Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Tender-Offer Solicitation/Recommendation Statement 36 200K
2: EX-1 Agreement and Plan of Merger 54 211K
3: EX-2 License Agreement Dated October 15, 1998 27 87K
4: EX-3 Stockholder Agreement With King R. Lee 10 37K
5: EX-4 Stockholder Agreement With Frank W. T. Lahaye 10 37K
6: EX-5 Stockholder Agreement With William H. Lane Iii 10 37K
7: EX-6 Stockholder Agreement With Howard Morgan 10 37K
8: EX-7 Stockholder Agreement With Frank Greico 10 37K
9: EX-8 Stockholder Agreement With Joyce Wrenn 10 36K
10: EX-9 Stockholder Agreement With Suzanne Dickson 10 37K
11: EX-10 Stockholder Agreement With Gadi Navon 10 36K
12: EX-11 Stockholder Agreement With Cheri Kaplan-Smith 10 37K
13: EX-12 Stockholder Agreement With John Strosahl 10 37K
14: EX-13 Letter to Stockholders of Quarterdeck Corporation 2± 11K
15: EX-14 Fairness Opinion of Broadview International LLC 2 17K
16: EX-15 Confidentiality Agreement Dated September 15, 1998 3 15K
17: EX-16 Disclosure Agreement 6 27K
18: EX-17 Form of Indemnification Agreement 7 33K
19: EX-18 Proxy Statement Pages 8 41K
EX-18 — Proxy Statement Pages
| EX-18 | 1st Page of 8 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
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Exhibit 18
The Board of Directors held 13 meetings during the fiscal year ended
September 30, 1997. All directors attended at least 75% of the meetings of the
Board of Directors, and all members of the committees of the Board of Directors
attended at least 75% of the meetings of those committees, in each case, after
the election of such individuals to the Board of Directors or to such committee.
DIRECTORS' COMPENSATION
Non-employee directors receive $6,000 ($12,000 in the case of the
Chairman of the Board) annually, payable quarterly, as compensation for serving
on the Board of Directors, plus $1,500 per meeting for Board or Committee
meetings attended. Non-employee directors are reimbursed for their reasonable
expenses incurred in attending meetings. Non-employee directors also participate
in the 1990 Directors Stock Option Plan which provides for automatic grants of
options to non-employee directors. Under the 1990 Directors Stock Option Plan,
each non-employee director is granted an option to purchase 30,000 shares of the
Company's Common Stock three business days following his or her first election
as a director (the "initial grant"). Thereafter, each non-employee director who
has been re-elected or who is continuing as a member of the Board of Directors
is granted an option to purchase 7,500 shares of the Company's Common Stock on
the date of the Company's annual meeting of stockholders (an "annual grant").
Options are granted at 100% of the fair market value of the Company's Common
Stock on the grant date and have a term of five years. Initial grants vest
immediately as to one-third of the shares and vest an additional one-third on
the first and second anniversaries of the grant date. Annual grants vest in full
on the first anniversary of the grant date. The Board of Directors or the
Compensation Committee may also make discretionary option grants to non-employee
directors. During fiscal 1997, the Board of Directors made a discretionary grant
of 25,000 options to each non-employee director.
In July 1994, King R. Lee, a director of the Company, entered into a
consulting agreement (the "Consulting Agreement") with the Company. Under the
terms of the Consulting Agreement, as amended, King R. Lee & Associates, Inc.,
of which Mr. Lee is President and sole stockholder, was paid $1,500 per full day
plus expenses in exchange for Mr. Lee's consulting services to the Company,
generally for four full days a week. Mr. Lee provided consulting services to the
Company under the Consulting Agreement through January 1995 and King R. Lee &
Associates, Inc. was paid $181,000 in fiscal year 1995 pursuant to the terms of
the Consulting Agreement. In addition, the Company entered into a new consulting
agreement (the "New Consulting Agreement") with Mr. Lee on August 27, 1996 when
Mr. Lee assumed the duties as a member of the Office of the President. Pursuant
to the New Consulting Agreement, King R. Lee & Associates, Inc. was paid $1,500
per full day plus expenses in exchange for Mr. Lee's consulting service to the
Company. The Company paid to King R. Lee & Associates, Inc. an additional
$33,000 during fiscal year 1996 and a total of $76,500 during fiscal year 1997
pursuant to the New Consulting Agreement. Mr. Lee provided consulting services
to the Company under the New Consulting Agreement through February 1997.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation paid by the Company during the fiscal years ended
September 30, 1997, 1996 and 1995 to (i) the persons who served as Chief
Executive Officer or performed the functions thereof during fiscal year 1997,
(ii) the four most highly compensated executive officers as of the end of fiscal
year 1997, whose total annual salary and bonus exceeded $100,000 and (iii) one
additional individual who would have been included among the four most highly
compensated executive officers, but for the fact the individual was not serving
as an executive officer at the end of fiscal year 1997.
SUMMARY COMPENSATION TABLE
[Enlarge/Download Table]
LONG-TERM
COMPENSATION AWARDS
ANNUAL ------------------------------
COMPENSATION SECURITIES
------------------------ UNDERLYING ALL OTHER
SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
----------------------------------------------- ---- ------- ------- ---------- ------------
Curtis A. Hessler(1) 1997 297,692 0 1,350,000 0
President and Chief Executive Officer
King R. Lee(2) 1997 101,250 0 122,500 0
Former Office of the President 1996 58,500 0 100,000 0
1995 192,000 0 0 0
Anatoly Tikhman(3) 1997 182,922 57,375 275,000 0
Former Office of the President 1996 22,153 0 250,000 0
Frank R. Greico(4) 1997 187,589 61,250 106,250 0
Senior Vice President and Chief Financial 1996 129,230 25,000 75,000 0
Officer
Joseph Fusco(5) 1997 145,802 43,531 150,000 0
Senior Vice President--Marketing and
Product Management
Ron Ben-Yehuda(6) 1997 136,667 61,083 72,500 0
Vice President, General Counsel and 1996 47,115 12,222 30,000 0
Secretary
John Strosahl(7) 1997 138,221 72,320 51,575 0
Vice President--International 1996 60,000 30,000 0 0
Bradley D. Schwartz(8) 1997 110,000 128,000 115,200 165,000
Former Senior Vice President, General 1996 127,500 82,500 100,000 0
Counsel and Secretary
----------
(1) Mr. Hessler became President and Chief Executive Officer of the Company
in February 1997. Mr. Hessler was granted options to purchase an
additional 150,000 shares of Common Stock in the first quarter of
fiscal 1998.
(2) From September of 1994 until January 1995, Mr. Lee acted in the
capacity of Chief Executive Officer and was formally appointed Interim
Chief Executive Officer in December 1994. In addition, Mr. Lee was
Interim Chief Executive Officer between July and December 1994. Mr. Lee
was appointed as a member of the Office of President in August 1996 and
resigned from such position upon the appointment of Mr. Hessler in
February 1997. Mr. Lee is also a director of the Company and received
compensation as a non-employee director. Mr. Lee's salary for fiscal
1995 includes $181,000 of consulting fees paid to King R. Lee &
Associates and
$11,000 of non-employee director fees, Mr. Lee's salary for fiscal 1996
includes $33,000 of consulting fees paid to King R. Lee & Associates
and $25,000 of non-employee director fees and Mr. Lee's salary for
fiscal 1997 includes $76,500 of consulting fees paid to King R. Lee &
Associates and approximately $25,000 of non-employee director fees. The
options granted to Mr. Lee during fiscal 1997 include 90,000 options
granted to Mr. Lee in connection with a like value exchange of options
discussed below.
(3) Mr. Tikhman was appointed Senior Vice President in July 1996 and as a
member of the Office of President in August 1996. He resigned as a
member of the Office of President upon the appointment of Mr. Hessler
in February 1997 and as a Senior Vice President in October 1997. The
options granted to Mr. Tikhman during fiscal 1997 include 225,000
options granted to Mr. Tikhman in connection with a like value exchange
of options discussed below.
(4) Mr. Greico was appointed an executive officer in February 1996. The
options granted to Mr. Greico during fiscal 1997 include 56,250 options
granted to Mr. Greico in connection with a like value exchange of
options discussed below.
(5) Mr. Fusco was appointed as a Vice President in September 1996 and in
April 28, 1997 he was appointed Senior Vice President--Marketing and
Product Management. The options granted to Mr. Fusco during fiscal 1997
include 67,500 options granted to Mr. Fusco in connection with a like
value exchange of options discussed below.
(6) Mr. Ben-Yehuda was appointed an executive officer in May 1997 and
joined the Company in April 1996. The options granted to Mr. Ben-Yehuda
during fiscal 1997 include 22,500 options granted to Mr. Ben-Yehuda in
connection with a like value exchange of options discussed below.
(7) Mr. Strosahl was appointed an executive officer in August 1997. The
bonus amount for Mr. Strosahl in fiscal 1997 includes reimbursement of
relocation and relocation related expenses that he received from the
Company in the amount of $38,722. The options granted to Mr. Strosahl
during fiscal 1997 include 21,575 options granted to Mr. Strosahl in
connection with a like value exchange of options discussed below.
(8) Mr. Schwartz was appointed an executive officer in February 1997 and
resigned as such in April 1997. The amounts shown for Mr. Schwartz
under "All Other Compensation" consist of severance payments which Mr.
Schwartz became entitled to receive upon resignation in accordance with
the terms of his employment agreement. The options granted to Mr.
Schwartz during fiscal 1997 include 75,000 options granted to Mr.
Schwartz in connection with a like value exchange of options discussed
below.
The following table sets forth the details of all exchanges and
repricings of options held by any named executive officer during the last ten
completed fiscal years (which only includes those in connection with the 1997
like-value exchange).
[Enlarge/Download Table]
NUMBER OF LENGTH OF
SECURITIES ORIGINAL
UNDERLYING MARKET PRICE OF OPTION
OPTIONS/SARS STOCK AT TIME OF EXERCISE PRICE AT TERM REMAINING
REPRICED OR REPRICING OR TIME OF REPRICING NEW EXERCISE AT DATE OF
AMENDED AMENDMENT OR AMENDMENT PRICE REPRICING OR
NAME DATE (#) ($) ($) ($) AMENDMENT
------------------ -------- ------------ ---------------- ------------------ ------------ -------------
Curtis A. Hessler -- -- -- -- -- --
King R. Lee 1/8/1997 100,000 4.6875 6.00 4.6875 9/18/2006
Anatoly Tikhman 1/8/1997 250,000 4.6875 7.00 4.6875 7/24/2006
Frank R. Greico 1/8/1997 75,000 4.6875 15.813 4.6875 1/18/2006
Joseph Fusco 1/8/1997 75,000 4.6875 6.875 4.6875 9/30/2006
Ron Ben-Yehuda 1/8/1997 30,000 4.6875 13.625 4.6875 4/18/2006
John Strosahl 1/8/1997 20,000 4.6875 8.8125 4.6875 6/25/2006
1/8/1997 4,766 4.6875 13.625 4.6875 3/28/2006
Bradley D. Schwartz 1/8/1997 100,000 4.6875 15.25 4.6875 1/16/2006
EMPLOYMENT AGREEMENTS
The Company entered into four-year employment agreement with Curtis A.
Hessler, dated as of January 13, 1997. Pursuant to that agreement, Mr. Hessler
is entitled to receive a base salary of $450,000 per year and an annual target
bonus of $250,000 based upon achievement of objectives established by the Board
of Directors or the Compensation Committee; provided, however, that during the
first four full fiscal quarters of employment, the minimum amount of bonus shall
be $125,000. In addition, Mr. Hessler was granted, pursuant to the terms of his
employment agreement, options to purchase 1,350,000 shares of Common Stock. The
employment agreement also provides for accelerated vesting of Mr. Hessler's
options upon the occurrence of certain "change in control" transactions or if
certain stock price levels are reached. Mr. Hessler is entitled to, among other
things, eighteen months annual base salary upon a termination of Mr. Hessler's
employment (other than for cause) prior to the expiration of the employment
agreement or if Mr. Hessler terminates his employment within one year of a
change in control if there is a material diminution of his duties and
responsibilities, a reduction in compensation or significant reduction in
benefits or a non-voluntary relocation from the Southern California area.
As described above, King R. Lee received compensation from the Company
pursuant to the terms of the Consulting Agreement.
The Company entered into an employment agreement with Anatoly Tikhman
dated as of July 24, 1996. The agreement provided for salary of $180,000 per
year and an annual bonus in an amount not to exceed $90,000 determined in
accordance with the terms of a management performance bonus plan. In addition,
Mr. Tikhman was granted options to purchase 300,000 shares of Common Stock
pursuant to the terms of the employment agreement. Mr. Tikhman resigned in
October 1997 and pursuant to the terms of his employment agreement is entitled
to receive, among other things, twelve months' salary payable in bi-weekly
installments over a twelve month period and accelerated vesting of 50% of his
unvested options.
Pursuant to the terms of Mr. Greico's offer letter, in the event that
his employment is terminated, he is entitled to receive an amount equal to six
months' salary plus six months' targeted bonus and accelerated vesting of 50% of
his unvested options.
The Company entered into a two-year employment agreement with Joseph
Fusco, dated as of September 16, 1996. Pursuant to that agreement, Mr. Fusco is
entitled to receive a base salary of $135,000 per year and an annual target
bonus of $67,500 determined in accordance with the terms of a management
performance bonus plan of the Company and contingent upon attainment of
objectives mutually agreed upon by Mr. Fusco and the Chief Executive Officer of
the Company. In addition, Mr. Fusco was granted options to purchase 75,000
shares of Common Stock pursuant to the terms of the employment agreement.
The Company entered into an employment agreement with Ron Ben-Yehuda,
dated as of May 1, 1996, which was amended on June 6, 1997. The agreement may be
terminated by the Company or Mr. Ben-Yehuda at any time in accordance with the
terms of the agreement. Pursuant to that agreement, Mr. Ben-Yehuda is entitled
to receive a base salary of $155,000 per year and an annual target bonus of
$70,000 contingent upon corporate and personal performance. In addition, Mr.
Ben-Yehuda was granted options to purchase 50,000 shares of Common Stock
pursuant to the terms of the employment agreement.
The Company entered into a four-year employment agreement with Bradley
D. Schwartz, dated as of January 16, 1996. Pursuant to that agreement, Mr.
Schwartz received a base salary of $170,000 per year and an annual bonus of
$110,000 multiplied by a "Multiplier" based upon achievement of certain
individual and department goals, but to be no less than one. Mr. Schwartz
resigned in April 1997 and pursuant to the terms of his employment agreement is
entitled to receive among other things, twelve months' salary plus an amount
equal to the maximum bonus he could have received for such 12-month period
(payable in bi-weekly installments) and accelerated vesting of 50% of his
unvested options.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's Compensation Committee oversees the Company's overall
executive compensation program in addition to reviewing and administering
programs available to employees of the Company.
COMPENSATION POLICIES
In recognition that the recruitment of personnel in the computer
software industry is highly competitive, the Company's compensation policies,
both for executive and non-executive employees, are structured to attract and
retain highly skilled technical, marketing and management personnel. To reward
and encourage performance that enhances both the short-term and long-term
results of the Company, the Company's compensation program is centered in three
specific areas: base salary, performance bonus and long-term incentive awards.
In applying these main components to executive compensation, the
Compensation Committee has determined to place a greater emphasis on merit and
risk-oriented compensation for the Company's executive officers. Consequently,
for executive officers, the Compensation Committee has generally preferred base
salaries for executive officers that fall within the moderate range of
competitor salaries and to establish bonus guidelines and long-term incentive
programs (particularly option grants) that are designed to inspire and reward
performance.
BASE SALARY
In general, the Compensation Committee reviews salaries for the Chief
Executive Officer and executive officers on an annual basis, generally
coordinated with the Board's annual election of executive officers following the
Company's annual meeting. During fiscal year 1997, the base salary for each of
Messrs. Hessler, Fusco, Ben-Yehuda, Tikhman and
Schwartz was paid pursuant to the terms of their employment agreements. The
Compensation Committee believes that the terms of each employment agreement are
consistent with the Committee's philosophy of establishing base salaries within
the moderate range and placing greater emphasis on merit and risk-oriented
compensation such as bonus payments based on performance and stock options.
DISCRETIONARY BONUS PLAN
In fiscal 1997, the Company implemented a Discretionary Bonus Plan (the
"Bonus Plan") designed to further the long-term growth and profitability of the
Company by motivating participants to achieve predefined quarterly and annual
objectives. Employees of the Company in senior management positions were
eligible to receive benefits under the Bonus Plan with the exception of Curt
Hessler, who was not eligible to receive any benefits under the Bonus Plan.
Awards under the Bonus Plan were based on a combination of Company, departmental
and individual performance.
The Company performance objectives were established by the Board of
Directors in conjunction with the Chief Executive Officer. Quarterly and annual
personal and departmental performance objectives were generally established by
the Chief Executive Officer in conjunction with each eligible employee and
reviewed by the Compensation Committee. In general, payment of bonus amounts was
dependent on achievement of the objectives according to the following formula:
(i) 50% of the individual bonus award for each eligible employee was based upon
achievement of company-wide sales and profitability relative to the established
performance objective and (ii) 50% of the individual bonus award for the
executive officer was based on an evaluation of the eligible employee's personal
performance against the targeted personal performance objectives and achievement
of department objectives.
Pursuant to his employment agreement, Mr. Hessler is entitled to
receive a base salary of $450,000 per year and an annual target bonus of
$250,000 based upon achievement of objectives established by the Board of
Directors or the Compensation Committee; provided, however, that during the
first four full fiscal quarters of employment, the minimum amount of bonus shall
be $125,000. Mr. Hessler's bonus has not yet been determined for fiscal 1997,
but is expected to be based on his achieving or exceeding certain financial
performance goals for the Company and other factors.
LONG-TERM INCENTIVE AWARDS
The Company's Stock Plan permits the Compensation Committee to grant to
eligible employees stock options, stock appreciation rights and other stock
awards such as restricted stock and bonus stock. The Compensation Committee
believes that the option grants made to the executive officers of the Company
were a key factor in the Company's ability to hire such executives during fiscal
year 1997 and were consistent with the Committee's philosophy of placing
emphasis on risk-oriented compensation. The Compensation Committee has
determined that long-term incentives should be granted on a discretionary basis
based principally on the quality of individual performance and base salary
levels. The Compensation Committee takes into consideration the amount of
previous option grants held when granting additional options.
INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, places
a per-person limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to certain of the Company's
most highly compensated officers. Section 162(m) does not, however, disallow a
deduction for qualified "performance-based compensation" the material terms of
which are disclosed to and approved by stockholders. In February 1995, the
stockholders approved amendments to and a restatement of the Company's 1990
Stock Plan with the result that compensation resulting from most awards granted
thereunder would be qualified "performance-based compensation" and would be
deductible. However, the Company may from time to time pay compensation to its
executive officers that may not be deductible. 750,000 of the options granted to
Mr. Hessler during fiscal year 1997 were granted outside of the Company's 1990
Stock Plan and will not qualify as performance based compensation.
Compensation Committee:
Frank W.T. LaHaye William H. Lane III
[Download Table]
Frank R. Greico(7)........................................ 29,126 *
Joseph Fusco(8)........................................... 21,094 *
William H. Lane III(9).................................... 15,000 *
Ron Ben-Yehuda(10)........................................ 9,843 *
John Strosahl(11)......................................... 8,314 *
All directors and executive officers as a group (10
persons)(12)........................................... 2,320,438 5.35%
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* Less than one percent
(1) Includes 175,000 shares which may be purchased pursuant to options
granted to Mr. Tikhman, exercisable within 60 days of November 19,
1997.
(2) Includes 337,500 shares which may be purchased pursuant to options
granted to Mr. Hessler, exercisable within 60 days of November 19,
1997.
(3) Includes 22,500 shares which may be purchased pursuant to options
granted to Mr. LaHaye, exercisable within 60 days of November 19, 1997,
and also includes 151,721 shares of Common Stock held by the Frank
LaHaye Family Trust, of which Mr. LaHaye is Trustee.
(4) Includes 22,500 shares which may be purchased pursuant to options
granted to Mr. Morgan, exercisable within 60 days of November 19, 1997,
and also includes 24,000 shares of Common Stock held in trust for Dr.
Morgan's children with respect to which Dr. Morgan disclaims beneficial
ownership.
(5) Includes 90,200 shares which may be purchased pursuant to options
granted to Mr. Schwartz, exercisable within 60 days of November 19,
1997.
(6) Includes 80,000 shares which may be purchased pursuant to options
granted to Mr. Lee, exercisable within 60 days of November 19, 1997,
and also includes 10,000 shares of Common Stock held by The Lee Living
Trust, of which Mr. Lee and his spouse are the Trustees.
(7) Includes 28,126 shares which may be purchased pursuant to options
granted to Mr. Greico, exercisable within 60 days of November 19, 1997.
(8) Includes 21,094 shares which may be purchased pursuant to options
granted to Mr. Fusco, exercisable within 60 days of November 19, 1997.
(9) Includes 10,000 shares which may be purchased pursuant to options
granted to Mr. Lane, exercisable within 60 days of November 19, 1997.
(10) Includes 9,843 shares which may be purchased pursuant to options
granted to Mr. Ben-Yehuda, exercisable within 60 days of November 19,
1997.
(11) Includes 8,314 shares which may be purchased pursuant to options
granted to Mr. Strosahl, exercisable within 60 days of November 19,
1997.
(12) Includes 805,077 shares which may be purchased pursuant to options
grated to the directors and executive officers as a group, exercisable
within 60 days of November 19, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1996, Frank Greico, Senior Vice President and Chief
Financial Officer of the Company, received an advance on his compensation of
approximately $74,000 pursuant to his employment offer letter. As of November
19, 1997, approximately $40,000 remained outstanding on the advance.
Dates Referenced Herein and Documents Incorporated by Reference
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