-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R/1Bk+d1TwdS8QVReX5qpLPZkb9XaTOutmkc8691KVPElKfCDL122KNqa5GUtzj5 3mcmRHbsivK/HP1UKkh/nA== 0000950124-01-501284.txt : 20010516 0000950124-01-501284.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950124-01-501284 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMSHARE INC CENTRAL INDEX KEY: 0000201513 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 381804887 STATE OF INCORPORATION: MI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28848 FILM NUMBER: 1640300 BUSINESS ADDRESS: STREET 1: 555 BRIARWOOD CIRCLE STREET 2: P O BOX 1588 CITY: ANN ARBOR STATE: MI ZIP: 48108 BUSINESS PHONE: 3139944800 MAIL ADDRESS: STREET 1: P O BOX 1588 STREET 2: 555 BRIARWOOD CIRCLE CITY: ANN ARBOR STATE: MI ZIP: 48108 10-Q 1 k62543e10-q.txt FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) ----- OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) ----- OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . ----- ----- COMMISSION FILE NUMBER 0-4096 COMSHARE, INCORPORATED (Exact name of registrant as specified in its charter) MICHIGAN 38-1804887 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (734) 994-4800 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of MARCH 31, 2001.
OUTSTANDING AT CLASS OF COMMON STOCK MARCH 31, 2001 --------------------- -------------- $1.00 PAR VALUE 9,949,181 SHARES
1 2 COMSHARE, INCORPORATED INDEX
Page No. -------- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Statements of Operations For the Three and Nine Months Ended March 31, 2001 and 2000 .......................................................3 Consolidated Statements of Comprehensive Income For the Three and Nine Months Ended March 31, 2001 and 2000 .......................................................4 Condensed Consolidated Balance Sheets as of March 31, 2001 and June 30, 2000 ..................................................................................5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2001 and 2000 .........................................................................7 Notes to Condensed Consolidated Financial Statements ..................................................................8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ..............................................................................11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .......................................................17 PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS .....................................................................17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .................................................................................18 SIGNATURE.................................................................................................................19
2 3 PART I. - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS COMSHARE, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2001 2000 2001 2000 ---- ---- ---- ---- REVENUE Software licenses $ 5,828 $ 5,562 $ 15,839 $ 16,430 Software maintenance 5,885 5,747 17,625 17,501 Implementation, consulting and other services 4,164 3,719 12,681 10,626 -------- -------- -------- -------- TOTAL REVENUE 15,877 15,028 46,145 44,557 COSTS AND EXPENSES Selling and marketing 6,140 5,944 17,404 17,693 Cost of revenue and support 6,004 5,422 18,736 16,393 Internal research and product development 2,284 2,285 6,425 6,571 General and administrative 1,425 1,547 4,147 4,498 Restructuring and unusual 892 892 -------- -------- -------- -------- TOTAL COSTS AND EXPENSES 16,745 15,198 47,604 45,155 -------- -------- -------- -------- LOSS FROM OPERATIONS (868) (170) (1,459) (598) OTHER INCOME (EXPENSE) Interest income 304 374 1,102 1,112 Interest expense (1) (18) (5) (62) Exchange gain (loss) - 62 (72) (32) -------- -------- -------- -------- TOTAL OTHER INCOME 303 418 1,025 1,018 INCOME (LOSS) BEFORE TAXES (565) 248 (434) 420 Provision for income taxes (48) 87 - 148 -------- -------- -------- -------- NET INCOME (LOSS) $ (517) $ 161 $ (434) $ 272 ======== ======== ======== ======== SHARES USED IN BASIC EPS COMPUTATION 9,940 9,649 9,836 9,632 ======== ======== ======== ======== SHARES USED IN DILUTED EPS COMPUTATION 9,940 10,105 9,836 9,875 ======== ======== ======== ======== NET INCOME (LOSS) PER COMMON SHARE - BASIC EPS $ (0.05) $ 0.02 $ (0.04) $ 0.03 ======== ======== ======== ======== NET INCOME (LOSS) PER COMMON SHARE - DILUTED EPS $ (0.05) $ 0.02 $ (0.04) $ 0.03 ======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 3 4 COMSHARE, INCORPORATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited, in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2001 2000 2001 2000 --------- --------- ------------ --------- Net income (loss) $ (517) $ 161 $ (434) $ 272 Other comprehensive income (loss): Currency translation adjustment (442) (124) (595) (197) ------- ------- ------- ------- COMPREHENSIVE INCOME (LOSS) $ (959) $ 37 $(1,029) $ 75 ======= ======= ======= =======
See accompanying notes to condensed consolidated financial statements. 4 5 COMSHARE, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
MARCH 31, June 30, 2001 2000 ---- ---- ASSETS (unaudited) (audited) CURRENT ASSETS Cash and cash equivalents $23,103 $29,506 Accounts receivable, net 18,490 17,328 Deferred income taxes 753 759 Prepaid expenses and other current assets 1,402 1,697 ------- ------- TOTAL CURRENT ASSETS 43,748 49,290 Property and equipment, at cost Computers & other equipment 8,075 8,508 Leasehold improvements 2,650 2,774 ------- ------- 10,725 11,282 Less - Accumulated depreciation 9,260 9,397 ------- ------- Property and equipment, net 1,465 1,885 Goodwill, net 995 1,047 Deferred income taxes 7,014 6,445 Other assets 1,329 1,479 ------- ------- TOTAL ASSETS $54,551 $60,146 ======= =======
See accompanying notes to condensed consolidated financial statements. 5 6 COMSHARE, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
MARCH 31, June 30, 2001 2000 ---- ---- LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) (audited) CURRENT LIABILITIES Accounts payable $ 2,154 $ 2,252 Accrued liabilities: Payroll 821 2,240 Taxes 1,199 1,154 Other 5,003 6,583 -------- -------- Total accrued liabilities 7,023 9,977 Deferred revenue 10,684 12,178 -------- -------- TOTAL CURRENT LIABILITIES 19,861 24,407 Long-term debt 303 599 Other liabilities 4,086 4,249 SHAREHOLDERS' EQUITY Capital stock: Preferred stock, no par value; authorized 5,000,000 shares; none issued - - Common stock, $1.00 par value; authorized 20,000,000 shares; outstanding 9,949,181 shares as of March 31, 2001 and 9,771,962 shares as of June 30, 2000 9,949 9,772 Capital contributed in excess of par value 39,052 38,790 Retained deficit (8,241) (7,807) Accumulated other comprehensive income (loss): - Pension liability, net of tax (4,282) (4,282) Cumulative translation adjustment (6,177) (5,582) -------- -------- TOTAL SHAREHOLDERS' EQUITY 30,301 30,891 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 54,551 $ 60,146 ======== ========
See accompanying notes to condensed consolidated financial statements. 6 7 COMSHARE, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in thousands)
NINE MONTHS ENDED MARCH 31, ----------------------------- 2001 2000 ---- ---- OPERATING ACTIVITIES Net income (loss) $ (434) $ 272 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 714 992 Changes in operating assets and liabilities: Accounts receivable (1,525) 19 Prepaid expenses and other assets 415 (217) Accounts payable (64) (3,980) Accrued liabilities (2,802) (558) Deferred revenue (1,289) (1,310) Deferred income taxes (562) 1,861 Other liabilities (163) (170) -------- -------- NET CASH USED IN OPERATING ACTIVITIES (5,710) (3,091) INVESTING ACTIVITIES Payments for property and equipment (152) (646) Other (165) 70 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (317) (576) FINANCING ACTIVITIES Net repayments under debt agreements, capital lease agreements and notes payable (284) (1,239) Other 440 318 -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 156 (921) Effect of exchange rate changes (532) (83) -------- -------- NET DECREASE IN CASH (6,403) (4,671) CASH AT BEGINNING OF PERIOD 29,506 32,212 -------- -------- CASH AT END OF PERIOD $ 23,103 $ 27,541 ======== ======== SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 5 $ 43 ======== ======== Cash paid for income taxes $ 785 $ 336 ======== ========
See accompanying notes to condensed consolidated financial statements. 7 8 COMSHARE, INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE A - GENERAL INFORMATION The condensed consolidated financial statements included herein have been prepared by Comshare, Incorporated (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's most recent Annual Report on Form 10-K. Certain amounts in the fiscal 2000 financial statements have been reclassified to conform with fiscal 2001 presentations. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, required to present fairly its consolidated statements of operations and the consolidated statements of comprehensive income for the three and nine months ended March 31, 2001 and 2000, the consolidated balance sheets as of March 31, 2001 and the consolidated statements of cash flows for the nine months ended March 31, 2001 and 2000. The results of operations for the three and nine months ended March 31, 2001 and 2000 are not necessarily indicative of the results to be expected in future quarters or the full fiscal year. The software industry is generally characterized by seasonal trends. NOTE B - COMPUTER SOFTWARE Product upgrades for the Company's products have been released regularly with an almost continuous product development cycle. Based on these continuous product life cycles, the time between establishing technological feasibility and general release to the public is very short. As a result, software costs qualifying for capitalization are not significant. Accordingly, the Company does not capitalize software development costs and does not anticipate capitalization of software costs in future periods. NOTE C - BORROWINGS The Company has a $10 million credit agreement which expires on September 30, 2002. Borrowings are secured by accounts receivable and the credit agreement contains covenants regarding, among other things, earnings leverage, net worth and payment of dividends. Under the terms of the credit agreement, the Company is not permitted to pay cash dividends on its common stock. Borrowings under this credit agreement were approximately $0.3 million and total available borrowings were $10 million at March 31, 2001. Borrowings available at any time are based on the lower of $10 million or a percentage of worldwide eligible accounts receivable and cash. At March 31, 2001, the interest rate on borrowings denominated in Japanese yen, which was used to hedge receivables, was 1.91%. 8 9 COMSHARE, INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) NOTE D - FINANCIAL INSTRUMENTS The Company, at various times, enters into forward exchange contracts to hedge certain exposures related to identifiable foreign currency transactions that are relatively certain as to both timing and amount. Gains and losses on the forward contracts are recognized concurrently with the gains and losses from the underlying transactions. The forward exchange contracts used are classified as "held for purposes other than trading." The Company does not use any other types of derivative financial instruments to hedge such exposures, nor does it use derivatives for speculative purposes. At March 31, 2001 and June 30, 2000, the Company had forward foreign currency exchange contracts outstanding of approximately $2.3 million and $5.6 million (notional amounts), respectively, denominated in foreign currencies. The contracts outstanding at March 31, 2001 mature at various dates through September 14, 2001 and are intended to hedge various foreign currency commitments due from the Company's distributors. Due to the short-term nature of these financial instruments, the fair value of these contracts is not materially different than their notional amounts at March 31, 2001 and June 30, 2000. The Financial Accounting Standards Board has issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. The Company has adopted this statement and there was no material effect on the financial statements. NOTE E - SEGMENT REPORTING The Company has only one reportable segment - the development, marketing and support of financial analytic applications software for management planning and control. Revenue is derived from the licensing of software and the provision of related services, that include product implementation, consulting, training and support. No single customer accounted for more than 10% of the Company's total revenue in the three and nine months ended March 31, 2001 and 2000. In addition, the Company is not dependent on any single customer or group of customers. Geographic segment information is as follows: 9 10 COMSHARE, INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2001 2000 2001 2000 ------------ ----------- -------------- ------------ REVENUE FROM EXTERNAL CUSTOMERS: United States $ 9,103 $ 7,756 $ 25,989 $ 22,968 United Kingdom 2,892 3,094 8,893 9,345 Other countries 3,882 4,178 11,263 12,244 -------- -------- -------- -------- TOTAL REVENUE $ 15,877 $ 15,028 $ 46,145 $ 44,557 ======== ======== ======== ======== OPERATING INCOME (LOSS): United States $ (4,275) $ (550) $ (5,833) $ (2,167) United Kingdom 3,835 782 5,387 2,572 Other countries 2,534 2,444 7,185 7,544 -------- -------- -------- -------- TOTAL OPERATING INCOME 2,094 2,676 6,739 7,949 Unallocated expenses (2,659) (2,428) (7,173) (7,529) -------- -------- -------- -------- INCOME (LOSS) BEFORE TAXES $ (565) $ 248 $ (434) $ 420 ======== ======== ======== ======== MARCH 31, June 30, 2001 2000 ------------ ----------- IDENTIFIABLE ASSETS: United States $ 45,217 $ 48,237 United Kingdom and other countries 9,334 11,909 -------- -------- TOTAL IDENTIFIABLE ASSETS $ 54,551 $ 60,146 ======== ========
Unallocated expenses consist of general corporate expenses, internal research and product development expenses, interest expense and interest income. 10 11 ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis sets forth information for the three and nine months ended March 31, 2001 compared to the three and nine months ended March 31, 2000. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2000. RESULTS OF OPERATIONS The following table sets forth for the periods indicated, certain financial data as a percentage of total revenue.
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, --------------------------- -------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- REVENUE Software licenses 36.7 % 37.0 % 34.3 % 36.9 % Software maintenance 37.1 38.2 38.2 39.3 Implementation, consulting and other services 26.2 24.8 27.5 23.8 ----------- -------- --------- ---------- TOTAL REVENUE 100.0 100.0 100.0 100.0 COSTS AND EXPENSES Selling and marketing 38.7 39.6 37.7 39.7 Cost of revenue and support 37.8 36.1 40.6 36.8 Internal research and product development 14.4 15.2 13.9 14.7 General and administrative 9.0 10.2 9.0 10.1 Restructuring and unusual 5.6 - 1.9 - ----------- -------- --------- ---------- TOTAL COSTS AND EXPENSES 105.5 101.1 103.1 101.3 LOSS FROM OPERATIONS (5.5) (1.1) (3.1) (1.3) OTHER INCOME (EXPENSE) Interest income 1.9 2.5 2.4 2.5 Interest expense - (0.1) - (0.1) Exchange gain (loss) - 0.4 (0.2) (0.1) ----------- -------- --------- ---------- TOTAL OTHER INCOME 1.9 2.8 2.2 2.3 INCOME (LOSS) BEFORE TAXES (3.6) 1.7 (0.9) 1.0 Provision for income taxes (0.3) 0.6 - 0.3 ----------- -------- --------- ---------- NET INCOME (LOSS) (3.3) % 1.1 % (0.9)% 0.7 % =========== ======== ========= ==========
11 12 REVENUE
THREE MONTHS ENDED PERCENT NINE MONTHS ENDED PERCENT MARCH 31, CHANGE MARCH 31, CHANGE ----------------------- -------- ----------------------- -------- 2001 2000 2001 2000 ---- ---- ---- ---- (in thousands) (in thousands) MPC REVENUE Software licenses $ 4,837 $ 3,449 40.2 % $ 11,441 $ 9,469 20.8 % Software maintenance 2,711 1,971 37.5 7,189 5,600 28.4 Implementation, consulting and other services 3,914 3,282 19.3 11,689 9,388 24.5 ---------- ---------- ---------- ---------- TOTAL MPC REVENUE $ 11,462 $ 8,702 31.7 % $ 30,319 $ 24,457 24.0 % ========== ========== ========== ========== LEGACY REVENUE Software licenses $ 991 $ 2,113 (53.1) % $ 4,398 $ 6,961 (36.8)% Software maintenance 3,174 3,776 (15.9) 10,436 11,901 (12.3) Implementation, consulting and other services 250 437 (42.8) 992 1,238 (19.9) ---------- ---------- ---------- ---------- TOTAL LEGACY REVENUE $ 4,415 $ 6,326 (30.2) % $ 15,826 $ 20,100 (21.3)% ========== ========== ========== ========== TOTAL REVENUE Software licenses $ 5,828 $ 5,562 4.8 % $ 15,839 $ 16,430 (3.6)% Software maintenance 5,885 5,747 2.4 17,625 17,501 0.7 Implementation, consulting and other services 4,164 3,719 12.0 12,681 10,626 19.3 ---------- ---------- ---------- ---------- TOTAL REVENUE $ 15,877 $ 15,028 5.6 % $ 46,145 $ 44,557 3.6 % ========== ========== ========== ==========
The increase in total revenue of 5.6% from the quarter ended March 31, 2000 was primarily due to a 31.7% increase in revenue from the Company's management planning and control software applications ("MPC"), offset by a 30.2% decrease in revenue from the Company's older desktop ("legacy") products. Total revenue growth of 3.6% from the nine months ended March 31, 2000 was primarily due to a 24.0% increase in MPC revenue, offset by a decline of 21.3% in the Company's legacy products. MPC revenue was $11.5 million for the quarter ended March 31, 2001, representing 72.2% of total revenue, and $30.3 million for the nine months ended March 31, 2001, representing 65.7% of total revenue. This compares with MPC revenue representing 57.9% and 54.9% of total revenue for the three and nine months ended March 31, 2000, respectively. The 4.8% increase in software license fees from the quarter ended March 31, 2000 was primarily due to a 40.2% increase in license fees from the Company's MPC products. The increase was offset by a decline in legacy license fees of 53.1%. License fee revenues from the Company's MPC products accounted for 83.0% of total license fees during the three months ended March 31, 2001 and 72.2% of total license fees for the nine month period ended March 31, 2001 versus 62.0% and 57.6% for the same periods in the prior year. License fees in the Company's direct operations, which include North America and the United Kingdom, grew 26.0% over the three month period and 8.3% over the nine month period ended March 31, 2000 primarily due to the growth in MPC license fees. Direct license fee growth was offset by a decline in distributor license fees of 24.8% compared to the 24.8% three month period ended March 31, 2000, reflecting a decline in the Company's legacy products, which are concentrated in the distributor operations. Software maintenance revenues increased 2.4% and 0.7% from the three months and nine months ended March 31, 2000, respectively. This was primarily due to an increase of 37.5% and 28.4% in MPC product maintenance in the three and nine months ended March 31, 2001, respectively, offset by a decline of 15.9% and 12.3%, for such periods, respectively, in the legacy maintenance, due to mainframe and desktop maintenance 12 13 Software maintenance revenues increased 0.7% from the nine-month period ended March 31, 2000 reflecting the growth in the Company's MPC products, offset by a decline in maintenance revenues from legacy products. Implementation, consulting and other services revenue was $4.2 million and $12.7 million for the three and nine months ended March 31, 2001, respectively. Implementation, consulting and other services revenue was $3.7 million and $10.6 million for the three and nine months ended March 31, 2000, respectively. During the quarter ended March 31, 2001, 94.0% of total implementation services revenue was related to MPC products. Implementation services revenue related to MPC products was 92.2% of total implementation services revenue for the nine months ended March 31, 2001. The increase in implementation services revenue from the nine-month period ended March 31, 2000 was primarily due to the growth in MPC license fees in the Company's direct operations. COSTS AND EXPENSES
THREE MONTHS ENDED PERCENT NINE MONTHS ENDED PERCENT MARCH 31, CHANGE MARCH 31, CHANGE ------------------------ --------- ---------------------- --------- 2001 2000 2001 2000 ---- ---- ---- ---- (in thousands) (in thousands) COSTS AND EXPENSES Selling and marketing $ 6,140 $ 5,944 3.3 % $ 17,404 $ 17,693 (1.6)% Cost of revenue and support 6,004 5,422 10.7 18,736 16,393 14.3 Internal research and product development 2,284 2,285 - 6,425 6,571 (2.2) General and administrative 1,425 1,547 (7.9) 4,147 4,498 (7.8) Restructuring and unusual 892 100.0 892 100.0 ---------- ---------- ---------- ---------- TOTAL COSTS AND EXPENSES $ 16,745 $ 15,198 10.2 % $ 47,604 $ 45,155 5.4 % ========== ========== ========== ==========
Total costs and expenses increased 10.2% and 5.4% for the three and nine months ended March 31, 2001, respectively, compared to the prior year. The increase in the three month period was primarily due to a restructuring charge taken in the third quarter, and to a lesser degree additional third party consulting costs associated with increased implementation services revenue. The increase in the nine month period was primarily due to the third party consulting costs, and to a lesser degree the third quarter restructuring charge. Selling and marketing expenses increased 3.3% and decreased 1.6% in the three and nine months ended March 31, 2001, respectively compared to the prior year. The increase in the three months ended March 31, 2001 from the same quarter a year ago is primarily due to increased spending in promotional and other purchased services. The decrease in the nine months ended March 31, 2001 is primarily due to decreased employee expenses offset by increased promotional and other purchased services. Cost of revenue and support expenses increased 10.7% and 14.3% for the three and nine months ended March 31, 2001, respectively. The increase was primarily due to increased costs associated with third party consultants involved in implementations. Internal research and product development costs remained relatively flat with the same periods of the prior year. General and administrative costs have decreased 7.9% and 7.8% from the three and nine-month periods ended March 31, 2000, respectively, primarily due to reduced third party computing costs and administrative expenses. The Company recorded a $0.9 million restructuring charge in the third quarter ending March 31, 2001. This charge reflects certain cost reductions actions by the Company, taken to reduce personnel costs and other expenses. The restructuring charge included total staff reductions of 13 employees. Because of planned investments in MPC products, the Company does not expect these cost reduction actions to reduce the Company's total expenses. 13 14 OTHER INCOME AND EXPENSE
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ---------------------- ---------------------- 2001 2000 2001 2000 ---- ---- ---- ---- (in thousands) (in thousands) OTHER INCOME (EXPENSE) Interest income $ 304 $ 374 $ 1,102 $ 1,112 Interest expense (1) (18) (5) (62) Exchange gain (loss) - 62 (72) (32) ------- ------- ------- ------- TOTAL OTHER INCOME $ 303 $ 418 $ 1,025 $ 1,018 ======= ======= ======= =======
Lower interest rates on short-term investments during the three and nine months ended March 31, 2001 resulted in decreased interest income compared to the three and nine months ended March 31, 2000. The marginal increase in other income from the nine-month period ended March 31, 2000 was due to reduced interest costs offset by higher losses on foreign exchange. FOREIGN CURRENCY For the three and nine months ended March 31, 2001, 42.7% and 43.7%, respectively, of the Company's total revenue was from outside North America compared with 48.4% and 48.5% for the three and nine months ended March 31, 2000, respectively. Most of the Company's international revenue is denominated in foreign currencies. The Company recognizes currency transaction gains and losses in the period of occurrence. As currency rates are constantly changing, these gains and losses can, at times, fluctuate greatly. The Company's future operating results may be adversely impacted by the overall strengthening of the U.S. dollar against foreign currencies of countries where the Company conducts business; conversely, future operating results may be favorably impacted by an overall weakening of the U.S. dollar against foreign currencies. For the three and nine months ended March 31, 2001, foreign currency fluctuations did not have a material impact on the Company's revenues, operating expenses or net income. The Company had several forward exchange contracts totaling a notional amount of $2.3 million, outstanding at March 31, 2001. See Note D of Notes to Condensed Consolidated Financial Statements. PROVISION FOR INCOME TAXES The Company's effective income tax rate in each of the three and nine months ended March 31, 2001 and 2000 was approximately 35%. No tax benefit was recognized associated with the losses incurred in the three and nine month period ended March 31, 2001. Realization of deferred tax assets associated with the Company's future deductible temporary differences, net of operating loss carryforwards and tax credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration. Although realization of the deferred tax assets is not assured, management believes it is more likely than not that the deferred tax assets will be realized through future taxable income or by using a tax strategy currently available to the Company. On a quarterly basis, management will assess whether it remains more likely than not that the deferred tax assets will be realized. This assessment could be impacted by a combination of continuing operating losses and a determination that the tax strategy is no longer sufficient to realize some or all of the deferred tax assets. The foregoing statements regarding the realization of deferred tax assets are "forward looking statements" within the meaning of the Securities Exchange Act of 1934. See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Safe Harbor Statement" for discussion of uncertainties relating to such statements. 14 15 LIQUIDITY AND CAPITAL RESOURCES At March 31, 2001 cash and cash equivalents were $23.1 million, compared with cash and cash equivalents of $29.5 million at June 30, 2000. The decrease in cash and cash equivalents is principally due to increased days sales outstanding in accounts receivable and payment of fiscal 1999 and earlier years' restructuring costs and related items. Net cash used in operating activities was $5.7 million in the nine months ended March 31, 2001, compared with $3.1 million in the nine months ended March 31, 2000, primarily due to increased accounts receivable and the payment of restructuring costs, as described above. The prior year cash benefited from a tax refund of $1.9 million. In addition, the increase in cash was due to reduced accounts payable accruals associated with payroll. Net cash used in investing activities was $0.3 million in the nine months ended March 31, 2001 and $0.6 in the nine months ended March 31, 2000. The Company purchases most of its computer equipment under operating leases. At March 31, 2001, the Company did not have any material capital expenditure commitments. Net cash provided by financing activities was $0.2 million in the nine months ended March 31, 2001, compared with net cash used in financing activities of $0.9 million in the same period one year ago. The net increase in cash provided by financing activities was due to reduced payments on debt from the prior year. Total assets were $54.5 million at March 31, 2001, compared with total assets of $60.1 million at June 30, 2000. The decrease in total assets is primarily due to the decrease in cash and cash equivalents. Working capital as of March 31, 2001 was $23.9 million, compared with $24.9 million as of June 30, 2000. The Company has a $10 million credit agreement which expires on September 30, 2002. Borrowings are secured by accounts receivable and the credit agreement contains covenants regarding, among other things, earnings leverage, net worth and payment of dividends. Under the terms of the credit agreement, the Company is not permitted to pay cash dividends on its common stock. Borrowings under this credit agreement were approximately $0.3 million and total available borrowings were $10 million at March 31, 2001. Borrowings available at any time are based on the lower of $10 million or a percentage of worldwide eligible accounts receivable and cash. At March 31, 2001, the interest rate on borrowings denominated in Japanese yen, which were used to hedge receivables in those currencies, was 1.91%. The Company believes that the combination of present cash balances and amounts available under credit facilities will be sufficient to meet the Company's currently anticipated cash requirements for at least the next twelve months. The foregoing statement is a "forward looking statement" within the meaning of the Securities and Exchange Act of 1934, as amended. The extent to which such sources will be sufficient to meet the Company's anticipated cash requirements is subject to a number of uncertainties, including the ability of the Company's operations to generate sufficient cash to support operations, and other uncertainties described in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Safe Harbor Statement." MARKET SENSITIVITY ANALYSIS The Company is exposed to market risk from changes in foreign exchange and interest rates. To reduce the risk from changes in foreign exchange rates, the Company selectively uses financial instruments. The Company does not hold or issue financial instruments for trading purposes. The Company, at various times, denominates borrowings in foreign currencies and enters into forward exchange contracts to hedge exposures related to foreign currency transactions. The Company does not use any other types of derivatives to hedge such exposures nor does it speculate in foreign currency. In general, the Company uses forward exchange contracts to hedge against large selective transactions that present the most exposure to exchange rate fluctuations. At March 31, 2001 and June 30, 2000, the Company had forward contracts of approximately $2.3 million and $5.6 million (notional amounts), respectively, denominated in foreign currencies. The contracts outstanding at March 31, 2001 mature through September 14, 2001 and are intended to hedge various foreign currency commitments due from the Company's distributors. Due to the short-term nature of these financial 15 16 instruments, the fair value of these contracts is not materially different than their notional amounts at March 31, 2001 and June 30, 2000. Gains and losses on the forward contracts are largely offset by gains and losses on the underlying exposure. The Company conducts business in approximately 6 foreign currencies, predominately British pounds, the Euro and Japanese yen. A hypothetical 10 percent appreciation of the U.S. dollar from March 31, 2001 market rates would increase the unrealized value of the Company's forward contracts and a hypothetical 10 percent depreciation of the U.S. dollar from March 31, 2001 market rates would decrease the unrealized value of the Company's forward contracts. In either scenario, the gains or losses on the forward contracts would be largely offset by the gains or losses on the underlying transactions, and so would have an immaterial impact on the Company's results of operations. The Company maintains its cash and cash equivalents in highly liquid investments with maturities of ninety days or less. The Company has the ability to hold its fixed income investments until maturity, and therefore the Company would not expect its operating results or cash flows to be affected to any significant degree by the effect of a hypothetical 10 percent change in market interest rates on its cash and cash equivalents. 16 17 SAFE HARBOR STATEMENT Certain information in this Form 10-Q Report contains "forward looking statements" within the meaning of the Securities Exchange Act of 1934, as amended, including those concerning the Company's future results, new market and business opportunities, strategy and product releases. Actual results could differ materially from those in the forward looking statements due to a number of uncertainties, including, but not limited to, the demand for the Company's products and services; the size, timing and recognition of revenue from significant orders; increased competition and pricing pressures from competitors; the Company's success in and expense associated with developing, introducing and shipping new products; new product introductions and announcements by the Company's competitors; the level of interest and success of the Company's distributors in marketing and selling the Company's products; changes in Company strategy; product life cycles; the cost and continued availability of third party software and technology incorporated into the Company's products, including the impact of expiration of the license for Essbase in December 2002; the impact of rapid technological advances, evolving industry standards and changes in customer requirements, including the impact on the Company's revenues of Microsoft's OLAP database; the overall competition for key employees; cancellations of maintenance and support agreements; software defects; changes in operating expenses; fluctuations in foreign exchange rates; the ability of the Company to generate sufficient future taxable income or to execute available tax strategies required to realize deferred tax assets; and economic conditions generally or in specific industry segments. In addition, a significant portion of the Company's revenue in any quarter is typically derived from non-recurring license fees, a substantial portion of which is booked in the last month of a quarter. Since the purchase of the Company's products is relatively discretionary and generally involves a significant commitment of capital, in the event of any downturn in any potential customer's business or the economy in general, purchases of the Company's products may be deferred or cancelled. Further, the Company's expense levels are based, in part, on its expectations as to future revenue and a significant portion of the Company's expenses do not vary with revenue. As a result, if revenue is below expectations, results of operations are likely to be materially, adversely affected. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations." PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. As previously reported, on February 16, 2001, the Board of Directors of the Company amended the Company's bylaws including the provisions of Section 4.03.5 relating to business to be conducted at meetings of shareholders and shareholder nominations and proposals. See "Item 6 - Exhibits and Reports on Form 8-K." Under the bylaws as amended, shareholder proposals intended to be presented at the 2001 Annual Meeting which are not eligible for inclusion in the Company's Proxy Statement under Rule 14a-8 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), and shareholder nominations of individuals for election to the Board of Directors at the 2001 Annual Meeting, must be received by the Company not later than August 22, 2001. This date may be earlier than the deadline date described in the Company's 2000 Proxy Statement. There is no change in the date that shareholder proposals intended to be presented at the 2001 Annual Meeting which are eligible for inclusion in the Company's Proxy Statement for that meeting under Rule 14a-8 promulgated under the Exchange Act must be received by the Company if they are to be included in the Company's Proxy Statement relating to that meeting. This date is not later than June 20, 2001. All such proposals or nominations should be addressed to the Secretary at the Company's principal executive offices and should satisfy the requirements applicable to shareholder proposals or nominations contained in the Company's bylaws. 17 18 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) None. (b) Reports on Form 8-K. On March 9, 2001, the Company filed a Form 8-K, reporting the amendment and restatement of its bylaws under Item 5, as described in Item 2 above. A copy of the restated bylaws was filed as an exhibit. 18 19 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: MAY 14, 2001 COMSHARE, INCORPORATED (Registrant) /s/ Brian Jarzynski -------------------- Brian Jarzynski Vice President, Chief Financial Officer, Treasurer and Assistant Secretary 19 20 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION 3.02 Restated Bylaws of the Registrant - incorporated by reference to Exhibit 3.02 to the Registrant's Form 8-K Report filed March 9, 2001. 10.01 Comshare, Incorporated Change in Control Severance Agreement, dated as of February 9, 2001, between Comshare, Incorporated and Brian Hartlen. 10.02 Comshare, Incorporated Change in Control Severance Agreement, dated as of February 16, 2001, between Comshare, Incorporated and Brian Jarzynski. 10.03 Letter of Understanding, dated February 8, 2001, between Comshare, Incorporated and Norman Neuman Jr. and Norman Neuman Jr. Notices of Grant of Stock Options and Option Agreements. 10.04 Kathryn A. Jehle Notices of Grant of Stock Options and Option Agreements. 10.05 Second Amendment to the Benefit Adjustment Plan of Comshare, Incorporated. 10.06 Third Amendment to 1988 Stock Option Plan. 10.07 Second Amendment to Directors' Stock Option Plan. 10.08 Second Amendment to Global Employee Stock Option Plan. 20 EX-10.01 2 k62543ex10-01.txt CHANGE IN CONTROL SEVERANCE AGREEMENT 1 EXHIBIT 10.01 COMSHARE, INCORPORATED CHANGE IN CONTROL SEVERANCE AGREEMENT THIS AGREEMENT, dated as of February 9, 2001, is between Comshare, Incorporated (the "Company") and Brian Hartlen, who is currently employed by the Company in the position of Senior Vice President, Marketing (the "Executive"). WITNESSETH: WHEREAS, the Company recognizes that the Executive has contributed to the growth and success of the Company; and WHEREAS, the Company believes that it is in the best interests of the Company and its shareholders if the Executive is assured of appropriate financial protection in the event of a Change in Control (as defined in Section 4 below), thus ensuring that the Executive shall have an incentive to perform valuable services for the Company and shall not be distracted in the event of a Change in Control; WHEREAS, the Company believes that the assurance of appropriate financial protection to the Executive in the event of a Change in Control shall encourage the Executive to remain in the employ of the Company through the transition period following a Change in Control, which is in the best interests of the Company and its shareholders; and WHEREAS, the Executive is willing to provide dedicated services to the Company on the condition that the Executive receives adequate assurance of appropriate financial protection in the event of a Change in Control; NOW THEREFORE, in consideration of the premises and mutual covenants, the parties hereto agree as follows: AGREEMENT 1. OPERATION OF AGREEMENT. This Agreement sets forth the severance compensation that the Company shall pay the Executive if the Executive's employment with the Company terminates under one of the applicable provisions set forth herein following a Change in Control. As used in this Agreement, employment with the Company shall be deemed to include employment with a subsidiary of the Company. 2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its execution by both parties and shall terminate upon the first of the following events to occur: (a) three years 2 from the date hereof if a Change in Control has not occurred within such three-year period; (b) the termination of the Executive's employment with the Company prior to a Change in Control; (c) the expiration of two years following a Change in Control (or two years following the later of one or more successive Changes in Control that occur within the two year period immediately following the initial Change in Control); (d) the termination of the Executive's employment with the Company following a Change in Control due to the Executive's death, Disability (as defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below); (e) the termination of the Executive's employment by the Company for Cause (as defined in Section 3(c) below) following a Change in Control; or (f) termination of employment by the Executive for other than Good Reason (as defined in Section 5) following the date of a Change in Control. Unless the Agreement has first terminated under clauses (a) through (f) hereof, commencing on the third anniversary of the date of this Agreement, and on each one-year anniversary thereafter, this Agreement shall be extended for one additional year, unless at least 30 days prior to any such anniversary, the Company notifies the Executive in writing that it shall not extend the term of this Agreement. 3. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the meanings set forth below: (a) "Disability" shall mean the Executive's total and permanent disability which prevents the Executive from performing for a continuous period exceeding six months the duties assigned to the Executive immediately prior to the Change in Control. The determination of Disability shall be made by a medical board-certified physician mutually acceptable to the Company and the Executive (or the Executive's legal representative, if one has been appointed), and if the parties cannot mutually agree to the selection of a physician, then each party shall select such a physician and the two physicians so selected shall select a third physician who shall make this determination. (b) "Retirement" shall mean retirement on or after age 65. (c) "Cause" shall mean the Executive's willful gross misconduct, willful and material breach of his duties or an act of fraud or dishonesty by the Executive that directly or indirectly results in material harm to the Company. 4. CHANGE IN CONTROL. A Change in Control shall be deemed to have occurred upon the occurrence of any of the following events: (a) the election of a Board of Directors of the Company, a majority of the members of which were nominees of a person (including an individual, a corporation, partnership, joint venture, trust or other entity) or a group of persons acting together (other than persons who were members of the Board of Directors or officers of the Company as of June 1, 1998 or a tax-qualified retirement plan approved by the Board of Directors of the Company (including at least a majority of the Incumbent Directors ("Exempted Persons")), following the acquisition by such person, group of persons or plan of ownership (directly or indirectly, 3 beneficially or of record) of twenty-five (25%) percent, or more, of the outstanding Common Stock of the Company; (b) the acquisition of ownership by a person or group of persons described in subparagraph (a) above (other than Exempted Persons) of fifty-one (51%) percent, or more of the outstanding Common Stock of the Company; (c) a sale of all or substantially all of the assets of the Company to any entity not controlled by persons who were members of the Board of Directors or officers of the Company as of June 1, 1998, or by any tax-qualified retirement plan for the benefit of employees of the Company; or (d) a merger, consolidation or other similar transaction between the Company and another entity if a majority of the members of the Board of Directors of the surviving company are not Continuing Directors, as defined below. The term "Incumbent Directors" means members of the Board of Directors of the Company as of June 1, 1998 or new directors whose election by the Board of Directors, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors in office at the time of such election or nomination, who either were directors as of June 1, 1998, or whose election or nomination was previously approved as provided above. In the event that a majority of the Incumbent Directors do not approve the tax-qualified retirement plan or there are no Incumbent Directors, the tax-qualified retirement plan shall not be an Exempted Person. The term "Continuing Directors" means persons (A) who are members of the Board of Directors immediately before the Change in Control and (B) who also were members of the Board of Directors of the Company as of June 1, 1998 or are new directors whose election by the Board of Directors, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors in office at the time of such election or nomination who either were directors as of June 1, 1998 or whose election or nomination for election was previously approved as provided above. 5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to Section 10(a) hereunder, the Executive shall be entitled to severance payments under this Agreement only if there has been a Change in Control and the Executive has incurred a Termination of Employment. (a) For purposes of this Agreement during the two-year period following any Change in Control that occurs during the term of this Agreement, "Termination of Employment" shall be defined as: (i) The Executive's involuntary termination by the Company for any reason other than death, Disability, Retirement or Cause; or 4 (ii) The Executive's termination for "Good Reason," defined as the occurrence of any of the following events without the Executive's written consent: (A) Any reassignment of the Executive to duties inconsistent with the Executive's position, title, duties, responsibilities and status with the Company immediately prior to the Change in Control, or a change in the Executive's reporting responsibilities, including a change in the identity or the corporate position to which the Executive reports, or a change in title (except for a promotion) in effect immediately prior to the Change in Control; (B) Any reduction in the Executive's base salary or targeted incentive bonus in effect immediately prior to the Change in Control, or failure by the Company to continue any bonus, stock or other incentive plans in effect immediately prior to the Change in Control (without the implementation of comparable successor plans that provide the same benefits), or any removal of the Executive from participation in such aforementioned plans; (C) The discontinuance or reduction in benefits to the Executive of any qualified or nonqualified retirement or welfare plan maintained by the Company immediately prior to the Change in Control, or the discontinuance of any fringe benefits or other perquisites that the Executive received immediately prior to the Change in Control; (D) Required relocation of the Executive's principal place of employment more than 50 miles from his or her place of employment prior to the Change in Control, or required business traveling by the Executive on a significantly more frequent basis and for significantly longer periods of time than the Executive was required to travel immediately prior to the Change in Control, unless the increase in required business traveling is on account of the Executive's promotion; or (E) The Company's breach of any provision in this Agreement. (b) An Executive who believes that he is entitled to a Termination of Employment for Good Reason as defined in subparagraph (a)(ii) above, may apply in writing to the Company for confirmation of such entitlement prior to the Executive's actual separation from employment, by following the claims procedure set forth in Section 14 hereof. The submission of such a request by an Executive shall not constitute "Cause" for the Company to terminate the Executive as defined under Section 3(c) hereof. If the Executive's request for a Good Reason Termination of Employment is denied under both the request and appeal procedures set forth in paragraphs (b) and (c) of Section 14 hereof, then the parties shall use their best efforts to resolve the claim within 90 days after the claim is submitted to arbitration pursuant to Section 14(d). 5 6. SEVERANCE PAYMENT. (a) Upon satisfaction of the requirements set forth in Sections 5 or 10(a) hereof and with respect to any one or more Changes in Control that may occur during the term of this Agreement, the Executive shall be entitled to a cash severance benefit equal to two times the Executive's annual base salary, as in effect at the time of the Change in Control, plus an amount equal to two times the average of the Executive's annual incentive bonus (excluding any special bonus payments) paid for the three fiscal years immediately preceding the fiscal year of the Change in Control. For purposes of computing the aforementioned incentive bonus average, bonuses paid for a period of time during which the Executive was not a senior executive reporting to the President of the Company shall be excluded, and bonuses paid for a partial fiscal year of service as a senior executive reporting to the President shall be amortized for the effect of a full fiscal year. The severance benefit provided under this Section 6 is in lieu of cash severance payments offered under the Company's documented severance policy. (b) Payments under this Agreement, when aggregated with any other "golden parachute" amounts (defined under Section 280G of the Internal Revenue Code of 1986, as amended [the "Code"] as compensation that becomes payable or accelerated due to a Change in Control) payable under this Agreement or any other plans, agreements or policies of the Company, shall not be subject to the golden parachute cap under Sections 280G and 4999 of the Code. (c) To the extent that the Executive's aggregate parachute payments equal or exceed the golden parachute cap set forth in Code Sections 280G and 4999, the Company shall pay the Executive an amount equal to the federal excise tax owed by the Executive on behalf of payments under this Agreement or other golden parachute amounts, as defined under (b) above, times 2.9. The Company shall pay such additional compensation to the Executive at the time when the Company withholds such excise tax from any payments to the Executive. 7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the Executive's cash severance benefit under Section 6(a) shall be paid in a lump sum cash payment within 10 days following the Executive's Termination of Employment, as defined in Section 5. Any payment made later than 10 days following the Executive's Termination of Employment (or applicable due date under Section 10(a) hereof) for whatever reason, shall include interest at the prime rate plus two percent, which shall begin accruing on the 10th day following the Executive's Termination of Employment (or applicable due date under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall be determined by reference to the prime rate established by Harris Trust and Savings Bank (or its successor), in effect from time to time commencing on the 10th day following the Executive's Termination of Employment (or applicable due date under Section 10(a) hereof). 8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall be under no duty or obligation to seek or accept other employment after Termination of Employment and 6 shall not be required to mitigate the amount of any payments provided for by this Agreement by seeking employment or otherwise. 9. TAX WITHHOLDING. The Company may withhold from any cash amounts payable to the Executive under this Agreement to satisfy all applicable Federal, State, local or other income (including excise) and employment withholding taxes. In the event the Company fails to withhold such sums for any reason, or withholding is required for any non-cash payments provided in connection with the Executive's Termination of Employment, the Company may require the Executive to promptly remit to the Company sufficient cash to satisfy all applicable income and employment withholding taxes. 10. BINDING EFFECT. (a) This Agreement shall be binding upon the successors and assigns of the Company. The Company shall take whatever actions are necessary to ensure that any successor to its operations (whether by purchase, merger, consolidation, sale of substantially all assets or otherwise) assumes the obligations under this Agreement and shall cause such successor to evidence the assumption of such obligations in an agreement satisfactory to the Executive. Notwithstanding any other provisions in this Agreement, if the Company fails to obtain an agreement evidencing the assumption of the Company's obligations by any such successor, the Executive shall be entitled to immediate payment of the severance compensation provided under Section 6, irrespective of whether the Executive's employment has then terminated. For purposes of implementing the foregoing, the date on which any succession becomes effective shall be deemed to constitute the date of the Executive's Termination of Employment. (b) This Agreement shall be binding upon the Executive and shall inure to the benefit of and be enforceable by the Executive's legal representatives and heirs. However, the rights of the Executive under this Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise encumbered, except by operation of law. 11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or amended except by instrument in writing signed by the parties hereto. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall continue in full force and effect. 13. LIMITATION ON RIGHTS. (a) This Agreement shall not be deemed to create a contract of employment between the Company and the Executive and shall create no right in the Executive to continue in the Company's employment for any specific period of time, or to create any other rights in the Executive or obligations on the part of the Company, except as set forth herein. This Agreement 7 shall not restrict the right of the Company to terminate the Executive, or restrict the right of the Executive to terminate employment. (b) Subject to the exception for cash severance payments under the Company's documented severance policy referenced in Section 6(a) above, this Agreement shall not be construed to exclude the Executive from participation in any other compensation or benefit programs in which the Executive is specifically eligible to participate either prior to or following the execution of this Agreement, or any such programs that generally are available to other executive personnel of the Company, nor shall it affect the kind and amount of other compensation to which the Executive is entitled. (c) The rights of the Executive under this Agreement shall be solely those of an unsecured general creditor of the Company. 14. CLAIMS PROCEDURE. (a) The administrator for purposes of this Agreement shall be the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box 1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800. The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be the Company. The Company shall have the right to designate one or more Company employees as the Administrator and the Named Fiduciary at any time, and to change the address and telephone number of the same. The Company shall give the Executive written notice of any change in the Administrator and Named Fiduciary, or in the address or telephone number of the same. (b) The Administrator shall make all determinations as to the right of any person to receive benefits under the Agreement. Any denial by the Administrator of a claim for benefits by the Executive ("the claimant") shall be stated in writing by the Administrator and delivered or mailed to the claimant within 10 days after receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 10-day period. In no event shall such extension exceed a period of 10 days from the end of the initial period. Any notice of denial shall set forth the specific reasons for the denial, specific reference to pertinent provisions of this Agreement upon which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim, with an explanation of why such material or information is necessary, and any explanation of claim review procedures, written to the best of the Administrator's ability in a manner that may be understood without legal or actuarial counsel. (c) A claimant whose claim for benefits has been wholly or partially denied by the Administrator may request, within 10 days following the date of such denial, in a writing addressed to the Administrator, a review of such denial. The claimant shall be entitled to submit such issues or comments in writing or otherwise, as the claimant shall consider relevant to a determination of the claim, and the claimant may include a request for a hearing in person before 8 the Administrator. Prior to submitting the request, the claimant shall be entitled to review such documents as the Administrator shall agree are pertinent to the claim. The claimant may, at all stages of review, be represented by counsel, legal or otherwise, of the claimant's choice. All requests for review shall be promptly resolved. The Administrator's decision with respect to any such review shall be set forth in writing and shall be mailed to the claimant not later than 10 days following receipt by the Administrator of the claimant's request unless special circumstances, such as the need to hold a hearing, require an extension of time for processing, in which case the Administrator's decision shall be so mailed not later than 20 days after receipt of such request. (d) A claimant who has followed the procedure in paragraphs (b) and (c) of this Section, but who has not obtained full relief on the claim for benefits, may, within 60 days following the claimant's receipt of the Administrator's written decision on review, apply in writing to the Administrator for binding arbitration of the claim before an arbitrator mutually acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan, in accordance with the arbitration rules of the American Arbitration Association, as then in effect. If the parties are unable to mutually agree upon an arbitrator, then the arbitration proceedings shall be held before three arbitrators, one of which shall be designated by the Company, one of which shall be designated by the claimant and the third of which shall be designated mutually by the first two arbitrators in accordance with the arbitration rules referenced above. The arbitrator(s) sole authority shall be to interpret and apply the provisions of this Agreement; the arbitrator(s) shall not change, add to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall have the power to compel attendance of witnesses at the hearing. Any court having jurisdiction may enter a judgment based upon such arbitration. All decisions of the arbitrator(s) shall be final and binding on the claimant and the Company without appeal to any court. Upon execution of this Agreement, the Executive shall be deemed to have waived any right to commence litigation proceedings outside of arbitration without the express written consent of the Company. 15. LEGAL FEES AND EXPENSES. In the event any arbitration or litigation is brought to enforce any provision of this Agreement and the Executive prevails, then the Executive shall be entitled to recover from the Company the Executive's reasonable costs and reasonable expenses of such arbitration or litigation, including reasonable fees and disbursements of counsel (both at trial and in appellate proceedings). If the Company prevails, then each party shall be responsible for its/his respective costs, expenses and attorneys fees, and the costs of arbitration shall be equally divided. In the event that it is determined that the Executive is entitled to compensation, legal fees and expenses hereunder, the Executive also shall be entitled to interest thereon, payable to the Executive at the prime rate of interest plus two percent. For purposes of this Section 15, "prime rate" shall be determined by reference to the prime rate established by Harris Trust and Savings Bank as in effect from time to time during the period from the date such amounts should have been paid to the date of actual payment. For purposes of determining the date when legal fees and expenses are payable, such amounts are not due until 30 days after notification to the Company of such amounts. 9 16. NONALIENATION OF BENEFITS. Except in so far as this provision may be contrary to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under this Agreement shall be valid or recognized by the Company. 17. ERISA. This Agreement is an unfunded compensation arrangement for a member of a select group of the Company's management and any exemptions under ERISA, as applicable to such an arrangement, shall be applicable to this Agreement. 18. REPORTING AND DISCLOSURE. The Company, from time to time, shall provide government agencies with such reports concerning this Agreement as may be required by law, and the Company shall provide the Executive with such disclosure concerning this Agreement as may be required by law or as the Company may deem appropriate. 19. NOTICES. Any notice required or permitted by this Agreement shall be in writing, sent by registered or certified mail, return receipt requested, addressed to the Board and the Company at the Company's then principal office, or to the Executive at the Executive's last address on file with the Company, as the case may be, or to such other address or addresses as any party hereto may from time to time specify in writing for the purpose of this Agreement in a notice given to the other parties in compliance with this Section 19. Notices shall be deemed given when received. 20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any subsequent breach of the same or any other term or condition. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. To the extent that any provision or benefit under this Agreement is not deemed to be in accordance with any applicable law, ordinance, rule or regulation, the noncomplying provision shall be construed, or benefit limited, to the extent necessary to comply with all applicable laws, ordinances and regulations and any such provision or benefit shall not affect the validity of any other provision or benefit provided by this Agreement. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof. 21. GOVERNING LAW. To the extent not preempted by Federal law, this Agreement shall be governed and construed in accordance with the laws of the State of Michigan. 22. ENTIRE AGREEMENT. This document represents the entire agreement and understanding of the parties with respect to the subject matter of the Agreement and it may not be altered or amended except by an agreement in writing. 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. COMSHARE, INCORPORATED By: ----------------------------------------- Its: --------------------------------------- -------------------------------------------- BRIAN HARTLEN EX-10.02 3 k62543ex10-02.txt CHANGE IN CONTROL SEVERANCE AGREEMENT 1 EXHIBIT 10.02 COMSHARE, INCORPORATED CHANGE IN CONTROL SEVERANCE AGREEMENT THIS AGREEMENT, dated as of February 16, 2001, is between Comshare, Incorporated (the "Company") and Brian Jarzynski, who is currently employed by the Company in the position of Vice President and Chief Financial Officer (the "Executive"). WITNESSETH: WHEREAS, the Company recognizes that the Executive has contributed to the growth and success of the Company; and WHEREAS, the Company believes that it is in the best interests of the Company and its shareholders if the Executive is assured of appropriate financial protection in the event of a Change in Control (as defined in Section 4 below), thus ensuring that the Executive shall have an incentive to perform valuable services for the Company and shall not be distracted in the event of a Change in Control; WHEREAS, the Company believes that the assurance of appropriate financial protection to the Executive in the event of a Change in Control shall encourage the Executive to remain in the employ of the Company through the transition period following a Change in Control, which is in the best interests of the Company and its shareholders; and WHEREAS, the Executive is willing to provide dedicated services to the Company on the condition that the Executive receives adequate assurance of appropriate financial protection in the event of a Change in Control; NOW THEREFORE, in consideration of the premises and mutual covenants, the parties hereto agree as follows: AGREEMENT 1. OPERATION OF AGREEMENT. This Agreement sets forth the severance compensation that the Company shall pay the Executive if the Executive's employment with the Company terminates under one of the applicable provisions set forth herein following a Change in Control. As used in this Agreement, employment with the Company shall be deemed to include employment with a subsidiary of the Company. 2. TERM OF THE AGREEMENT. This Agreement shall be effective upon its execution by both parties and shall terminate upon the first of the following events to occur: (a) three years 2 from the date hereof if a Change in Control has not occurred within such three-year period; (b) the termination of the Executive's employment with the Company prior to a Change in Control; (c) the expiration of two years following a Change in Control (or two years following the later of one or more successive Changes in Control that occur within the two year period immediately following the initial Change in Control); (d) the termination of the Executive's employment with the Company following a Change in Control due to the Executive's death, Disability (as defined in Section 3(a) below) or Retirement (as defined in Section 3(b) below); (e) the termination of the Executive's employment by the Company for Cause (as defined in Section 3(c) below) following a Change in Control; or (f) termination of employment by the Executive for other than Good Reason (as defined in Section 5) following the date of a Change in Control. Unless the Agreement has first terminated under clauses (a) through (f) hereof, commencing on the third anniversary of the date of this Agreement, and on each one-year anniversary thereafter, this Agreement shall be extended for one additional year, unless at least 30 days prior to any such anniversary, the Company notifies the Executive in writing that it shall not extend the term of this Agreement. 3. DEFINED TERMS. For purposes of this Agreement, the following terms shall have the meanings set forth below: (a) "Disability" shall mean the Executive's total and permanent disability which prevents the Executive from performing for a continuous period exceeding six months the duties assigned to the Executive immediately prior to the Change in Control. The determination of Disability shall be made by a medical board-certified physician mutually acceptable to the Company and the Executive (or the Executive's legal representative, if one has been appointed), and if the parties cannot mutually agree to the selection of a physician, then each party shall select such a physician and the two physicians so selected shall select a third physician who shall make this determination. (b) "Retirement" shall mean retirement on or after age 65. (c) "Cause" shall mean the Executive's willful gross misconduct, willful and material breach of his duties or an act of fraud or dishonesty by the Executive that directly or indirectly results in material harm to the Company. 4. CHANGE IN CONTROL. A Change in Control shall be deemed to have occurred upon the occurrence of any of the following events: (a) the election of a Board of Directors of the Company, a majority of the members of which were nominees of a person (including an individual, a corporation, partnership, joint venture, trust or other entity) or a group of persons acting together (other than persons who were members of the Board of Directors or officers of the Company as of June 1, 1998 or a tax-qualified retirement plan approved by the Board of Directors of the Company (including at least a majority of the Incumbent Directors ("Exempted Persons")), following the acquisition by such person, group of persons or plan of ownership (directly or indirectly, 3 beneficially or of record) of twenty-five (25%) percent, or more, of the outstanding Common Stock of the Company; (b) the acquisition of ownership by a person or group of persons described in subparagraph (a) above (other than Exempted Persons) of fifty-one (51%) percent, or more of the outstanding Common Stock of the Company; (c) a sale of all or substantially all of the assets of the Company to any entity not controlled by persons who were members of the Board of Directors or officers of the Company as of June 1, 1998, or by any tax-qualified retirement plan for the benefit of employees of the Company; or (d) a merger, consolidation or other similar transaction between the Company and another entity if a majority of the members of the Board of Directors of the surviving company are not Continuing Directors, as defined below. The term "Incumbent Directors" means members of the Board of Directors of the Company as of June 1, 1998 or new directors whose election by the Board of Directors, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors in office at the time of such election or nomination, who either were directors as of June 1, 1998, or whose election or nomination was previously approved as provided above. In the event that a majority of the Incumbent Directors do not approve the tax-qualified retirement plan or there are no Incumbent Directors, the tax-qualified retirement plan shall not be an Exempted Person. The term "Continuing Directors" means persons (A) who are members of the Board of Directors immediately before the Change in Control and (B) who also were members of the Board of Directors of the Company as of June 1, 1998 or are new directors whose election by the Board of Directors, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors in office at the time of such election or nomination who either were directors as of June 1, 1998 or whose election or nomination for election was previously approved as provided above. 5. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Subject to Section 10(a) hereunder, the Executive shall be entitled to severance payments under this Agreement only if there has been a Change in Control and the Executive has incurred a Termination of Employment. (a) For purposes of this Agreement during the two-year period following any Change in Control that occurs during the term of this Agreement, "Termination of Employment" shall be defined as: (i) The Executive's involuntary termination by the Company for any reason other than death, Disability, Retirement or Cause; or 4 (ii) The Executive's termination for "Good Reason," defined as the occurrence of any of the following events without the Executive's written consent: (A) Any reassignment of the Executive to duties inconsistent with the Executive's position, title, duties, responsibilities and status with the Company immediately prior to the Change in Control, or a change in the Executive's reporting responsibilities, including a change in the identity or the corporate position to which the Executive reports, or a change in title (except for a promotion) in effect immediately prior to the Change in Control; (B) Any reduction in the Executive's base salary or targeted incentive bonus in effect immediately prior to the Change in Control, or failure by the Company to continue any bonus, stock or other incentive plans in effect immediately prior to the Change in Control (without the implementation of comparable successor plans that provide the same benefits), or any removal of the Executive from participation in such aforementioned plans; (C) The discontinuance or reduction in benefits to the Executive of any qualified or nonqualified retirement or welfare plan maintained by the Company immediately prior to the Change in Control, or the discontinuance of any fringe benefits or other perquisites that the Executive received immediately prior to the Change in Control; (D) Required relocation of the Executive's principal place of employment more than 50 miles from his or her place of employment prior to the Change in Control, or required business traveling by the Executive on a significantly more frequent basis and for significantly longer periods of time than the Executive was required to travel immediately prior to the Change in Control, unless the increase in required business traveling is on account of the Executive's promotion; or (E) The Company's breach of any provision in this Agreement. (b) An Executive who believes that he is entitled to a Termination of Employment for Good Reason as defined in subparagraph (a)(ii) above, may apply in writing to the Company for confirmation of such entitlement prior to the Executive's actual separation from employment, by following the claims procedure set forth in Section 14 hereof. The submission of such a request by an Executive shall not constitute "Cause" for the Company to terminate the Executive as defined under Section 3(c) hereof. If the Executive's request for a Good Reason Termination of Employment is denied under both the request and appeal procedures set forth in paragraphs (b) and (c) of Section 14 hereof, then the parties shall use their best efforts to resolve the claim within 90 days after the claim is submitted to arbitration pursuant to Section 14(d). 5 6. SEVERANCE PAYMENT. (a) Upon satisfaction of the requirements set forth in Sections 5 or 10(a) hereof and with respect to any one or more Changes in Control that may occur during the term of this Agreement, the Executive shall be entitled to a cash severance benefit equal to two times the Executive's annual base salary, as in effect at the time of the Change in Control, plus an amount equal to two times the average of the Executive's annual incentive bonus (excluding any special bonus payments) paid for the three fiscal years immediately preceding the fiscal year of the Change in Control. For purposes of computing the aforementioned incentive bonus average, bonuses paid for a period of time during which the Executive was not a senior executive reporting to the President of the Company shall be excluded, and bonuses paid for a partial fiscal year of service as a senior executive reporting to the President shall be amortized for the effect of a full fiscal year. The severance benefit provided under this Section 6 is in lieu of cash severance payments offered under the Company's documented severance policy. (b) Payments under this Agreement, when aggregated with any other "golden parachute" amounts (defined under Section 280G of the Internal Revenue Code of 1986, as amended [the "Code"] as compensation that becomes payable or accelerated due to a Change in Control) payable under this Agreement or any other plans, agreements or policies of the Company, shall not be subject to the golden parachute cap under Sections 280G and 4999 of the Code. (c) To the extent that the Executive's aggregate parachute payments equal or exceed the golden parachute cap set forth in Code Sections 280G and 4999, the Company shall pay the Executive an amount equal to the federal excise tax owed by the Executive on behalf of payments under this Agreement or other golden parachute amounts, as defined under (b) above, times 2.9. The Company shall pay such additional compensation to the Executive at the time when the Company withholds such excise tax from any payments to the Executive. 7. TIME OF PAYMENT. Subject to Section 10(a) hereof, the Executive's cash severance benefit under Section 6(a) shall be paid in a lump sum cash payment within 10 days following the Executive's Termination of Employment, as defined in Section 5. Any payment made later than 10 days following the Executive's Termination of Employment (or applicable due date under Section 10(a) hereof) for whatever reason, shall include interest at the prime rate plus two percent, which shall begin accruing on the 10th day following the Executive's Termination of Employment (or applicable due date under Section 10(a) hereof). For purposes of this Section 7, "prime rate" shall be determined by reference to the prime rate established by Harris Trust and Savings Bank (or its successor), in effect from time to time commencing on the 10th day following the Executive's Termination of Employment (or applicable due date under Section 10(a) hereof). 8. NO MITIGATION OR DUTY TO SEEK REEMPLOYMENT. The Executive shall be under no duty or obligation to seek or accept other employment after Termination of Employment and 6 shall not be required to mitigate the amount of any payments provided for by this Agreement by seeking employment or otherwise. 9. TAX WITHHOLDING. The Company may withhold from any cash amounts payable to the Executive under this Agreement to satisfy all applicable Federal, State, local or other income (including excise) and employment withholding taxes. In the event the Company fails to withhold such sums for any reason, or withholding is required for any non-cash payments provided in connection with the Executive's Termination of Employment, the Company may require the Executive to promptly remit to the Company sufficient cash to satisfy all applicable income and employment withholding taxes. 10. BINDING EFFECT. (a) This Agreement shall be binding upon the successors and assigns of the Company. The Company shall take whatever actions are necessary to ensure that any successor to its operations (whether by purchase, merger, consolidation, sale of substantially all assets or otherwise) assumes the obligations under this Agreement and shall cause such successor to evidence the assumption of such obligations in an agreement satisfactory to the Executive. Notwithstanding any other provisions in this Agreement, if the Company fails to obtain an agreement evidencing the assumption of the Company's obligations by any such successor, the Executive shall be entitled to immediate payment of the severance compensation provided under Section 6, irrespective of whether the Executive's employment has then terminated. For purposes of implementing the foregoing, the date on which any succession becomes effective shall be deemed to constitute the date of the Executive's Termination of Employment. (b) This Agreement shall be binding upon the Executive and shall inure to the benefit of and be enforceable by the Executive's legal representatives and heirs. However, the rights of the Executive under this Agreement shall not be assigned, transferred, pledged, hypothecated or otherwise encumbered, except by operation of law. 11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or amended except by instrument in writing signed by the parties hereto. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall continue in full force and effect. 13. LIMITATION ON RIGHTS. (a) This Agreement shall not be deemed to create a contract of employment between the Company and the Executive and shall create no right in the Executive to continue in the Company's employment for any specific period of time, or to create any other rights in the Executive or obligations on the part of the Company, except as set forth herein. This Agreement 7 shall not restrict the right of the Company to terminate the Executive, or restrict the right of the Executive to terminate employment. (b) Subject to the exception for cash severance payments under the Company's documented severance policy referenced in Section 6(a) above, this Agreement shall not be construed to exclude the Executive from participation in any other compensation or benefit programs in which the Executive is specifically eligible to participate either prior to or following the execution of this Agreement, or any such programs that generally are available to other executive personnel of the Company, nor shall it affect the kind and amount of other compensation to which the Executive is entitled. (c) The rights of the Executive under this Agreement shall be solely those of an unsecured general creditor of the Company. 14. CLAIMS PROCEDURE. (a) The administrator for purposes of this Agreement shall be the Company ("Administrator"), whose address is 555 Briarwood Circle, P.O. Box 1588, Ann Arbor, Michigan 48108, and whose telephone number is (734) 994-4800. The "Named Fiduciary" as defined in Section 402(a)(2) of ERISA, also shall be the Company. The Company shall have the right to designate one or more Company employees as the Administrator and the Named Fiduciary at any time, and to change the address and telephone number of the same. The Company shall give the Executive written notice of any change in the Administrator and Named Fiduciary, or in the address or telephone number of the same. (b) The Administrator shall make all determinations as to the right of any person to receive benefits under the Agreement. Any denial by the Administrator of a claim for benefits by the Executive ("the claimant") shall be stated in writing by the Administrator and delivered or mailed to the claimant within 10 days after receipt of the claim, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 10-day period. In no event shall such extension exceed a period of 10 days from the end of the initial period. Any notice of denial shall set forth the specific reasons for the denial, specific reference to pertinent provisions of this Agreement upon which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim, with an explanation of why such material or information is necessary, and any explanation of claim review procedures, written to the best of the Administrator's ability in a manner that may be understood without legal or actuarial counsel. (c) A claimant whose claim for benefits has been wholly or partially denied by the Administrator may request, within 10 days following the date of such denial, in a writing addressed to the Administrator, a review of such denial. The claimant shall be entitled to submit such issues or comments in writing or otherwise, as the claimant shall consider relevant to a determination of the claim, and the claimant may include a request for a hearing in person before 8 the Administrator. Prior to submitting the request, the claimant shall be entitled to review such documents as the Administrator shall agree are pertinent to the claim. The claimant may, at all stages of review, be represented by counsel, legal or otherwise, of the claimant's choice. All requests for review shall be promptly resolved. The Administrator's decision with respect to any such review shall be set forth in writing and shall be mailed to the claimant not later than 10 days following receipt by the Administrator of the claimant's request unless special circumstances, such as the need to hold a hearing, require an extension of time for processing, in which case the Administrator's decision shall be so mailed not later than 20 days after receipt of such request. (d) A claimant who has followed the procedure in paragraphs (b) and (c) of this Section, but who has not obtained full relief on the claim for benefits, may, within 60 days following the claimant's receipt of the Administrator's written decision on review, apply in writing to the Administrator for binding arbitration of the claim before an arbitrator mutually acceptable to both parties, the arbitration to be held in Ann Arbor, Michigan, in accordance with the arbitration rules of the American Arbitration Association, as then in effect. If the parties are unable to mutually agree upon an arbitrator, then the arbitration proceedings shall be held before three arbitrators, one of which shall be designated by the Company, one of which shall be designated by the claimant and the third of which shall be designated mutually by the first two arbitrators in accordance with the arbitration rules referenced above. The arbitrator(s) sole authority shall be to interpret and apply the provisions of this Agreement; the arbitrator(s) shall not change, add to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall have the power to compel attendance of witnesses at the hearing. Any court having jurisdiction may enter a judgment based upon such arbitration. All decisions of the arbitrator(s) shall be final and binding on the claimant and the Company without appeal to any court. Upon execution of this Agreement, the Executive shall be deemed to have waived any right to commence litigation proceedings outside of arbitration without the express written consent of the Company. 15. LEGAL FEES AND EXPENSES. In the event any arbitration or litigation is brought to enforce any provision of this Agreement and the Executive prevails, then the Executive shall be entitled to recover from the Company the Executive's reasonable costs and reasonable expenses of such arbitration or litigation, including reasonable fees and disbursements of counsel (both at trial and in appellate proceedings). If the Company prevails, then each party shall be responsible for its/his respective costs, expenses and attorneys fees, and the costs of arbitration shall be equally divided. In the event that it is determined that the Executive is entitled to compensation, legal fees and expenses hereunder, the Executive also shall be entitled to interest thereon, payable to the Executive at the prime rate of interest plus two percent. For purposes of this Section 15, "prime rate" shall be determined by reference to the prime rate established by Harris Trust and Savings Bank as in effect from time to time during the period from the date such amounts should have been paid to the date of actual payment. For purposes of determining the date when legal fees and expenses are payable, such amounts are not due until 30 days after notification to the Company of such amounts. 9 16. NONALIENATION OF BENEFITS. Except in so far as this provision may be contrary to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment of any benefits under this Agreement shall be valid or recognized by the Company. 17. ERISA. This Agreement is an unfunded compensation arrangement for a member of a select group of the Company's management and any exemptions under ERISA, as applicable to such an arrangement, shall be applicable to this Agreement. 18. REPORTING AND DISCLOSURE. The Company, from time to time, shall provide government agencies with such reports concerning this Agreement as may be required by law, and the Company shall provide the Executive with such disclosure concerning this Agreement as may be required by law or as the Company may deem appropriate. 19. NOTICES. Any notice required or permitted by this Agreement shall be in writing, sent by registered or certified mail, return receipt requested, addressed to the Board and the Company at the Company's then principal office, or to the Executive at the Executive's last address on file with the Company, as the case may be, or to such other address or addresses as any party hereto may from time to time specify in writing for the purpose of this Agreement in a notice given to the other parties in compliance with this Section 19. Notices shall be deemed given when received. 20. MISCELLANEOUS/SEVERABILITY. A waiver of the breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any subsequent breach of the same or any other term or condition. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. To the extent that any provision or benefit under this Agreement is not deemed to be in accordance with any applicable law, ordinance, rule or regulation, the noncomplying provision shall be construed, or benefit limited, to the extent necessary to comply with all applicable laws, ordinances and regulations and any such provision or benefit shall not affect the validity of any other provision or benefit provided by this Agreement. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof. 21. GOVERNING LAW. To the extent not preempted by Federal law, this Agreement shall be governed and construed in accordance with the laws of the State of Michigan. 22. ENTIRE AGREEMENT. This document represents the entire agreement and understanding of the parties with respect to the subject matter of the Agreement and it may not be altered or amended except by an agreement in writing. 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. COMSHARE, INCORPORATED By: --------------------------------- Its: ------------------------------- ------------------------------------ BRIAN JARZYNSKI EX-10.03 4 k62543ex10-03.txt LETTER OF UNDERSTANDING OF STOCK OPTIONS AND 1 EXHIBIT 10.03 February 8, 2001 Mr. Norman Neuman Jr. 755 S Freer Road Chelsea, MI 48118 RE: LETTER OF UNDERSTANDING Dear Norm: This letter ("Agreement") confirms the terms and conditions of your separation from Comshare, Incorporated ("Comshare") under mutually agreed upon circumstances. The arrangement will be as follows: (1) Your termination from Comshare, Incorporated will be effective on February 9, 2001("Termination Date"). (2) Comshare agrees to pay you salary continuation pay commencing from your "Termination Date" until April 16, 2004 ("Salary Continuation Period"). You (or in the event of your death, your heirs or estate) will be paid $5,723.83 bi-weekly during the Salary Continuation Period, less appropriate federal and state withholdings and deductions, on Comshare's regular, scheduled pay dates. Comshare also agrees to pay you your car allowance in the amount of $945 per month in bi-weekly installments of $436.16 until February 9, 2002. (3) Your group health, dental, vision, and life coverage, including elected dependent coverage, which are currently in effect shall continue for you and any of your covered dependents until April 16, 2004, or until you are eligible for group health insurance from other employment, whichever occurs first, provided that Comshare shall have the right to change such coverage to the extent Comshare is generally changing coverage for its employees. You shall continue to make required contributions, via payroll deductions, at the then current rate for similarly situated Comshare employees. You may also continue to participate in the Comshare Reimbursement plan including the Health Care flexible spending account during the Salary Continuation Period. You may convert the group life insurance plan within thirty (30) days after April 16, 2004. Conversion forms will be provided to you upon your Termination Date. It is your responsibility to make application to the insurance company to convert your group term life insurance to an individual policy within thirty (30) days of the date your group term life insurance coverage terminates. Long-term disability coverage ceases on your Termination Date and there is no conversion option available. (4) You may exercise your rights under the Benefits Adjustment Plan (BAP) in accordance with the provisions of the plan. In accordance with the terms of the BAP, you will receive a distribution of the vested amounts credited to your Deferred Compensation Account and Company Contribution Account as defined in the BAP. This amount will be distributed to you within a reasonable time following a special valuation date of January 5, 2002 (the "Special Valuation Date"). In addition, within a reasonable time after the Special Valuation Date, you will receive a distribution of the amount credited to your Supplemental Compensation Account as defined in the BAP. As provided in the BAP, the amount contained in your Supplemental Compensation Account will be distributed in the form of an annuity that will be purchased by Comshare and issued in your name to pay the amount over a period of 180 months (based on an 8% fixed rate of return during the payout period). In order to receive the distribution of the amounts in the Deferred Compensation Account and Company Contribution Account after the Special Valuation Date, you must confirm your intention to receive these amounts after the Special Valuation Date by signing the attached Distribution Election Form and returning it to Comshare, Benefits Department, 555 Briarwood Circle, Ann Arbor, MI 48108 prior to your Termination Date. Taxes will be withheld from these distributions. (5) Subject to approval of Comshare's Board of Directors, the period of time that you have to exercise your vested stock options under Comshare's 1988 Stock Option Plan and 1998 Global Employee Stock Option Plan will be extended to permit you to exercise your vested options up to the expiration date of each of your individual stock option grants under the respective plans. Comshare will issue to you revised stock option agreements with respect to each of your grants to reflect the amended terms. Your stock options under the revised terms are required to be re-classified from incentive stock options to non-qualified stock options. No additional options will vest beyond your Termination Date. 2 Page 2 (6) Comshare will issue a check to you in the aggregate amount of all payroll deductions that have been made on your behalf pursuant to your participation in Comshare's Employee Stock Purchase Plan in calendar year 2001 that have not been applied to the purchase of shares of the company as of your Termination Date. (7) Comshare shall make available to you and your qualified dependents, the election of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") when your group health insurance coverage through Comshare terminates as required by COBRA. Comshare agrees to pay your COBRA premium for this coverage from April 16, 2004 through October 31, 2005 or until you become ineligible for COBRA, whichever event occurs first. (8) You will be provided with reasonable tax return preparation provided by Arthur Anderson for calender years 2000 and 2001. (9) You will not accrue vacation benefits during the Salary Continuation Period. All unused and accrued vacation that is available to you if any, as of your Termination Date, will be paid within two weeks of February 9, 2001. Our records indicate that you have twenty (20) days of unused and accrued vacation. (10) You will not be eligible to continue active participation, including the right to make contributions pursuant to the 401(k) provisions of the Profit Sharing Plan after your Termination Date. You will be apprised of your options, with respect to such plans, under separate cover. (11) Except for publicly available information, all information to which you had access to during your employment with Comshare or as a result of your dealings with Comshare and/or any clients, customers, suppliers, or business partners shall be kept confidential and shall not be disclosed to any third party. This information includes, without limitation, (a) computer programs, technical specifications, software programming techniques, methodologies, ideas, concepts, or interfaces; (b) information which relates to Comshare's proprietary software, prototypes, or plans; (c) business, financial, marketing, or sales plans and data (d) customer lists and information; and (e) other information. Your confidentiality obligations under this paragraph are in addition to those set forth in your Comshare Employee Agreement. (12) You shall not discuss any of the terms of this Agreement with any third party including, but not limited to, other Comshare employees. In addition, you shall not comment upon the business affairs, policies or the like of Comshare without the specific written approval of Comshare. NOTWITHSTANDING THE FOREGOING, YOU MAY AND ARE ENCOURAGED TO PROVIDE A COPY OF THIS AGREEMENT TO LEGAL COUNSEL AND OTHER OUTSIDE ADVISORS OF YOUR CHOICE TO OBTAIN SUCH COUNSEL AND ADVICE, AS YOU DEEM APPROPRIATE. (13) You will return to Comshare all property of Comshare in your possession and/or subject to your control, including, but not limited to, any and all credit cards, files, memoranda, correspondence, customer lists, proposals, software, or the like, and all copies of such items on whatever media they appear. If you uncover additional company property please return it to the company. Notwithstanding the foregoing, you are not required to return the following Comshare property: --------------------- ITEM DESCRIPTION --------------------- Libretto Computer --------------------- DeskJet printer --------------------- Epson Scanner --------------------- (14) It is understood and agreed that this Agreement constitutes the entire understanding of the parties with respect to your employment at Comshare and that this Agreement and your Comshare Employee Agreement supersede all other understandings, proposals, samples, models, agreements, representations, or conditions, written or oral, regarding its subject matter. You agree that until February 9, 2002, you will not perform services anywhere in the world for a competitor of Comshare, whether such services are provided as an officer, director, proprietor, employee, partner, investor (other than as a holder of less than one percent (1%) of the equity securities of any entity exchange), consultant, advisor, or in any other capacity. As used in this agreement, a competitor is defined as an entity engaged in the licensing or distribution of financial applications software whose product is designed to be competitive with Comshare. If you are unsure whether a particular entity is competitive, you may submit a written request to the President of Comshare for a determination. (15) You acknowledge and agree that you will not be eligible for and are not entitled to severance pay or other considerations, except for the payment of your COBRA premium, at the end of the Salary Continuation Period. 3 Page 3 (16) In exchange for the good and valuable consideration detailed in this Agreement and effective as of the date you sign this Agreement and for all acts prior to such date, you hereby release, waive and discharge any and all manner of action, causes of action, claims, rights, charges, suits, damages, debts, demands, obligations, attorney's fees, and any and all other liabilities or claims of whatever nature, whether in law or in equity, known or unknown, including, but not limited to any claim or claims of damages or other relief for tort, breach of contract, personal injury, negligence, age discrimination under the Age Discrimination in Employment Act of 1967 as amended, employment discrimination prohibited by other federal, state or local laws including discrimination as to sex, race, national origin, marital status, age, disability, height, weight, or religion, and any other claims of unlawful employment practices, and any other similar and dissimilar claims, which you have claimed or may claim or could claim against Comshare, Incorporated, its direct and indirect subsidiaries or their respective directors, officers, employees, successors, or assigns, as a result of employment at and the separation from employment with Comshare or otherwise. (17) You acknowledge that you have read this Agreement and that you understand all of its terms and execute it voluntarily with full knowledge of its significance and the consequences thereof. Further, you acknowledge that you have had twenty-one (21) days to consider the terms and conditions of this Agreement. In addition, you shall have a seven (7) day period following your execution of this Agreement, during which you may revoke the Agreement by providing Comshare with written notice to that effect. (Any notice should be addressed to the attention of the undersigned.) Finally, you hereby acknowledge that you have had an adequate opportunity to review and consider the terms of this Agreement, and have discussed this Agreement with legal counsel of your choice. You agree that you grant a full and final release as set forth herein. (18) The Agreement shall be governed by and construed according to the laws of the State of Michigan. The Agreement shall be binding upon you and your heirs, administrator, representatives, executors, and assigns. (19) Sections 7, 11, 12, 14, 16 and 18 shall survive the end of the Salary Continuation Period. If the above is acceptable, please sign this Agreement and return it to me by February 8, 2001. If I am not in receipt of a copy of this Agreement, executed by you on or before that date, this offer shall be void. Sincerely, COMSHARE, INCORPORATED /s/ Dennis Ganster Dennis G. Ganster President and Chief Executive Officer The above terms and conditions are agreed to and accepted: /s/ Norman Neuman Jr. - ----------------------------------- Norman Neuman Jr. 2/8/2001 - ----------------------------------- Date 4 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000533 NORMAN NEUMAN, JR. PLAN: 1998 - ----------------------------------------------------------------------------------------------------------------------
Effective 6/24/1999, you were granted an Incentive Stock Option (ISO) to buy 20,000 shares of Comshare Common stock at $3.0938 per share. The total price for the shares granted under this Option is $61,876.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 5,000 On Vest Date 6/24/2000 6/24/2009 5,000 On Vest Date 6/24/2001 2/9/2001 5,000 On Vest Date 6/24/2002 2/9/2001 5,000 On Vest Date 6/24/2003 2/9/2001
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 3/30/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Norman Neuman, Jr. 4/4/2001 - -------------------------------------------- --------------------------------- NORMAN NEUMAN, JR. Date Optionee
5 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000044 NORMAN NEUMAN, JR. PLAN: 1988 - ----------------------------------------------------------------------------------------------------------------------
Effective 8/15/1996, you were granted an Incentive Stock Option (ISO) to buy 5,000 shares of Comshare Common stock at $14.7500 per share. The total price for the shares granted under this Option is $73,750.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 1,250 On Vest Date 8/15/1997 8/15/2001 1,250 On Vest Date 8/15/1998 8/15/2001 1,250 On Vest Date 8/15/1999 8/15/2001 1,250 On Vest Date 8/15/2000 8/15/2001
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 3/30/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Norman Neuman, Jr. 4/4/2001 - -------------------------------------------- --------------------------------- NORMAN NEUMAN, JR. Date Optionee
6 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000237 NORMAN NEUMAN, JR. PLAN: 1988 - ----------------------------------------------------------------------------------------------------------------------
Effective 8/14/1997, you were granted an Incentive Stock Option (ISO) to buy 30,000 shares of Comshare Common stock at $8.2500 per share. The total price for the shares granted under this Option is $247,500.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 7,500 On Vest Date 8/14/1998 8/14/2002 7,500 On Vest Date 8/14/1999 8/14/2002 7,500 On Vest Date 8/14/2000 8/14/2002 7,500 On Vest Date 8/14/2001 2/9/2001
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 3/30/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Norman Neuman, Jr. 4/4/2001 - -------------------------------------------- --------------------------------- NORMAN NEUMAN, JR. Date Optionee
7 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000338 NORMAN NEUMAN, JR. PLAN: 1988 - ----------------------------------------------------------------------------------------------------------------------
Effective 6/26/1998, you were granted an Incentive Stock Option (ISO) to buy 15,000 shares of Comshare Common stock at $7.7500 per share. The total price for the shares granted under this Option is $116,250.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 3,750 On Vest Date 6/26/1999 6/26/2003 3,750 On Vest Date 6/26/2000 6/26/2003 3,750 On Vest Date 6/26/2001 2/9/2001 3,750 On Vest Date 6/26/2002 2/9/2001
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 3/30/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Norman Neuman, Jr. 4/4/2001 - -------------------------------------------- --------------------------------- NORMAN NEUMAN, JR. Date Optionee
8 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000385 NORMAN NEUMAN, JR. PLAN: 1998 - ----------------------------------------------------------------------------------------------------------------------
Effective 2/3/1999, you were granted an Incentive Stock Option (ISO) to buy 12,000 shares of Comshare Common stock at $3.5938 per share. The total price for the shares granted under this Option is $43.125.60. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 3,000 On Vest Date 2/3/2000 2/3/2009 3,000 On Vest Date 2/3/2001 2/3/2009 3,000 On Vest Date 2/3/2002 2/9/2001 3,000 On Vest Date 2/3/2003 2/9/2001
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 3/30/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Norman Neuman, Jr. 4/4/2001 - -------------------------------------------- --------------------------------- NORMAN NEUMAN, JR. Date Optionee
EX-10.04 5 k62543ex10-04.txt NOTICES OF GRANT OF STOCK OPTIONS AND OPTION 1 EXHIBIT 10.04 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000284 KATHRYN A JEHLE PLAN: 1988 - ----------------------------------------------------------------------------------------------------------------------
Effective 11/6/1997, you were granted an Incentive Stock Option (ISO) to buy 9,000 shares of Comshare Common stock at $7.0000 per share. The total price for the shares granted under this Option is $63,000.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 2,250 On Vest Date 11/6/1998 11/6/2002 2,250 On Vest Date 11/6/1999 11/6/2002 2,250 On Vest Date 11/6/2000 11/6/2002 2,250 On Vest Date 11/6/2001 11/6/2002
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 4/13/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Kathryn A. Jehle 4/16/2001 - -------------------------------------------- --------------------------------- KATHRYN A. JEHLE Date Optionee
2 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000012 KATHRYN A JEHLE PLAN: 1988 - ----------------------------------------------------------------------------------------------------------------------
Effective 11/8/1996, you were granted an Incentive Stock Option (ISO) to buy 9,000 shares of Comshare Common stock at $14.8800 per share. The total price for the shares granted under this Option is $133,920.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 2,250 On Vest Date 11/8/1997 11/8/2001 2,250 On Vest Date 11/8/1998 11/8/2001 2,250 On Vest Date 11/8/1999 11/8/2001 2,250 On Vest Date 11/8/2000 11/8/2001
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 4/13/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Kathryn A. Jehle 4/16/2001 - -------------------------------------------- --------------------------------- KATHRYN A. JEHLE Date Optionee
3 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000329 KATHRYN A JEHLE PLAN: 1988 - ---------------------------------------------------------------------------------------------------------------------- Effective 6/26/1998, you were granted an Incentive Stock Option (ISO) to buy 15,000 shares of Comshare Common stock at $7.7500 per share. The total price for the shares granted under this Option is $116,250.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 3,750 On Vest Date 6/26/1999 6/26/2003 3,750 On Vest Date 6/26/2000 6/26/2003 3,750 On Vest Date 6/26/2001 6/26/2003 3,750 On Vest Date 6/26/2002 6/26/2003
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 4/13/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Kathryn A. Jehle 4/16/2001 - -------------------------------------------- --------------------------------- KATHRYN A. JEHLE Date Optionee
4 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000382 KATHRYN A JEHLE PLAN: 1998 - ----------------------------------------------------------------------------------------------------------------------
Effective 2/3/1999, you were granted an Incentive Stock Option (ISO) to buy 15,000 shares of Comshare Common stock at $3.5938 per share. The total price for the shares granted under this Option is $53,907.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 3,750 On Vest Date 2/3/2000 2/3/2009 3,750 On Vest Date 2/3/2001 2/3/2009 3,750 On Vest Date 2/3/2002 2/3/2009 3,750 On Vest Date 2/3/2003 2/3/2009
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 4/13/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Kathryn A. Jehle 4/16/2001 - -------------------------------------------- --------------------------------- KATHRYN A. JEHLE Date Optionee
5 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000531 KATHRYN A JEHLE PLAN: 1998 - ----------------------------------------------------------------------------------------------------------------------
Effective 6/24/1999, you were granted an Incentive Stock Option (ISO) to buy 20,000 shares of Comshare Common stock at $3.0938 per share. The total price for the shares granted under this Option is $61,876.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 5,000 On Vest Date 6/24/2000 6/24/2009 5,000 On Vest Date 6/24/2001 6/24/2009 5,000 On Vest Date 6/24/2002 6/24/2009 5,000 On Vest Date 6/24/2003 6/24/2009
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 4/13/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Kathryn A. Jehle 4/16/2001 - -------------------------------------------- --------------------------------- KATHRYN A. JEHLE Date Optionee
6 - ---------------------------------------------------------------------------------------------------------------------- Comshare, Inc. NOTICE OF GRANT OF STOCK OPTIONS ID: 38-1804887 555 Briarwood Circle AND OPTION AGREEMENT Ann Arbor, MI 48108 - ---------------------------------------------------------------------------------------------------------------------- OPTIONEE: OPTION NUMBER: 00000976 KATHRYN A JEHLE PLAN: 1998 - ---------------------------------------------------------------------------------------------------------------------- Effective 6/29/2000, you were granted an Incentive Stock Option (ISO) to buy 10,000 shares of Comshare Common stock at $4.6250 per share. The total price for the shares granted under this Option is $46,250.00. Comshare's Board approved a special provision allowing you the right to continue to exercise your vested stock options following your termination of employment. You are eligible to exercise your vested options up to the expiration dates shown below. The status of your options was also changed from ISO to Non-Qualified Stock Options to comply with current regulations. Option shares will become vested in installments, on the dates set forth below:
SHARES VEST TYPE FULL VEST EXPIRATION ----------- --------------- ------------ ------------- 2,500 On Vest Date 6/29/2001 6/29/2005 2,500 On Vest Date 6/29/2002 6/29/2005 2,500 On Vest Date 6/29/2003 6/29/2005 2,500 On Vest Date 6/29/2004 6/29/2005
NOTE: All dates are shown in a month/day/year format. - ---------------------------------------------------------------------------------------------------------------------- As it becomes vested, this Option may be exercised in installments. This Option is not transferable except pursuant to the laws of descent and distribution, and any such transfer is subject to the provisions of the attached Stock Option Plan and this Option Agreement. The Stock Option Plan and this Option Agreement are governed by the laws of the State of Michigan. By signing below, both Comshare and the Optionee (on behalf of the Optionee and any transferee), agree to abide by the terms and provisions of this Option Agreement and the attached Stock Option Plan, as amended from time to time. - ---------------------------------------------------------------------------------------------------------------------- /s/ Brian Jarzynski 4/13/2001 - -------------------------------------------- --------------------------------- Comshare, Inc. Date Brian Jarzynski Vice President & Chief Financial Officer /s/ Kathryn A. Jehle 4/16/2001 - -------------------------------------------- --------------------------------- KATHRYN A. JEHLE Date Optionee
EX-10.05 6 k62543ex10-05.txt SECOND AMENDMENT TO THE BENEFIT ADJUSTMENT PLAN 1 EXHIBIT 10.05 SECOND AMENDMENT TO THE COMSHARE, INCORPORATED BENEFIT ADJUSTMENT PLAN (AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 6, 1997) Pursuant to Resolutions adopted by the Board of Directors of Comshare, Incorporated ("Corporation") on February 16, 2001, the Plan is amended, as set forth below. 1. Section 7.01 is amended by adding a new paragraph (e) which reads as follows: (E) SPECIAL VALUATION DATE. In accordance with the Distribution Election Form signed on February 9, 2001 by Mr. Norman Neuman, Mr. Neuman shall be entitled to a lump sum distribution of his vested Deferred and Company Contribution Accounts valued as of January 5, 2002. 2. Article VIII is amended by adding a new Section 8.03 which reads as follows: SECTION 8.03 SPECIAL VALUATION DATE. In accordance with the Distribution Election Form signed on February 9, 2001 by Mr. Norman Neuman, Mr. Neuman's Supplemental Compensation Account shall be valued as of January 5, 2002, and distributions shall commence to him as soon as reasonably practicable thereafter. THIS SECOND AMENDMENT to the Benefit Adjustment Plan of Comshare, Incorporated is executed as of February 16, 2001. COMSHARE, INCORPORATED By: /s/ Brian Jarzynski Brian Jarzynski Vice President and Chief Financial Officer EX-10.06 7 k62543ex10-06.txt THIRD AMENDMENT TO 1988 STOCK OPTION PLAN 1 EXHIBIT 10.06 THIRD AMENDMENT TO THE COMSHARE, INCORPORATED 1988 STOCK OPTION PLAN Pursuant to resolutions adopted by the Board of Directors of Comshare, Incorporated on February 16, 2001, the 1988 Stock Option Plan (the "Plan") is hereby amended as set forth below. Effective February 16, 2001, the first two sentences in Section 9 "Termination of Employment" shall be amended and restated in their entirety to read as follows: Upon the expiration of a period of three (3) months after the termination of employment of an optionee for any reason other than death or disability as defined in Section 22(e) of the Code, all rights to purchase shares pursuant to an exercisable option and all related stock appreciation rights shall expire and terminate; provided, however, that the Board, in its sole discretion, may permit an option to continue to vest and/or expire later than three (3) months following an optionee's termination of employment but not later than the original expiration date of the option. The Board also may determine that an option granted under the Plan shall terminate at a time prior to three (3) months following termination of employment. THIS THIRD AMENDMENT to the Comshare, Incorporated 1988 Stock Option Plan is hereby executed as of February 16, 2001. COMSHARE, INCORPORATED By: /s/ Brian Jarzynski Brian Jarzynski Vice President and Chief Financial Officer EX-10.07 8 k62543ex10-07.txt SECOND AMENDMENT TO DIRECTOR'S STOCK OPTION PLAN 1 EXHIBIT 10.07 SECOND AMENDMENT TO THE COMSHARE, INCORPORATED DIRECTORS' STOCK OPTION PLAN Pursuant to approval of the Board of Directors on February 16, 2001, the Comshare Incorporated Directors' Stock Option Plan (the "Plan") is hereby amended, effective February 16, 2001, by the addition of a new Section 4.2 to read as follows: 4.2. Change in Control Acceleration. The portion of any outstanding option (including any option that has not been outstanding for twelve (12) months) that has not expired or been exercised, terminated, canceled, forfeited or surrendered shall become exercisable in full in the event of a Change in Control. For this purpose, Change in Control shall be defined as the occurrence of any of the following events: (a) the election of a Board of Directors of the Company, a majority of the members of which were nominees of a person (including an individual, a corporation, partnership, joint venture, trust or other entity) or a group of persons acting together (other than persons who were members of the Board of Directors or officers of the Company as of August 14, 1998 or a tax-qualified retirement plan approved by the Board of Directors of the Company (including at least a majority of the Incumbent Directors ("Exempted Persons")), following the acquisition by such person, group of persons or plan of ownership (directly or indirectly, beneficially or of record) of twenty-five (25%) percent, or more, of the outstanding Common Stock of the Company; (b) the acquisition of ownership by a person or group of persons described in subparagraph (a) above (other than Exempted Persons) of fifty-one (51%) percent, or more of the outstanding Common Stock of the Company; (c) a sale of all or substantially all of the assets of the Company to any entity not controlled by persons who were members of the Board of Directors or officers of the Company as of August 14, 1998 or by any tax-qualified retirement plan for the benefit of employees of the Company; or 2 (d) a merger, consolidation or other similar transaction between the Company and another entity if a majority of the members of the Board of Directors of the surviving company are not Continuing Members. The term "Incumbent Directors" means members of the Board of Directors of the Company as of August 14, 1998 or new directors whose election by the Board of Directors, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors in office at the time of such election or nomination, who either were directors as of August 14, 1998, or whose election or nomination was previously approved as provided above. In the event that a majority of the Incumbent Directors do not approve the tax-qualified retirement plan or there are no Incumbent Directors, the tax-qualified retirement plan shall not be an Exempted Person. The term "Continuing Directors" means persons (A) who are members of the Board of Directors immediately before the change in control and (B) who also were members of the Board of Directors of the Company as of August 14, 1998 or are new directors whose election by the Board of Directors, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors in office at the time of such election or nomination who either were directors as of August 14, 1998 or whose election or nomination for election was previously approved as provided above. THIS SECOND AMENDMENT to the Comshare, Incorporated Directors' Stock Option Plan is hereby executed as of February 16, 2001. COMSHARE, INCORPORATED By: /s/ Brian Jarzynski -------------------- Brian Jarzynski Vice President and Chief Financial Officer 2 EX-10.08 9 k62543ex10-08.txt SECOND AMENDMENT TO GLOBAL EMPLOYEE STOCK OPTION 1 EXHIBIT 10.08 SECOND AMENDMENT TO THE COMSHARE, INCORPORATED 1998 GLOBAL EMPLOYEE STOCK OPTION PLAN Pursuant to resolutions adopted by the Board of Directors of Comshare, Incorporated on February 16, 2001, the 1998 Global Employee Stock Option Plan (the "Plan") is hereby amended as set forth below. Effective February 16, 2001, the first two sentences in Section 8 "Termination of Employment" shall be amended and restated in their entirety to read as follows: Upon the expiration of a period of ninety (90) days after the termination of employment of an optionee for any reason other than death or disability as defined in Section 22(e) of the Code, all rights to purchase shares pursuant to an exercisable option shall expire and terminate; provided, however, that the Committee, in its sole discretion, may permit an option to continue to vest and/or expire later than ninety (90) days following an optionee's termination of employment but not later than the original expiration date of the option. The Committee also may determine that an option granted under the Plan shall terminate at a time prior to ninety (90) days following termination of employment. THIS SECOND AMENDMENT to the Comshare, Incorporated 1998 Global Employee Stock Option Plan is hereby executed as of February 16, 2001. COMSHARE, INCORPORATED By: /s/ Brian Jarzynski -------------------- Brian Jarzynski Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----