SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
CENTRA SOFTWARE, INC.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement no.:
3) Filing Party:
4) Date Filed:
* * * *
CENTRA SOFTWARE, INC.
430 Bedford Street
Lexington, Massachusetts 02420
(781) 861-7000
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Notice of Annual Meeting of Stockholders
June 26, 2002
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Centra Software, Inc. hereby gives notice that its annual meeting of
stockholders will be held at the offices of Foley Hoag LLP, 155 Seaport
Boulevard, Boston, Massachusetts 02210, on Wednesday, June 26, 2002, beginning
at 10:00 A.M., local time, for the following purposes:
1. To elect two Class III directors.
2. To consider and act upon a proposal to amend the Company's 1999 Stock
Incentive Plan to increase the number of shares of the Company's common
stock available for issuance under the plan by 1,000,000, to 6,100,000
shares.
3. To consider and act upon a proposal to adjourn the meeting for the
purpose of soliciting additional proxies to vote for Proposal No. 2, if at
the time of the meeting there are not enough affirmative votes to approve
Proposal No. 2.
4. To transact any further business that may properly come before the
annual meeting or any adjournment.
The board of directors has fixed the close of business on May 15, 2002, as
the record date for the determination of Centra stockholders entitled to
receive notice of, and to vote at, the annual meeting and any adjournment of
the annual meeting. Only stockholders of record on such date are entitled to
receive notice of, and to vote at, the annual meeting or any adjournment.
By Order of the Board of Directors,
Stephen A. Johnson
Chief Financial Officer, Treasurer
and Secretary
Lexington, Massachusetts
May 24, 2002
YOUR VOTE IS IMPORTANT
Please sign and return the enclosed proxy, whether or not you
plan to attend the meeting.
CENTRA SOFTWARE, INC.
430 Bedford Street
Lexington, Massachusetts 02420
(781) 861-7000
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
June 26, 2002
This proxy statement relates to the annual meeting of stockholders of Centra
Software, Inc. We are mailing the proxy statement and the enclosed form of
proxy to stockholders on or about May 24, 2002. The board of directors is
soliciting proxies to be used at the annual meeting and any adjournments of the
meeting. The annual meeting will be held at the offices of Foley Hoag LLP, 155
Seaport Boulevard, Boston, Massachusetts 02210 on Wednesday, June 26, 2002,
beginning at 10:00 a.m. local time.
When proxies are returned properly executed, the persons named in the
proxies will vote the shares represented in accordance with the stockholders'
directions. We encourage stockholders to vote on each matter to be considered.
However, if a stockholder has specified no choice in a properly executed proxy,
the persons named as proxies will vote the shares as recommended by management.
Any stockholder may revoke his proxy at any time before it has been
exercised by:
. providing us with a later dated proxy,
. notifying Centra's Secretary in writing at the following address: Centra
Software, Inc., 430 Bedford Street, Lexington, Massachusetts 02420, Attn:
Secretary, or
. attending the annual meeting and voting in person.
We have fixed the close of business on May 15, 2002 as the record date for
the annual meeting and any adjournment of the annual meeting. Only stockholders
of record on the record date are entitled to receive notice of, and to vote at,
the annual meeting or any adjournment. At the close of business on the record
date, there were issued and outstanding 25,650,791 shares of common stock, each
of which is entitled to cast one vote.
QUORUM AND TABULATION OF VOTES
Our by-laws provide that a quorum for the annual meeting will be a majority
in interest of the shares of common stock issued and outstanding and entitled
to vote at the annual meeting. We will treat shares of common stock represented
by a properly signed and returned proxy as present at the annual meeting for
the purpose of determining a quorum. In general, votes withheld from any
nominee for election as a director, abstentions and "broker non-votes" are
counted as present or represented for purposes of determining the presence or
absence of a quorum for the annual meeting. A "broker non-vote" occurs when a
broker or nominee holding shares for a beneficial owner votes on one proposal,
but does not vote on another proposal because, in respect of such other
proposal, the broker or nominee does not have discretionary voting power and
has not received instructions from the beneficial owner.
A plurality of the votes properly cast at the annual meeting will elect each
director. Abstentions and votes withheld from director-nominees will not be
included in calculating the number of votes cast and accordingly will not
affect the outcome of the vote.
1
The persons named in the proxies will vote the shares FOR election of each
nominee as a director and FOR each other proposal if no specification is made.
If a quorum is present, each of Proposal No. 2, to approve the amendment of
the 1999 Stock Incentive Plan, and Proposal No. 3, to adjourn the special
meeting under the circumstances described below, requires a majority of the
votes properly cast at the meeting. Nasdaq Stock Market rules require
stockholder approval of the amendment to the 1999 Stock Incentive Plan. Also,
the stockholders must approve the amendment in order for stock options and
other awards relating to shares issuable under the plan to qualify for
favorable tax treatment under the Internal Revenue Code. Abstentions with
respect to either of these proposals will count as being present and
represented and entitled to vote, and will be included in calculating the
number of votes cast. Abstentions will therefore have the effect of a vote
against the proposal. Broker non-votes will not be included in calculating the
number of votes cast on these proposals. We know of no other matter to be
presented at the annual meeting. If any other matter should be presented at the
annual meeting upon which a vote properly may be taken, shares represented by
all proxies we receive will be voted with respect thereto in accordance with
the best judgment of the persons named in the proxies.
We know of no other matter to be presented at the annual meeting. If any
other matter should be presented at the annual meeting upon which a vote
properly may be taken, shares represented by all proxies we receive will be
voted with respect thereto in accordance with the best judgment of the persons
named in the proxies.
American Stock Transfer & Trust Company, our transfer agent, will tabulate
votes at the annual meeting.
PROPOSAL ONE--ELECTION OF DIRECTORS
Our board of directors is divided into three classes. Each of the directors
serves a three-year term with one class of directors being elected by our
stockholders at each annual meeting.
At the annual meeting, two Class III directors will be elected to serve
until the 2005 annual meeting and until such directors' successors are duly
elected and qualified, or until their earlier death, resignation, removal or
disqualification. The board of directors has nominated each of Leon Navickas
and Robert E. Hult for re-election as a Class III Director. Each of the
nominees has agreed to serve if elected, and we have no reason to believe that
either nominee will be unable to serve. In the event that either nominee is
unable or declines to serve as a director at the time of the annual meeting,
proxies will be voted for such other nominee as is then designated by the board
of directors.
A quorum being present, the affirmative vote of a plurality of the shares
present in person or represented by proxy is necessary to elect each of the
nominees as a Class III director of Centra.
The board of directors recommends that you vote FOR the election of Leon
Navickas and Robert E. Hult as Class III directors of Centra.
2
PROPOSAL TWO--AMENDMENT OF OUR 1999 STOCK INCENTIVE PLAN
On May 13, 2002, our board of directors amended our 1999 Stock Incentive
Plan to increase the number of shares available for the grant of options under
the plan from 5,100,000 to 6,100,000, subject to adjustment in the event of
stock splits, stock dividends, recapitalizations and the like. Our board of
directors is submitting this amendment to the 1999 Stock Incentive Plan to our
stockholders for approval.
Options constitute a significant portion of the overall compensation of our
employees, including our executive officers. Options issued under the 1999
Stock Incentive Plan also represent a significant form of compensation that we
pay to employees. Our board of directors, including the members of the
Compensation Committee, believes that we will derive substantial benefits from
increasing the aggregate number of options that we can issue under the 1999
Stock Incentive Plan. Our board of directors believes that the proposed
amendment, by enabling us to issue additional options under the plan, will
enable us to further align the interests of our executive officers and other
employees with the interests of our stockholders. The Board also believes that
the proposed amendment will assist us to attract and retain key executives by
enabling us to offer competitive compensation packages. In addition, the board
of directors believes that the availability of additional shares under the 1999
Stock Incentive Plan would provide increased flexibility in structuring any
acquisitions that we may pursue.
In order to pass, this proposal must receive a majority of the votes cast
with respect to this matter.
The board of directors recommends that you vote FOR this proposal to approve
the amendment of the 1999 Stock Incentive Plan.
PROPOSAL THREE--ADJOURNMENT OF THE MEETING TO
PERMIT FURTHER SOLICITATION OF PROXIES IF NECESSARY
If there are not enough affirmative votes to approve the amendment to the
1999 Stock Incentive Plan at the time we convene the annual meeting of
shareholders, the proposal could not be approved unless we adjourn the meeting
to permit us to solicit additional proxies. In order to allow proxies that we
have received at the time of the meeting to be voted for such an adjournment,
if necessary, we are submitting the question of adjournment under those
circumstances to you, our shareholders, as a separate matter for your
consideration. A majority of the shares present or represented and voting at
the meeting is required in order to approve any such adjournment.
If it is necessary to adjourn the meeting and the adjournment is for a
period of less than 30 days, then we do not intend to give any additional
notice of the time and place of the adjourned meeting to shareholders other
than an announcement at the annual meeting.
The board of directors recommends that you vote FOR this proposal to adjourn
the meeting to permit further solicitation of proxies if necessary.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each director
and executive officer of Centra:
Name Age Position
---- --- --------
Leon Navickas......... 45 Chief Executive Officer and Chairman of the Board of Directors
Anthony J. Mark....... 55 President and Chief Operating Officer
Stephen A. Johnson.... 46 Chief Financial Officer, Treasurer and Secretary
Joseph M. Gruttadauria 42 Senior Vice President, Professional Services
David Barrett(1)...... 45 Director
Richard D'Amore(1).... 48 Director
Robert E. Hult(2)..... 55 Director
--------
(1)Member of the Audit Committee and Compensation Committee.
(2)Member of the Audit Committee.
Leon Navickas founded Centra and has served as our Chief Executive Officer
and Chairman of the Board since our incorporation in April 1995. He also served
as our President from our incorporation until January 1999. From May 1983 until
April 1995, Mr. Navickas served as General Manager of Research and Development,
Notes Division for Lotus Development Corp.
Anthony J. Mark has served as our President and Chief Operating Officer
since January 1999 and as our Chief Operating Officer since October 1997. From
March 1997 until October 1997, Mr. Mark served as our Vice President, Product
Development. From May 1995 until March 1997, he performed consulting services
for a number of private companies. From May 1993 until May 1995, Mr. Mark
served as Vice President and General Manager, Broadcast Products Division for
Avid Technology, Inc., a software development company.
Stephen A. Johnson has served as our Chief Financial Officer since November
1998. Since June 1999, Mr. Johnson has served as our Chief Financial Officer,
Treasurer and Secretary. From May 1997 until November 1998, Mr. Johnson served
as our Director of Finance and Administration. From March 1997 until May 1997,
he served as a consultant to Centra. From October 1991 until March 1997, Mr.
Johnson served in a number of positions at Avid Technology, Inc., including
Controller from October 1991 until August 1995; Finance Manager, Desktop
Products Division from August 1995 until February 1996; and Director of
Finance, Worldwide Field Operations from February 1996 until March 1997.
Joseph M. Gruttadauria has served as our Senior Vice President, Professional
Services since October 2000 and our Vice President, Professional Services since
March 1997. From March 1996 until March 1997, Mr. Gruttadauria served as the
Vice President of Sales and Services and Chief Information Officer for
OneWave, Inc., a consulting company. From December 1994 until March 1996, he
served as Director, Customer Service for SAP Americas, a software company. From
June 1994 until December 1994, Mr. Gruttadauria served as Vice President,
Services and Manufacturing for the Softswitch Business Unit of Lotus
Development Corp. From December 1989 until June 1994, Mr. Gruttadauria served
as Vice President, Service and Manufacturing for Softswitch, Inc., a software
development company.
David Barrett has served as a director since December 1999. Since August
2001, Mr. Barrett has been a General Partner at Polaris Venture Partners, LLP,
a venture capital investing firm, which he joined in May 2000 as a Venture
Partner. From February 1998 to March 2000, Mr. Barrett served as Executive Vice
President of Calico Commerce, Inc., a provider of e-business enabling software
and services, including responsibilities as Chief Operating Officer from April
1999 to March 2000. From December 1996 until February 1998, Mr. Barrett served
as Senior Vice President, Worldwide Operations at Pure Atria/Rational Software
Corporation, an enterprise software development automation company. From March
1996 to December 1996, Mr. Barrett served as Vice President, Sales, Marketing
and Services at Nets, Inc., an e-commerce company. From August 1984 through
March 1996, Mr. Barrett held numerous executive roles for Lotus Development
Corporation/IBM,
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including service as Vice President, Field Sales and Services from July 1993
until March 1996. Mr. Barrett is a director of four other companies.
Richard D'Amore has served as a director since April 1995. Since March 1994,
Mr. D'Amore has been a General Partner of North Bridge Venture Partners, L.P.,
a venture capital investing firm. Mr. D'Amore also serves as a director of
Veeco Instruments, Inc., Silverstream Software, Inc., and Solectron Corporation.
Robert E. Hult has served as a director since January 2001. Since March
1998, Mr. Hult has been the Senior Vice President Finance and Operations, Chief
Financial Officer and Treasurer for NMS Communications, Inc., a provider of
systems and platform building blocks for voice, video and data communication
services on wireless and wireline networks. From June 1997 to October 1998, Mr.
Hult served as the Vice President and General Manager for AltaVista Search
Service, an internet portal acquired by Compaq. From December 1995 to June
1997, Mr. Hult served as Chief Financial Officer, and Vice President Operations
& Web Business Development for AltaVista Internet Software, Inc., a wholly
owned subsidiary of Digital Equipment Corp. He served Digital Equipment
Corporation in a variety of financial executive positions from 1972 to 1995.
The board of directors is divided into three classes, referred to as Class
I, Class II and Class III, each consisting of approximately one-third of the
directors. One class is elected each year at the annual meeting of stockholders
to hold office for a term of three years and until their respective successors
have been duly elected and qualified. Centra currently has four directors. The
current terms of Centra's two Class III directors, Messrs. Navickas and Hult,
will expire at the annual meeting to be held on June 26, 2002. The current term
of Mr. D'Amore, Centra's Class I director, will expire at the annual meeting to
be held in 2003. The current term of Mr. Barrett, Centra's Class II director,
will expire at the annual meeting to be held in 2004.
Executive officers are elected annually by the board of directors and serve
at the discretion of the board or until their respective successors have been
duly elected and qualified. There are no family relationships among Centra's
directors and executive officers.
Committees and Meetings of the Board
During the fiscal year ended December 31, 2001, the board met four times and
acted five times by unanimous written consent. No current director attended
fewer than 75% of the total number of meetings held by the board or committees
of the board on which he served. The board of directors currently has two
standing committees: the audit committee and the compensation committee.
Audit Committee
The audit committee is currently composed of Messrs. Barrett, D'Amore and
Hult. The audit committee reviews Centra's internal accounting procedures and
consults with and reviews the services provided by Centra's independent
auditors. The audit committee also has the responsibilities and authority
described in its written charter. The charter has been adopted by the board of
directors and was attached as Appendix A to our proxy statement for our 2001
annual stockholder meeting. We expect to include our audit committee charter as
an appendix to our proxy statement for our annual meeting of stockholders again
in 2004, in accordance with applicable SEC rules. The audit committee met four
times during fiscal 2001. The members of the audit committee are independent,
as defined in Rule 4200(a)(15) of the National Association of Securities
Dealers, Inc.'s listing standards. See "Report of the Audit Committee" below.
Compensation Committee
The compensation committee currently consists of Messrs. Barrett and
D'Amore. The compensation committee reviews and recommends to the board of
directors the compensation and benefits of our officers and directors,
including administering and granting options under our stock option plans. The
compensation committee also establishes and reviews general policies relating
to the compensation and benefits of our employees. The compensation committee
met four times during fiscal 2001.
5
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
Director Compensation
We do not currently compensate directors for their services as members of
the board of directors or any committee of the board. We reimburse directors
for out-of-pocket expenses incurred in attending board and committee meetings.
Each director who is not an employee of Centra is eligible to receive option
grants under the 1999 Director Plan. The 1999 Director Plan provides that each
non-employee director is eligible to receive an automatic option to purchase
10,000 shares of common stock upon his initial election to the board, and an
additional grant to purchase 5,000 shares of common stock upon each
re-election. The 1999 Director Plan also permits discretionary grants to
non-employee directors. All option grants under the 1999 Director Plan are
priced at the market price of the common stock at the time of grant. Our
non-employee directors waived the right to receive options under this provision
of the 1999 Director Plan for 2001 and we have not granted any options under
the 1999 Director Plan.
In January 2001, the board of directors granted David Barrett an option to
purchase 17,500 shares of common stock under the 1999 Stock Incentive Plan at a
price of $4.13 per share. The option vests over a 4-year period with 6.25%
vesting each quarter. Additionally, in January 2001 the board of directors
granted Richard D'Amore and Robert Hult options to purchase 40,000 shares of
common stock at a price of $4.13 per share. They vest over a 4-year period with
25% vesting at the first anniversary of the grant date and 6.25% each quarter
thereafter.
Executive Compensation
Summary of Cash and Other Compensation. The following table provides
certain summary information concerning the cash and other compensation earned
by Centra's Chief Executive Officer and each of the four other most highly
compensated executive officers during fiscal 2001 (the "Named Executive
Officers"), for services rendered in all capacities to Centra during fiscal
2001 and during the fiscal years ended December 30, 1999 and 2000.
Summary Compensation Table
Long-Term
Annual Compensation(1) Compensation
----------------------- ---------------------
Securities Underlying
Name and Principal Position Year Salary($) Bonus($) Options
--------------------------- ---- --------- -------- ---------------------
Leon Navickas.................................... 2001 $175,000 $131,250 200,000
Chief Executive Officer 2000 $150,000 $175,000 500,000
1999 $150,000 $175,000 --
Anthony J. Mark.................................. 2001 $175,000 $116,250 200,000
President and Chief Operating Officer 2000 $175,000 $155,000 250,000
1999 $175,000 $100,000 300,000
Stephen A. Johnson............................... 2001 $160,000 $ 50,000 70,000
Chief Financial Officer, Treasurer and Secretary 2000 $150,000 $ 45,000 66,000
1999 $140,000 $ 35,000 45,000
Joseph M. Gruttadauria........................... 2001 $175,000 $ 75,000 50,000
Senior Vice President, Professional Services 2000 $175,000 $100,000 150,000
1999 $150,000 $ 75,000 37,500
Steven N. Lesser(2).............................. 2001 $160,000 $ 62,882 50,000
Former Vice President, Worldwide Sales 2000 $150,000 $155,000 75,000
1999 $ 99,680 $100,680 364,500
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(1)In accordance with the applicable SEC rules, other compensation in the form
of perquisites and other personal benefits has been omitted because such
perquisites and other personal benefits constituted less than $50,000 and
less than ten percent of the total annual salary and bonus for each
executive officer.
(2)Mr. Lesser joined Centra during 1999 and, therefore, received compensation
for only a portion of that year. Mr. Lesser's employment with Centra ended
in April 2002.
Option Grants in Last Fiscal Year. The following table contains information
concerning stock option grants made during 2001 under the 1999 Stock Incentive
Plan to the Chief Executive Officer and each of the other Named Executive
Officers:
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term(2)
Options Employees in Price Expiration ----------------------
Name Granted(#) Last Year(5) ($/Share)(1) Date 5%($) 10%($)
---- ---------- ------------ ------------ ---------- -------- ----------
Leon Navickas......... 200,000(3) 10.6% $4.13 1/02/11 $518,838 $1,314,838
Anthony J. Mark....... 200,000(3) 10.6% 4.13 1/02/11 518,838 1,314,838
Stephen A. Johnson.... 50,000(3) 2.7% 4.13 1/02/11 129,710 328,709
20,000(4) 1.1% 5.72 4/03/11 71,933 182,292
Joseph M. Gruttadauria 50,000(3) 2.7% 4.13 1/02/11 129,710 328,709
Steven N. Lesser...... 50,000(3) 2.7% 4.13 1/02/11 129,710 328,709
--------
(1)All options were granted at exercise prices that were not less than fair
market value at the time of grant, which was determined by the board of
directors to be the last sale price of the common stock on the date of grant
as reported by the Nasdaq Stock Market.
(2)Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming the specified compounded rates of appreciation of the
common stock over the term of the options. These numbers are calculated
based on rules promulgated by the SEC and do not represent Centra's estimate
of future stock price growth. Actual gains, if any, on stock option
exercises and common stock holdings are dependent on the timing of such
exercises and the future performance of the common stock. There can be no
assurance that the rates of appreciation assumed in this table can be
achieved or that the amounts reflected will be received by the Named
Executive Officers. This table does not take into account any appreciation
in price of the common stock from the date of grant to the current date. The
values shown are net of the option price, but do not include deductions for
taxes or other expenses associated with the exercise.
(3)Option vests 6.25% each quarter beginning 4/02/01 and ending 1/02/05.
(4)Option vests 6.25% each quarter beginning 7/03/01 and ending 4/03/05.
(5)In 2001, Centra granted options to purchase an aggregate of 1,879,900 shares
of common stock under its 1999 Stock Incentive Plan.
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Fiscal Year-End Option Values. No Named Executive Officer exercised any
options in fiscal 2001. The following table sets forth information regarding
exercisable and unexercisable options held as of December 31, 2001 by each of
the Named Executive Officers.
Year-End Option Values
Common Stock Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Year-End(#) Year-End($)(2)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Leon Navickas......... 287,500 412,500 $473,313 $957,688
Anthony J. Mark....... 226,250 223,750 392,953 710,048
Stephen A. Johnson.... 59,125 99,375 250,678 251,459
Joseph M. Gruttadauria 56,250 143,750 97,828 292,722
Steven N. Lesser...... 23,438 101,563 54,778 237,372
--------
(1)Amounts disclosed in this column do not necessarily reflect amounts received
by the Named Executive Officers but are calculated based on the difference
between the fair market value of the common stock on the date of exercise
and the exercise price of the options. Named Executive Officers will receive
cash only if and when they sell the common stock issued upon exercise of the
options, and the amount of cash received by such individuals is dependent on
the price of the common stock at the time of such sale.
(2)Calculated on the basis of the last sale price of the common stock on
December 31, 2001 as reported by the Nasdaq Stock Market ($8.00 per share),
less the applicable option exercise price.
Severance Agreements
The Company has entered into severance agreements with each of Leon
Navickas, our Chief Executive Officer; Anthony J. Mark, our President and Chief
Operating Officer; Stephen A. Johnson, our Chief Financial Officer, Treasurer
and Secretary; and Joseph M. Gruttadauria, our Senior Vice President,
Professional Services. Under these agreements, if the executive officer is
terminated without cause, he will be entitled to continue to receive base
salary and benefits for a period ending on the earliest of (a) 181 days from
the date of termination, (b) the date on which he begins new employment or (c)
the date on which he materially breaches any written agreement with Centra.
None of our executive officers has any other employment agreement with
Centra. Our executive officers may resign and we may terminate their employment
at any time, subject to the provisions of their severance agreements.
Change of Control Arrangements
We have entered into change of control agreements with each of Leon
Navickas, Anthony J. Mark, Stephen A. Johnson and Joseph M. Gruttadauria. Each
agreement provides that upon a change of control, 50% of the executive's
unvested options will vest and become immediately exercisable and 50% of our
right to repurchase the executive's unvested restricted stock will terminate. A
"change of control" means:
. any merger or consolidation which results in the voting shares outstanding
immediately prior to the merger or consolidation, representing immediately
after the merger or consolidation, less than 50% of the voting power of
the surviving entity;
. a sale of all or substantially all of our assets; or
. the sale of our shares in a single transaction or a series of related
transactions, representing at least 80% of the voting power of our voting
shares.
8
These change of control provisions apply to previous grants of restricted
stock and options and to any future grants of restricted stock and options.
The compensation committee of the board of directors, in administering the
1995 Stock Plan and the 1999 Stock Incentive Plan, can provide for accelerated
vesting of the shares of common stock subject to outstanding options held by
any of our executive officers or directors if a change of control of Centra, as
defined in the plans, occurs. The accelerated vesting may be conditioned on the
termination of the individual's employment following the change of control.
Equity Compensation Plan Disclosure
The following table sets forth certain information as of December 31, 2001
regarding securities authorized for issuance under our equity compensation
plans.
Number of
securities to be Number of securities
issued upon exercise Weighted-average remaining available
of outstanding exercise price of for future issuance
options, warrants outstanding options, under equity
Plan Category and rights warrants and rights compensation plans
------------- -------------------- -------------------- --------------------
Equity compensation plans approved by stockholders 5,072,181 $5.47 3,018,960(1)
Equity compensation plans not approved by
stockholders.................................... 0 N/A N/A
--------- ----- ---------
Total.......................................... 5,072,181 $5.47 3,018,960(1)
========= ===== =========
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(1)Our 1999 Stock Incentive Plan authorizes the issuance of incentive stock
options, nonqualified stock options, restricted stock awards, unrestricted
stock awards, stock appreciation rights and performance share awards. Our
1995 Stock Plan authorizes the issuance of incentive stock options and
nonqualified stock options and also authorizes the board to issue shares of
common stock free from restrictions or subject to such conditions and
restrictions as the board may determine. The above number includes 684,934
shares of common stock available for future grants under the 1999 Stock
Incentive Plan and 247,431 shares available for future issuance under the
1995 Stock Plan. The above number also includes 1,886,598 shares of common
stock reserved for issuance under our 1999 Employee Stock Purchase Plan. As
of December 31 of each year, we increase the number of shares reserved for
issuance under the 1999 Employee Stock Purchase Plan automatically by 2% of
the total number of shares of our common stock then outstanding or, if less,
300,000 shares.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a former or current employee of
Centra or a party to any other relationship of a character required to be
disclosed pursuant to Item 402(j) of Regulation S-K.
Compensation Committee Report on Executive Compensation
This report has been furnished by the compensation committee. David Barrett
and Richard D'Amore, two non-employee members of the board of directors, are
the members of the compensation committee. The compensation committee meets at
least annually or more frequently if requested by the board of directors. The
compensation committee is primarily responsible for the review of executive
compensation, which includes base salary, cash bonus, profit sharing, and stock
option awards.
Compensation Policies. Centra believes that it is critical to its continued
success to attract and retain highly qualified executive officers who will play
a vital role in future achievements. To this end, Centra has established its
compensation policy to reward executives based upon corporate, departmental and
individual
9
performance which is measured against the internal goals set for each area.
Centra also understands the need to provide long term incentives to its
executive officers to achieve future financial and strategic goals which
include Centra's growth, enhancement of Centra's profitability and thus
shareholder value. Centra believes that its total compensation is sufficiently
competitive to retain and, if necessary, attract executive officers capable of
leading Centra in accomplishing its business goals.
Executive compensation for fiscal 2001 consisted of a base salary,
performance bonus and equity-based long-term incentive compensation in the form
of incentive and/or nonstatutory stock options. Since options granted under the
1995 Stock Plan and the 1999 Stock Incentive Plan generally vest over a two- to
four-year period, option awards encourage the holders to improve the
profitability and shareholder value of Centra.
Base Salaries of Executive Officers and Chief Executive Officer
Compensation. The salaries of the executive officers are established annually
by evaluating requirements of the position, the contribution of the individual
executive with respect to Centra's performance and the executive's
responsibility, technical experience and future potential. Base salaries of the
executive officers are generally adjusted annually in January to reflect
comparable executive salaries for comparably sized companies and to maintain
the objectives of the compensation policy noted above. In determining base
salaries, the compensation committee relies upon independent surveys of
companies in the industry to determine whether Centra's executive compensation
is in a competitive range for executives within Centra's industry. The total
cash compensation (including base salary and bonus) of Leon Navickas, Centra's
Chief Executive Officer, was $306,250 for fiscal 2001. This represented a
decrease of approximately 12.5% from fiscal 2000. Mr. Navickas also received
200,000 options to purchase Common Stock at the then-current fair market value
of $4.13 per share. Mr. Navickas's fiscal 2001 compensation was based on the
financial performance of Centra in 2001, as well as execution against Centra's
2001 business plan.
Long-Term Incentive Compensation. One of Centra's goals is the enhancement
of shareholder value. The principal incentive tool we use to achieve this goal
is awarding to key employees options to purchase common stock. Centra's stock
option plans are long-term plans designed to link executive rewards to
shareholder value over time. Stock options granted typically have a term of 10
years and vest in 16 quarterly installments over a period of four years from
the date of grant. In fiscal 2001, Centra granted long-term incentive
compensation in the form of incentive and nonstatutory stock options under the
1999 Stock Incentive Plan to Centra's executive officers. These grants included
options granted to Messrs. Navickas, Mark, Johnson and Gruttadauria and Lesser
to purchase up to 200,000, 200,000, 70,000, 50,000 and 50,000 shares of common
stock, respectively. See "Option Grants in Last Fiscal Year" at page 7.
David Barrett
Richard D'Amore
10
AUDIT COMMITTEE REPORT
The audit committee consists of David Barrett, Richard D'Amore and Robert E.
Hult, three non-employee directors. All of the members of the audit committee
are "independent" of Centra and its management, as that term is defined in Rule
4200(a)(15) of the National Association of Securities Dealers, Inc.'s listing
standards.
The primary purposes of the audit committee are (i) to make such
examinations as are necessary to monitor Centra's financial reporting and its
internal and external audits and Centra's process for compliance with laws and
regulations, (ii) to provide to the board of directors the results of its
examinations and recommendations derived therefrom, (iii) to propose to the
board of directors improvements in internal accounting controls, (iv) to
propose independent auditors to the board of directors and (v) to provide to
the board of directors such additional information and materials as it may deem
necessary to make the board aware of significant financial matters that require
board attention. Management has the primary responsibility for Centra's
financial statements and the reporting process, including the systems of
internal controls. Centra's independent auditors are responsible for auditing
the financial statements and expressing an opinion on the conformity of those
audited financial statements with generally accepted accounting principles.
In fulfilling its oversight responsibilities, the audit committee discussed
with Arthur Andersen LLP ("Arthur Andersen"), Centra's independent auditors for
fiscal 2001, the overall scope and plans for Arthur Andersen's audit of
Centra's financial statements for fiscal 2001. The audit committee met with
Arthur Andersen, with and without management present, to discuss the results of
Arthur Andersen's examinations, Arthur Andersen's evaluations of Centra, its
internal controls, and the overall quality of Centra's financial reporting. The
audit committee held four meetings during fiscal 2001.
The audit committee reviewed Centra's audited financial statements with
management and Arthur Andersen. The audit committee discussed with Arthur
Andersen the matters required to be discussed by Statement of Auditing
Standards No. 61, including a discussion of Arthur Andersen's judgments as to
the quality, not just the acceptability, of Centra's accounting principles and
such other matters as are required to be discussed with the audit committee
under generally accepted auditing standards. In addition, the audit committee
received from Arthur Andersen the written disclosures and the letter required
by Independence Standards Board Standard No. 1 and discussed these documents
with Arthur Andersen, as well as other matters related to Arthur Andersen's
independence from Centra and its management.
Based on the reviews and discussions referred to above and subject to the
limitations on its role and responsibilities referred to above and in the audit
committee charter, the audit committee recommended to the board of directors,
and the board approved, that the Company's audited financial statements be
included in its Annual Report on Form 10-K for the year ended December 31, 2001
for filing with the SEC.
Richard D'Amore
David Barrett
Robert E. Hult
11
RELATED PARTY TRANSACTION
In 2001, we paid employee recruitment fees of approximately $133,750 to
Lynx, Inc., an entity that is owned and operated by the spouse of Leon
Navickas, our Chairman and Chief Executive Officer.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative total shareholder return on Centra's common stock, based on the
market price of Centra's common stock with the total shareholder return of
companies included within the Nasdaq Stock Market Index and the Business
Software and Services Index published by Media General Financial Services,
Inc., for the period commencing February 3, 2000 and ending December 31, 2001.
The calculation of total cumulative shareholder return assumes a
$100 investment in Centra's common stock, the Nasdaq Stock Market Index and the
Business Software and Services Index published by Media General Financial
Services, Inc. on February 3, 2000, the date of our initial public offering,
and further assumes the reinvestment of any dividends. We paid no cash
dividends in the periods shown.
Cumulative Total Return
Compared Among Centra Common Stock,
Nasdaq Stock Market Index
and Business Software and Services Index
[CHART]
CENTRA SOFTWARE, INC. MG GROUP INDEX NASDAQ MARKET INDEX
2/3/2000 100.00 100.00 100.00
12/31/2000 11.65 25.40 62.58
12/31/2001 24.06 17.14 49.88
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on May 15, 2002, there were issued and outstanding
25,650,791 shares of common stock. The closing price of Centra's common stock
on May 15, 2002, as reported by the Nasdaq Stock Market, was $3.17 per share.
Principal Stockholders
The following table sets forth information about the beneficial ownership of
our outstanding common stock on April 30, 2002 by: (i) each person or entity
who is known by us to own beneficially more than five percent of our common
stock; (ii) each of the executive officers; (iii) each of our directors; and
(iv) all of our executive officers and directors as a group.
Number of Shares Percentage of
Beneficially Owned Outstanding
------------------------------ Shares
Outstanding Right to Total Beneficially
Shares Acquire Number Owned(1)
----------- -------- --------- -------------
GeoCapital LLC(2)........................................ 2,241,825 -- 2,241,825 8.8
825 Third Avenue
New York, NY 10022
Leon Navickas............................................ 1,785,000 362,500 2,147,500(3) 8.3
Kern Capital Management LLC and persons filing jointly(4) 1,596,100 -- 1,596,100 6.3
825 Third Avenue
New York, NY 10022
Anthony J. Mark.......................................... 507,384 315,821 823,205(5) 3.2
Joseph M. Gruttadauria................................... 243,834 84,571 328,405(6) 1.3
Stephen A. Johnson....................................... 87,293 79,161 166,454(7) 0.7
Richard D'Amore.......................................... 93,018 12,500 105,518 0.4
David Barrett............................................ 22,500 18,124 40,624 0.2
Robert E. Hult........................................... -- 12,500 12,500 0.0
All executive officers and directors as a group (seven
persons)(8)............................................ 2,739,029 886,582 3,625,611 13.7
--------
* Less than one percent.
(1)In accordance with SEC rules, beneficial ownership includes any shares as to
which a person or entity has sole or shared voting power or investment power
and any shares as to which the person or entity has the right to acquire
beneficial ownership within 60 days after April 30, 2002 through the
exercise of any stock option. Except as noted, we believe that the persons
named in the table have sole voting and investment power with respect to the
shares of common stock set forth opposite their names. Percentage of
beneficial ownership is based on 25,485,306 shares of common stock
outstanding as of April 30, 2002. All shares included under "Right to
Acquire" represent shares subject to outstanding stock options that are
exercisable within 60 days of the date of this table as well as shares
subject to options under the Company's Employee Stock Purchase Plan that
were purchased on May 1, 2002. The address of each officer and director
listed is in care of Centra Software, Inc., 430 Bedford Street, Lexington,
Massachusetts 02420.
(2)The information is based on an amended Schedule 13G filed by GeoCapital, LLC
with the Securities and Exchange Commission on February 12, 2002. The report
states that GeoCapital, LLC is an investment adviser and has sole
dispositive power with respect to the securities identified.
(3)Includes 53,000 shares held of record by Trustees of the Navickas Education
Trust 1997 and 362,500 shares subject to outstanding stock options that are
exercisable within 60 days of the date of this table.
(4)The information is based on a Schedule 13G filed jointly by Kern Capital
Management LLC, Robert E. Kern, Jr., and David G. Kern with the Securities
and Exchange Commission on February 14, 2002. The report states that Messrs.
Kern are the controlling members of Kern Capital Management LLC and may be
13
deemed to be the beneficial owners of, or to share the power to direct the
voting or disposition of, the securities identified. Messrs. Kern expressly
disclaim beneficial ownership of the securities identified.
(5)Includes 312,500 shares subject to outstanding stock options that are
exercisable within 60 days of the date of this table, 3,321 shares subject
to options under the Company's Employee Stock Purchase Plan that were
purchased on May 1, 2002 and 18,750 "restricted" shares that were acquired
upon early exercise of stock options that remain subject to repurchase by
the Company at the original option price and subject to the same vesting
rates as provided in the original option agreement.
(6)Includes 81,250 shares subject to outstanding stock options that are
exercisable within 60 days of the date of this table, 3,321 shares subject
to options under the Company's Employee Stock Purchase Plan that were
purchased on May 1, 2002 and 7,031 "restricted" shares that were acquired
upon early exercise of stock options that remain subject to repurchase by
the Company at the original option price and subject to the same vesting
rates as provided in the original option agreement.
(7)Includes 76,125 shares subject to outstanding stock options that are
exercisable within 60 days of the date of this table, 3,036 shares subject
to options under the Company's Employee Stock Purchase Plan that were
purchased on May 1, 2002 and 8,907 "restricted" shares that were acquired
upon early exercise of stock options that remain subject to repurchase by
the Company at the original option price and subject to the same vesting
rates as provided in the original option agreement.
(8)See Notes 3 and 5-7.
1999 Stock Incentive Plan
The 1999 Stock Incentive Plan (the "1999 Plan") was adopted by the board of
directors in October 1999 and approved by our stockholders in November 1999. We
have reserved a total of 5,100,000 shares of common stock for issuance under
the 1999 Plan, as amended. As of December 31, 2001, options to purchase a total
of 4,324,656 shares of common stock were outstanding under the 1999 Plan. In
May 2002, the board adopted an amendment to the 1999 Plan to increase the total
number of shares of common stock that may be issued pursuant to awards under
the plan by 1,000,000, to 6,100,000. Set forth below is a summary description
of the 1999 Stock Incentive Plan, as proposed to be amended and restated.
General Information; Number of Shares Issuable. The 1999 Plan authorizes
the grant of (i) options to purchase Common Stock intended to qualify as
incentive stock options ("Incentive Options"), as defined in Section 422 of the
Code, (ii) options that do not so qualify ("Nonstatutory Stock Options," and
together with Incentive Options, "Options"), (iii) rights to purchase
restricted stock, the terms and conditions of which are determined by the
Committee ("Restricted Stock Awards") as well as rights to purchase stock
without restrictions ("Unrestricted Stock Awards," and together with Restricted
Stock Awards, "Stock Awards"), (iv) rights to receive cash payments based on or
measured by appreciation in the market price of the Common Stock ("Stock
Appreciation Rights") and (v) awards entitling the recipient to acquire shares
of Common Stock upon the attainment of specified performance goals
("Performance Share Awards," and together with Incentive Options, Nonstatutory
Stock Options, Stock Awards, and Stock Appreciation Rights, "Awards"). If the
proposed amendment is approved by the stockholders, then up to 6,100,000 shares
of common stock (subject to adjustment upon certain changes in the
capitalization of the Company) may be issued in total pursuant to Awards
granted under the 1999 Plan.
Eligibility. Awards may be granted under the 1999 Plan to officers,
directors, employees and consultants. As of April 30, 2001, three non-employee
directors, four officers and approximately 260 non-officer employees were
eligible to participate in the 1999 Plan.
Administration of the 1999 Plan. The 1999 Plan is administered by a
committee (the "Committee") of the board of directors consisting of at least
two (2) members who qualify as "outside directors" under Section 162(m) of the
Internal Revenue Code. Currently, our Compensation Committee is acting as the
Committee to administer the 1999 Plan. The Committee selects the individuals to
whom Awards are granted and determines the terms of each Award, subject to the
provisions of the 1999 Plan.
14
Incentive Options and Nonstatutory Stock Options. Awards of Options under
the 1999 Plan may be made to any eligible person. No Option may extend for more
than ten years from the date of grant (five years in the case of an optionee
who owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any parent or subsidiary
("greater-than-ten-percent-stockholders")). The exercise price of Incentive
Options granted under the 1999 Plan must be at least equal to the fair market
value of the common stock on the date of grant (110% of fair market value in
the case of a greater-than-ten-percent-stockholder). The last sale price of the
common stock on May 15, 2002, as reported by the Nasdaq Stock Market, was
$3.17. The aggregate fair market value (determined at the time of grant) of
shares issuable pursuant to Incentive Options that first become exercisable by
an employee or officer in any calendar year may not exceed one hundred thousand
dollars ($100,000). Incentive Options are non-transferable except by will or by
the laws of descent or distribution and are exercisable, during the optionee's
lifetime, only by the optionee.
The Committee will set the exercise price for Nonstatutory Stock Options at
the time of grant. A Nonstatutory Stock Option will be transferable to the
extent permitted under the option agreement governing such Nonstatutory Stock
Option. No Nonstatutory Stock Options may extend for more than ten years from
the date of grant.
Options held by employees generally expire (i) 90 days after termination of
the optionee's employment with the Company for any reason other than death or
disability, (ii) two years following the optionee's termination of employment
with the Company by reason of death, or (iii) one year following the optionee's
termination of employment with the Company by reason of disability. In all
other cases, the Committee has the discretion to establish the expiration date.
Payment of the exercise price of the shares subject to the Option may be made
(i) in cash at the time the Option is exercised or (ii) at the discretion of
the Committee, either at the time of grant or exercise of the Option (a) by
delivery to the Company of shares of common stock of the Company, (b) according
to a deferred payment or other arrangement (which may include, without limiting
the generality of the foregoing, the use of other common stock of the Company)
with the person to whom the Option is granted or to whom the Option is
transferred or (c) in any other form of legal consideration that may be
acceptable to the Committee on terms determined by the Committee.
Stock Awards. The Committee may grant Restricted Stock Awards to any
eligible person, entitling the recipient to acquire, for a purchase price
determined by the Committee, shares of stock subject to such restrictions and
conditions as the Committee may determine at the time of grant, including
continued employment and/or achievement of pre-established performance goals
and objectives. The purchase price of stock acquired pursuant to a restricted
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Committee, according to a deferred
payment or other arrangement with the person to whom the stock is sold; or
(iii) in any other form of legal consideration that may be acceptable to the
Committee in its discretion on terms determined by the Committee. Shares of
common stock sold or awarded under a Restricted Stock Award may, but need not,
be subject to a repurchase option in favor of the Company in accordance with a
vesting schedule to be determined by the Committee. The Committee may also
grant or sell to any eligible person shares of common stock free of any
restrictions under the 1999 Plan in an Unrestricted Stock Award at a purchase
price determined by the Committee.
Performance Share Awards. The Committee may award Performance Share Awards
to any eligible person. Each Performance Share Award shall be in such form and
shall contain such terms and conditions as the Committee shall deem
appropriate, and shall entitle the recipient to acquire shares of common stock
upon the attainment of specified performance goals.
Stock Appreciation Rights. Each stock appreciation right shall entitle the
holder upon exercise to an appreciation distribution equal in amount to the
product of (A) the excess fair market value, on the date of exercise, over the
exercise price per share specified in such stock appreciation right agreement,
multiplied by (B) the number of shares of stock for which such stock
appreciation right shall be exercised. Stock appreciation rights may be
exercised for common stock, cash or a combination thereof as determined by the
Committee and as set forth in the stock appreciation right agreement.
15
Other Terms. Except as otherwise provided in the 1999 Plan, no rights under
an Award shall be assignable by any participant under the 1999 Plan, either
voluntarily or by operation of law, except by will or by the laws of descent
and distribution, and shall be exercisable during the lifetime of the person to
whom the rights are granted only by such person. The 1999 Plan provides that
upon a change in control of the Company (as defined in the plan), the Committee
may (i) accelerate the vesting schedule of any Awards, (ii) cancel Awards,
provided that notice and an opportunity to exercise vested Awards is provided
to holders, or (iii) allow Awards to remain outstanding, provided that upon
exercise of Awards, holder receive consideration in the form of stock,
securities, cash or other property as the holders of shares of stock of the
Company received in connection with the change of control. The Board may amend
the 1999 Plan at any time, provided that no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary for the 1999 Plan to satisfy the requirements of Section 422 of
the Code, Section 16b-3 of the Securities Act of 1933, as amended, and the
listing or eligibility for quotation requirements of the Nasdaq Stock Market or
any similar organization or of any national securities exchange upon which
shares of the Company's common stock are listed or eligible for trading. The
board of directors may terminate or suspend the 1999 Plan at any time. Unless
sooner terminated, the 1999 Plan will terminate on October 13, 2009.
New Plan Benefits
The Committee may grant Awards under the 1999 Plan on a discretionary basis.
Therefore, the Company is unable to determine the dollar value and number of
options which will be received by or allocated to (i) any of the executive
officers, (ii) the current executive officers, as a group, (iii) the current
directors who are not executive officers, as a group, (iv) each nominee for
election as a director and (v) the employees who are not executive officers, as
a group, as a result of the adoption of the amendment to the 1999 Plan. If the
proposed amendment had been in effect during 2001, it would not have affected
the determination of the number of options received by or allocated to
participants in 2001.
Federal Income Tax Information with Respect to the 1999 Plan. The grantee
of a Nonstatutory Stock Option ordinarily recognizes no income for federal
income tax purposes on the grant thereof. On the exercise of a Nonstatutory
Stock Option, the difference between the fair market value of the underlying
shares of common stock on the exercise date and the option exercise price is
treated as compensation to the holder of the option taxable as ordinary income
in the year of exercise, and such fair market value becomes the basis for the
underlying shares which will be used in computing any capital gain or loss upon
disposition of such shares. Subject to certain limitations, the Corporation may
deduct for the year of exercise an amount equal to the amount recognized by the
option holder as ordinary income upon exercise of a Nonstatutory Stock Option.
The grantee of an Incentive Stock Option recognizes no income for federal
income tax purposes on the grant thereof. Except as described below with
respect to the alternative minimum tax, there is no tax upon exercise of an
Incentive Option. If no disposition of shares acquired upon exercise of the
Incentive Stock Option is made by the option holder within two years from the
date of the grant of the Incentive Stock Option or within one year after
exercise of the Incentive Option, any gain realized by the option holder on the
subsequent sale of such shares is treated as a long-term capital gain for
federal income tax purposes. If the shares are sold prior to the expiration of
such periods, the difference between the lesser of the value of the shares at
the date of exercise or at the date of sale and the exercise price of the
Incentive Stock Option is treated as compensation to the employee taxable as
ordinary income and the excess gain, if any, is treated as capital gain (which
will be long-term capital gain if the shares are held for more than one year).
The excess of the fair market value of the underlying shares over the option
price at the time of exercise of an Incentive Stock Option will constitute an
item of tax preference for purposes of the alternative minimum tax. Taxpayers
who incur the alternative minimum tax are allowed a credit, which may be
carried forward indefinitely to be used as a credit against the regular tax
liability in a later year; however, the alternative minimum tax credit can not
reduce the regular tax below the alternative minimum tax for that carryover
year. In connection with the sale of the shares covered by Incentive Options,
the Corporation is allowed a deduction for tax purposes only to the extent, and
at the time, the option holder receives ordinary income (for example, by reason
of the sale of shares by the holder of an Incentive Stock Option within
16
two years after the date of the granting of the Incentive Stock Option or one
year after the exercise of the Incentive Option), subject to certain
limitations on the deductibility of compensation paid to executives.
Full Text of 1999 Plan. The above summary description of the 1999 Stock
Incentive Plan is qualified by and subject to the plan itself, the full text of
which, as proposed to be amended and restated, is set forth as Appendix A to
this proxy statement.
We intend to file, as soon as practicable, a Registration Statement on Form
S-8 covering the additional shares of common stock issuable under the 1999 Plan.
INDEPENDENT ACCOUNTANTS
The board of directors is currently in the process of selecting a firm of
independent certified public accountants to serve as Centra's independent
auditors for the fiscal year ending December 31, 2002. We have been advised
that a representative of Arthur Andersen LLP will be present at the 2002 annual
meeting. This representative will have the opportunity to make a statement if
he desires and will be available to respond to appropriate questions presented
at the meeting.
Audit Fees
The aggregate fees for professional services rendered by Arthur Andersen LLP
in connection with their audit of our annual consolidated financial statements
for the year ended December 31, 2001 and review of the consolidated financial
statements included in our quarterly reports on Form 10-Q during fiscal 2001
was approximately $159,000.
All Other Fees
The aggregate fees for all other services rendered by Arthur Andersen LLP in
fiscal 2001 was approximately $189,850, including services in connection our
acquisition of MindLever.com, Inc., tax compliance and the audit of our 401(k)
plan.
SOLICITATION
We will pay all expenses incurred in connection with this solicitation of
proxies for the annual meeting. We will reimburse brokers, banks and other
nominees for their out-of-pocket expenses and other reasonable clerical
expenses incurred in obtaining instructions from beneficial owners of common
stock. In addition to the solicitation by mail, the board of directors,
officers and certain employees may make special solicitation of proxies in
certain instances, personally or by telephone. We expect that the expense of
any such special solicitation will be nominal. At present, we do not expect to
pay any compensation to any other person or firm in connection with the
solicitation of proxies for the annual meeting.
17
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials related to our
2003 annual meeting of stockholders, or special meeting in lieu thereof, must
be received by Centra at our executive offices no later than December 24, 2002.
Stockholder proposals must also comply with the requirements of Rule 14a-8
under the Securities Exchange Act of 1934.
In addition, our by-laws provide that a stockholder must give us written
notice not less than sixty days prior to the scheduled annual meeting
describing any proposal to be brought before such meeting, even if such item is
not to be included in Centra's proxy statement relating to such meeting. Such
procedural requirements are fully set forth in Section 3 of our by-laws.
MISCELLANEOUS
The board of directors does not intend to present to the annual meeting any
business other than the proposals listed herein, and the board was not aware, a
reasonable time before mailing this proxy statement to stockholders, of any
other business that may be properly presented for action at the annual meeting.
If any other business should come before the annual meeting, the persons
present will have discretionary authority to vote the shares they own or
represent by proxy in accordance with their judgment.
AVAILABLE INFORMATION
Stockholders of record on May 15, 2002 will receive a copy of this proxy
statement and our annual report to stockholders, which contains detailed
financial information about us. The annual report to stockholders is not
incorporated herein and is not deemed a part of this proxy statement. We will
mail, without charge, a copy of our Annual Report on Form 10-K (excluding
exhibits) to any stockholder solicited hereby who requests it in writing.
Please submit any such written request to: Investor Relations, Centra Software,
Inc., 430 Bedford Street, Lexington, MA 02420.
18
APPENDIX A
CENTRA SOFTWARE, INC.
AMENDED AND RESTATED
1999 STOCK INCENTIVE PLAN
SECTION 1. General Purpose of the Plan; Definitions
The name of the plan is the Centra Software, Inc. 1999 Stock Incentive Plan
(the "Plan"). The purpose of the Plan is to encourage and enable officers,
directors and employees of Centra Software, Inc. (the "Company") and its
Subsidiaries and other persons to acquire a proprietary interest in the
Company. It is anticipated that providing such persons with a direct stake in
the Company's welfare will assure a closer identification of their interests
with those of the Company and its stockholders, thereby stimulating their
efforts on the Company's behalf and strengthening their desire to remain with
the Company.
The following terms shall be defined as set forth below:
"Award" or "Awards", except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Statutory
Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Performance
Share Awards and Stock Appreciation Rights.
"Board" means the Board of Directors of the Company.
"Cause" means (i) any material breach by the participant of any agreement to
which the participant and the Company are both parties, and (ii) any act or
omission justifying termination of the participant's employment for cause, as
determined by the Committee.
"Change of Control" shall have the meaning set forth in Section 15.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Conditioned Stock Award" means an Award granted pursuant to Section 6.
"Committee" shall have the meaning set forth in Section 2.
"Disability" means disability as set forth in Section 22(e)(3) of the Code.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.
"Eligible Person" shall have the meaning set forth in Section 4.
"Fair Market Value" on any given date means the closing price per share of
the Stock on such date as reported by a nationally recognized stock exchange,
or, if the Stock is not listed on such an exchange, as reported by NASDAQ, or,
if the Stock is not quoted on NASDAQ, the fair market value of the Stock as
determined by the Committee.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
"Non-Statutory Stock Option" means any Stock Option that is not an Incentive
Stock Option.
"Normal Retirement" means retirement from active employment with the Company
and its Subsidiaries in accordance with the retirement policies of the Company
and its Subsidiaries then in effect.
A-1
"Outside Director" means any director who (i) is not an employee of the
Company or of any "affiliated group," as such term is defined in Section
1504(a) of the Code, which includes the Company (an "Affiliate"), (ii) is not a
former employee of the Company or any Affiliate who is receiving compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the Company's or any Affiliate's taxable year, (iii) has not been an
officer of the Company or any Affiliate and (iv) does not receive remuneration
from the Company or any Affiliate, either directly or indirectly, in any
capacity other than as a director. "Outside Director" shall be determined in
accordance with Section 162(m) of the Code and the Treasury regulations issued
thereunder.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means an Award granted pursuant to Section 8.
"Stock" means the Common Stock, $.001 par value per share, of the Company,
subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means an Award granted pursuant to Section 9.
"Subsidiary" means a subsidiary as defined in Section 424 of the Code.
"Unrestricted Stock Award" means an award granted pursuant to Section 7.
SECTION 2. Administration of Plan; Committee Authority to Select Participants
and Determine Awards
(a) Committee. The Plan shall be administered by a committee of the Board
(the "Committee") consisting of not less than two (2) Outside Directors, but
the authority and validity of any act taken or not taken by the Committee shall
not be affected if any person administering the Plan is not an "Outside
Director." Except as specifically reserved to the Board under the terms of the
Plan, the Committee shall have full and final authority to operate, manage and
administer the Plan on behalf of the Company. Action by the Committee shall
require the affirmative vote of a majority of all members thereof.
(b) Powers of Committee. The Committee shall have the power and authority
to grant and modify Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the persons to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Statutory Stock Options, Restricted Stock,
Unrestricted Stock, Performance Shares and Stock Appreciation Rights, or any
combination of the foregoing, granted to any one or more participants;
(iii) to determine the number of shares to be covered by any Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards; provided, however, that no such action shall adversely affect rights
under any outstanding Award without the participant's consent;
(v) to accelerate the exercisability or vesting of all or any portion of
any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend the period
in which any outstanding Stock Option or Stock Appreciation Right may be
exercised;
(vii) to determine whether, to what extent, and under what circumstances
Stock and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the participant and whether and
to what extent the Company shall pay or credit amounts equal to interest (at
rates determined by the Committee) or dividends or deemed dividends on such
deferrals; and
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(viii) to adopt, alter and repeal such rules, guidelines and practices
for administration of the Plan and for its own acts and proceedings as it
shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all
determinations it deems advisable for the administration of the Plan; to
decide all disputes arising in connection with the Plan; and to otherwise
supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
SECTION 3. Shares Issuable under the Plan; Mergers; Substitution
(a) Shares Issuable. The maximum number of shares of Stock with respect to
which Awards (including Stock Appreciation Rights) may be granted under the
Plan shall be six million one hundred thousand (6,100,000). For purposes of
this limitation, the shares of Stock underlying any Awards which are forfeited,
cancelled, reacquired by the Company or otherwise terminated (other than by
exercise) shall be added back to the shares of Stock with respect to which
Awards may be granted under the Plan so long as the participants to whom such
Awards had been previously granted received no benefits of ownership of the
underlying shares of Stock to which the Awards related. Subject to such overall
limitation, any type or types of Award may be granted with respect to shares,
including Incentive Stock Options. Shares issued under the Plan may be
authorized but unissued shares or shares reacquired by the Company.
(b) Limitation on Awards. In no event may any Plan participant be granted
Awards (including Stock Appreciation Rights) with respect to more than five
hundred thousand (500,000) shares of Stock in any calendar year. The number of
shares of Stock relating to an Award granted to a Plan participant in a
calendar year that is subsequently forfeited, cancelled or otherwise terminated
shall continue to count toward the foregoing limitation in such calendar year.
In addition, if the exercise price of an Award is subsequently reduced, the
transaction shall be deemed a cancellation of the original Award and the grant
of a new one so that both transactions shall count toward the maximum shares
issuable in the calendar year of each respective transaction.
(c) Stock Dividends, Mergers, etc. In the event that after approval of the
Plan by the stockholders of the Company in accordance with Section 17, the
Company effects a stock dividend, stock split or similar change in
capitalization affecting the Stock, the Committee shall make appropriate
adjustments in (i) the number and kind of shares of stock or securities with
respect to which Awards may thereafter be granted (including without limitation
the limitations set forth in Sections 3(a) and (b) above), (ii) the number and
kind of shares remaining subject to outstanding Awards, and (iii) the option or
purchase price in respect of such shares. In the event of any merger,
consolidation, dissolution or liquidation of the Company, the Committee in its
sole discretion may, as to any outstanding Awards, make such substitution or
adjustment in the aggregate number of shares reserved for issuance under the
Plan and in the number and purchase price (if any) of shares subject to such
Awards as it may determine and as may be permitted by the terms of such
transaction, or accelerate, amend or terminate such Awards upon such terms and
conditions as it shall provide (which, in the case of the termination of the
vested portion of any Award, shall require payment or other consideration which
the Committee deems equitable in the circumstances), subject, however, to the
provisions of Section 15.
(d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances. Shares which may be delivered under
such substitute awards may be in addition to the maximum number of shares
provided for in Section 3(a).
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SECTION 4. Eligibility
Awards may be granted to officers, directors and employees of the Company or
its Subsidiaries ("Eligible Persons").
SECTION 5. Stock Options
The Committee may grant to Eligible Persons options to purchase stock.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Statutory Stock Options. Unless otherwise so designated, an Option shall
be a Non-Statutory Stock Option. To the extent that any option does not qualify
as an Incentive Stock Option, it shall constitute a Non-Statutory Stock Option.
No Incentive Stock Option shall be granted under the Plan after the tenth
anniversary of the earlier of (i) the date of adoption of the Plan by the Board
or (ii) the date on which the Plan is approved by the stockholders as set forth
in Section 17.
The Committee in its discretion may determine the effective date of Stock
Options, provided, however, that grants of Incentive Stock Options shall be
made only to persons who are, on the effective date of the grant, employees of
the Company or any Subsidiary. Stock Options granted pursuant to this Section
5(a) shall be subject to the following terms and conditions and the terms and
conditions of Section 13 and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(a) Exercise Price. The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5(a) shall be determined by the
Committee at the time of grant but shall be, in the case of Incentive Stock
Options, not less than one hundred percent (100%) of Fair Market Value on the
date of grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation and an Incentive Stock Option
is granted to such employee, the option price shall be not less than one
hundred ten percent (110%) of Fair Market Value on the grant date.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
(10) years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than ten percent (10%) of the combined voting power of all classes
of stock of the Company or any Subsidiary or parent corporation and an
Incentive Stock Option is granted to such employee, the term of such option
shall be no more than five (5) years from the date of grant.
(c) Exercisability; Rights of a Stockholder. Stock Options shall become
vested and exercisable at such time or times, whether or not in installments,
as shall be determined by the Committee at or after the grant date. The
Committee may at any time accelerate the exercisability of all or any portion
of any Stock Option. An optionee shall have the rights of a stockholder only as
to shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(d) Method of Exercise. Stock Options may be exercised in whole or in part,
by delivering written notice of exercise to the Company, specifying the number
of shares to be purchased. Payment of the purchase price may be made by one or
more of the following methods:
(i) in cash, by certified or bank check or other instrument acceptable to
the Committee;
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(ii) in the form of shares of Stock that are not then subject to
restrictions, if permitted by the Committee, in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the exercise date;
(iii) by the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable to
the Company to pay the purchase price; provided that in the event the
optionee chooses to pay the purchase price as so provided, the optionee and
the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure. The Company need not act upon such
exercise notice until the Company receives full payment of the exercise
price; or
(iv) by any other means (including, without limitation, by delivery of a
promissory note of the optionee payable on such terms as are specified by
the Committee) which the Committee determines are consistent with the
purpose of the Plan and with applicable laws and regulations.
The delivery of certificates representing shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the Optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the
Stock Option or imposed by applicable law.
(e) Non-transferability of Options. Except as the Committee may provide
with respect to a Non-Statutory Stock Option, no Stock Option shall be
transferable other than by will or by the laws of descent and distribution and
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee.
(f) Annual Limit on Incentive Stock Options. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Stock with
respect to which incentive stock options granted under this Plan and any other
plan of the Company or its Subsidiaries become exercisable for the first time
by an optionee during any calendar year shall not exceed $100,000.
(g) Form of Settlement. Shares of Stock issued upon exercise of a Stock
Option shall be free of all restrictions under the Plan, except as otherwise
provided in this Plan.
SECTION 6. Restricted Stock Awards
(a) Nature of Restricted Stock Award. The Committee in its discretion may
grant Restricted Stock Awards to any Eligible Person, entitling the recipient
to acquire, for a purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Stock"), including continued employment and/or
achievement of pre-established performance goals and objectives.
(b) Acceptance of Award. A participant who is granted a Restricted Stock
Award shall have no rights with respect to such Award unless the participant
shall have accepted the Award within sixty (60) days (or such shorter date as
the Committee may specify) following the award date by making payment to the
Company of the specified purchase price of the shares covered by the Award and
by executing and delivering to the Company a written instrument that sets forth
the terms and conditions applicable to the Restricted Stock in such form as the
Committee shall determine.
(c) Rights as a Stockholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a stockholder with respect to the
Restricted Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Restricted Award. Unless the
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Committee shall otherwise determine, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company until such
shares are vested as provided in Section 6(e) below.
(d) Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability,
Normal Retirement and for Cause), the Company shall have the right, at the
discretion of the Committee, to repurchase shares of Restricted Stock with
respect to which conditions have not lapsed at their purchase price, or to
require forfeiture of such shares to the Company if acquired at no cost, from
the participant or the participant's legal representative. The Company must
exercise such right of repurchase or forfeiture within ninety (90) days
following such termination of employment (unless otherwise specified in the
written instrument evidencing the Restricted Stock Award).
(e) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." The Committee at any time may accelerate such date or
dates and otherwise waive or, subject to Section 13, amend any conditions of
the Award.
(f) Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Restricted Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.
SECTION 7. Unrestricted Stock Awards
(a) Grant or Sale of Unrestricted Stock. The Committee in its discretion
may grant or sell to any Eligible Person shares of Stock free of any
restrictions under the Plan ("Unrestricted Stock") at a purchase price
determined by the Committee. Shares of Unrestricted Stock may be granted or
sold as described in the preceding sentence in respect of past services or
other valid consideration.
(b) Restrictions on Transfers. The right to receive unrestricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered, other than
by will or the laws of descent and distribution.
SECTION 8. Performance Share Awards
Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any Eligible
Person. The Committee in its discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and
all other limitations and conditions applicable to the awarded Performance
Shares.
SECTION 9. Stock Appreciation Rights
The Committee in its discretion may grant Stock Appreciation Rights to any
Eligible Person (i) alone or (ii) simultaneously with the grant of a Stock
Option and in conjunction therewith or in the alternative thereto. A Stock
Appreciation Right shall entitle the participant upon exercise thereof to
receive from the Company, upon written request to the Company at its principal
offices (the "Request"), a number of shares of Stock (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Committee in its sole discretion), an amount of cash, or any
combination of Stock and cash, as specified in the Request (but
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subject to the approval of the Committee in its sole discretion, at any time up
to and including the time of payment, as to the making of any cash payment),
having an aggregate Fair Market Value equal to the product of (i) the excess of
Fair Market Value, on the date of such Request, over the exercise price per
share of Stock specified in such Stock Appreciation Right or its related
Option, multiplied by (ii) the number of shares of Stock for which such Stock
Appreciation Right shall be exercised. Notwithstanding the foregoing, the
Committee may specify at the time of grant of any Stock Appreciation Right that
such Stock Appreciation Right may be exercisable solely for cash and not for
Stock.
SECTION 10. Termination of Stock Options and Stock Appreciation Rights
(a) Incentive Stock Options:
(i) Termination by Death. If any participant's employment by the Company
and its Subsidiaries terminates by reason of death, any Incentive Stock
Option owned by such participant may thereafter be exercised to the extent
exercisable at the date of death, by the legal representative or legatee of
the participant, for a period of two (2) years (or such longer period as the
Committee shall specify at any time) from the date of death, or until the
expiration of the stated term of the Incentive Stock Option, if earlier.
(ii) Termination by Reason of Disability or Normal Retirement.
(A) Any Incentive Stock Option held by a participant whose employment
by the Company and its Subsidiaries has terminated by reason of
Disability may thereafter be exercised, to the extent it was exercisable
at the time of such termination, for a period of one (1) year (or such
longer period as the Committee shall specify at any time) from the date
of such termination of employment, or until the expiration of the stated
term of the Option, if earlier.
(B) Any Incentive Stock Option held by a participant whose employment
by the Company and its Subsidiaries has terminated by reason of Normal
Retirement may thereafter be exercised, to the extent it was exercisable
at the time of such termination, for a period of ninety (90) days (or
such longer period as the Committee shall specify at any time) from the
date of such termination of employment, or until the expiration of the
stated term of the Option, if earlier.
(C) The Committee shall have sole authority and discretion to
determine whether a participant's employment has been terminated by
reason of Disability or Normal Retirement.
(D) Except as otherwise provided by the Committee at the time of
grant, the death of a participant during a period provided in this
Section 10(b) for the exercise of an Incentive Stock Option shall extend
such period for two (2) years from the date of death, subject to
termination on the expiration of the stated term of the Option, if
earlier.
(iii) Termination for Cause. If any participant's employment by the
Company and its Subsidiaries has been terminated for Cause, any Incentive
Stock Option held by such participant shall immediately terminate and be of
no further force and effect; provided, however, that the Committee may, in
its sole discretion, provide that such Option can be exercised for a period
of up to thirty (30) days from the date of termination of employment, or
until the expiration of the stated term of the Option, if earlier.
(iv) Other Termination. Unless otherwise determined by the Committee, if
a participant's employment by the Company and its Subsidiaries terminates
for any reason other than death, Disability, Normal Retirement or for Cause,
any Incentive Stock Option held by such participant may thereafter be
exercised, to the extent it was exercisable on the date of termination of
employment, for ninety (90) days (or such longer period as the Committee
shall specify at any time) from the date of termination of employment, or
until the expiration of the stated term of the Option, if earlier.
(b) Non-Statutory Stock Options and Stock Appreciation Rights. Any
Non-Statutory Stock Option or Stock Appreciation Right granted under the Plan
shall contain such terms and conditions with respect to its termination as the
Committee, in its discretion, may from time to time determine.
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SECTION 11. Tax Withholding
(a) Payment by Participant. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant.
(b) Payment in Shares. A Participant may elect, with the consent of the
Committee, to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to an Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due with respect to such Award, or (ii) transferring to the
Company shares of Stock owned by the participant with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
SECTION 12. Transfer, Leave of Absence, Etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; and
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 13. Amendments and Termination
The Board may at any time amend or discontinue the Plan and the Committee
may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially
granted under this Plan) for the purpose of satisfying changes in law or for
any other lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the holder's consent. However, no such
amendment, unless approved by the stockholders of the Company, shall be
effective if it would cause the Plan to fail to satisfy the incentive stock
option requirements of the Code
SECTION 14. Status of Plan
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the provision of the foregoing sentence.
SECTION 15. Change of Control Provisions
(a) Upon the occurrence of a Change of Control as defined in this Section 15:
(i) subject to the provisions of clause (iii) below, after the effective
date of such Change of Control, each holder of an outstanding Stock Option,
Restricted Stock Award, Performance Share Award or Stock
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Appreciation Right shall be entitled, upon exercise of such Award, to
receive, in lieu of shares of Stock (or consideration based upon the Fair
Market Value of Stock), shares of such stock or other securities, cash or
property (or consideration based upon shares of such stock or other
securities, cash or property) as the holders of shares of Stock received in
connection with the Change of Control;
(ii) the Committee may accelerate the time for exercise of, and waive all
conditions and restrictions on, each unexercised and unexpired Stock Option,
Restricted Stock Award, Performance Share Award and Stock Appreciation
Right, effective upon a date prior or subsequent to the effective date of
such Change of Control, specified by the Committee; or
(iii) each outstanding Stock Option, Restricted Stock Award, Performance
Share Award and Stock Appreciation Right may be cancelled by the Committee
as of the effective date of any such Change of Control provided that (x)
notice of such cancellation shall be given to each holder of such an Award
and (y) each holder of such an Award shall have the right to exercise such
Award to the extent that the same is then exercisable or, in full, if the
Committee shall have accelerated the time for exercise of all such
unexercised and unexpired Awards, during the thirty (30) day period
preceding the effective date of such Change of Control.
(b) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person" becomes a "beneficial owner" (as such terms are defined
in Rule 13d-3 promulgated under the Securities and Exchange Act of 1934, as
amended) (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the combined voting power of the Company's
then outstanding securities; or
(ii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation or other entity, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than sixty-five percent (65%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
SECTION 16. General Provisions
(a) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring shares pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all applicable
securities laws and other legal and stock exchange requirements have been
satisfied. The Committee may require the placing of such stop orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including trusts, subject to
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stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan or any Award under the Plan does not confer upon any employee any
right to continued employment with the Company or any Subsidiary.
SECTION 17. Effective Date of Plan
The Plan shall become effective upon approval by the holders of a majority
of the shares of capital stock of the Company present or represented and
entitled to vote at a meeting of stockholders.
SECTION 18. Governing Law
This Plan shall be governed by, and construed and enforced in accordance
with, the substantive laws of the State of Delaware without regard to its
principles of conflicts of laws.
* * *
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CENTRA SOFTWARE, INC.
430 Bedford Street
Lexington, Massachusetts 02420
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 2002
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby constitute(s) and appoint(s) Leon Navickas,
Anthony J. Mark and Stephen A. Johnson, and each of them acting singly, as
proxies of the undersigned, each with full power to appoint his substitute, and
authorizes each of them, and each substitute so appointed, to represent and vote
all shares of Common Stock of Centra Software, Inc. (the "Company") held of
record by the undersigned at the close of business on May 15, 2002 at the Annual
Meeting of Stockholders of the Company to be held on Wednesday, June 26, 2002,
at the offices of Foley Hoag LLP, World Trade Center West, 155 Seaport
Boulevard, Boston, Massachusetts 02210, beginning at 10:00 a.m. local time, and
at any and all adjournments thereof. A stockholder wishing to vote in accordance
with the recommendation of the Board of Directors need only sign and date this
proxy and return it in the enclosed envelope.
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS 1
THROUGH 4 AND IN THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Centra Software, Inc.
Dear Shareholder:
Please take note of the important information enclosed with this proxy
ballot. The proposals which are discussed in detail in the enclosed proxy
materials require your immediate attention and approval.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the box on the proxy card to indicate how your shares shall
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders
to be held on June 26, 2002.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Centra Software, Inc.
- 2 -
Please Detach and Mail in the Envelope Provided
A [X] Please mark your votes as in this example.
UNLESS OTHERWISE SPECIFIED THIS PROXY WILL
BE VOTED "FOR" THE FOLLOWING ITEMS:
1. Election of Class III Nominees: FOR WITHHELD
Directors.
Leon Navickas [_] [_]
Robert Hult [_] [_]
FOR ALL NOMINEES EXCEPT AS NOTED BELOW:
--------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Amendment to the 1999 Stock Incentive Plan to
increase the number of shares of common stock
available for issuance by 1,000,000 to
6,100,000 shares. [_] [_] [_]
3. Adjournment of the meeting, if necessary, to
permit further solicitation of proxies if
there are not sufficient votes at the time
of the meeting to approve Proposal No. 2. [_] [_] [_]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
RECORD DATE SHARES _________
The undersigned hereby acknowledge(s) receipt of a copy
of the accompanying Notice of Annual Meeting of
Stockholders and of the Proxy Statement relating thereto,
and hereby revoke(s) any proxy or proxies heretofore
given. This proxy may be revoked at any time before it is
exercised.
HAS YOUR ADDRESS CHANGED?
DO YOU HAVE ANY COMMENTS?
---------------------------------------------------------
Shareholder sign here ________________________ Co-owner sign here ____________
Dated: _________________, 2002
Please be sure to sign and date this proxy. Please sign this proxy exactly as
your name appears on the books of the Company. Joint owners should each sign
personally. Trustees, custodians, and other fiduciaries should indicate the
capacity in which they sign, and where more than one name appears, each person
must sign. If the shareholder is a corporation, the signature should be that of
an authorized officer who should state his or her title.
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