4) So long as Mr. Lemont remains an employee of the Company, options for the
purchase of 6,000 shares of Common Stock became exercisable on April 4,
1997 and options for the purchase of 6,000 shares of Common Stock will
become exercisable on each of April 4, 1998, 1999 and 2000.
(5) So long as Mr. Evans remains an employee of the Company, options for the
purchase of 3,750 shares of Common Stock became exercisable on April 4,
1997 and options for the purchase of 3,750 shares of Common Stock will
become exercisable on each of April 4, 1998, 1999, and 2000.
(6) So long as Mr. Lanell remains an employee of the Company, options for the
purchase of 3,750 shares of Common Stock became exercisable on April 4,
1997 and options for the purchase of 3,750 shares of Common Stock will
become exercisable on each of April 4, 1998, 1999, and 2000.
(7) So long as Mr. Phillips remains an employee of the Company, options for
the purchase of 3,125 shares of Common Stock became exercisable on April
4, 1997 and options for the purchase of 3,125 shares of Common Stock will
become exercisable on each of April 4, 1998, 1999 and 2000.
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AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the number
and value of exercised and unexercised options held by each of the Named
Executive Officers on March 31, 1997.
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT MARCH 31, 1997(#) MARCH 31, 1997($)(1)
ACQUIRED VALUE ---------------------------- -----------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
Lawrence W. Rosenfeld...... -- -- 161,251 60,000 $116,250 $11,250
David I. Lemont............ 14,546 38,183 42,518 70,545 2,250 6,750
Garreth P. Evans........... -- -- 31,351 57,195 1,406 4,219
Peter T. Lanell............ -- -- 65,752 32,340 59,091 4,219
Robert E. Phillips......... -- -- 25,490 24,738 13,446 6,584
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(1) Calculated on the basis of the stock price of the underlying securities
at March 31, 1997 of $5.25 per share, as determined by the Company's
Board of Directors, minus the per share exercise price.
NONCOMPETITION AND TERMINATION AGREEMENTS
The Company has entered into a Noncompetition and Termination Agreement
with Mr. Rosenfeld under which he has agreed not to compete with the Company for
a period of one year following termination of his employment and the Company has
agreed to pay to him, in the event his employment is terminated by the Company
without cause, a termination payment equal to his then current base salary plus
80% of his then current-year maximum variable compensation amount (the
"Termination Payment"). The Termination Payment is payable in twelve equal
monthly installments. In addition, in the event Mr. Rosenfeld's employment is
terminated by the Company without cause, all options held by him at the time his
employment is terminated will continue to vest during the period when the
Company is obligated to make installments of the Termination Payment and will
vest fully on the first anniversary of termination so long as he has not
breached his noncompetition agreement.
The Company has entered into separate and similar Employee
Noncompetition, Nondisclosure and Developments Agreements with Messrs. Lemont
and Evans which provide, in part, for continued payment of their base salary
("Severance Pay") in the event their employment is terminated by the Company
without cause. Under his agreement, Mr. Evans, whose current base salary is
$14,583 per month, is entitled to Severance Pay for six months following
termination of his employment by the Company without cause. Under his agreement,
Mr. Lemont, whose current base salary is $14,583 per month, is entitled to
Severance Pay for up to six months in the event his employment is terminated by
the Company without cause. Messrs. Lemont and Evans have each agreed not to
compete with the Company for a period of one year following the termination of
his employment unless his employment is terminated by the Company without cause,
in which case his noncompetition obligation will terminate six months following
final payment of the Severance Pay. In addition to the Company's Employee
Noncompetition, Nondisclosure and Developments Agreement, the Company's U.K.
subsidiary, ICAD Engineering Automation Ltd., has entered into an agreement with
Mr. Evans requiring six months written notice prior to termination of Mr. Evans'
employment, subject to any longer notice period under the British Contract of
Employment Act 1972, as amended. This agreement permits the Company to pay
salary in lieu of notice.
EMPLOYEE STOCK OPTION PLANS
The 1987 and 1993 Stock Plans of the Company (the "Stock Plans") enable
the Company to grant incentive stock options to employees and to make awards of
restricted Common Stock and to grant non-qualified
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12
options to purchase Common Stock to employees, officers and directors of and
consultants to the Company. Restricted stock awards entitle the recipient to
purchase Common Stock from the Company under terms which provide for vesting
over a period of time and a right of repurchase in favor of the Company of the
unvested portion of the Common Stock, subject to the award upon the termination
of recipient's employment or other relationship with the Company. Stock options
entitle the optionee to purchase Common Stock from the Company, for a specified
exercise price during a period specified in the applicable option agreement. The
Stock Plans are administered by the Compensation Committee of the Board of
Directors which selects the persons to whom restricted stock awards and stock
options are granted and determines the number of shares of Common Stock covered
by the award or option, its purchase price or exercise price, its vesting
schedule and (in the case of stock options) its expiration date. No grants of
restricted stock have been made under either plan. As of March 31, 1997, under
the 1987 Plan, 266,025 shares of Common Stock had been issued upon exercise of
options, options to purchase 643,066 shares of Common Stock were outstanding,
and no shares remained available for future issuance. As of the same date, under
the 1993 Plan, 7,680 shares of Common Stock had been issued upon exercise of
options, options to purchase 585,153 shares of Common Stock were outstanding and
566,258 shares remained available for future issuance.
EMPLOYEE STOCK PURCHASE PLAN
The Company's 1995 Employee Stock Purchase Plan (the "Stock Purchase
Plan") was adopted by the Board of Directors on July 27, 1995, which is intended
to qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code (the "Code"). The Stock Purchase Plan is administered by
the Compensation Committee. The Stock Purchase Plan covers up to 440,000 shares
of the Company's Common Stock (subject to adjustment for any dividend, stock
split or other relevant changes in the Company's capitalization). With certain
exceptions, all employees (including officers) who are employed for at least 20
hours a week and at least five months or more per calendar year and who have
completed ninety days of continuous employment are eligible to participate in
the Stock Purchase Plan. The Stock Purchase Plan has a term of ten years and
consists of eleven offerings of 40,000 shares each, each of which offerings
shall be six months in duration. The first offering under the Stock Purchase
Plan commenced on October 1, 1995 and subsequent offerings will commence on the
day following termination of the prior offering. The number of shares available
for an offering may be increased at the election of the Board by the number of
shares of Common Stock, if any, which were made available but not purchased
during an earlier offering. Participation in one offering under the Stock
Purchase Plan neither limits nor requires participation in any other offering.
To participate in the Stock Purchase Plan, an eligible employee must
complete, sign and deliver a subscription agreement before the first day of an
offering. Participating employees are permitted to purchase shares of Common
Stock through payroll deductions at a purchase price equal to 85% of the lower
of the fair market value of the Common Stock on the first or last day of the
offering period. On each offering date, a participant may elect to purchase up
to the number of whole shares of Company stock determined by dividing (i) 10% of
such participant's compensation in the preceding 12 calendar months by (ii) 85%
of the fair market value of a share of the Common Stock on the offering date.
Employees may terminate their participation in an offering at any time during
the offering period, and participation ends automatically upon termination of
employment (except that the beneficiary of a deceased employee who dies while
participating in the plan may elect to use the amount previously withheld from
the deceased employee to purchase shares under the Stock Purchase Plan). Unless
a participating employee cancels his option or withdraws from the Stock Purchase
Plan, his option for the purchase of shares under the Stock Purchase Plan will
be exercised automatically upon the date of termination of an offering. The
Stock Purchase Plan provides that the Board of Directors may terminate the Stock
Purchase Plan at any time; provided, however, that no such termination may
affect any outstanding options.
401(k) PLAN
In 1991, the Board of Directors adopted the Company's 401(k) Plan, (the
"401(k) Plan"), which is intended to qualify under section 401(k) of the
Internal Revenue code of 1986, as amended (the "Code"). All
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13
employees who are at least 21 years of age and have been employed by the Company
for at least six months are eligible to participate in the 401(k) Plan. Each
eligible employee may elect to contribute to the 401(k) Plan, through payroll
deductions, up to 15% of his or her salary, subject to statutory limitation. The
Company may at its discretion make matching contributions on behalf of each
participating employee in an amount equal to some uniform percentage fixed from
time to time by the Board of Directors. The Company is not currently making
matching contributions. If the Company were to do so in the future, under the
current terms of the 401(k) Plan, employees would become vested in such Company
contributions at the rate of 25% per year of service.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company's 1994 Directors Stock Option Plan (the "Directors Plan") was
adopted on November 18, 1994 and amended on March 29, 1996, and provides for the
granting of options to purchase up to an aggregate of 150,000 shares of Common
Stock to directors who are not employees of the Company. The Directors Plan is
administered by the Compensation Committee. The Directors Plan and the options
granted thereunder are intended to comply with Rule 16b-3 (Reg. sec, 240.16b-3)
under the Securities Exchange Act of 1934, as amended. The exercise price for
options granted under the Directors Plan will be equal to the fair market value
of the Common Stock on the date of grant. Under the Directors Plan, each
eligible director (excluding directors who decline the grant of options in
writing) will be granted an option for the purchase of 2,500 shares of Common
Stock on the first day of each fiscal year during which such a person serves as
a member of the Board of Directors. The current non-employee members of the
Board of Directors, who received options under the Company's 1987 Stock Plan,
first received options under the Directors Plan on April 1, 1996. Newly elected
directors will become eligible for grants under the Directors Plan on the first
day of the fiscal year following the year in which they are first elected and
qualified as members of the Board of Directors and, so long as they remain on
the Board of Directors, on the first day of each fiscal year thereafter. Options
granted under the Directors Plan will remain exercisable for a period of ten
years from the date of grant (so long as the optionee remains a director of the
Company). If a holder of options granted under the Directors Plan ceases to be a
director of the Company, his or her options will terminate on the earlier of the
scheduled termination date or three months after the effective date of
termination of his or her directorship. As of March 31, 1997, options for the
purchase of 12,500 shares were outstanding under the Directors Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to July 6, 1994, the Company did not have a Compensation Committee
and decisions relating to executive compensation were made by the Board of
Directors or the Executive Committee of the Board of Directors. Messrs.
Rosenfeld and Cucchiaro, as members of the Board of Directors, participated in
executive compensation decisions relating to executive officers other than
themselves. On July 6, 1994, the Board of Directors established a Compensation
Committee, consisting of Messrs, de Benedictis, Berkman and Kelly, and delegated
to the Compensation Committee responsibility for decisions concerning executive
compensation.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this proxy statement, in whole or in part, the following
report and the stock performance graph contained elsewhere herein shall not be
incorporated by reference into any such filings nor shall they be deemed to be
soliciting material or deemed filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or under the Securities Exchange
Act of 1934, as amended.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Company's Board of
Directors (the "Board") acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the
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14
Company. In addition, the Committee (i) recommends to the Board the base level
and incentive compensation for the Chief Executive Officer ("CEO"), (ii)
establishes policies and programs that determine the compensation of the
Company's executive officers, (iii) administers the 1987 and 1993 Stock Plans of
the Company (the "Stock Plans"), (iv) administers the 1995 Employee Stock
Purchase Plan (the "Stock Purchase Plan"), and (v) maintains the exclusive
authority to grant stock options to executive officers of the Company under its
Stock Plans.
COMPOSITION AND ACTIVITIES OF THE COMMITTEE
The Committee is composed of three directors, none of whom is an employee
or officer of the Company. Currently, the Committee consists of A. William
Berkman, Jr. (who serves as Chairman), Alberto de Benedictis and William E.
Kelly. The Chairman of the Board and CEO, Lawrence W. Rosenfeld, participates in
the Committee's discussions, except those that relate to his compensation. Mr.
Rosenfeld provides compensation information, survey data and other material
requested by the Committee. In addition, he makes recommendations to the
Committee on the compensation methods and levels of the other executive
officers. Mr. Rosenfeld does not attend or participate in the discussions
regarding his own compensation, nor does he make any recommendation with respect
thereto. Mr. Rosenfeld does not vote on any matter considered by the Committee,
and he does not participate in administration of the Stock Plans or the Stock
Purchase Plan.
The Committee held six meetings in the fiscal year ended March 31, 1997,
and all voting members of the Committee attended those meetings.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's objective is to develop compensation policies which will
assist in attracting, motivating, and retaining the high quality of executives
and managers capable of sustaining the Company's aggressive growth and profit
objectives. It is the opinion of the Committee that the implementation of this
philosophy is best accomplished by aligning each manager's compensation, and
therefore the manager's motivation, with that of the stockholders. Compensation
policies which support this philosophy include industry competitive salaries,
cash bonuses and equity incentives.
The Committee favors a compensation system which emphasizes performance
bonus compensation and equity incentives, the proportion of variable
compensation increasing to 50% of total target compensation for senior
executives. Furthermore, the Committee believes that broad-based employee equity
ownership provides an important incentive to focus the efforts and contributions
of each participating employee on the Company's success.
ELEMENTS OF COMPENSATION
The components of officer and key manager compensation include salary,
cash bonus, stock options granted pursuant to the Stock Plans, purchase of stock
through participation in the Stock Purchase Plan, the right to participate in
the 401(k) plan (without matching employer contributions), supplemental life
insurance, and other standard benefits. There are no other officer or key
manager perquisites. Compensation of sales personnel include identical
components, except that sales commissions replace cash bonuses. All salaried
employees are compensated with a base salary, are entitled to participate in the
401(k) plan (without matching employer contributions), and receive other
standard benefits. In addition, all salaried employees are granted options under
the Stock Plans as part of an offer of employment, and are encouraged to accept
slightly lower salaries in exchange for participation in variable compensation
programs.
Base salary is determined on the basis of the level of responsibility,
expertise and experience of the employee or officer, taking into consideration
competitive conditions in the industry and the percentage of total target cash
compensation that is variable. The Committee reviews and approves the salaries
of the Company's executives. The measures of individual performance considered
in setting executive salaries include, to the extent
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15
applicable to an individual executive officer, a number of quantitative and
qualitative factors, including, the Company's historical and recent financial
performance in the principal area of responsibility, individual performance,
experience and overall contributions made to the Company's success. The
Committee had not found it practicable, nor has it attempted, to assign relative
weights to the specific factors used in determining base salary levels, and the
specific factors used may vary among individual officers. Payment of base salary
is not conditioned upon the achievement of any specific or predetermined
performance targets.
The Company's incentive compensation program seeks to motivate officers
and key managers to work effectively to achieve the Company's financial
performance objective and to reward the program participants when individuals
and corporate objectives are met. Cash bonuses awarded to officers and other key
employees are typically based on a target percentage of salary, adjusted for
achievement of revenue and profit goals by the Company and evaluations of
individual performance to predetermined objectives. Sales commissions are paid
to sales personnel during the fiscal year as a percentage of individual sales
production. The percentage of commission paid increases only after the
individual sales person exceeds a predetermined quota for the applicable period.
Ownership of the Company's Common Stock is a significant element of
executive and key manager compensation, and is considered an important
motivational tool for all employees. All employees are eligible to participate
in the Stock Plans. The Stock Plans permit the Board or the Committee to grant
options to employees on such terms as the Board or the Committee may determine.
The Committee has sole authority to grant stock options to officers of the
Company. In determining the terms of a stock option grant to an officer or other
employee (including the number of shares subject to an option), the Committee
takes into account equity participation by comparable employees within the
Company, external competitive circumstances, individual significant
contributions, the dilutive effect of any such option granted to earnings per
share, and other factors that may, from time to time, be relevant. This program
is intended to permit broad-based equity ownership throughout the Company.
The Committee has delegated the authority to recommend to the Committee
the grant of a small number of options as part of an offer of employment to
members of a management committee. This management committee consists of the
CEO, the Chief Operating Officer and the Chief Financial Officer. The delegated
authority limits the size of any such recommendation of grants to the maximum in
a range of options predetermined for the job classification of the prospective
employee.
Options granted under the Stock Plans in fiscal 1997 generally vested
linearly over five years. The Committee may, from time to time, change the
vesting schedule of options, including options which have already been granted.
The Committee may also choose to grant options which do not vest until the end
of the option period, and wherein any future acceleration of such vesting is at
the sole discretion of the Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 1997
The Company's Chairman of the Board and CEO, Lawrence W. Rosenfeld,
received salary payments totaling $200,000 during the fiscal year ended March
31, 1997. In addition, Mr. Rosenfeld was paid cash bonus compensation of
$156,692 during the fiscal year. Mr. Rosenfeld was granted an option to purchase
40,000 shares of the Company's Common Stock at an exercise price of $4.875 in
the fiscal year ended March 31, 1997.
DEDUCTIBILITY OF COMPENSATION EXPENSES
The Committee has reviewed Section 162(m) of the Code as amended by the
Omnibus Budget Reconciliation Act of 1993. The Committee has decided to take no
action at this time with respect to the Company's compensation program as a
result of this change in the tax law, but will continue to evaluate the possible
effects of the new provisions.
- 13 -
16
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
A. William Berkman, Jr., Chairman
William E. Kelly
Alberto de Benedictis
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the Company's six month
cumulative total stockholder return with the NASDAQ Stock Market - US Index and
the S&P Computer Software & Services Index. Cumulative total return is measured
assuming an initial investment of $100 and reinvestment of dividends.
RESEARCH Total Return - Data Summary
CTRA
Cumulative Total Return
---------------------------------------------------------------------------------------
2/07/95 2/95 3/95 4/95 5/95 6/95 7/95 8/95 9/95 10/95 11/95 12/95
CONCENTRA CORP CTRA 100 81 109 99 80 77 89 87 83 75 81 69
NASDAQ STOCK MARKET-US INAS 100 105 108 112 115 124 133 136 139 138 141 141
S&P COMPUTERS (SOFTWARE & SERVICES) ICSF 100 108 113 123 126 136 139 139 137 150 148 142
RESEARCH
CTRA
---------------------------------------------------------------------------------------
1/96 2/96 3/96 4/96 5/96 6/96 7/96 8/96 9/96 10/96 11/96 12/96
CONCENTRA CORP CTRA 44 49 42 50 48 48 46 53 49 73 68 71
NASDAQ STOCK MARKET-US INAS 141 147 147 159 167 159 145 153 165 163 173 173
S&P COMPUTERS (SOFTWARE & SERVICES) ICSF 153 158 160 172 176 181 177 178 198 201 229 220
RESEARCH
CTRA
----------------------
1/97 2/97 3/97
CONCENTRA CORP CTRA 113 106 42
NASDAQ STOCK MARKET-US INAS 185 175 164
S&P COMPUTERS (SOFTWARE & SERVICES) ICSF 249 239 225
- 14 -
17
PROPOSAL NO. 2 - APPROVAL OF THE AMENDMENT TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK
OF THE COMPANY AUTHORIZED TO BE ISSUED UNDER
THE COMPANY'S 1993 STOCK PLAN
On May 20, 1997, the Board of Directors adopted, subject to stockholder
approval, an amendment to the Company's 1993 Stock Plan (the "1993 Stock Plan")
to increase by 250,000 the number of shares of Common Stock authorized for
issuance under the 1993 Stock Plan.
DESCRIPTION OF THE 1993 STOCK PLAN
GENERAL. The 1993 Stock Plan was adopted by the Company's Board of
Directors on June 11, 1993, and was subsequently approved by the Company's
stockholders. The 1993 Stock Plan is intended to encourage ownership of the
Company's Common Stock by directors, officers and employees of, and consultants
to, the Company. Under the Plan, the Company is able to provide incentives by
four methods. First, the Company may grant options to employees of the Company
which provide these individuals with the opportunity to purchase shares of the
Common Stock of the Company at a specified price during a given time period,
subject to various restrictions imposed by law, the Plan and Company policy.
These options qualify as "incentive stock options" ("Incentive Stock Options")
under Section 422A(b) of the Code. The Company may also grant options to
directors, officers, employees and consultants of the Company which do not
qualify as Incentive Stock Options ("Non-Qualified Options" and, together with
Incentive Stock Options, "Options"). These Non-Qualified Options also provide
the optionholder with the opportunity to purchase shares of the Company's Common
Stock. Another method by which the Company can provide incentives under the Plan
is to award Common Stock to its directors, officers, employees and consultants
("Awards"). Finally, the Company may authorize a director, officer, employee or
consultant to make a direct purchase of shares of the Common Stock of the
Company ("Direct Purchases"). Under the Plan, the Company may grant Incentive
Stock Options, Non-Qualified Options and Awards and authorize Direct Purchases
at any time prior to June 11, 2003. The Plan shall expire on June 11, 2003,
except as to Options outstanding on that date.
ADMINISTRATION OF THE PLAN. The 1993 Stock Plan is currently administered
by the Compensation Committee of the Board of Directors, which consists of three
directors, each of whom must be a "disinterested person" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Compensation Committee selects the persons to whom Options, Awards
and Direct Purchases are granted and determines the number os shares of Common
Stock covered by the Options, Awards or Direct Purchases, the purchase price or
exercise price, the vesting schedule and (in the case of Options) the expiration
date. No option is exercisable after 10 years from the date on which it is
granted.
STOCK OPTION FEATURES. The aggregate fair market value (determined at the
time of grant) of shares issuable pursuant to incentive stock options which
first become exercisable in any calendar year by an employee or officer may not
exceed $100,000. Incentive stock options may not be granted at less than the
fair market value of the Common Stock on the date of grant or 110% of fair
market value in the case of incentive stock options granted to any optionee
holding 10% or more of all classes of voting stock of the Company.
Options issued under the 1993 Stock Plan are not transferable, except by
will or the laws of descent and distribution. Each option is exercisable only
while the optionee is in the employ or serving as a director of, or consultant
or to, the Company, except that an incentive stock option is exercisable within
up to three months after termination of employment or service to the extent such
option has vested at the time of such termination and non-qualified stock
options may be exercisable for a longer period after termination of employment
or any service arrangement. If an optionee dies while employed or retained by
the Company or within three months of the termination of his or her employment
by or service to the Company, such optionee's options may be exercised up to 180
days after his or her death. If an optionee is permanently disabled during his
or her employment by or service to the Company, such optionee's options may be
exercised up to 180 days following termination of his or
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18
her employment or service due to such disability. The exercise price of options
granted under the 1993 Stock Plan must be paid in full upon exercise in cash,
shares of Common Stock already owned by the optionee or by any other means the
Board of Directors determines, or a combination thereof.
TERMINATION AND AMENDMENT OF THE 1993 STOCK OPTION PLAN. The 1993 Stock
Plan will terminate on June 11, 2003, 10 years from the date the plan was
adopted by the Company's Board of Directors. The Board may terminate or amend
the 1993 Stock Plan at any time.
ACCOUNTING EFFECTS. Under current accounting rules, neither the grant nor
exercise of options under the Stock Incentive Plan is expected to result in any
charge to the earnings of the Company. Options with variable exercise prices or
at an exercise price less the fair market value on the date of grant may result
in charges to earnings under certain circumstances.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary
of certain Federal income tax aspects of options granted or which may be under
the Plan based upon the Federal income tax laws in effect on the date hereof.
This summary is not intended to be exhaustive and does not describe state or
local tax consequences.
1. Incentive Stock Options. An employee receiving an incentive stock
option ("ISO") will not realize taxable income upon the grant of the ISO or upon
its timely exercise. Exercise of an ISO will be timely if made during its terms
and if the employee remains an employee of the Company or a subsidiary
corporation at all times during the period beginning on the date of grant of the
ISO and ending on the date three months before the date of exercise (or 180 days
before the date of exercise in the case of a disabled employee). Exercise of an
ISO will also be timely if made within 180 days of the date of death (provided
it is exercisable by its terms) by the legal representative of an employee who
dies while in the employ of the Company or a subsidiary corporation. However,
the 1993 Stock Plan limits the right of the legal representative of any
participant to exercise an option to 180 days following death. Upon a sale of
the stock received upon exercise, except as noted below, the employee will
generally recognize long-term capital gain or loss equal to the difference
between the amount realized upon such sale and the exercise price. The Company,
under these circumstances, will not be entitled to any Federal income tax
deduction in connection with the exercise of the ISO or the sale of such stock.
If the stock acquired pursuant to an exercise of an ISO is disposed of by
the employee prior to the expiration of two years from the date of grant or
within one year from the date such stock is issued to him upon exercise (a
"disqualifying disposition"), any gain realized by the employee generally will
be taxable at the time of such disqualifying disposition, as follows: (i) at
ordinary income rates to the extent of the difference between the exercise price
and the lesser of the fair market value of the stock on the date the ISO is
exercised (the value on a later date is likely to govern in the case of an
employee whose sale of the stock at a profit could subject him to suit under
Section 16(b) of the Securities Exchange Act of 1934) or the amount realized on
such disqualifying disposition, and (ii) if the stock is a capital asset of the
employee, as short-term or long-term capital gain to the extent of any excess of
the amount realized on such disqualifying disposition over the fair market value
of the stock on the date which governs the determination of the employee's
ordinary income. In such case, the Company may claim a Federal income tax
deduction at the time of such disqualifying disposition for the amount taxable
to the employee as ordinary income. Any capital gain realized by the employee
will be long-term capital gain if the employee's holding period for the stock at
the time of disposition is more than one year; otherwise it will be short-term.
The amount by which the fair market value of the stock on the exercise date of
an ISO exceeds the exercise price will be an item of tax preference for purposes
of the alternative minimum tax imposed by the Code.
2. Non-qualified Stock Options. In the case of non-qualified stock
options ("NQSOs") (and in the case of an untimely exercise of an ISO), the
employee will not be taxed upon grant of any such option, but rather, at the
time of exercise of such NQSOs, the employee, except as noted below, will
realize ordinary income for Federal income tax purposes in an amount equal to
the excess of the fair market value of the shares purchased
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19
over the exercise price. The Company will generally be entitled to a tax
deduction at such time and in the same amount that the employee realizes
ordinary income. If stock so acquired is later sold or exchanged, then the
difference between the sales price and the fair market value of such stock on
the date of exercise of the option is generally taxable as long-term or
short-term capital gains or loss depending upon whether the stock has been held
for more than one year after such date.
As stated above, generally income is realized by an employee upon
exercise of an NQSO (or untimely exercise of an ISO). However, in the case of
such exercise of an option by an employee whose sale of shares at a profit could
subject the employee to suit under Section 16(b) of the Securities Exchange Act
of 1934, realization of income is postponed so long as a sale of the shares
would expose the employee to such suit, unless the employee elects within 30
days after the exercise to be taxed as of the exercise date in the manner
described above. Absent such election, such an employee will realize ordinary
income at the time a sale would no longer expose him to such suit in an amount
equal to the excess of the fair market value of the shares at that time over the
exercise price. That fair market value will also govern for purposes of the
Company's deduction and for determining the employee's gain or loss upon
subsequent disposition of the shares.
3. Exercise with Shares. An employee who pays the exercise price upon
exercise of an NQSO, in whole or in part, by delivering shares of the Company's
stock already owned by him will realize no gain or loss for Federal income tax
purposes on the share surrendered, but otherwise will be taxed according to the
rules described above for NQSOs. (See "Certain Federal Income Tax Consequences -
2. Nonqualified Stock Options.") With respect to shares acquired upon exercise
which are equal in number to the shares surrendered, the basis of such shares
will be equal to the fair market value of such shares on the date of exercise,
and the holding period for such additional shares will commence on the date the
option is exercised.
When shares of the Company's stock are surrendered upon exercise of an
ISO, (i) no gain or loss will be recognized as a result of the exchange, (ii) a
number of shares received which is equal to the number of shares surrendered
will have a basis equal to that of the shares surrendered, and (except for
purposes of determining whether a disposition will be a disqualifying
disposition) will have a holding period which includes the holding period of the
shares exchanged and (iii) the remaining shares received will have a zero basis
and will have a holding period which begins on the date of the exchange. If any
of the shares received are disposed of within two years of the date of grant of
the ISO or within one year after exercise, the shares with the lowest basis
(i.e., a zero basis) will be deemed to be disposed of first, and such
disposition will be a disqualifying disposition giving rise to ordinary income
as discussed above.
AMENDED PLAN BENEFITS
1993 STOCK PLAN
Number of Shares Aggregate
Subject to Options Exercise
NAME AND POSITION GRANTED(#) PRICE($)
- ----------------- ------------------ ---------
Lawrence W. Rosenfeld 46,250 $252,813
President, Chief
Executive Officer
and Chairman of the Board
David I. Lemont 30,853 181,088
Senior Vice President and
Chief Operating Officer
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20
Garreth P. Evans 42,273 260,627
Senior Vice President,
Business Units Aerospace
and Automotive
Peter T. Lanell 19,545 104,372
Vice President, Business Units
Industrial Products and High
Technology
Robert E. Phillips 27,500 203,438
Vice President, Engineering
Executive Group 206,058 1,277,528
Non-Executive Director -- --
Group
Non-Executive Officer 483,940 3,318,892
Employee Group
No Awards or Direct Purchases have been granted under the 1993 Stock
Plan.
REQUIRED AFFIRMATIVE VOTE
The approval of the amendment to increase by 250,000 the number of shares
of Common Stock authorized for issuance under the 1993 Stock Plan will require
the affirmative approval of a majority of the votes which may be cast at the
Annual Meeting by the holders of the Common Stock.
THIS PROPOSAL HAS BEEN UNANIMOUSLY APPROVED BY THE BOARD OF DIRECTORS,
WHICH RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ITS ADOPTION.
PROPOSAL NO. 3 - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Coopers & Lybrand
L.L.P. as auditors of the Company for the fiscal year ending March 31, 1998 and
further directed that management submit the selection of auditors for
ratification by the stockholders. Coopers & Lybrand L.L.P. were the Company's
auditors for the fiscal year ended March 31, 1997.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting, with the opportunity to make a statement if they desire to
do so, and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE CHOICE OF COOPERS & LYBRAND, L.L.P. AS THE COMPANY'S AUDITORS.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and San Giorgio System Technology S.p.A. ("SGST"), a
subsidiary of Finmeccanica and a corporate affiliate of San Giorgio S.A. ("San
Giorgio"), the Company's largest stockholder, are parties to an exclusive
distributor agreement pursuant to which the Company has appointed SGST exclusive
distributor in Italy of Concentra's products and customer support services for a
three-year term which expired in June 1996. The agreement obligated SGST to make
a payment to Concentra in the amount of $1.2 million, which was paid in four
equal quarterly installments beginning July 1, 1993, in return for which SGST
received the master copy of the licensed products with the right to resell 40
copies of the Concentra software to end users.
The Company and Elsag International N.V. ("Elsag"), a subsidiary of
Finmeccanica, entered into a Corporate Software License Agreement, which was
subsequently assigned by Elsag to San Giorgio and thereafter by San Giorgio to
Finmeccanica. Under this agreement, the Company granted 60 licenses for use of
Concentra software by the Elsag Bailey Group, a division of Finmeccanica, at an
aggregate purchase price of $2.8 million, payable in quarterly installments. As
of March 31, 1995, the Company had received all payments due under the agreement
and Finmeccanica had received the master copy of the licensed products. In the
event Finmeccanica orders more than 60 licenses, such additional licenses may be
purchased at a discount of 30% below Concentra's U.S. list price.
The Company and Stephen J. Cucchiaro were parties to a Noncompetition and
Termination Agreement. Prior to Mr. Cucchiaro's resignation as President on
March 31, 1994, the Company modified its Noncompetition and Termination
Agreement with him to provide for a severance payment to Mr. Cucchiaro in the
amount of $141,500, payable in installments through March 1995. Mr. Cucchiaro is
a director of the Company. The terms of the severance arrangement with Mr.
Cucchiaro were reviewed and approved as consistent with similar arrangements
within the software industry and in the best interest of the Company and its
stockholders by the disinterested members of the Board of Directors.
The Company has retained the law firm of Peabody & Arnold as general
counsel. William E. Kelly, a director and Secretary of the Company, is a partner
in Peabody & Arnold.
Stephen J. Cucchiaro, a director of the Company, has since July 1, 1996
been the manager of record for two of the seven investment options available to
eligible employees under the Company's 401(k) Plan. The decision to invest in
these funds is at the discretion of the individual employee and is completely
voluntary. Although Mr. Cucchiaro receives no compensation or remuneration
directly from the Company for his role as the manager of record for the two
funds, he is entitled to receive an annual management fee based on the amounts,
if any, which are invested in the two funds by eligible employees; such
management fee is payable from the accounts managed by Mr. Cucchiaro.
On July 6, 1994, the Company adopted a policy that all transactions
between the Company and its officers, directors and other affiliates must (i) be
approved by a majority of the members of the Company's Board of Directors and by
a majority of the disinterested members of the Company's Board of Directors and
(ii) be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the Company's 1998
annual meeting of stockholders must be received at the executive offices of the
Company not later than March 31, 1998 in order to be considered for inclusion in
the Company's proxy statement and form of proxy for that meeting.
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ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
March 31, 1997 is being furnished to stockholders of record on July 25, 1997.
The Annual Report to Stockholders does not constitute a part of the proxy
soliciting material.
OTHER MATTERS
As of the date of this proxy statement, management of the Company knows
of no matter not specifically referred to above as to which any action is
expected to be taken at the Annual Meeting. The persons named in the enclosed
form of proxy, or their substitutes, will vote the proxies, insofar as the same
are not limited to the contrary, in regard to such other matters and the
transaction of such other business as may properly be brought before the Annual
Meeting, in their best judgement.
FORM 10-K AVAILABLE
THE ANNUAL REPORT OF THE COMPANY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K, WHICH INCLUDES CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES FOR THE COMPANY AND ITS SUBSIDIARIES, IS AVAILABLE
TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CHIEF FINANCIAL
OFFICER OF THE COMPANY AT 21 NORTH AVENUE, BURLINGTON, MASSACHUSETTS 01803.
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APPENDIX A
CONCENTRA CORPORATION
1993 STOCK PLAN
---------------
1. PURPOSE. This 1993 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of Concentra Corporation
(the "Company"), its parent (if any) and any present or future subsidiaries of
the Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422A(b) of
the Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs");
(b) to directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors, officers,
employees and consultants of the Company and Related Corporations by providing
them with awards of stock in the Company ("Awards"); and (d) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options". Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 425 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board may appoint a Stock Plan Committee (the
"Committee") of three or more of its members to administer the Plan. Subject to
ratification of the grant or authorization of each Stock Right by the Board (if
so required by applicable state law), and subject to the terms of the Plan, the
Committee, if so appointed, shall have the authority to (i) determine the
employees of the Company and Related Corporation (from among the class of
employees eligible under paragraph 3 to receive ISOs) to whom ISOs may be
granted, and to determine (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Awards and to
make Purchases) to whom Non-Qualified Options, Awards and authorizations to make
Purchases may be granted; (ii) determine the time or times at which Options or
Awards may be granted or Purchases made; (iii) determine the option price of
shares subject to each Option, which price shall not be less than the minimum
price specified in paragraph 6, and the purchase price of shares subject to each
Purchase; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraph 7) the time or times
when each Option shall become exercisable and the duration of the exercise
period; (vi) determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options, Awards and Purchases and the nature of
such restrictions, if any, and (vii) interpret the Plan
24
and prescribe and rescind rules and regulations relating to it. If the Committee
determines to issue a Non-Qualified Option, it shall take whatever actions it
deems necessary, under Section 422A of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Rights granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Stock Right granted under it.
B. The Committee may select one of its members as its chairman, and
shall hold meetings at such time and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. All references in this Plan to the Committee shall mean the Board if
no Committee has been appointed. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.
C. Stock Rights may be granted to members of the Board, but no Stock
Right shall be granted to any person who is, at the time of the proposed grant,
a member of the Board, unless such grant has been approved by a majority vote of
the other members of the Board. All grants of Stock Rights to members of the
Board shall in all other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Members of the Board who are
either (i) eligible for Stock Rights pursuant to the Plan or (ii) have been
granted Stock Rights may vote on any matters affecting the administration of the
Plan or the grant of any Stock Rights pursuant to the Plan, except that no such
member shall act upon the granting to himself of Stock Rights, but any such
member may be counted in determining the existence of a quorum at any meeting of
the Board during which action is taken with respect to the granting to him of
Stock Rights.
D. Notwithstanding any other provision of this paragraph 2, in the
event the Company registers any class of any equity security pursuant to Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
grants to directors of Stock Rights made at any time from the effective date of
such registration until six months after the termination of such registration
shall be made only by the Board; provided, however, that if a majority of the
Board is eligible to participate in the Plan or in any other stock option or
other stock plan of the Company or any of its affiliates, or has been so
eligible at any time within the preceding year, any grant to directors of Stock
Rights must be made by, or only in accordance with the recommendation of, a
committee consisting of three or more persons, who may but need not be directors
or employees of the Company, appointed by the Board but having full authority to
act in the matter, none of whom is eligible to participate in this Plan or any
other stock option or other stock plan of the
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Company or any of its affiliates, or has been eligible at any time within the
preceding year. The requirements imposed by the preceding sentence shall also
apply with respect to grants to officers who are also directors. Once appointed,
such Committee shall continue to serve until otherwise directed by the Board.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted to any employee of
the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any director (whether or not an employee), officer, employee or
consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining whether
to grant an ISO, a Non-Qualified Option or an authorization to make a Purchase.
Granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify him from, participation in any
other grant of Stock Rights.
4. STOCK. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.00001
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 5,250,000, subject to adjustment as provided in
paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options or
Awards, or to persons or entities making Purchases, so long as the number of
shares so issued does not exceed such number, as adjusted. If any Option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole or in
part, or if the Company shall reacquire any unvested shares issued pursuant to
Awards or Purchases, the unpurchased shares subject to such Options and any
unvested shares so reacquired by the Company shall again be available for grants
of Stock Rights under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan at
any time on or after June 11, 1993 and prior to June 11, 2003. The date of grant
of a Stock Right under the Plan will be the date specified by the Committee at
the time it grants the Stock Right; provided, however, that such date shall not
be prior to the date on which the Committee acts to approve the grant. The
Committee shall have the right, with the consent of the optionee, to convert as
ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph 16.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. The price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan shall in no event be less than the
lesser of (i) the book value per share of Common Stock as of the end of the
fiscal year of the Company immediately preceding the date of such grant, or (ii)
50 percent of the fair market value per share of Common Stock on the date of
such grant.
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B. The price per share specified in the agreement relating to each ISO
granted under the Plan shall not be less than the fair market value per share of
Common Stock on the date of such grant. In the case of an ISO to be granted to
an employee owning stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company or any Related Corporation,
the price per share specified in the agreement relating to such ISO shall not be
less than 110 percent of the fair market value per share of Common Stock on the
date of grant.
C. In no event shall the aggregate fair market value (determined at
the time an ISO is granted) of Common Stock for which ISOs granted to any
employee are exercisable for the first time by such employee during any calendar
year (under all stock option plans of the Company and any Related Corporation)
exceed $100,000; provided that this paragraph 6(C) shall have no force or effect
if its inclusion in the Plan is not necessary for Options issued as ISOs to
qualify as ISOs pursuant to Section 422A(b)(7) of the Code.
D. If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market List. However, if the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall be deemed to
be the fair value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an employee owning stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or any
Related Corporation. Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
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8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. The Option shall either be fully exercisable on the date of grant
or shall become exercisable thereafter in such installments as the Committee may
specify.
B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.
C. Each Option or installment may be exercised at the acceleration
time named at the Board's discretion, or from time to time, in whole or in part,
for up to the total number of shares with respect to which it is then
exercisable.
D. The Committee shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Committee shall not
accelerate the exercise date of any installment of any Option granted to any
employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 16) if such acceleration would violate the annual vesting
limitation contained in Section 422A(b)(7) of the Code, as described in
paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of 60 days
from the date of termination of his employment, but in no event later than on
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed 90 days or, if longer, any period during
which such optionee's right to reemployment is guaranteed by statute. A bona
fide leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.
10. DEATH; DISABILITY.
A. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his death, any ISO of his may be exercised, to
the extent
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of the number of shares with respect to which he could have exercised it on the
date of his death, by his estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and distribution, at any time
prior to the earlier of the ISO's specified expiration date or 180 days from the
date of the optionee's death.
B. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his disability, he shall have the right to
exercise any ISO held by him on the date of termination of employment, to the
extent of the number of shares with respect to which he could have exercised it
on that date, at any time prior to the earlier of the ISO's specified expiration
date or 180 days from the date of the termination of the optionee's employment.
For the purposes of the Plan, the term "disability" shall mean "permanent and
total disability" as defined in Section 22(e)(3) of the Code or successor
statute.
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable
by the grantee except by will or by the laws of descent and distribution, and
during the lifetime of the grantee each Stock Right shall be exercisable only
by him.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 and 11 hereof and may contain such other
provisions as the Committee deems advisable which are not inconsistent with the
Plan, including restrictions applicable to shares of Common Stock issuable upon
exercise of Options. In granting any Non-Qualified Option, the Committee may
specify that such Non-Qualified Option shall be subject to the restrictions set
forth herein with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may determine. The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one
or more officers of the Company to execute and deliver such instruments. The
proper officers of the Company are authorized and directed to take any and all
action necessary or advisable from time to time to carry out the terms of such
instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. If the shares of Common Stock shall be subdivided or combined into
a greater or smaller number of shares or if the Company shall issue any shares
of Common Stock as a stock dividend on its outstanding Common Stock, the number
of shares of Common Stock deliverable upon the exercise of Options shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
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B. If the Company is to be consolidated with or acquired by another
entity in a merger, sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor
Board"), shall, as to outstanding Options, either (i) make appropriate provision
for the continuation of such Options by substituting on an equitable basis for
the shares then subject to such Options the consideration payable with respect
to the outstanding shares of Common Stock in connection with the Acquisition; or
(ii) upon written notice to the optionees, provided that all Options must be
exercised, to the extent then exercisable, within a specified number of days of
the date of such notice, at the end of which period the Options shall terminate;
or (iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options (to the
extent then exercisable) over the exercise price thereof.
C. In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
securities he would have received if he had exercised his Option prior to such
recapitalization or reorganization.
D. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs A, B or C with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term is
defined in Section 425 of the Code) or would cause any adverse tax consequences
for the holders of such ISOs. If the Committee determines that such adjustments
made with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments.
E. In the event of the proposed dissolution or liquidation of the
Company, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Committee.
F. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Company.
G. No fractional shares shall be issued under the Plan and the
optionee shall receive from the Company cash in lieu of such fractional shares.
H. Upon the happening of any of the foregoing events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in
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paragraph 4 hereof that are subject to Stock Rights which previously have been
or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events described in such subparagraphs. The Committee or
the Successor Board shall determine the specific adjustments to be made under
this paragraph 13 and, subject to paragraph 2, its determination shall be
conclusive.
If any person or entity owning restricted Common Stock obtained by exercise
of a Stock Right made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs A, B or C
above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares or Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right, or (c) at the discretion of the Committee, by delivery
of the grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, or (d) at the discretion of the Committee, by
any combination of (a), (b) and (c) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (b), (c) or (d) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO in
question. The holder of a Stock Right shall not have the rights of a shareholder
with respect to the shares covered by his Stock Right until the date of issuance
of a stock certificate to him for such shares. Except as expressly provided
above in paragraph 13 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights for which
the record date is before the date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on June
11, 1993, subject (with respect to the validation of ISOs granted under the
Plan) to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by unanimous written consent. If
the approval of the stockholders is not obtained by June 11, 1994, any grants of
ISOs under the Plan made prior to that date will be rescinded. The Plan shall
expire on June 11, 2003 (except as to Options outstanding on that date). Subject
to the provisions of paragraph 5 above, Stock Rights may be granted under the
Plan prior to the date of stockholder approval of the Plan. The Board may
terminate or amend the Plan in any respect at any time, except that, without the
approval of the stockholders obtained within 12 months before or after the Board
adopts a resolution
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authorizing any of the following actions: (a) the total number of shares that
may be issued under the Plan may not be increased (except by adjustment pursuant
to paragraph 13); (b) the provisions of paragraph 3 regarding eligibility for
grants of ISOs may not be modified; (c) the provisions of paragraph 6(B)
regarding the exercise price at which shares may be offered pursuant to ISOs may
not be modified (except by adjustment pursuant to paragraph 13); and (d) the
expiration date of the Plan may not be extended. Except as provided in the
fourth sentence of this paragraph 15, in no event may action of the Board or
stockholders alter or impair the rights of a grantee, without his consent, under
any Stock Right previously granted to him.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS. The
Committee, at the written request of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the Optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includable in such person's gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock for
less than its fair market value,
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32
or (iv) the vesting of restricted Common Stock acquired by exercising a Stock
Right on the grantee's payment of such additional withholding taxes.
20. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
21. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan
and the instruments evidencing Stock Rights shall be governed by the laws of the
State of Delaware. In construing this Plan, the singular shall include the
plural and the masculine gender shall include the feminine and neuter, unless
the context otherwise requires.
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33
CONCENTRA CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Lawrence
W. Rosenfeld and Alex Braverman, and each of them, with full power of
substitution, as proxies to represent and vote as designated herein, all shares
of stock of Concentra Corporation (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held at the Renaissance Bedford Hotel, 44 Middlesex Turnpike,
Bedford, Massachusetts 01730, on Friday, August 29, 1997 at 1:00 p.m., or any
adjourned sessions thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholders. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. Attendance of the undersigned at the
meeting or at any adjournment thereof will not be deemed to revoke this proxy
unless the undersigned revokes this proxy in writing before it is exercised.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
34
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Stockholders, you
can be sure your shares are represented at the Meeting by promptly returning
your proxy (attached below) in the enclosed envelope. Thank you for your
attention to this important matter.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. To elect the following persons to serve as directors for a term of three
years (except as marked below):
NOMINEES: Vincenzo Cannatelli and Stephen J. Cucchiaro
FOR [ ] WITHHELD [ ]
[ ] ______________________________________________________________
(Instruction: To vote against an individual nominee, write the
name of such nominee in the space provided above.
2. To approve the adoption of an amendment to the Company's 1993 Stock Plan
to increase by 250,000 the number of shares of Common Stock authorized
for issuance under the 1993 Stock Plan as described in the accompanying
proxy statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the 1998 fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments of the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT.
Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give the full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
Signature: ___________________________________ Date: _____________________
Signature: ___________________________________ Date: _____________________