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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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Progress Software Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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PROGRESS SOFTWARE CORPORATION
14 OAK PARK
BEDFORD, MASSACHUSETTS 01730
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Progress
Software Corporation will be held on Friday, April 24, 1998, commencing at 9:00
A.M., local time, at the principal executive offices of the Corporation, at 14
Oak Park, Bedford, Massachusetts 01730, for the following purposes:
1. To fix the number of directors constituting the full Board of
Directors of the Company at eight.
2. To consider and vote upon the election of eight directors.
3. To act upon a proposal to amend the Company's 1991 Employee Stock
Purchase Plan to increase the maximum number of shares that may be
issued under such plan from 300,000 shares to 500,000 shares.
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on February 27, 1998
as the record date for determination of shareholders entitled to receive notice
of and vote at the meeting and any adjournment thereof.
By Order of the Board of Directors,
Joseph W. Alsop
Clerk
March 23, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS SOON AS
POSSIBLE. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
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PROGRESS SOFTWARE CORPORATION
14 OAK PARK
BEDFORD, MASSACHUSETTS 01730
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Progress Software Corporation (the "Company") of
proxies for use at the 1998 Annual Meeting of Shareholders (the "1998 Annual
Meeting") to be held on April 24, 1998, at 9:00 A.M., local time, at the
principal executive offices of the Company, at 14 Oak Park, Bedford,
Massachusetts 01730. It is anticipated that this Proxy Statement and the
accompanying form of proxy will first be mailed to shareholders on or about
March 23, 1998. The cost of solicitation of proxies will be borne by the
Company.
At the 1998 Annual Meeting, the shareholders of the Company will be asked
to consider and vote upon the following specific matters:
(1) To fix the number of directors constituting the full Board of
Directors of the Company at eight;
(2) To consider and vote upon the election of eight directors;
(3) To act upon a proposal to amend the Company's 1991 Employee Stock
Purchase Plan to increase the maximum number of shares that may be
issued under such plan from 300,000 shares to 500,000 shares; and
(4) To transact such other business as may properly come before the
meeting and any adjournment thereof.
The information contained in the "Compensation Committee Report" on pages
11 and 12 and the "Stock Performance Graph" on page 13 shall not be deemed
"filed" with the Securities and Exchange Commission (the "Commission") or
subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended.
VOTING PROCEDURES
Only holders of record of Common Stock, par value $.01, of the Company
outstanding at the close of business on February 27, 1998 are entitled to vote
at the 1998 Annual Meeting and any adjournment thereof. As of that date, there
were 11,384,322 shares outstanding and entitled to vote. Each outstanding share
entitles the holder thereof to one vote on any proposal presented at the
meeting.
Any shareholder who has given a proxy may revoke it at any time prior to
its exercise at the 1998 Annual Meeting by giving written notice of such
revocation to the Clerk of the Company, by signing and duly delivering a proxy
bearing a later date, or by attendance and voting in person at the 1998 Annual
Meeting. Duly executed proxies received and not revoked prior to the meeting
will be voted in accordance with the instructions indicated in the proxy. If no
instructions are indicated, such proxies will be voted FOR the proposal to fix
the number of directors constituting the full Board of Directors at eight, FOR
the election of the nominees for director named in the proxy, FOR the amendment
to the Company's 1991 Employee Stock Purchase Plan and in the discretion of the
proxies as to other matters that may properly come before the 1998 Annual
Meeting.
Votes withheld from any nominee for election as director, abstentions and
broker "non-votes" will be counted as present or represented at the meeting for
purposes of determining the presence or absence of a quorum for the meeting. A
broker "non-vote" occurs when a broker or other nominee who holds shares for a
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beneficial owner withholds his vote on a particular proposal with respect to
which he does not have discretionary voting power or instructions from the
beneficial owner. Abstentions with respect to a proposal are included in the
number of shares present or represented and entitled to vote on such proposal.
"Non-votes" are not so included. An automated system administered by the
Company's transfer agent tabulates the votes.
The Board of Directors of the Company knows of no other matters to be
presented at the meeting. If any other matter should be presented at the meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as proxies.
ELECTION OF DIRECTORS
The Company's by-laws provide for a Board of Directors, the number of which
shall be fixed from time to time by the shareholders of the Company, and may be
enlarged or reduced by vote of a majority of the Board of Directors. The Board
of Directors has recommended that the number of directors be fixed at eight and
has nominated for election as directors Joseph W. Alsop, Larry R. Harris, Robert
J. Lepkowski, Michael L. Mark, Arthur J. Marks, Scott A. McGregor, Amram Rasiel
and James W. Storey, each of whom is currently a director of the Company. Each
director elected at the 1998 Annual Meeting will hold office until the next
Annual Meeting of Shareholders or special meeting in lieu thereof and until his
successor has been duly elected and qualified, or until his earlier death,
resignation or removal. There are no family relationships among any of the
executive officers or directors of the Company.
Each of the nominees has agreed to serve as a director if elected, and the
Company has no reason to believe that any nominee will be unable to serve. In
the event that one or more nominees should become unwilling or unable to serve,
however, the persons named in the enclosed proxy will vote such proxy for such
other person or persons as may thereafter be nominated for director by the Board
of Directors of the Company.
If a quorum is present at the meeting, the vote of a majority of the shares
of Common Stock present or represented and entitled to vote at the meeting will
be necessary to fix the number of directors constituting the full Board of
Directors at eight, and a plurality of the votes properly cast will be required
to elect a nominee to the office of director.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO FIX THE
NUMBER OF DIRECTORS CONSTITUTING THE FULL BOARD OF DIRECTORS AT EIGHT, AND THAT
YOU VOTE FOR THE ELECTION OF THE EIGHT INDIVIDUALS NAMED BELOW AS DIRECTORS OF
THE COMPANY.
NAME AGE PRESENT PRINCIPAL EMPLOYER AND BUSINESS EXPERIENCE
---- --- --------------------------------------------------
Joseph W. Alsop........................ 52 Mr. Alsop, a founder of the Company, has been a
director and President of the Company since its
inception in 1981.
Larry R. Harris........................ 50 Dr. Harris has been a director of the Company since
January 1995. Dr. Harris is a founder of Linguistic
Technology Corporation and has been its President
since 1994. From 1992 to 1994, he was Chief Technology
Officer of Trinzic Corporation.
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NAME AGE PRESENT PRINCIPAL EMPLOYER AND BUSINESS EXPERIENCE
---- --- --------------------------------------------------
Robert J. Lepkowski.................... 44 Mr. Lepkowski has been a director of the Company since
August 1988. He is a private investor and director of
various companies. Since 1996 Mr. Lepkowski has served
as a General Partner for Emerging Resource Group. He
founded Renaissance Partners in late 1991 and retired
as a General Partner of Renaissance Partners in
December 1995. His investment activities have focused
on the computer, communications and software
industries.
Michael L. Mark........................ 51 Mr. Mark has been a director of the Company since July
1987. Mr. Mark is a private investor and has been
President of Refined Reports, Inc., an electronic
publishing company, since 1990.
Arthur J. Marks........................ 53 Mr. Marks has been a director of the Company since
July 1987. Mr. Marks has served as a General Partner
of New Enterprise Associates, a venture capital
partnership, since August 1984. His investment
activities focus on information technology compa-
nies. Mr. Marks is also a director of the following
publicly-held corporations: Object Design, Inc.,
Netrix Corporation, and Platinum Software Corporation.
Scott A. McGregor...................... 41 Mr. McGregor has been a director of the Company since
March 1998. Mr. McGregor has been a Senior Vice
President and General Manager of Philips
Semiconductors, Inc. since February 1998. He was a
software consultant from June 1997 until January 1998.
From 1992 until May 1997, Mr. McGregor was Senior Vice
President, Products, of The Santa Cruz Operation, Inc.
Amram Rasiel........................... 68 Dr. Rasiel has been a director of the Company since
April 1983. Dr. Rasiel is a private investor. Dr.
Rasiel is also a director of a publicly-held
corporation, PRI Automation, Inc., and several
privately-held companies.
James W. Storey........................ 63 Mr. Storey has been a director of the Company since
December 1993. Mr. Storey has been a consultant since
January 1993 and was President of Wellingsley
Corporation, a private investment management company,
from 1987 to 1992. He is also a director of Westerbeke
Corporation, a publicly-held company.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held seven meetings during the fiscal
year ended November 30, 1997. No director attended fewer than 75% of the
aggregate number of meetings of the Board of Directors and of any committee of
the Board of Directors on which he served. The Audit Committee, of which Messrs.
Lepkowski and Rasiel are members, reviews the scope and results of the audit and
other services provided by the Company's independent auditors and also makes
recommendations to the Board of Directors as to the selection of independent
auditors. The Audit Committee held one meeting during the fiscal year ended
November 30, 1997. The Compensation Committee, of which the members are Messrs.
Lepkowski and Marks, held one meeting during the fiscal year ended November 30,
1997. The Compensation Committee makes recommendations concerning salaries and
incentive compensation for employees of the Company and determines the salaries
and incentive compensation for executive officers of the Company. The
Compensation
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Committee also administers the Company's stock plans. The Audit and Compensation
Committees are the only standing committees of the Board of Directors.
DIRECTORS' COMPENSATION
Each of the Company's non-employee directors who rendered services during
fiscal 1997 received an annual fee of $14,000 and has been reimbursed, upon
request, for expenses incurred in attending Board of Directors' meetings. In
addition, each non-employee member of the Audit and Compensation Committees
received an annual fee of $2,000 for each committee on which he served during
fiscal 1997. Directors who are employees of the Company are not paid any
separate fees for service as directors.
In December 1993, pursuant to the 1993 Directors' Stock Option Plan (the
"1993 Directors' Plan"), each of Messrs. Lepkowski, Mark, Marks, Rasiel and
Storey was granted an option to purchase 20,000 shares of Common Stock at a
purchase price of $21.57 per share which expires on December 31, 2003. In
January 1995, Dr. Harris was granted an option pursuant to the 1993 Directors'
Plan to purchase 20,000 shares of Common Stock at a purchase price of $18.69 per
share which expires on January 1, 2005. In February 1998, in consideration for
consulting services rendered and an agreement to become a member of the Board of
Directors, Mr. McGregor was granted an option pursuant to the 1994 Stock
Incentive Plan to purchase 20,000 shares of Common Stock at a purchase price of
$21.63 per share which expires on February 1, 2008.
Each option granted to a non-employee director pursuant to the 1993
Directors' Plan expires on the tenth anniversary of the date of grant and
becomes exercisable in installments cumulatively as to one seventy-second (1/72)
of the shares subject to such option at the end of each one month period
following its date of grant, provided the optionee is a director at the end of
each such period. The 1993 Directors' Plan required that the exercise price of
each option granted under the 1993 Directors' Plan be equal to the fair market
value of the Common Stock on the date the option was granted. The 1993
Directors' Plan was terminated in April 1997. Options granted and outstanding
under the 1993 Directors' Plan remain outstanding and are exercisable in
accordance with their terms, but no further options will be granted under this
plan. The option granted to Mr. McGregor pursuant to the 1994 Stock Incentive
Plan expires on the tenth anniversary of the date of grant and becomes
exercisable in equal monthly installments cumulatively as to one seventy-second
(1/72) of the shares subject to such option beginning on April 1, 1998 and
continuing so long as he remains a director.
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SECURITY OWNERSHIP OF CERTAIN HOLDERS AND MANAGEMENT
The following table sets forth the numbers of shares of the Company's
Common Stock beneficially owned by all persons known by the Company to be the
beneficial owners of more than 5% of the Company's Common Stock, by each of the
Company's current directors, by each of the executive officers named in the
Summary Compensation Table appearing on Pages 8 and 9, and by all executive
officers and directors of the Company as a group, as of March 15, 1998.
BENEFICIALLY OWNED
SHARES
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT
---------------------------------------- ------ -------
Private Capital Management, Inc.(2)................ 2,041,600 17.93%
Bruce S. Sherman
Michael J. Seaman
Gregg J. Powers
and
SPS Partners, L.P.
3003 Tamiami Trail North
Naples, FL 33940
Joseph W. Alsop(3)................................. 974,579 8.33%
14 Oak Park
Bedford, MA 01730
Mellon Bank Corporation(4)......................... 933,500 8.20%
One Mellon Bank Center
500 Grant Street
Pittsburgh, PA 15258
Lighthouse Capital Management...................... 734,460 6.45%
10000 Memorial Drive #660
Houston, TX 77024
Chadwick H. Carpenter, Jr.(5)...................... 207,194 1.79%
Amram Rasiel(6).................................... 152,445 1.34%
David P. Vesty(7).................................. 96,959 *
Jennifer J. Bergantino(8).......................... 45,600 *
Michael L. Mark(9)................................. 40,445 *
Robert J. Lepkowski(10)............................ 22,445 *
Arthur J. Marks(11)................................ 15,707 *
James W. Storey(12)................................ 14,445 *
Norman R. Robertson(13)............................ 13,464 *
Larry R. Harris(14)................................ 11,389 *
Scott A. McGregor(15).............................. 1,556 *
All executive officers and directors as a group (14
persons)(16)..................................... 1,627,856 13.38%
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* Less than 1%
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(1) All persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and subject to the
information contained in the footnotes to this table.
(2) Derived from Schedules 13G/A dated February 17, 1998, submitted to the
Company. The five persons named are described as a group in such Schedule
13G/A. The persons named reported beneficial ownership of the following
shares: Private Capital Management, Inc. (1,791,500); Bruce S. Sherman
(2,031,200); Michael J. Seaman (5,000); Gregg J. Powers (5,400); and SPS
Partners, L.P. (210,700). Bruce S. Sherman is President of Private Capital
Management, Inc. ("PCM") and exercises shared dispositive power with
respect to shares held by it on behalf of its clients. Mr. Sherman is also
the Managing General Partner of SPS Partners, L.P. ("SPS") which acts as
the Investment Advisor for the Entrepreneurial Value Fund, L.P. ("EVF"),
and exercises shared dispositive power with respect to those shares held by
EVF. Messrs. Seaman and Powers are employees of PCM or affiliates thereof
and they (i) do not exercise sole or shared dispositive or voting powers
with respect to shares held by PCM or SPS, (ii) disclaim beneficial
ownership of shares held by Mr. Sherman, PCM and SPS, and (iii) disclaim,
along with Mr. Sherman, the existence of a group.
(3) Includes 315,752 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(4) Derived from Schedules 13G/A dated January 23, 1998, submitted to the
Company. All of the securities are beneficially owned by Mellon Bank
Corporation and direct or indirect subsidiaries of Mellon Bank Corporation.
(5) Includes 166,794 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(6) Includes 24,445 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(7) Includes 96,959 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(8) Includes 45,600 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(9) Includes 24,445 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(10) Includes 21,445 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(11) Includes 14,445 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(12) Includes 14,445 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(13) Includes 13,464 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(14) Includes 11,389 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
(15) Includes 556 shares issuable upon the exercise of outstanding options that
are exercisable within 60 days of March 15, 1998.
(16) Includes 781,367 shares issuable upon the exercise of outstanding options
that are exercisable within 60 days of March 15, 1998.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership of, and transactions in, the Company's securities with the Securities
and Exchange Commission. This information is also filed with the Nasdaq Stock
Market. Such directors, executive officers and ten-percent shareholders are also
required to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms received by it, and on
written representations from certain reporting persons, the Company believes
that with respect to the fiscal year ended November 30, 1997, all Section 16(a)
filing requirements applicable to its directors, officers and ten-percent
shareholders were complied with, except that one Form 4 Statement of Changes in
Beneficial Ownership for Joseph W. Alsop, President and Treasurer of the
Company, reporting one transaction, the sale of shares owned by Mr. Alsop's wife
and therefore indirectly owned by Mr. Alsop, was filed one business day late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1994, the Company purchased 100,000 shares of Series A Preferred
Stock from Linguistic Technology Corporation ("LTC") for $100,000. In March
1996, the Company purchased approximately 87,000 shares of Series B Preferred
Stock from LTC for $200,000, and an additional 30,000 shares of Series B
Preferred Stock in January 1997 for $70,000. In total, these purchases represent
an approximate equity interest in LTC of 6%. Dr. Larry R. Harris, a director of
the Company, is a founder and President of LTC.
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EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation earned by (i)
the President and (ii) each of the Company's four most highly compensated
executive officers other than the President during the 1997 fiscal year
(collectively, the "Named Executive Officers"), for services rendered in fiscal
1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION --------------------- ALL OTHER
----------------------- SECURITIES UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS/SARS(#)(2) ($)(3)
--------------------------- ---- --------- ----------- --------------------- ------------
Joseph W. Alsop...................... 1997 $200,000 $319,000 100,000 $24,549
President 1996 $200,000 $110,000 137,000 $14,472
1995 $160,000 $240,000 60,000 $13,221
Jennifer J. Bergantino............... 1997 $162,500 $ 77,938 29,400 $ 6,576
Vice President, 1996 $141,250 $ 20,000 85,000 $ 2,859
Marketing and Strategic Planning 1995 $114,375 $ 1,250 16,000 $ 3,467
Chadwick H. Carpenter, Jr.(4)........ 1997 $185,000 $217,500 30,700 $19,837
Senior Vice President, 1996 $180,000 $ 67,500 83,700 $ 9,304
Corporate Development 1995 $150,000 $150,000 24,000 $ 8,351
Norman R. Robertson(5)............... 1997 $158,750 $ 95,458 16,000 $ 7,798
Vice President, 1996 $ 87,500 $ 41,250 40,500 $ 254
Finance and Administration 1995 -- -- -- --
and Chief Financial Officer
David P. Vesty(6).................... 1997 $190,000 $213,765 68,500 $21,690
Vice President, 1996 $180,000 $ 55,000 45,900 $ 9,390
Worldwide Sales 1995 $150,000 $ 98,505 18,000 $ 6,356
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(1) The amounts shown in this column reflect bonuses and commissions earned
under (i) the Company's Bonus Program for Executives and Key Contributors,
(ii) the Company's sales commission plan and (iii) the Crescent Division
Bonus Plan.
(2) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during
fiscal 1997, 1996 and 1995.
(3) The amounts disclosed in this column include:
(a) Company contributions for fiscal 1997 to a defined contribution
plan, the Progress Software Corporation 401(k) Plan (the "401(k)
Plan") as follows: Mr. Alsop, $11,638; Ms. Bergantino, $5,819; Mr.
Carpenter, $11,638; Mr. Robertson, $5,819; and Mr. Vesty, $11,638.
(b) Payments by the Company for fiscal 1997 401(k) Plan matching
contributions in excess of participation limits imposed on
higher-paid individuals under federal tax law, as follows: Mr.
Alsop, $11,810; Ms. Bergantino, $355; Mr. Carpenter, $7,345; Mr.
Robertson, $1,562; and Mr. Vesty, $6,708.
(c) Payments by the Company in fiscal 1997 of term life insurance
premiums for the benefit of the following executive officers: Mr.
Alsop, $1,101; Ms. Bergantino, $403; Mr. Carpenter, $854; Mr.
Robertson, $417; and Mr. Vesty, $311.
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(d) Company contributions for fiscal 1996 to the 401(k) Plan as follows:
Mr. Alsop, $4,500; Ms. Bergantino, $2,375; Mr. Carpenter, $4,500;
and Mr. Vesty, $4,500.
(e) Payments by the Company for fiscal 1996 401(k) Plan matching
contributions in excess of participation limits imposed on
higher-paid individuals under federal tax law, as follows: Mr.
Alsop, $9,012; Ms. Bergantino, $139; Mr. Carpenter, $3,940; and Mr.
Vesty, $4,026.
(f) Payments by the Company in fiscal 1996 of term life insurance
premiums for the benefit of the following executive officers: Mr.
Alsop, $960; Ms. Bergantino, $345; Mr. Carpenter, $864; Mr.
Robertson, $254; and Mr. Vesty, $864.
(g) Company contributions for fiscal 1995 to the 401(k) Plan as follows:
Mr. Alsop, $3,750; Ms. Bergantino, $3,240; Mr. Carpenter, $3,750;
and Mr. Vesty, $3,750.
(h) Payments by the Company for fiscal 1995 401(k) Plan matching
contributions in excess of participation limits imposed on
higher-paid individuals under federal tax law, as follows: Mr.
Alsop, $8,735; Mr. Carpenter, $3,939; and Mr. Vesty; $2,126.
(i) Payments by the Company in fiscal 1995 of term life insurance
premiums for the benefit of the following executive officers: Mr.
Alsop, $736; Ms. Bergantino, $227; Mr. Carpenter, $662; and Mr.
Vesty, $480.
(4) Mr. Carpenter relinquished his position as Senior Vice President, Corporate
Development, effective December 31, 1997, but continues as a part-time
employee of the Company.
(5) Mr. Robertson joined the Company in May 1996.
(6) Amount shown under "Annual Compensation-Bonus" includes commissions paid by
the Company of $32,515 in fiscal 1997 and $8,505 in fiscal year 1995.
OPTION GRANTS IN FISCAL 1997
The following table sets forth certain information with respect to the
grant of incentive and non-qualified stock options in fiscal year 1997 for each
of the Named Executive Officers.
INDIVIDUAL GRANTS POTENTIAL
-------------------------------------------------------- REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS/SARS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERM(4)
OPTIONS/SARS FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) YEAR(2) ($/SHARE)(3) DATE 5%($) 10%($)
---- ------------- ------------ ------------ ---------- ----- ------
Joseph W. Alsop............... 21,000(5) 1.97% $14.13 3/03/07 $175,856 $ 455,722
79,000(6) 7.41% $14.13 3/03/07 $661,554 $1,714,384
Jennifer J. Bergantino........ 200(5) 0.02% $14.13 3/03/07 $ 1,675 $ 4,340
19,200(6) 1.80% $14.13 3/03/07 $160,783 $ 416,661
2,393(5) 0.22% $17.00 6/01/07 $ 26,315 $ 65,999
7,607(6) 0.71% $17.00 6/01/07 $ 83,651 $ 209,801
Chadwick H. Carpenter, Jr..... 30,700(6) 2.88% $14.13 3/03/07 $257,085 $ 666,223
Norman R. Robertson........... 200(5) 0.02% $14.13 3/03/07 $ 1,675 $ 4,340
15,800(6) 1.48% $14.13 3/03/07 $132,311 $ 342,877
David P. Vesty................ 68,500(6) 6.42% $14.13 3/03/07 $573,626 $1,486,523
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(1) These options vest monthly over a 60-month period commencing on March 3,
1997, except for Ms. Bergantino's options to purchase 2,393 shares and 7,607
shares which vest monthly over a 60-month period commencing on June 1, 1997.
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(2) The Company granted options to purchase 1,066,830 shares of Common Stock in
fiscal 1997. The Company granted no SARs during fiscal 1997.
(3) All options were granted at fair market value on the date of grant.
(4) Potential Realizable Value is computed based on the value of stock price
appreciation at assumed rates, reduced by the exercise price of the option,
compounded over the actual option term (10 years). Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the amounts reflected in this table will be
achieved.
(5) These options were granted as incentive stock options.
(6) These options were granted as non-qualified stock options.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND YEAR-END OPTION/SAR VALUES
The following table sets forth certain information with respect to option
exercises in fiscal year 1997 and the value of unexercised options, as of
November 30, 1997, for each of the Named Executive Officers.
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#)(1) FISCAL YEAR-END($)(1)(2)
--------------------- ------------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- ------------- -------------
Joseph W. Alsop.......... -- -- 277,869/227,331 $869,853/$1,005,985
Jennifer J. Bergantino... -- -- 34,160/ 80,240 $ 209,686/$ 481,139
Chadwick H. Carpenter,
Jr..................... -- -- 149,679/101,821 $ 517,714/$ 474,842
Norman R. Robertson...... -- -- 6,713/ 49,787 $ 38,360/$ 286,771
David P. Vesty........... 5,000 $80,243 183,100/ 81,794 $ 356,050/$ 543,175
- ---------------
(1) As of November 30, 1997, the Company had issued no SARs.
(2) Calculated on the basis of $20.56 per share which was the average of the
high and the low price of the Company's Common Stock at November 28, 1997,
as reported by the Nasdaq Stock Market, less the applicable exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Company's Board of
Directors are Robert J. Lepkowski and Arthur J. Marks. Neither of them is or has
ever been an officer or employee of the Company or of any of its subsidiaries.
No member of the Compensation Committee is a party to any relationship required
to be disclosed under Item 402 or Item 404 of the Regulation S-K promulgated by
the Commission.
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COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is established by the
Compensation Committee. The Company's philosophy is to reward executives based
upon corporate and individual performance as well as to provide long-term
incentive for the achievement of future financial and strategic goals. These
goals include growth of the Company, defined primarily in terms of growth in
revenue and earnings per share. It is also the Company's philosophy to base a
significant portion of the executive's total compensation opportunity on
performance incentives consistent with the scope and level of the executive's
responsibilities.
The executive compensation program for fiscal 1997 consisted of the
following three elements: (1) base salary; (2) incentive compensation in the
form of annual cash bonus awards earned under the Company's Fiscal 1997 Bonus
Program for Executives and Key Contributors (the "1997 Bonus Program") and (3)
equity-based long-term incentive compensation in the form of stock options. The
Compensation Committee believes that executive compensation should be aligned
with long-term shareholder value. Therefore, the elements of the executive
compensation program are weighted such that the equity-based long-term element
is potentially the most rewarding element. All elements of the executive
compensation program are designed to be competitive with those of comparable
technology companies. A further explanation of these elements as they relate to
the President and the other Named Executive Officers disclosed in the Summary
Compensation Table is as follows:
Base salary increases are based upon individual and departmental
contribution and performance. Base salary for Mr. Alsop did not increase during
fiscal year 1997. Base salaries for the other Named Executive Officers increased
during fiscal year 1997 as follows: for Ms. Bergantino 13.8%, for Mr. Carpenter
2.8%, for Mr. Robertson 10.0% and for Mr. Vesty 5.6%.
The 1997 Bonus Program was established by the Compensation Committee and
approved by the Board of Directors. For each participant, the 1997 Bonus Program
provided for a specified payment as a percentage of base salary depending on the
attainment of targeted growth levels for revenue and earnings per share. The
target growth levels are approved by the Board of Directors. If the Company
achieves 100% of its revenue and earnings per share targets, 100% of the
specified bonus is paid. More or less than 100% of the specified bonus is paid
depending on the Company's level of achievement and the Compensation Committee's
assessment of the Company's strength, stability and strategic position, as well
as individual contribution. Bonus awards paid in fiscal 1997 were based upon
increases in the Company's revenue and earnings per share and the Compensation
Committee's favorable assessment of the Company's strength, stability and
strategic position. In view of the fact that the Company's performance against
revenue and earnings per share targets in fiscal year 1997 was significantly
improved over such performance in fiscal year 1996, fiscal year 1997 bonuses
were significantly larger than fiscal year 1996 bonuses.
Based upon the Company's overall performance in fiscal year 1997, the total
compensation received by Mr. Alsop and the other Named Executive Officers
(computed on an annualized basis for all such persons) increased for fiscal year
1997 over fiscal year 1996. Total compensation increased 68% for Mr. Alsop, 55%
for Ms. Bergantino, 64% for Mr. Carpenter, 36% for Mr. Robertson and 74% for Mr.
Vesty.
Mr. Alsop's 68% increase in fiscal 1997 total compensation was primarily
due to an increase in the incentive cash bonus award. Mr. Alsop's bonus was
based on fiscal 1997 Company accomplishments as compared to target objectives as
described above.
Long-term incentive compensation, in the form of stock options, is intended
to correlate executive compensation with the Company's long-term success as
measured by the Company's stock price. Stock options are tied to the future
success of the Company because options granted generally have an exercise price
equal to the market value at the date of the grant and will only provide value
to the extent that the price of the
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Company's stock increases above the exercise price. Since options granted
generally vest monthly over a five year period, option participants are
encouraged to continue employment with the Company. During fiscal 1997, Mr.
Alsop and the other Named Executive Officers received incentive and
non-qualified stock options as disclosed in the Option Grant Table on page 9.
The Compensation Committee approved a discretionary matching contribution
to the 401(k) Plan for fiscal 1997, representing up to 7.35% of each full-time
employee's calendar year compensation, including base salary, commissions and
bonus, depending on the employee's length of service with the Company and the
employee's contribution level. The Named Executive Officers also received such a
contribution, except that, due to limitations imposed on 401(k) matching
contributions to higher-paid individuals under federal tax law, a portion of the
contributions that otherwise would have been received by Mr. Alsop and the other
Named Executive Officers disclosed in the Summary Compensation Table, pursuant
to the 401(k) Plan were instead paid directly to such individuals. All such
amounts are disclosed as "Other Compensation" in the Summary Compensation Table
on pages 8 and 9.
Robert J. Lepkowski
Arthur J. Marks
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STOCK PERFORMANCE GRAPH
The following line graph compares the Company's cumulative shareholder
return with that of a broad market index (Nasdaq Stock Market Index for U.S.
Companies) and a published industry index (Nasdaq Computer and Data Processing
Services Stocks). Each of these indices is calculated assuming that $100 was
invested on November 30, 1992.
COMPARATIVE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PROGRESS SOFTWARE CORPORATION, NASDAQ STOCK MARKET INDEX
AND NASDAQ COMPUTER AND DATA PROCESSING SERVICES STOCKS
[GRAPH]
11/30/92 11/30/93 11/30/94 11/30/95 11/30/96 11/30/97
- ---------------------------------------------------------------------------------------------------------------------
PROGRESS SOFTWARE CORPORATION 100 83 62 109 69 71
- ---------------------------------------------------------------------------------------------------------------------
NASDAQ STOCK MARKET INDEX 100 116 116 165 203 252
- ---------------------------------------------------------------------------------------------------------------------
NASDAQ COMPUTER AND DATA PROCESSING SERVICES
STOCKS 100 105 126 196 242 312
- ---------------------------------------------------------------------------------------------------------------------
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PROPOSED AMENDMENT TO THE PROGRESS SOFTWARE CORPORATION
1991 EMPLOYEE STOCK PURCHASE PLAN
The Progress Software Corporation 1991 Employee Stock Purchase Plan (the
"Plan") was adopted by the shareholders of the Company at a special meeting of
shareholders held on July 1, 1991. As of February 27, 1998, a total of 300,000
shares of Common Stock were authorized for issuance under the Plan, of which
140,777 remained available and reserved for issuance. The Company believes that
the availability of an adequate reserve of shares for issuance under the Plan
will benefit the Company by providing employees with an opportunity to acquire
shares of the Company's Common Stock and will enable the Company to attract,
retain and motivate valued employees. In March 1998, the Board of Directors
unanimously approved certain amendments to the Plan, including an increase in
the number of shares of Common Stock reserved for issuance thereunder by 200,000
shares to a total of 500,000 shares, which increase is subject to shareholder
approval being received at the 1998 Annual Meeting.
SUMMARY OF THE PROVISIONS OF THE PLAN
The following summary of the Plan, as amended, is qualified in its entirety
by the specific language of the Plan, a copy of which is available to any
shareholder upon request.
Any employee of the Company or any present or future subsidiary corporation
of the Company is eligible to participate in the Plan so long as the employee is
customarily employed for more than twenty (20) hours per week and for more than
five (5) months in a calendar year. No person who owns or holds options to
purchase, or as a result of participation in the Plan would own or hold options
to purchase, 5% or more of the total outstanding Common Stock of the Company is
entitled to participate in the Plan. No employee will be permitted to exercise
an option granted under the Plan which permits the employee to purchase Common
Stock having a value of more than $25,000 (determined using the fair market
value of the stock on the Exercise Date, as hereinafter defined) in any calendar
year.
Participation in the Plan is limited to eligible employees who authorize
payroll deductions (within ranges specified by the Compensation Committee)
pursuant to the Plan. There are currently approximately 1,100 employees eligible
to participate in the Plan, of whom 145 are participating. Once an employee
becomes a participant in the Plan, that employee will automatically participate
in an Offering Period, as hereinafter defined, or successor thereto, until such
time as that employee withdraws from the Plan, becomes ineligible to participate
in the Plan, or his or her employment ceases. A participant may be enrolled in
only one Offering Period at a time.
Each offering of Common Stock under the Plan is for a period of 27 months
(an "Offering Period"). Offering Periods are overlapping, with a new 27-month
Offering Period beginning every three months. New Offering Periods begin on each
January 1, April 1, July 1, and October 1. Each Offering Period is comprised of
nine three-month exercise periods ("Exercise Periods"). Shares are purchased on
the last business day of each Exercise Period, in March, June, September and
December ("Exercise Dates"). The Board of Directors may establish different
Offering Periods or Exercise Periods under the Plan.
On the first day of an Offering Period, the Company grants to employees
participating in such Offering Period, an option to purchase shares of Common
Stock. On the Exercise Date of each Exercise Period, the employee is deemed to
have exercised the option, at the exercise price, to the extent of accumulated
payroll deductions. The option exercise price is an amount equal to 85% of the
fair market value per share of the Common Stock on either the first day of the
Offering Period or the Exercise Date, whichever is lower. If the fair market
value of the Common Stock on an Exercise Date (other than the last Exercise Date
of an Offering Period) is less than its fair market value on the first day of
the Offering Period, then after the exercise of the
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17
option, all participants will automatically be withdrawn from that offering and
enrolled in the new Offering Period.
Subject to certain limitations, the number of shares of Common Stock a
participant purchases in each Exercise Period is determined by dividing the
total amount of payroll deductions withheld from the participant's compensation
during the Exercise Period by the option exercise price. If an employee is not a
participant on an Exercise Date, the employee's option which would have been
automatically exercised on such date will be automatically terminated, and the
amount of the employee's accumulated payroll deductions will be refunded.
A participant may elect to increase or decrease the amount of his or her
payroll deductions at any time. A reduction in the amount of a participant's
payroll deductions will be effective seven (7) business days after the Company
receives written notice from the participant and will apply to the first full
pay period commencing after such date. An increase in the amount of a
participant's payroll deductions will be effective seven (7) business days after
the Company receives written notice from the participant and will apply to the
first full Exercise Period commencing after such date. A participant may
withdraw from an Offering Period at any time without affecting his or her
eligibility to participate in future Offering Periods. If a participant
withdraws from an Offering Period, that participant may not again participate in
the same Offering Period.
The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee, at its sole discretion, may establish a
minimum holding period, if any, for shares of stock acquired by a participant or
a participant's beneficiary upon exercise of an option granted under the Plan.
Currently, the Compensation Committee has set a three (3) month holding period.
The Plan will continue until terminated by the Board of Directors.
Until its amendment in March 1998, the Plan required executive officers to
hold shares of Common Stock acquired under the Plan for a minimum of six (6)
months, in order to facilitate compliance with Section 16(b) of the Securities
Exchange Act of 1934, as amended. As a result of certain changes to Rule 16b-3
promulgated under Section 16(b), however, transactions under the Plan are now
generally exempt from the provisions of Section 16(b), and the Plan no longer
subjects executive officers of the Company to a different holding period than
that applicable to other participants. Although the Company anticipates that the
changes in the Plan and Rule 16b-3 may result in increased participation in the
Plan by executive officers, the Company is unable to determine the amount of any
benefits that will be received by its executive officers or other employees if
the proposed amendment to the Plan is approved.
If the increase in the number of shares reserved for issuance under the
Plan is approved by the shareholders of the Company, the Company intends to file
a Registration Statement on Form S-8 covering the shares of Common Stock
issuable as a result of such increase, and upon the effectiveness of such
registration statement all such shares will be, when issued, eligible for resale
in the public market.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
A participant in the Plan recognizes no taxable income either as a result
of participation in the Plan or upon exercise of an option to purchase shares of
Common Stock under the terms of the Plan.
If a participant disposes of shares purchased upon exercise of an option
granted under the Plan within two years from the first day of the applicable
Offering Period or within one year from the Exercise Date (a "Disqualifying
Disposition"), the participant will realize ordinary income in the year of such
disposition equal to the amount by which the fair market value of the shares on
the date the shares were purchased exceeds the purchase price. The amount of the
ordinary income will be added to the participant's basis in the shares, and any
additional gain or resulting loss recognized on the disposition of the shares
will be a capital gain or loss. A
15
18
capital gain or loss will be long-term if the participant's holding period is
more than eighteen (18) months, mid-term if the participant's holding period is
more than twelve (12) months but less than or equal to eighteen (18) months, or
short-term if the participant's holding period is twelve (12) months or less.
If the participant disposes of shares purchased upon exercise of an option
granted under the Plan at least two years after the first day of the applicable
Offering Period and at least one year after the Exercise Date, the participant
will realize ordinary income in the year of disposition equal to the lesser of
(i) the excess of the fair market value of the shares on the date of disposition
over the exercise price or (ii) the excess of the fair market value of the
shares on the first day of the applicable Offering Period over the exercise
price. The amount of any ordinary income will be added to the participant's
basis in the shares, and any additional gain recognized upon the disposition
after such basis adjustment will be a capital gain, long-term or otherwise,
depending upon the holding period measured from the Exercise Date. If the fair
market value of the shares on the date of disposition is less than the exercise
price, there will be no ordinary income and any loss recognized will be a
capital loss, long-term or otherwise, depending upon the holding period measured
from the Exercise Date.
If the participant still owns the shares at the time of death, the lesser
of (i) the excess of the fair market value of the shares on the date of death
over the exercise price or (ii) the excess of the fair market value of the
shares on the first day of the Offering Period in which the shares were
purchased over the exercise price will constitute ordinary income in the year of
death.
The Company will generally be entitled to a tax deduction in the year of a
Disqualifying Disposition equal to the amount of ordinary income recognized by
the participant as a result of such disposition. In all other cases, no
deduction is allowed by the Company.
The foregoing is only a summary of the effect of the United States income
tax laws and regulations upon an employee and the Company with respect to an
employee's participation in the Plan. This summary does not purport to be a
complete description of all federal tax implications of participation in the
Plan, nor does it discuss the income tax laws of any municipality, state or
foreign country in which a participant may reside or otherwise be subject to
tax. PARTICIPANTS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISOR CONCERNING
THE APPLICATION OF THE VARIOUS TAX LAWS WHICH MAY APPLY TO A PARTICIPANT'S
PARTICULAR SITUATION.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND
THE PLAN.
SELECTION OF AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP,
independent certified public accountants, to serve as the Company's independent
auditors for the fiscal year ending November 30, 1998. The Company has been
advised that a representative of Deloitte & Touche LLP will be present at the
1998 Annual Meeting. This representative will have the opportunity to make a
statement if he desires and will be available to respond to appropriate
questions presented at the meeting.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In
addition to soliciting shareholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of nominees and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs in forwarding proxy materials to the beneficial owners of shares held of
record by them. Directors, officers and regular employees of the Company may,
without additional compensation,
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19
solicit shareholders in person or by mail, telephone, facsimile, in person or
otherwise following the original solicitation.
PROPOSALS OF SHAREHOLDERS FOR 1999 ANNUAL MEETING
The Company anticipates that its 1999 Annual Meeting of Shareholders will
be held on or about April 23, 1999. Proposals of shareholders of the Company
intended to be presented at the 1999 Annual Meeting must, in order to be
included in the Company's proxy statement and the form of proxy for the 1999
Annual Meeting, be received at the Company's principal executive offices by
November 25, 1998.
In addition, under the by-laws of the Company, any shareholder intending to
present at the 1998 Annual Meeting any proposal (other than a proposal made by,
or at the direction of, the Board of Directors of the Company) must give written
notice of such proposal (including certain information about any nominee or
matter proposed and the proposing shareholder) to the Clerk of the Company not
less than 60 days nor more than 90 days prior to the date of the scheduled
annual meeting; provided, however, that if less than 70 days' notice or prior
public disclosure of the scheduled annual meeting is given or made, such notice,
to be timely, must be given within 10 days following such public disclosure or
mailing of such notice, whichever is earlier.
AVAILABLE INFORMATION
Shareholders of record on February 27, 1998 have previously received or
will receive with this Proxy Statement a copy of the Company's 1997 Annual
Report, containing detailed financial information concerning the Company, which
is incorporated herein by reference. The Company will mail, without charge, a
copy of the Company's Annual Report on Form 10-K, without exhibits, to any
shareholder solicited hereby who requests it in writing. Please submit your
written request to Investor Relations, Progress Software Corporation, 14 Oak
Park, Bedford, Massachusetts 01730 or call (781) 280-4450.
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CARD DETACH CARD
PROGRESS SOFTWARE CORPORATION
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, April
24, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Progress Software Corporation
21
PROGRESS SOFTWARE CORPORATION
14 OAK PARK, BEDFORD MASSACHUSETTS 01730
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- APRIL 24, 1998
The undersigned shareholder of Progress Software Corporation, revoking all prior
proxies, hereby appoints Joseph W. Alsop, Norman R. Robertson and Robert L.
Birnbaum, or any of them acting singly, proxies, with full power of
substitution, to vote all shares of Common Stock of Progress Software
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Company's office at 14 Oak Park,
Bedford, Massachusetts on April 24, 1998, at 9:00 A.M., local time, and at any
adjournments thereof, upon matters set forth in the Notice of Annual Meeting and
Proxy Statement dated March 23, 1998, a copy of which has been received by the
undersigned, and in their discretion, upon any other business that may properly
come before the meeting or any adjournments thereof. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. A SHAREHOLDER WISHING TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS NEED ONLY SIGN
AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. Attendance of the
undersigned at the meeting or any adjourned session thereof will not be deemed
to revoke the proxy unless the undersigned shall affirmatively indicate the
intention of the undersigned to vote the shares represented hereby in person.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, IT WILL BE VOTED FOR THE PROPOSALS SET FORTH ON THE REVERSE.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE AND SIGN THIS PROXY ON THE OTHER SIDE AND MAIL IT IN THE
ENCLOSED ENVELOPE TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES. PLEASE SIGN EXACTLY AS NAME(S)
APPEAR(S) ON STOCK CERTIFICATE. IF SHAREHOLDER IS A CORPORATION OR PARTNERSHIP,
PLEASE HAVE AN AUTHORIZED OFFICER SIGN ON BEHALF OF THE CORPORATION OR
PARTNERSHIP.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
- ------------------------------------ -------------------------------------
22
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
-------------------------------------- For Against Abstain
PROGRESS SOFTWARE CORPORATION 1. To fix the number of directors constituting [ ] [ ] [ ]
-------------------------------------- the full Board of Directors of the Company at
eight.
Mark box at right if you plan to attend the [ ] 2. Election of Directors.
Annual Meeting.
With- For All
Joseph W. Alsop, Larry R. Harris, For held Except
Mark box at right if an address change or [ ] Robert J. Lepkowski, Michael L. Mark, [ ] [ ] [ ]
comment has been noted on the reverse Arthur J. Marks, Scott A. McGregor,
side of this card Amram Rasiel and James W. Storey
RECORD DATES SHARES: NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through
name(s) of the nominee(s). Your shares will be voted for the
remaining nominee(s).
3. To act upon a proposal to amend For Against Abstain
the Company's 1991 Employee Stock Purchase [ ] [ ] [ ]
Plan to increase the maximum number of shares
that may be issued under such plan from
300,000 shares to 500,000 shares.
-----------------
Please be sure to sign and date this Proxy. Date
- ---------------------------------------------------------------
- ---------------------------- ---------------------------
Shareholder sign here Co-owner sign here
23
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Page 1
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PROGRESS SOFTWARE CORPORATION
1991 EMPLOYEE STOCK PURCHASE PLAN
(Amended and Restated as of March 10, 1998)
1. PURPOSE
The Progress Software Corporation Employee Stock Purchase Plan (the "Plan")
is intended to provide a method whereby employees of Progress Software
Corporation (the "Company") will have an opportunity to acquire an
ownership interest (or increase an existing ownership interest) in the
Company through the purchase of shares of the Common Stock of the Company.
It is the intention of the Company that the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. DEFINITIONS
(a) "Eligible Compensation" for purposes of the Plan means: (i) with
respect to individuals who are hourly employees, base salary plus
payments for overtime and bonuses or (ii) with respect to individuals
who are salaried employees, base salary plus sales commissions and
bonuses. Eligible Compensation shall not include any deferred
compensation other than contributions by an individual through a
salary reduction agreement to a cash or deferred plan pursuant to
Section 401(k) of the Code or to a cafeteria plan pursuant to Section
125 of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means the Compensation Committee of the Board.
(d) "Common Stock" means the common stock, $.01 par value per share, of
the Company.
(e) "Company" shall also include any subsidiary of Progress Software
Corporation designated as a participant in the Plan by the Board,
unless the context otherwise requires.
(f) "Employee" means any person who is customarily employed at least 20
hours per week and more than five months in a calendar year by (i) the
Company or (ii) any subsidiary corporation.
(g) "Subsidiary Corporation" shall mean any present or future corporation
which is or would constitute a "subsidiary corporation" as that term
is defined in Section
24
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Page 2
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424(f) of the Code.
3. ELIGIBILITY
(a) Participation in the Plan is completely voluntary. Participation
during any one or more of the Offering Periods, as hereafter defined,
under the Plan shall neither limit, nor require, participation during
any other Offering Period.
(b) Each Employee of the Company and its Subsidiary Corporations shall be
eligible to participate in the Plan on any Offering Period
commencement date, as hereafter identified, following the completion
of three months of continuous service with the Company and/or its
Subsidiary Corporations; provided, however, that no Employee shall be
granted an option under the Plan:
(i) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Company or any Subsidiary Corporation;
for purposes of this Paragraph the rules of Section 424(d) of the
Code shall apply in determining stock ownership of any employee;
or
(ii) which permits his/her rights to purchase stock under all Section
423 employee stock purchase plans of the Company and its
Subsidiary Corporations to exceed US $25,000 of the fair market
value of the stock (determined at the time such option is
granted) for each calendar year in which such option is
outstanding; for purposes of this Paragraph, the rules of Section
423 (b)(8) of the Code shall apply.
4. OFFERING PERIOD / EXERCISE PERIOD
The right to purchase stock hereunder shall be made available by a series
of "Exercise Periods" during an "Offering Period" to employees eligible in
accordance with Paragraph 3 hereof.
Offering Period. Each participant in the Plan will be enrolled in an
Offering Period. An Offering Period has a duration of 27 consecutive months
unless a participant: withdraws from the Plan, ceases to be an eligible
employee, or is automatically transferred to a new Offering Period.
Offering Periods commence on each of the following dates: January 1, April
1, July 1, or October 1.
Exercise Period. Each 27-month Offering Period consists of nine consecutive
Exercise Periods lasting three months each. Exercise Periods start on
January 1, April 1, July 1, and October 1.
Exercise Date. During each 27-month Offering Period there will be nine
Exercise Dates. An Exercise Date is the last date of each Exercise Period.
Therefore, Exercise
25
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Page 3
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Dates will be as follows: March 31, June 30, September 30, and December 31.
5. PARTICIPATION
Any eligible employee may become a participant by completing a payroll
deduction authorization form provided by the Company and filing it with
their payroll department and the Plan administrator 20 days prior to an
Offering Period commencement date.
A participant may be enrolled in only one Offering Period at a time. A
participant will be re-enrolled automatically as a participant in future
Offering Periods when an Offering Period in which such participant is
currently enrolled ends, unless such participant withdraws from
participation, is terminated or terminates employment, becomes ineligible
to participate for any reason, or the Plan terminates.
6. PAYROLL DEDUCTIONS
(a) At the time a participant files his/her authorization for a payroll
deduction, he/she shall specify a percentage of his/her Eligible
Compensation to be deducted from his/her pay on each payday during any
Offering Period in which he/she is a participant in the Plan. Such
percentage shall be in increments of one percent (1%) up to a maximum
percentage to be established for each Offering Period by the
Committee.
(b) Payroll deductions for participants shall commence on the Offering
Period commencement date following the effective date of his/her
authorization for such payroll deductions.
(c) A participant may, at any time, reduce the percentage (but not below
1%) of his/her Eligible Compensation to be deducted on each payday
that he/she participates in the Plan. A reduction in payroll
deductions will be effective on the seventh business day following
receipt of notice by the Company and will apply to the first full pay
period commencing after such date.
(d) A participant may, at any time, increase the percentage (but not above
the maximum established by the Committee) of his/her Eligible
Compensation to be deducted on each payday that the he/she
participates in the Plan. An increase in payroll deductions will be
effective on the seventh business day following receipt of notice by
the Company and will apply to the first full Exercise Period
commencing after such date.
(e) All payroll deductions made for a participant shall be credited to
his/her account under the Plan. A participant may not make any
separate cash payment into such account.
7. GRANTING OF OPTION / EXERCISE PRICE
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(a) On the commencement date of each Offering Period, a participant in
such Offering Period shall be deemed to have been granted an option to
purchase on each Exercise Date during such Offering Period (at the per
share exercise price) up to a number of shares of the Company's Common
Stock determined by dividing such participant's payroll deductions
accumulated during the applicable Exercise Period by eighty-five (85%)
of the market value per share of the Company's Common Stock on the
Offering Period commencement date or on the Exercise Date, whichever
is lower, provided that the number of shares subject to the option
shall not exceed 200% of the number of shares determined by dividing
10% of the participant's Eligible Compensation over the Offering
Period (determined as of the Offering Period commencement date) by 85%
of the market value per share of the Company's Common Stock on the
Offering Period commencement date, subject to the limitations set
forth in Section 3 (b) and 12 hereof. The Market value per share of
the Company's Common Stock shall be determined as provided in Section
7(b) herein.
(b) The exercise price per share to be paid for Common Stock purchased
under the Plan shall be equal to the lower of 85% of the market value
per share of the Common Stock on the first day of the Offering Period
in which the Exercise Date falls, or 85% of the market value per share
of the Common Stock on the Exercise Date. Market value per share of
the Common Stock on a particular date is the closing price (or closing
bid, if no sales were reported) of the Common Stock on the National
Association of Securities Dealers Automated Quotation System, Inc.
("NASDAQ"), or, in the event the Common Stock is listed on a stock
exchange, the market value per share shall be the closing price on
such exchange, for that date, as reported in the Wall Street Journal.
If a closing price is not available for a particular date, then the
market value per share to be used for that date will be the closing
stock price as of the last preceding trading day on the NASDAQ or a
stock exchange for which a closing price is available. If the Common
Stock is not listed on the NASDAQ or a stock exchange then the market
value per share will be determined by the Committee.
For purpose of calculating the number of shares of Common Stock to be
purchased with payroll deductions from participants outside of the
United States, the Company will use the exchange rate published in the
Wall Street Journal on the Exercise Date.
8. EXERCISE OF OPTION
Unless a participant withdraws from the Plan or is terminated from
participating in the Plan pursuant to paragraph 10 hereof, his/her option
for the purchase of Common Stock will be deemed to have been exercised
automatically on each Exercise Date for the purchase of the number of full
shares of Common Stock which the accumulated payroll deductions in his/her
account at that time will purchase at the price of the Common Stock as
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determined in Paragraph 7 (b). Fractional shares will not be issued under
the Plan and any excess funds in a participant's account representing any
fractional shares after Common Stock purchases made on each Exercise Date
will be automatically carried forward to the next Exercise Period unless
the participant elects, by written notice to their payroll department, to
have the excess returned to him/her.
9. NEW OFFERING PERIOD
If the market value of the Common Stock is lower on an Exercise Date than
it was on the first day of the Offering Period, then all participants in
such Offering Period will be automatically withdrawn from that Offering
Period immediately after the participants' exercise of the option on such
Exercise Date, and such participants will be automatically re-enrolled in a
new Offering Period commencing immediately after that Exercise Date. The
old Offering Period terminates upon such automatic re-enrollment.
10. WITHDRAWAL AND TERMINATION
(a) Prior to the Exercise Date for each Exercise Period, any participant
may withdraw all but not less than all of his/her payroll deductions
under the Plan for such Exercise Period by giving written notice to
his/her payroll department. All of the participant's payroll
deductions credited to such account will be paid to him/her after
receipt of notice of withdrawal, without interest, and no future
payroll deductions will be made. Withdrawal from an Exercise Period
will be deemed to be a withdrawal from the Offering Period which
includes such Exercise Period. The Company will treat any attempt to
borrow by a participant on the security of accumulated payroll
deductions as an election to withdraw such deductions.
(b) A participant may elect not to exercise an option by giving written
notice to their payroll department no less than seven (7) business
days prior to the applicable Exercise Date. Any such election will be
treated as a withdrawal pursuant to section (a) above.
(c) A participant's election not to participate in, or withdrawal from,
any Offering Period or Exercise Period within such Offering Period
will not have any effect upon his/her eligibility to participate in
any succeeding Offering Period or in any similar plan which may
hereafter be adopted by the Company.
(d) Upon termination of the participant's employment for any reason,
including retirement but excluding death, all of his/her payroll
deductions accrued during the relevant Exercise Period will be
returned to the participant.
(e) Upon termination of the participant's employment because of death, the
participant's beneficiary (as defined in Paragraph 14) shall have the
right to elect, by written notice given to the participant's former
payroll department prior to the expiration of a period of 90 days
commencing with the date of the death of the participant but in no
event later than the applicable Offering Period, either
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(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or
(ii) to exercise the participant's option for the purchase of stock on
the Exercise Date next following the date of the participant's
death for the purchase of the number of full shares which the
participant's accumulated payroll deductions, at the date of the
participant's death, will purchase at the applicable price, and
any excess deductions will be returned to said beneficiary. In
the event that no such written notice of election shall be duly
received by the appropriate payroll department of the Company,
the beneficiary shall automatically be deemed to have elected to
withdraw the payroll deductions credited to the participant at
the date of the participant's death and the same will be paid
promptly to said beneficiary.
11. INTEREST
No interest will be paid or allowed on any money paid into the Plan or
credited to any participant.
12. STOCK
(a) The maximum number of shares of Common Stock available for issuance
and purchase by participants under the Plan, subject to adjustment
upon changes in capitalization of the Company as provided in Paragraph
17, shall be 500,000 shares of Common Stock, par value $.01 per share,
of the Company. If on a given Exercise Date the number of shares with
respect to which options are to be exercised exceeds the number of
shares then available, the Company shall make a pro rata allocation of
the shares available for delivery and distribution in an equitable
manner, with the balances of payroll deductions credited to each
participant under the Plan carried forward to the next Exercise Period
in the applicable Offering Period or returned to the participant if
the participant so chooses, by giving written notice to their payroll
department to this effect.
(b) The participant will have no interest in stock underlying his/her
option until such option has been exercised.
(c) The Committee, in its sole discretion, may establish a minimum holding
period, if any, for shares of stock acquired pursuant hereto by any
participant or his beneficiary pursuant to Paragraph 14 hereof.
Certificates representing said shares of stock issued pursuant to this
Plan may bear legends to that effect.
13. ADMINISTRATION
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The Plan shall be administered by the Committee. The interpretation and
construction of any provision of the Plan and adoption of rules and
regulations for administering the Plan shall be made by the Committee.
Determinations made by the Committee with respect to any matter or
provision contained in the Plan shall be final, conclusive and binding upon
the Company and upon all participants, their heirs or legal
representatives. Any rule or regulation adopted by the Committee shall
remain in full force and effect unless and until altered, amended, or
repealed by the Committee.
14. DESIGNATION OF BENEFICIARY
A participant shall file with their payroll department a written
designation of a beneficiary who is to receive any Common Stock and/or cash
under the Plan. Such designation of beneficiary may be changed by the
participant at any time by written notice. Upon the death of a participant
and upon receipt by the Company of proof of the identity and existence at
the participant's death of a beneficiary validly designated by him under
the Plan, the Company shall deliver such Common Stock and/or cash to such
beneficiary validly designated under the Plan who is living at the time of
such participant's death, the Company shall deliver such Common Stock
and/or cash to the executor or administrator of the estate of the
participant. No beneficiary shall prior to the death of the participant by
whom he has been designated, acquire any interest in the Common Stock
and/or cash credited to the participant under the Plan.
15. TRANSFERABILITY
Neither payroll deductions credited to a participant nor any rights with
regard to the exercise of an option or to receive Common Stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such
act as an election to withdraw funds in accordance with Paragraph 10(a).
16. USE OF FUNDS
All payroll deductions received or held by the Company under this Plan may
be used by the Company for any corporate purpose, and the Company shall not
be obligated to segregate such payroll deductions.
17. EFFECT OF CHANGES OF COMMON STOCK
If the Company shall subdivide or reclassify the Common Stock which has
been or may be optioned under this Plan, or shall declare thereon any
dividend payable in shares of such Common Stock, or shall take any other
action of a similar nature affecting such Common Stock, then the number and
class of shares of Common Stock which may thereafter be optioned (in the
aggregate and to any participant) shall be adjusted accordingly and in the
case of each option outstanding at the time of any such action, the number
and class of
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shares which may thereafter be purchased pursuant to such option and the
option price per share shall be adjusted to such extent as may be
determined by the Committee, with the approval of independent public
accountants and counsel, to be necessary to preserve the rights of the
holder of such option.
18. AMENDMENT OR TERMINATION
The Board may at any time terminate or amend the Plan. No such termination
shall affect options previously granted, nor may an amendment make any
change in any option theretofore granted which would adversely affect the
rights of any participant holding options under the Plan.
19. NOTICES
All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received by the participant's payroll department.
20. MERGER OR CONSOLIDATION
If the Company shall at any time merge into or consolidate with another
corporation, the holder of each option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such
option for each share as to which such option shall be exercised, the
securities or property which a holder of one share of the Common Stock was
entitled to upon and at the time of such merger or consolidation. In
accordance with this Paragraph and Paragraph 17, the Committee shall
determine the kind and amount of such securities or property which such
holder of an option shall be entitled to receive. A sale of all or
substantially all of the assets of the Company shall be deemed a merger or
consolidation for the foregoing purposes.
21. APPROVAL OF STOCKHOLDERS
The Plan is subject to the approval of the stockholders of the Company at
their next annual meeting or at any special meeting of the stockholders for
which one of the purposes of such a special meeting shall be to act upon
the Plan.
22. GOVERNMENTAL AND OTHER REGULATIONS
The Plan, and the grant and exercise of the rights to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may, in the opinion
of counsel for the Company, be required. The Plan shall be governed by, and
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construed and enforced in accordance with, the provisions of Sections 421,
423 and 424 of the Code and the substantive laws of the Commonwealth of
Massachusetts. In the event of any inconsistency between such provisions of
the Code and any such laws, said provisions of the Code shall govern to the
extent necessary to preserve favorable federal income tax treatment
afforded employee stock purchase plans under Section 423 of the Code.
