Astea
International Inc.
240
Gibraltar Road
Horsham,
Pennsylvania 19044
---------------------------------
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON
MAY
5, 2006
To
the
Stockholders of Astea International Inc.:
The
Annual Meeting of Stockholders of Astea International Inc., a Delaware
corporation (the "Company"), will be held on Friday, May 5, 2006 at 10:00
a.m.,
local time, at the Company's headquarters at 240 Gibraltar Road, Horsham,
Pennsylvania 19044, for the following purposes:
1.
To
elect four (4) directors to serve until the next Annual Meeting of
Stockholders.
2.
To
approve the 2006 Stock Option Plan.
3. To
ratify
the selection of BDO Seidman LLP as independent auditors for the fiscal year
ending December 31, 2006.
4. To
transact such other business as may properly come before the meeting or any
adjournments thereof. Only stockholders of record at the close of business
on
March 31, 2006, the record date fixed by the Board of Directors of the Company,
are entitled to notice of and to vote at the meeting.
All
stockholders are cordially invited to attend the meeting in person. To assure
your representation at the meeting, however, you are urged to complete, sign,
date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
By
Order
of the Board of Directors of the Company
/s/
Zack B. Bergreen
Zack
B.
Bergreen
Chief
Executive Officer
Horsham,
Pennsylvania
April
3,
2006
WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
CARD IS MAILED IN THE UNITED STATES.
Astea
International Inc.
240
Gibraltar Road
Horsham,
Pennsylvania 19044
PROXY
STATEMENT
April
3,
2006
Proxies
in the form enclosed with this proxy statement, which were first mailed to
stockholders on or about April 3, 2006, are being solicited by the Board
of
Directors (the “Board of Directors”) of Astea International Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders
to be
held on Friday, May 5, 2006, at 10:00 a.m. local time, at the Company's
headquarters at 240 Gibraltar Road, Horsham, Pennsylvania 19044, or at any
adjournments thereof (the "Annual Meeting").
Only
stockholders of record at the close of business on March 31, 2006 (the "Record
Date") will be entitled to notice of and to vote at the Annual Meeting and
any
adjournments thereof. As of that date, 3,585,185 shares of common stock,
$.01
par value per share (the "Common Stock"), of the Company were issued and
outstanding. The holders of Common Stock are entitled to one vote per share
on
any proposal presented at the Annual Meeting. Stockholders may vote in person
or
by proxy. If the form of Proxy which accompanies this Proxy Statement is
executed and returned, it will be voted in accordance with the instructions
marked thereon. Execution of a proxy will not in any way affect a stockholder's
right to attend the Annual Meeting and vote in person. Any stockholder giving
a
proxy has the right to revoke it at any time before it is exercised, by (1)
filing with the Secretary of the Company, before the taking of the vote at
the
Annual Meeting, a written notice of revocation bearing a later date than
the
proxy, (2) duly executing a later-dated proxy relating to the same shares
and
delivering it to the Secretary of the Company before the taking of the vote
at
the Annual Meeting or (3) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
a revocation of a proxy).
Our
Bylaws provide that at any meeting of stockholders, the holders of a majority
of
the issued and outstanding shares of Common Stock present in person or by
proxy
constitute a quorum for the transaction of business. The election of directors
will be decided by a plurality of the votes of the shares cast, in person
or by
proxy, at the Annual Meeting. Accordingly, abstentions and broker non-votes
will
not affect the outcome of the election of directors. A broker non-vote occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power
for that proposal and has not received voting instructions from the beneficial
owner. On all other matters being submitted to stockholders, affirmative
vote of
a majority of the shares present in person or by proxy and entitled to vote
is
required for approval. An abstention with respect to any such proposal will
have
the same effect as a vote against such proposal. With respect to broker
non-votes, the shares will not be considered present at the meeting for the
proposal as to which authority was withheld. Consequently, broker non-votes
will
have the effect of reducing the number of affirmative votes required to approve
the proposal (but not the percentage), because they reduce the number of
shares
present at the meeting from which a majority is calculated.
The
persons named as proxies and attorneys-in-fact are officers of the Company.
All
properly executed proxies returned in time to be counted at the Annual Meeting
will be voted. In addition to the election of directors, the stockholders
will
consider and vote upon a proposal to approve the 2006 Stock Option Plan and
consider and vote upon a proposal to ratify the selection of auditors, as
further described in this proxy statement. Where a choice has been specified
on
the proxy with respect to the foregoing matters, the shares represented by
the
proxy will be voted in accordance with the specifications, and will be voted
FOR
the proposal if no specification is indicated.
The
Board
of Directors knows of no other matters to be presented at the Annual Meeting
other than as set forth in this proxy statement. If any other matter should
be
presented at the Annual Meeting (or any adjournments thereof) upon which
a vote
properly may be taken, shares represented by all proxies received by the
Board
of Directors will be voted with respect thereto in accordance with the judgment
of the persons named as proxies and attorneys-in-fact in the proxies, to
the
extent permitted by applicable law.
An
Annual
Report to Stockholders containing financial statements for the fiscal year
ended
December 31, 2005, is being mailed together with this proxy statement to
all
stockholders entitled to vote.
PROPOSAL
1
ELECTION
OF DIRECTORS
Nominees
In
accordance with the Company's By-Laws, the Board of Directors currently consists
of four (4) members - Zack B. Bergreen, Adrian Peters, Thomas J. Reilly,
Jr. and
Eric Siegel. Messrs. Peters, Reilly and Siegel are independent directors.
The
terms of the current directors will expire at the Annual Meeting. All directors
will hold office until their successors have been duly elected and qualified
or
until their earlier resignation or removal.
The
Board
of Directors has nominated and recommended Zack B. Bergreen, Adrian Peters,
Thomas J. Reilly, Jr. and Eric Siegel to be elected to hold office until
the
2007 Annual Meeting of Stockholders. The Board of Directors knows of no reason
why the director nominees should be unable or unwilling to serve, but if
any
director nominee should for any reason be unable or unwilling to serve, the
proxies will be voted for the election of such other person for the office
of
director as the Board of Directors may recommend in the place of such director
nominee. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the director nominees named below.
THE
BOARD RECOMMENDS A VOTE "FOR" THE DIRECTOR NOMINEES LISTED
BELOW.
The
following table sets forth the nominees for election as directors at the
Annual
Meeting and the year each such nominee was first elected as a director; the
positions currently held by the nominee with the Company, if applicable;
and the
year the nominee's term will expire:
Nominee's
Name and Year
Nominee
First Became a
Director
|
|
Age
|
|
Position(s)
with the Company
|
|
Year
Current Term
Will
Expire
|
|
|
|
|
|
|
|
Zack
B. Bergreen (1979)
|
|
60
|
|
Chairman
of the Board and
Chief
Executive Officer
|
|
2006
|
|
|
|
|
|
|
|
Adrian
Peters (2000)
|
|
56
|
|
Director
|
|
2006
|
|
|
|
|
|
|
|
Thomas
J. Reilly, Jr. (2003)
|
|
66
|
|
Director
|
|
2006
|
|
|
|
|
|
|
|
Eric
Siegel (2002)
|
|
49
|
|
Director
|
|
2006
|
EXECUTIVE
OFFICERS
The
following table sets forth the executive officers of the Company, their ages,
and the positions currently held by each such person with the
Company:
Name
|
|
Age
|
|
Position
|
Zack
B. Bergreen
|
|
60
|
|
Chairman
of the Board and Chief Executive Officer
|
|
|
|
|
|
John
Tobin
|
|
40
|
|
President
|
|
|
|
|
|
Fredric
(“Rick”) Etskovitz
|
|
51
|
|
Chief
Financial Officer and Treasurer
|
Zack
B.
Bergreen, 60, founded the Company in November 1979. He holds the positions
of
Chairman and Chief Executive Officer. Mr. Bergreen received a
Bachelor of
Science and a Master of Science degree in Electrical Engineering from the
University of Maryland.
Adrian
Peters, 56, joined the Company's Board of Directors in June 2000 and is also
a
member of both the Audit and Compensation Committees. He is the President
and
founder of Tellstone, a management consulting firm that specializes in advising
middle market companies, covering various industries, including high-tech
firms.
From 1986 through 1995, he held positions as President and CEO of various
companies, within Siemens AG, a large maker of telecommunications and industrial
and other equipment. Prior to that, he held senior positions at Federale,
an
investment firm, Arthur Andersen and IBM. Mr. Peters studied science and
engineering at the University of Stellenbosch in South Africa as well as
management at the Harvard Business School.
Thomas
J.
Reilly, Jr., 66, joined Astea’s Board in September 2003. He serves as Chairman
of the Audit Committee and is a member of the Compensation Committee. He
also
serves as a Director of inTEST Corporation (NASDAQ: INTT), a manufacturer
of
semiconductor equipment and a Trustee of Taberna Realty Finance Trust, a
financing REIT. A thirty-one year veteran of Arthur Andersen, he brings
extensive experience auditing both public and private corporations in the
manufacturing, professional services, construction and distribution industries
to the Company. He was partner in charge of the Philadelphia Audit Division
of
Arthur Andersen for seven years and participated in Quality Control reviews
of
several U.S. and International offices before retiring in 1996.
Eric
Siegel, 49, joined Astea’s Board in September 2002 and is a member of both the
Audit and Compensation Committees. In 1983, he founded Siegel Management
Company, a strategy consulting and investment banking advisory firm with
a
diverse client base, principally middle market firms. His expertise and
experience has been utilized by growth companies, public market and acquisition
candidates, industry consolidators and turnarounds. Mr. Siegel serves on
the
board of B&W Tek, a private equity backed manufacturer of analytical,
diagnostic and medical instrumentation. Additionally, he serves on the Board
of
NCO Group (NASDAQ: NCOG), a provider of outsourced accounts receivable
management and collection services, and PSCInfoGroup, a private equity backed
information management company. An established author, he has been a lecturer
in
management at the Wharton School for over twenty years. Mr. Siegel is a magna
cum laude graduate of the University of Pennsylvania and received an MBA
from
the Wharton School with honors.
John
Tobin, 40, joined the Company in June 2000 and serves as President, General
Counsel, and Secretary. Mr. Tobin is responsible for general management of
the
Company, along with handling legal affairs of the Company and various corporate
development and business development initiatives. Prior to joining Astea,
John
worked at the Philadelphia law firms Pepper Hamilton LLP and Wolf, Block,
Schorr
and Solis Cohen LLP, specializing in corporate transactions and intellectual
property. Prior to returning to the Philadelphia area in 1998, he worked
as a
corporate and entertainment lawyer in Los Angeles, specializing in motion
picture, television and music transactions and licensing, most recently with
PolyGram Filmed Entertainment. Mr. Tobin received his Bachelor of Science
degree
in Economics from the Wharton School of the University of Pennsylvania in
1987,
and received his law degree from the University of Pennsylvania in 1992.
Rick
Etskovitz, 51, joined Astea International in June 2000, when he was elected
Chief Financial Officer and Treasurer. Mr. Etskovitz resigned from the Company
in April 2004 and returned as CFO on January 4, 2005, during which time he
was a
partner in the Philadelphia accounting firm of Shechtman, Marks, Devor and
Etskovitz. Responsible for the firm’s financial planning, investor relations,
and executive guidance to help drive corporate performance, Rick brings to
his
position 25 years of experience in financial management and reporting. A
certified public accountant, he previously served Astea for seven years as
the
engagement partner from an independent accounting firm. Before beginning
his
career in private practice, Rick was part of the financial management team
at
DuPont where he held responsibilities for Mergers and Acquisitions, Financial
Planning, Corporate Accounting and Benefits. Rick received his Bachelor of
Science from the Pennsylvania State University and his Masters of Business
Administration from the Wharton Graduate School at the University of
Pennsylvania.
The
Board
of Directors elects executive officers on an annual basis, who serve until
their
successors have been duly elected and qualified. There are no family
relationships among any of our executive officers or directors. Directors
are
encouraged to attend the Annual Meeting, but are not required to do so. No
directors attended the 2005 Annual Meeting.
THE
BOARD OF DIRECTORS AND ITS COMMITTEES
The
business and affairs of the Company are managed under the direction of its
Board
of Directors. The Board of Directors met seven times in person or by telephone
during the fiscal year ended December 31, 2005. During their respective terms
of
service in fiscal 2005, each of the directors attended at least 75% of the
meetings of the Board of Directors and of all committees on which each served.
The Board of Directors has determined that each of its current directors,
including all directors standing for re-election, except the Chief Executive
Officer, has no material relationship with the Company and is an “independent
director” within the meaning of the Marketplace Rules of The Nasdaq Stock Market
director independence standards, as well as within the rules of the Securities
and Exchange Commission (“SEC”). The Board of Directors has Audit, Nominating
and Corporate Governance, and Compensation Committees. Each of these committees
has adopted a written charter. All members of the committees are appointed
by
the Board of Directors, and are non-employee directors. Currently, all three
independent directors, Messrs. Peters, Reilly and Siegel, are members of
each
committee of the Board of Directors.
Audit
Committee
The
Audit
Committee of the Board of Directors (the “Audit Committee”) operates under a
written charter that has recently been revised. The new charter was adopted
by
the Board of Directors on May 12, 2004 and was included as an exhibit to
the
2004 proxy statement. The composition of the Audit Committee, the attributes
of
its members and the responsibilities of the committee, as reflected in its
charter, are intended to be in accordance with applicable requirements for
corporate audit committees. The committee reviews and assesses the adequacy
of
its charter on an annual basis. The Board of Directors has determined that
Mr.
Reilly, the Chairman, is an “audit committee financial expert” as defined in the
SEC rules.
The
Audit
Committee oversees the accounting, financial reporting and audit processes;
reviews the results and scope of audit and other services provided by the
independent auditors; reviews the accounting principles and auditing practices
and procedures to be used in preparing our financial statements; and reviews
our
internal controls. The Audit Committee has the ultimate authority and
responsibility to select, evaluate and, when appropriate, replace the Company's
independent auditor.
The
Audit
Committee works closely with management and our independent auditors. The
Audit
Committee also meets with our independent auditors in an executive session,
without the presence of our management, on a quarterly basis, following
completion of their quarterly reviews and annual audit and prior to our earnings
announcements, to review the results of their work. The Audit Committee also
meets with our independent auditors to approve the annual scope of the audit
services to be performed. The Audit Committee met five times during the fiscal
year ended December 31, 2005.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee of the Board of Directors (the
“Nominating and Corporate Governance Committee”) was formed on May 12, 2004.
Upon formation, the Board of Directors adopted the Nominating and Corporate
Governance Committee charter, which was included as an exhibit to the 2004
proxy
statement. The Nominating and Corporate Governance Committee charter is not
available on the Company’s website. Prior to such adoption, the functions of the
Nominating and Corporate Governance Committee were performed by the entire
Board
of Directors.
The
Nominating and Corporate Governance Committee considers and periodically
reports
on matters relating to the identification, selection and qualification of
the
Board of Directors and candidates nominated to the Board of Directors and
its
committees; develops and recommends governance principles applicable to the
Company; oversees the evaluation of the Board of Directors and management;
and
oversees and sets compensation for the Board of Directors.
The
Nominating and Corporate Governance Committee considers properly submitted
stockholder recommendations for candidates for membership on the Board of
Directors as described below. In evaluating such recommendations, the Nominating
and Corporate Governance Committee seeks to achieve a balance of knowledge,
experience and capability on the Board of Directors and to address the
membership criteria detailed below. Any stockholder recommendations proposed
for
consideration by the Nominating and Corporate Governance Committee should
include the candidate’s name and qualifications for membership on the Board of
Directors and should be addressed to our Corporate Secretary. In addition,
procedures for stockholder direct nomination of directors are discussed in
the
section titled “Communicating with the Board of Directors”, and are discussed in
detail in the Company’s By-Laws, which will be provided to you upon written
request. There are no differences in the manner in which the Nominating and
Corporate Governance Committee evaluates nominees for director, whether the
nominee is recommended by a stockholder or another party.
The
Nominating and Corporate Governance Committee uses a variety of criteria
to
evaluate the qualifications and skills necessary for members of the Board
of
Directors. Under these criteria, members of the Board of Directors should
have
the highest professional and personal ethics and values, consistent with
the
Company’s longstanding values and standards. They should have broad experience
at the policy-making level in business, government, education, technology
or
public interest. They should be committed to enhancing stockholder value
and
should have sufficient time to carry out their duties and to provide insight
and
practical wisdom based on experience. Their service on other boards of public
companies should be limited to a number that permits them, given their
individual circumstances, to perform responsibly all director duties. Each
director must represent the interests of all stockholders.
All
nominees for election to the Board of Directors this year are incumbents,
and
have previously stood for election to the Board of Directors by the
stockholders.
Compensation
Committee
The
Compensation Committee of the Board of Directors (the “Compensation Committee”)
was formally created on May 12, 2004. Prior to that, it was an ad hoc committee
consisting of the independent members of the Board of Directors. The
Compensation Committee oversees and makes recommendation to the Board of
Directors regarding our compensation and benefits policies; and oversees,
evaluates and approves compensation plans, policies and programs for our
executive officers.
Communicating
with the Board of Directors
Our
policy is that stockholders may communicate with the Board of Directors by
writing to the Company at Astea International Inc. Attention: Board of
Directors, 240 Gibraltar Road, Horsham, Pennsylvania 19044. Stockholders
who
would like their submission directed to a particular member of the Board
of
Directors may so specify, and the communication will be forwarded, as
appropriate.
Code
of Conduct and Ethics
The
Board
of Directors has adopted a Code of Conduct, which is applicable to all officers
and employees of the Company, including the Chief Executive Officer and Chief
Financial Officer. A copy of the Code of Conduct can be found on our website,
www.astea.com.
The
Board of Directors has also adopted a Code of Ethics which is applicable
to our
Chief Executive Officer, our Chief Financial Officer and our Controller.
Copies
of this are available upon request in writing to Astea International Inc.
Attention: Chief Financial Officer, 240 Gibraltar Road, Horsham, Pennsylvania
19044.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth as of March 31, 2006: (i) the name of each person
who, to the knowledge of the Company, owned beneficially more than 5% of
the
shares of Common Stock of the Company outstanding at such date; (ii) the
name of
each director of the Company; and (iii) the name of each current executive
officer of the Company. The following table also sets forth as of March 31,
2006
the number of shares of Common Stock owned by each of such persons and the
percentage of the outstanding shares represented thereby, and also sets forth
such information for directors, nominees and executive officers as a
group:
Name
and Address Of Beneficial Owner +
|
|
Amount
of Ownership(1)
|
|
Percent
of Class(2)
|
|
|
|
|
|
|
|
Zack
B. Bergreen(3)
|
|
|
1,358,000
|
|
|
38.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian
Peters (4)
|
|
|
17,500
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Eric
Siegel (5)
|
|
|
4,100
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Thomas
J. Reilly, Jr. (6)
|
|
|
5,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
John
Tobin (7)
|
|
|
12,500
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Rick
Etskovitz (8)
|
|
|
15,500
|
|
|
*
|
|
|
|
|
|
|
|
|
|
FieldCentrix
Inc (9)
|
|
|
421,106
|
|
|
11.9
|
%
|
8 Hughes, Irvine, CA 92618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
current directors, nominees and executive officers as a group
(6 persons)(3)-(8)
|
|
|
1,412,600
|
|
|
39.9
|
%
|
+ |
Except
as otherwise indicated, the address of each person named in the
table is
c/o Astea International, 240 Gibraltar Road, Horsham, Pennsylvania
19044.
|
· |
Less
than 1% of the outstanding shares of Common Stock.
|
(1) |
Except
as noted in the footnotes to this table, each person or entity named
in
the table has sole voting and investment power with respect to all
shares
of Common Stock owned, based upon information provided to the Company
by
directors, officers and principal stockholders. Beneficial ownership
is
determined in accordance with the rules of the Securities and Exchange
Commission (the “Commission”) and includes voting and investment power
with respect to shares of Common Stock subject to options currently
exercisable or exercisable within 60 days after the Record Date
(“presently exercisable stock options”).
|
(2) |
Applicable
percentage of ownership as of the Record Date is based upon
3,585,185 shares of Common Stock outstanding as of that date.
Beneficial ownership is determined in accordance with the rules of
the
Commission and includes voting and investment power with respect
to
shares. Presently exercisable stock options are deemed outstanding
for
computing the percentage ownership of the person holding such options,
but
are not deemed outstanding for computing the percentage of any other
person.
|
(3) |
Includes
1,093,203 shares of Common Stock held by trusts of which Mr. Bergreen
and
his wife are the only trustees,
209,192
shares held by trusts with independent trustees, and 55,803 shares
of
Common Stock held by a family limited partnership of which Mr. Bergreen
is
the sole general partner.
|
(4) |
Director.
Represents options to purchase 17,500 shares, all of which are currently
exercisable.
|
(5) |
Director.
Represents options to purchase 4,100 shares, all of which are currently
exercisable.
|
(6) |
Director.
Represents 1,000 shares of common stock and also options to purchase
4,000
all of which are exercisable.
|
(7) |
President.
Represents options to purchase 12,500 shares, all of which are currently
exercisable.
|
(8) |
Chief
Financial Officer. Represents 3,000 shares of common stock and also
options to purchase 12,500 shares all of which are currently
exercisable.
|
(9) |
Represents
shares issued per the terms of the FieldCentrix acquisition on September
21, 2005.
|
COMPENSATION
AND OTHER INFORMATION
CONCERNING
DIRECTORS AND OFFICERS
Executive
Compensation Summary
The
following table sets forth information concerning the compensation for services
in all capacities to the Company for the fiscal years ended December 31,
2005,
2004, and 2003, of the following persons (i) each person who served as Chief
Executive Officer during the year ended December 31, 2005, and (ii) four
most
highly compensated executive officers of the Company in office at December
31,
2005 (collectively, the “Named Executive Officers”):
SUMMARY
COMPENSATION TABLE
|
|
Annual
Compensation
|
|
Long-Term
Compensation
|
|
|
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Securities
Underlying
Options
(#
of shares)
|
|
All
Other
Compensation
($)
|
|
Zack
B. Bergreen
|
|
|
2005
|
|
$
|
250,000
|
|
|
—
|
|
|
—
|
|
$
|
742,504
(1
|
)
|
Chairman
of the Board and Chief
|
|
|
2004
|
|
|
210,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Executive
Officer
|
|
|
2003
|
|
|
210,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Tobin (2)
|
|
|
2005
|
|
|
198,714
|
|
|
—
|
|
|
20,000
(3
|
)
|
|
94,276
(1
|
)
|
President
|
|
|
2004
|
|
|
139,681
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
2003
|
|
|
150,306
|
|
|
—
|
|
|
10,000
(3
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rick
Etskovitz (4)
|
|
|
2005
|
|
|
184,423
|
|
|
—
|
|
|
20,000
(3
|
)
|
|
87,250
(1
|
)
|
Chief
Financial Officer
|
|
|
2004
|
|
|
54,338
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
2003
|
|
|
129,525
|
|
|
—
|
|
|
10,000
(3
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Kent (5)
|
|
|
2005
|
|
|
172,080
|
|
$
|
127,389
|
|
|
10,000
(3
|
)
|
|
50,753
(1
|
)
|
Managing
Director, Europe
|
|
|
2004
|
|
|
181,861
|
|
|
105,963
|
|
|
20,000
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Buzby (6)
|
|
|
2005
|
|
|
111,000
|
|
|
22,000
|
|
|
|
|
|
25,900
(1
|
)
|
Managing
Director, Asia/Pacific
|
|
|
2004
|
|
|
111,000
|
|
|
|
|
|
|
|
|
8,681
(1
|
)
|
|
|
|
2003
|
|
|
30,850
|
|
|
11,150
|
|
|
10,000
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents
earnings associated with exercise of options.
|
(2) |
John
Tobin was promoted to President on September 21,
2005.
|
(3) |
Represents
options to purchase shares of Common Stock, which were awarded based
on
merit.
|
(4) |
Rehired
as employee in January 2005.
|
(5) |
Mark
Kent joined Astea in January of 2004.
|
(6) |
Paul
Buzby joined Astea in September of 2003.
|
Option
Grants in Last Fiscal Year
The
following table sets forth each grant of stock options made during the year
ended December 31, 2005 to each of the Named Executive Officers. Options
to
purchase shares will vest in equal installments on each of the first four
anniversaries of the grant date:
|
|
Individual
Grants
|
|
Name
|
|
Number
of
Securities
Underlying
Options
Granted
(#)
|
|
Percent
of
Total
Options
Granted
to
Employees
In
Fiscal
Year
|
|
Exercise
Price
($/Share)(1)
|
|
Expiration
Date
|
|
Potential
Realizable Value at
Assumed
Annual
Rates of Stock Price
Appreciation
for Option
Terms(2)
5%($)
10%($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rick
Etskovitz
|
|
|
10,000
|
|
|
7
|
%
|
$
|
7.28
|
|
|
3/21/15
|
|
$
|
118,584
|
|
$
|
188,284
|
|
Rick
Etskovitz
|
|
|
10,000
|
|
|
7
|
%
|
|
8.05
|
|
|
9/21/15
|
|
|
131,126
|
|
|
208,796
|
|
John
Tobin
|
|
|
10,000
|
|
|
7
|
%
|
|
7.28
|
|
|
3/21/15
|
|
|
118,584
|
|
|
188,824
|
|
John
Tobin
|
|
|
10,000
|
|
|
7
|
%
|
|
8.05
|
|
|
9/21/15
|
|
|
131,126
|
|
|
208,796
|
|
Mark
Kent
|
|
|
10,000
|
|
|
7
|
%
|
|
7.28
|
|
|
3/21/15
|
|
|
118,584
|
|
|
188,824
|
|
(1) |
The
exercise price per share of each option was fixed by the Board of
Directors.
|
(2) |
Amounts
reported in these columns represent amounts that may be realized
upon
exercise of the options immediately prior to the expiration of their
term
assuming the specified compounded rates of appreciation (5% and 10%)
on
the market value of the Company’s Common Stock on the date of option grant
over the term of the options. These numbers are calculated based
on rules
promulgated by the Commission and do not reflect the Company’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 exercise
and
the future performance of the Company’s 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 individual.
|
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The
following table sets forth, for each of the Named Executive Officers,
information with respect to the exercise of stock options during the year
ended
December 31, 2005 and the year-end value of unexercised options:
Name
|
|
Shares
Acquired
on
Exercise(#)
|
|
Value
Realized($)
|
|
Numbers
of Unexercised
Options
at Year End
Exercisable/Unexercisable
|
|
Value
of Unexercised
In-the-Money
Options
at
Year End
Exercisable/Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
Zack
B. Bergreen
|
|
|
80,000
|
|
$
|
742,504
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rick
Etskovitz
|
|
|
10,000
|
|
|
87,250
|
|
|
12,500/27,500
|
|
$
|
127,050/$208,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Tobin
|
|
|
10,000
|
|
|
94,276
|
|
|
12,500/27,500
|
|
$
|
115,250/$208,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Kent
|
|
|
5,000
|
|
|
50,752
|
|
|
0/25,000
|
|
$
|
0.0/$234,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Buzby
|
|
|
2,500
|
|
|
8,837
|
|
|
0/5,000
|
|
$
|
0.0/$54,150
|
|
Employment
Agreements and Severance Arrangements with Executive
Officers
The
Company has not entered into any employment agreements, termination of
employment or change-in-control arrangements with any of its current Named
Executive Officers.
Compensation
Committee Interlocks and Insider Participation
Messrs.
Peters, Reilly and Siegel served as members of the Compensation Committee
during
the fiscal year ended December 31, 2005. No executive officer of the Company
served as a member of the Board of Directors, Compensation Committee, or
other
committee performing equivalent functions, of another entity one of whose
executive officers served as a director of the Company. Other than Mr. Bergreen,
no person who served as a member of the Board of Directors was, during the
fiscal year ended December 31, 2005, simultaneously an officer, employee
or
consultant of the Company or any of its subsidiaries. Mr. Bergreen did not
participate in any Company determination of his own personal compensation
matters.
Report
on Executive Compensation
This
report is submitted by the Compensation Committee. The Compensation Committee
is
responsible for developing the compensation programs that relate to the
Company’s executive officers, senior management and other key employees and for
establishing the specific short- and long-term compensation elements thereunder.
The Compensation Committee also oversees the general compensation structure
for
all of the Company’s employees. In addition, the Compensation Committee
currently administers the Company’s 1997 Stock Option Plan, 1998 Stock Option
Plan and 2001 Stock Option Plan.
The
principal objective of the Company’s executive compensation program is to
enhance the Company’s short-term and long-term financial results for the benefit
of the Company’s stockholders. To achieve this objective, the Company’s
executive compensation program is designed to provide levels of compensation
that assist the Company in attracting, motivating and retaining qualified
executive officers and aligning their financial interests with those of the
Company’s stockholders by providing a competitive compensation package based on
corporate and individual performance. In addition, the Company performs periodic
reviews of its executive compensation program to confirm the competitiveness
of
its overall executive compensation package as compared with companies that
compete with the Company for prospective employees possessing skills necessary
for developing, manufacturing and marketing successful high technology products
and associated services.
Compensation
under the Company’s executive compensation program consists of three principal
elements: (i) cash compensation in the form of base salary, (ii) annual
incentive compensation in the form of cash bonuses, and (iii) long-term
incentive awards in the form of stock option grants. In addition, the
compensation program is comprised of various benefits, including medical
and
insurance plans and a 401(k) profit sharing plan with matching Company
contributions, which are available to all employees of the Company.
Base
Salary.
Compensation levels for each of the Company’s executive officers, including the
Chief Executive Officer, are generally set within the range of salaries that
the
committee believes are paid to executive officers with comparable
qualifications, experience and responsibilities at similar companies. In
setting
compensation levels, the committee seeks to align total executive compensation
levels with corporate performance. Accordingly, base salary levels are set
at
what the committee believes are at the low-end of base salaries paid to
executive officers with comparable qualifications, experience and
responsibilities at similar companies, while endeavoring to provide relatively
higher incentive award opportunities. In addition, the committee generally
takes
into account such factors as (i) the Company’s past financial performance and
future expectations, (ii) business unit performance and future expectations,
(iii) individual performance and experience and (iv) past salary levels.
The
committee does not assign relative weights or rankings to these factors,
but
instead makes an informed, but ultimately subjective, determination based
upon
the consideration of all of these factors as well as the progress made with
respect to the Company’s long-term goals and strategies. Generally, salary
decisions for the Company’s executive officers other than the Chief Executive
Officer are made by the Compensation Committee near the beginning of each
calendar year based on recommendations of the Chief Executive Officer.
Fiscal
2005 base salaries were determined after considering the base salary level
of
the executive officers in prior years, and taking into account for each
executive officer the amount of base salary as a component of total
compensation. Base salary, while reviewed annually, is only adjusted as deemed
necessary by the Compensation Committee in determining total compensation
to
each executive officer. A significant factor in setting base salary levels
for
each of the Company’s executive officers, other than the Chief Executive
Officer, were evaluations and recommendations made by the Chief Executive
Officer. The Compensation Committee believes that fiscal 2005 base salary
levels
for each of the Named Executive Officers named in the Summary Compensation
Table
were slightly below the median salary levels for comparable positions at
comparable companies.
Incentive
Compensation.
Each
executive officer is eligible to receive a cash bonus at the end of the fiscal
year based in part on attainment of certain earnings targets and partly at
the
discretion of the Compensation Committee. Additional bonuses may be awarded
during the fiscal year to reward an executive officer for superior individual
or
business-unit performance. In 2005, no cash bonuses were awarded based on
Company performance.
Stock
Options.
Stock
options are the principal vehicle used by the Company for the payment of
long-term compensation, to provide a stock-based incentive to improve the
Company’s financial performance, and to assist in the recruitment, motivation
and retention of key professional and managerial personnel. Long-term incentive
compensation in the form of stock options enables officers to share in the
appreciation of the value of the Common Stock. The Compensation Committee
believes that such long-term stock option participation more closely aligns
the
interests of the executive officers with those of the stockholders by
encouraging executive officers to enhance the value of the Company. In addition,
the Compensation Committee believes that equity ownership by executive officers
helps to balance the short-term focus of annual incentive compensation with
a
longer-term view.
The
Company’s stock option plans have been administered by the Board of Directors
since January 1997 and by the Compensation Committee since its creation in
May
2004. The Compensation Committee periodically grants new options to provide
continuing incentives for future performance. When establishing stock option
grant levels, the Compensation Committee considers existing levels of stock
ownership, previous grants of stock options, vesting schedules of outstanding
options and the current price of the Common Stock. For additional information
regarding the grant of options, see the table under the heading “Option Grants
in Last Fiscal Year.”
Other
Benefits.
The
Company also has various broad-based employee benefit plans. Executive officers
participate in these plans on the same terms as eligible, non-executive
employees, subject to any legal limits on the amounts that may be contributed
or
paid to executive officers under these plans. The Company offers a 401(k)
profit
sharing plan, which permits employees to invest in a variety of funds on
a
pre-tax basis and includes partial matching Company contributions. The Company
also maintains insurance and other benefit plans for its employees.
Compensation
of Chief Executive Officer.
In
2005, Mr. Bergreen received an annual base salary of $250,000. In the event
that
the Company improves its financial performance, his base salary may be
increased, and bonuses may potentially be awarded. The Compensation Committee
deemed Mr. Bergreen’s compensation appropriate based on an assessment of
salaries believed by the Compensation Committee to be paid to chief executive
officers at comparable companies, and an assessment of Mr. Bergreen’s
qualifications, performance and expected contributions to the Company’s future
growth.
Tax
Deductibility of Executive Compensation.
Section
162(m) of the Code limits the tax deduction to $1 million for compensation
paid
to any of the executive officers, unless certain requirements are met. The
Compensation Committee has considered these requirements and the related
regulations. It is the present intent of the committee that, so long as it
is
consistent with its overall compensation objectives, substantially all executive
compensation shall be deductible for federal income tax purposes.
Respectfully
submitted by the following members of the Compensation Committee:
Adrian
Peters
Thomas
J.
Reilly, Jr.
Eric
Siegel
Compensation
of Directors
Each
director who is not employed by the Company receives a $5,000 annual retainer
and a fee of $1,500 for attendance at each regular and special meeting of
the
Board of Directors, and is also reimbursed for his reasonable out-of-pocket
expenses incurred in attending meetings. Non-employee directors may elect
to
receive, in lieu of the foregoing cash compensation, unrestricted shares
of
Common Stock. Shares of Common Stock in lieu of cash compensation are acquired
at the fair market value of the Common Stock on the last day of the calendar
quarter during which the cash compensation was earned and foregone. Directors
who are employees are not compensated for their service on the Board of
Directors or any committee thereof.
In
2005,
in addition to the above compensation, each Audit Committee member received
a
$5,000 supplement, and the Audit Committee Chairman received an additional
$5,000 supplement. Each director also received an annual option grant of
3,000
shares. This additional compensation was instituted due to the increased
workload on the directors.
REPORT
OF THE AUDIT COMMITTEE
For
fiscal 2005, the Audit Committee has reviewed and discussed the audited
consolidated financial statements with management and the independent auditor,
management represented to the Audit Committee that the Company’s consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the Audit Committee has discussed with the
independent auditor the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended, “Communication with Audit Committees.”
The Company’s independent auditor also provided the Audit Committee with the
written disclosures required by Independence Standards Board Standard No.
1,
“Independence Discussions with Audit Committees,” and the Audit Committee
discussed with the independent auditor that firm’s independence.
Following
the Audit Committee’s discussions with management and the independent auditor,
the Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2005.
Principal
Accountant Fees and Services
The
following table presents fees for professional audit services rendered by
BDO
Seidman, LLP for the audit of the Company’s consolidated financial statements
for the years ended December 31, 2005 and 2004, and fees billed for other
services rendered by BDO Seidman, LLP during those periods:
|
|
2005
|
|
2004
|
|
Audit
Fees (1)
|
|
$
|
187,500
|
|
$
|
160,071
|
|
Audit-Related
Fees (2)
|
|
|
9,000
|
|
|
9,000
|
|
Tax
Fees (3)
|
|
|
85,000
|
|
|
73,219
|
|
All
Other Fees (4)
|
|
|
-
|
|
|
-
|
|
Total
(5)
|
|
$
|
281,500
|
|
$
|
242,290
|
|
(1) |
Audit
fees consist of fees for professional services performed by BDO Seidman,
LLP for the audit of the Company’s annual consolidated financial
statements and review of consolidated financial statements included
in the
Company’s 10-Q filings, and services that are normally provided in
connection with statutory and regulatory filings or
engagements.
|
(2) |
Audit-related
fees consist of fees for assurance and related services performed
by BDO
Seidman, LLP. This includes employee benefit plan audit and consulting
on
financial accounting and reporting
standards.
|
(3) |
Tax
fees consist of fees for tax compliance, tax advice and tax
planning.
|
(4) |
All
other fees include fees for services not included in the other three
categories.
|
(5) |
The
Audit Committee pre-approved 100% of the fees for
2005.
|
The
Audit
Committee has considered the non-audit services rendered to the Company by
BDO
Seidman LLP and believes the rendering of those services is not incompatible
with BDO Seidman LLP maintaining its independence. The Audit Committee has
established a policy governing our use of BDO Seidman LLP for non-audit
services. Under the policy, management may use BDO Seidman LLP for non-audit
services that are permitted under SEC rules and regulations, provided that
management obtains the Audit Committee’s approval before such services are
rendered. In fiscal 2005, all fees identified above under the captions
“Audit-Related Fees”, “Tax Fees” and “All Other Fees” that were billed by BDO
Seidman LLP were approved by the Audit Committee.
Audit
Committee:
Thomas
J.
Reilly, Jr., Chairman
Adrian
Peters
Eric
Siegel
STOCK
PERFORMANCE GRAPH
The
following graph compares the percentage change in the cumulative total
stockholder return on the Common Stock during the period from December 31,
2000
through December 31, 2005, with the cumulative total return on (i) an SIC
Index
that includes all organizations in the Company's Standard Industrial
Classification (SIC) Code 7372-Prepackaged Software and (ii) the Nasdaq Market
Index. The comparison assumes that $100 was invested on December 31, 2000
in the
Common Stock at the initial public offering price and in each of the foregoing
indices, and assumes reinvestment of dividends, if any.
PROPOSAL
2
APPROVAL
OF ASTEA INTERNATIONAL INC. 2006 STOCK OPTION PLAN
The
Board
of Directors has approved the Astea International Inc. 2006 Stock Option
Plan
(the “2006 Plan”) and submitted the 2006 Plan for stockholder approval at the
Annual Meeting. Because only approximately 106,458
shares of Common Stock are available for issuance to employees under existing
stock option plans, the Board of Directors believes that the 2006 Plan is
necessary in order to fulfill the Company’s needs of attracting new managerial
and technical talent and retaining existing talent.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE 2006 PLAN.
Existing
Stock Plans
Excluding
the 2006 Plan, the Company currently has three stock ownership plans which
are
still active: the 1997 Stock Option Plan (the “1997 Plan”), the 1998 Stock
Option Plan (the “1998 Plan”), and the 2001 Stock Option Plan (the “2001 Plan”).
The 1997 Plan, the 1998 Plan, and the 2001 Plan (collectively the “Plans”)
provide for the grant of incentive stock options to officers and other employees
and the grant of non-qualified stock options, stock awards and authorization
to
make purchases of Common Stock to employees, consultants, directors and officers
of the Company. As of March 31, 2006, options to purchase a total of
approximately 189,839 shares of Common Stock were outstanding under the Plans,
of which approximately 41,416 shares were then exercisable. In addition,
from
earlier expired stock option plans that have outstanding grants, there are
approximately 68,150 options to purchase outstanding, 26,875 of which are
currently exercisable.
The
Astea International Inc. 2006 Stock Option Plan
Plan
Description. The
2006
Plan was adopted by the Board of Directors of the Company on March 28, 2006
and
has been submitted to the Company’s stockholders for approval at the Annual
Meeting. The 2006 Plan is attached as Exhibit A hereto.
The
2006
Plan provides for the grant of incentive stock options to officers and other
employees and the grant of non-qualified stock options, stock awards and
authorization to make purchases of Common Stock to employees, consultants,
directors and officers of the Company. The 2006 Plan is intended to provide
incentives to the officers and other employees of the Company by providing
them
with opportunities to purchase stock in the Company pursuant to options granted
thereunder which qualify as “incentive stock options” (“ISO” or “ISOs”) under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”); to
directors, officers, employees and consultants of the Company by providing
them
with opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs (“Non-Qualified Option” or “Non-Qualified
Options”); to directors, officers, employees and consultants of the Company by
providing them with awards of stock in the Company; and to directors, officers,
employees and consultants of the Company by providing them with opportunities
to
make direct purchases of stock in the Company. Both ISOs and Non-Qualified
Options are referred to hereafter individually as an “Option” and collectively
as “Options.”
The
2006
Plan will be administered by the Board of Directors or, if one exists at
the
time, the Compensation Committee of the Board of Directors (the “Committee”).
Subject to the provisions of the 2006 Plan, the Board or the Committee has
the
authority to determine the terms of such Options, including (i) the number
of
shares subject to each Option, (ii) the exercise price of the Options, (iii)
the
duration of the Options, (iv) the times when the Options become exercisable
and
(v) the time, manner and form of payment upon the exercise of an Option.
The
2006
Plan currently authorizes the issuance of a maximum of 350,000 shares of
Common
Stock of the Company. Any shares subject to an Option which expires or
terminates may again be available for grant under the 2006 Plan. As of the
Record Date, approximately 195 employees were eligible for awards under the
2006
Plan.
Options
may be granted under the 2006 Plan at any time prior to May 5, 2016. The
exercise price per share of ISOs granted under the 2006 Plan cannot be less
than
the fair market value of the Common Stock on the date of grant (or, in the
case
of ISOs granted to employees holding more than 10% of the total combined
voting
power of all classes of stock of the Company, 110% of the fair market value
per
share of the Common Stock on the date of the grant). No eligible employee
may be
granted ISOs that become exercisable for the first time by such employee
during
any calendar year which would entitle the employee to purchase more than
$100,000 in fair market value (determined at the time the ISOs were granted)
of
Common Stock in that year. Any Options granted to an employee in excess of
that
amount will be granted as Non-Qualified Options. The exercise price per share
of
all Non-Qualified Options cannot be less than the minimum legal consideration
required under the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
The
2006
Plan provides that each Option shall expire on the date specified in the
option
agreement, but not more than (i) ten years and one day from its date of grant
with respect to Non-Qualified Options, (ii) ten years from its date of grant
with respect to ISOs generally, and (iii) five years in the case of ISOs
granted
to an employee holding more than 10% of the voting stock of the Company.
Options
granted under the 2006 Plan shall not be exercisable until they become vested.
Options typically vest over a four-year period. An Option is exercisable
in
whole or in part by giving written notice to the Company, stating the number
of
shares with respect to which the Option is being exercised, and making payment
in full for such shares. An Option is not transferable by the optionholder
except (a) to members of the optionholder’s immediate family,
(b) by
will or by the laws of descent and distribution or (c) in the case of
Non-Qualified Options only, pursuant to a valid domestic relations order.
Generally, ISOs may not be exercised more than 90 days following termination
of
employment. However, in the event that termination is due to death or permanent
disability, the ISO is exercisable for a maximum of 180 days after such
termination.
As
of the
Record Date, no options to purchase shares of Common Stock were outstanding
under the 2006 Plan.
On
the Record Date, the fair market
value of the Company's Common Stock was $11.73, the last
reported sale price of the Company's Common Stock quoted on the Nasdaq Capital
Market on such date.
Federal
Income Tax Consequences
The
following discussion of United States federal income tax consequences of
the
issuance and exercise of options granted under the 2006 Plan, and awards
and
purchases granted under such plan is based upon the provisions of the Code
as in
effect on the date of this Proxy Statement, current regulations, and existing
administrative rulings of the Internal Revenue Service. It is not intended
to be
a complete discussion of all of the federal income tax consequences of the
2006
Plan or of the requirements that must be met in order to qualify for the
described tax treatment.
A.
Incentive Stock Options. The following general rules are applicable under
current United States federal income tax law to ISOs granted under the 2006
Plan:
1.
In
general, no taxable income results to the optionholder upon the grant of
an ISO
or upon the issuance of shares to him or her upon the exercise of the ISO,
and
no federal income tax deduction is allowed to the Company upon either the
grant
or exercise of an ISO.
2.
If
shares acquired upon exercise of an ISO are not disposed of within (i) two
years
following the date the ISO was granted or (ii) one year following the date
the
shares are issued to the optionholder pursuant to the ISO exercise (the “Holding
Periods”), the difference between the amount realized on any subsequent
disposition of the shares and the exercise price will generally be treated
as
capital gain or loss to the optionholder.
3.
If
shares acquired upon exercise of an ISO are disposed of on or before the
expiration of one or both of the requisite Holding Periods (a “Disqualifying
Disposition”), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the exercise
price or (ii) the actual gain on disposition, will be treated as compensation
to
the optionholder and will be taxed as ordinary income in the year of such
disposition.
4.
In any
year that an optionholder recognizes compensation income on a Disqualifying
Disposition of stock acquired by exercising an ISO, the Company generally
should
be entitled to a corresponding deduction for federal income tax purposes.
5.
Any
excess of the amount realized by the optionholder as the result of a
Disqualifying Disposition over the sum of (i) the exercise price and (ii)
the
amount of ordinary income recognized under the above rules will be treated
as
capital gain.
6.
Capital gain or loss recognized on a disposition of shares will be long-term
capital gain or loss if the optionholder's holding period for the shares
exceeds
one year.
7.
An
optionholder may be entitled to exercise an ISO by delivering shares of the
Company's Common Stock to the Company in payment of the exercise price, if
the
optionholder's ISO agreement so provides. If an optionholder exercises an
ISO in
such fashion, special rules will apply.
8.
In
addition to the tax consequences described above, the exercise of ISOs may
result in a further “minimum tax” under the Code. The Code provides that an
“alternative minimum tax” (at a maximum rate of 28%) will be applied against a
taxable base which is equal to “alternative minimum taxable income,” reduced by
a statutory exemption. In general, the amount by which the value of the Common
Stock received upon exercise of the ISO exceeds the exercise price is included
in the optionholder's alternative minimum taxable income. A taxpayer is required
to pay the higher of his regular tax liability or the alternative minimum
tax. A
taxpayer who pays alternative minimum tax attributable to the exercise of
an ISO
may be entitled to a tax credit against his or her regular tax liability
in
later years.
9.
Special rules apply if the Common Stock acquired through the exercise of
an ISO
is subject to vesting, or is subject to certain restrictions on resale under
federal securities laws applicable to Directors, officers or 10% stockholders.
B.
Non-Qualified Stock Options. The following general rules are applicable under
current federal income tax law to options that do not qualify as incentive
stock
options under the 2006 Plan (individually, a “NQSO,” and collectively, “NQSOs”):
1.
The
optionholder generally does not recognize any taxable income upon the grant
of a
NQSO, and the Company is not allowed a federal income tax deduction by reason
of
such grant.
2.
The
optionholder generally will recognize ordinary compensation income at the
time
of exercise of the NQSO in an amount equal to the excess, if any, of the
fair
market value of the shares on the date of exercise over the exercise price.
The
Company may be required to withhold income tax on this amount.
3.
When
the optionholder sells the shares acquired through the exercise of a NQSO,
he or
she generally will recognize a capital gain or loss in an amount equal to
the
difference between the amount realized upon the sale of the shares and his
or
her basis in the stock (generally, the exercise price plus the amount taxed
to
the optionholder as compensation income). If the optionholder's holding period
for the shares exceeds one year, such gain or loss will be a long-term capital
gain or loss.
4.
The
Company generally should be entitled to a federal income tax deduction when
compensation income is recognized by the optionholder.
5.
An
optionholder may be entitled to exercise a NQSO by delivering shares of the
Company's Common Stock to the Company in payment of the exercise price. If
an
optionholder exercises a NQSO in such fashion, special rules will apply.
6.
Special rules apply if the Common Stock acquired through the exercise of
a NQSO
is subject to vesting, or is subject to certain restrictions on resale under
federal securities laws applicable to Directors, officers or 10% stockholders.
C.
Stock Awards and Purchases. The following general rules are applicable under
current federal income tax law to Awards and Purchases under the 2006 Plan:
Under
current federal income tax law, persons receiving Common Stock under the
2006
Plan pursuant to an award of Common Stock or a grant of an opportunity to
purchase Common Stock generally recognize ordinary compensation income equal
to
the fair market value of the shares received, reduced by any purchase price
paid. The Company generally should be entitled to a corresponding federal
income
tax deduction. When such stock is sold, the seller generally will recognize
capital gain or loss. Special rules apply if the stock acquired is subject
to
vesting, or is subject to certain restrictions on resale under federal
securities laws applicable to Directors, officers or 10% stockholders.
Plan
Benefits
The
benefits and amounts that may be received in the future by persons eligible
to
participate in the 2006 Plan are not currently determinable.
EQUITY
COMPENSATION PLAN
The
following table provides information as of December 31, 2005 regarding shares
of
our common stock that may be issued under our equity compensation
plan:
Plan
category
|
Number
of Securities to be issued upon exercise of outstanding options,
warrents
and rights
|
Weighted-average
exercise price of outstanding options, warrents and
rights
|
Number
of securities remaining
available
for future issuance under equity compensation plans (excluding
securities
reflected
in column (a))
|
|
(a)
|
(b)
|
(c)
|
Equity
compensation
plans approved by
security holders
|
309,664
|
$7.04
|
55,208
|
|
|
|
|
Equity
compensation
plans not approved by
security holders
|
-
|
-
|
-
|
|
|
|
|
Total
|
309,664
|
$7.04
|
55,208
|
PROPOSAL
3
RATIFICATION
AND SELECTION OF AUDITORS
The
Audit
Committee has selected the firm of BDO Seidman LLP, independent certified
public
accountants, to serve as auditors for the fiscal year ending December 31,
2006.
It is expected that a member of BDO Seidman LLP will be present at the Annual
Meeting with the opportunity to make a statement if so desired and will be
available to respond to appropriate questions.
Before
making its selection, the Audit Committee carefully considered that firm’s
qualifications as independent auditors. This included a review of the
qualifications of the engagement team, the quality control procedures the
firm
has established, and any issues raised by the most recent quality control
review
of the firm; as well as its reputation for integrity and competence in the
fields of accounting and auditing. The Audit Committee’s review also included
matters required to be considered under the SEC’s Rules on Auditor Independence,
including the nature and extent of non-audit services, to ensure that they
will
not impair the independence of the accountants. The Audit Committee is satisfied
with BDO Seidman LLP in all these respects.
The
submission of the selection of BDO Seidman LLP to the stockholders is not
required by law or the Company’s By-Laws. The Board of Directors is nevertheless
submitting it to the stockholders to ascertain their views. If the stockholders
do not ratify the Audit Committee’s selection, the Audit Committee will consider
the selection of another independent public accountant.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THIS SELECTION.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's directors,
executive officers and holders of more than 10% of the Common Stock
(collectively, "Reporting Persons") to file with the SEC initial reports
of
ownership and reports of changes in ownership of the Common Stock. Such persons
are required by regulations of the SEC to furnish to the Company copies of
all
such filings. Based on the Company’s review of the copies of such filings
received by the Company with respect to the fiscal year ended December 31,
2005,
and written representations from certain Reporting Persons, the Company believes
that all Reporting Persons complied with all Section 16(a) filing requirements
in the fiscal year ended December 31, 2005.
STOCKHOLDER
PROPOSALS
Proposals
of stockholders intended for inclusion in the proxy statement to be furnished
to
all stockholders entitled to vote at the next annual meeting of stockholders
of
the Company must be received by the Company's Secretary not later than December
2, 2006. Any such proposal must comply with the rules and regulations of
the
SEC. In order to curtail controversy as to the date on which a proposal was
received by the Company, it is suggested that proponents submit their proposals
by Certified Mail, Return Receipt requested to Astea International Inc.,
240
Gibraltar Road, Horsham, Pennsylvania 19044, Attention: Secretary. In addition,
the execution of a proxy solicited by the Company in connection with the
2007
Annual Meeting of Stockholders shall confer on the designated proxy holder
discretionary voting authority to vote on any stockholder proposal which
is not
included in the Company's proxy materials for such meeting and for which
the
Company has not received notice before December 2, 2006.
EXPENSES
AND SOLICITATION
The
cost
of solicitation of proxies will be borne by the Company. Proxies may be
solicited by mail, personal interview, telephone or telegraph and, in addition,
directors, officers and regular employees of the Company may solicit proxies
by
such methods without additional remuneration. The Company may request banks,
brokers and other custodians, nominees and fiduciaries to solicit their
customers who have stock of the Company registered in the names of a nominee
and, if so, will reimburse such banks, brokers and other custodians, nominees
and fiduciaries for their reasonable out-of-pocket costs.
THE
COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT FOR
EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM 10-K
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS
FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED DECEMBER
31, 2005. REQUESTS SHOULD BE DIRECTED TO CHIEF FINANCIAL OFFICER, ASTEA
INTERNATIONAL, 240 GIBRALTAR ROAD, HORSHAM, PENNSYLVANIA
19044.
By
Order of the Board
of Directors
/s/
Zack B.
Bergreen
Zack
B.
Bergreen
Chief
Executive
Officer
Horsham,
Pennsylvania
April
3,
2006
Exhibit
A
ASTEA
INTERNATIONAL INC.
2006
STOCK OPTION PLAN
1. Purpose.
This
2006 Stock Option Plan (the "Plan") is intended to provide incentives:
(a) to the officers and other employees of Astea International Inc. (the
"Company"), its parent (if any) and any present or future subsidiaries of
the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" ("ISO" or "ISOs") under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"); (b) to directors, officers, employees and consultants of the
Company and Related Corporations by providing them with opportunities to
purchase stock in the Company pursuant to options granted hereunder which
do not
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); (c) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with awards of stock in the Company ("Awards");
and (d) to directors, officers, employees and consultants of the Company
and Related Corporations by providing them with opportunities to make direct
purchases of stock in the Company ("Purchases"). Both ISOs and Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options." Options, Awards and authorizations to make Purchases are referred
to hereafter collectively as "Stock Rights." A Person to whom Stock Rights
are
granted under the Plan is referred to hereafter as a "Grantee. " As used
herein,
the terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation", respectively, as those terms are defined in Section 424 of
the Code.
2. Administration
of the Plan.
A. Board
or Committee Administration.
The Plan
shall be administered by the Board of Directors of the Company (the "Board")
or,
subject to paragraph 2(D) (relating to compliance with Section 162(m) of
the
Code), by a committee appointed by the Board (the "Committee"). If the Company
has a class of securities required to be registered under Section 12 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") any
Committee appointed by the Board shall consist of no less than two members
of
the Board, and each member of the Committee shall qualify as a "Non-Employee
Director" as defined in Rule 16b-3(b)(3)(i) promulgated under the Exchange
Act
(or any successor provision). Hereinafter, all references in this Plan to
the
"Committee" shall mean the Board if no Committee has been appointed. Subject
to
ratification of the grant or authorization of each Stock Right by the Board
(if
so required by applicable state law), and subject to the terms of the Plan,
the
Committee shall have the authority to (i) determine the employees of the
Company and Related Corporations (from among the class of employees eligible
under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to
determine (from among the class of individuals and entities eligible under
paragraph 3 to receive Non-Qualified Options and Awards and to make
Purchases) to whom Non-Qualified Options, Awards and authorizations to make
Purchases may be granted; (ii) determine the time or times at which Options
or Awards may be granted or Purchases made; (iii) determine the exercise
price per share subject to each Option, which price shall not be less than
the
minimum price specified in paragraph 6, and the purchase price of shares
subject to each Purchase; (iv) determine whether each Option granted shall
be an ISO or a Non-Qualified Option; (v) determine (subject to
paragraph 7) the time or times when each Option shall become exercisable
and the duration of the exercise period; (vi) extend the period during
which outstanding Options may be exercised; (vii) determine whether restrictions
such as repurchase options are to be imposed on shares subject to Options,
Awards and Purchases and the nature of such restrictions, if any, and
(viii) interpret the Plan and prescribe and rescind rules and regulations
relating to it. If the Committee determines to issue a Non-Qualified Option,
it
shall take whatever actions it deems necessary, under Section 422 of the
Code and the regulations promulgated thereunder, to ensure that such Option
is
not treated as an ISO. The interpretation and construction by the Committee
of
any provisions of the Plan or of any Stock Right granted under it shall be
final
and binding upon all parties. The Committee may from time to time adopt such
rules and regulations for carrying out the Plan as it may deem best. No member
of the Board or the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Stock Right granted under
it.
Members of the Committee will serve for such period of time as the Board
may
determine. From time to time the Board may increase the size of the Committee
and appoint additional members thereto, remove members (with or without cause)
and appoint new members in substitution therefor, fill vacancies however
caused,
or remove all members of the Committee and thereafter directly administer
the
Plan.
B. Committee
Action.
The
Committee may select one of its members as its chairman, and shall hold meetings
at such time and places as it may determine. Acts by a majority of the
Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. From
time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
C. Grant
of Stock Rights to Board Members.
Stock
Rights may be granted to members of the Board. All grants of Stock Rights
to
members of the Board shall in all other respects be made in accordance with
the
provisions of this Plan applicable to other eligible persons. Members of
the
Board who either (i) are eligible for Stock Rights pursuant to the Plan or
(ii) have been granted Stock Rights may vote on any matters affecting the
administration of the Plan or the grant of any Stock Rights pursuant to the
Plan, except that no such member shall act upon the granting to himself of
Stock
Rights, but any such member may be counted in determining the existence of
a
quorum at any meeting of the Board during which action is taken with respect
to
the granting to him of Stock Rights.
D. Performance-Based
Compensation.
The
Board, in its discretion, may take such action as may be necessary to ensure
that Stock Rights granted under the Plan qualify as "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code and applicable
regulations promulgated thereunder ("Performance-Based Compensation"). Such
action may include, in the Board’s discretion, some or all of the following (i)
if the Board determines that Stock Rights granted under the Plan generally
shall
constitute Performance-Based Compensation, the Plan shall be administered,
to
the extent required for such Stock Rights to constitute Performance-Based
Compensation, by a Committee consisting solely of two or more "outside
directors" (as defined in applicable regulations promulgated under Section
162(m) of the Code), (ii) if any Non-Qualified Options with an exercise price
less than the fair market value per share of Common Stock are granted under
the
Plan and the Board determines that such Options should constitute
Performance-Based Compensation, such options shall be made exercisable only
upon
the attainment of a pre-established, objective performance goal established
by
the Committee, and such grant shall be submitted for, and shall be contingent
upon shareholder approval and (iii) Stock Rights granted under the Plan may
be
subject to such other terms and conditions as are necessary for compensation
recognized in connection with the exercise or disposition of such Stock Right
or
the disposition of Common Stock acquired pursuant to such Stock Right to
constitute Performance-Based Compensation.
3. Eligible
Employees and Others.
ISOs may
be granted only to employees of the Company or any Related Corporation.
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any director (whether or not an employee), officer, employee or
consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining
whether
to grant an ISO, a Non-Qualified Option, an Award or an authorization to
make a
Purchase. Granting of any Stock Right to any individual or entity shall neither
entitle that individual or entity to, nor disqualify him from, participation
in
any other grant of Stock Rights.
4. Stock.
The
stock subject to Options, Awards and Purchases shall be authorized but unissued
shares of Common Stock of the Company, par value $.01 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner.
The
aggregate number of shares which may be issued pursuant to the Plan is 350,000
shares, subject to adjustment as provided in paragraph 14. Those shares may
be subject to Options, Awards, Purchases or any combination of Stock Rights.
If
any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the shares subject to such Options shall
again
be available for grants of Stock Rights under the Plan. The maximum number
of
shares that may be subject to Stock Rights granted to any one employee of
the
Company or any Related Corporation during a calendar year is
100,000.
5. Granting
of Stock Rights.
Assuming
the Plan is approved by the stockholders of the Company Stock Rights may
be
granted under the Plan at any time on or after May 5, 2006 and prior to May
5,
2016. The date of grant of a Stock Right under the Plan will be the date
specified by the Committee at the time it grants the Stock Right; provided,
however, that such date shall not be prior to the date on which the Committee
acts to approve the grant.
6. Minimum
Option Price; ISO Limitations.
A. Price
for Non-Qualified Options, Awards, and Purchases.
Subject
to paragraph 2(D) (relating to compliance with Section 162(m) of the Code),
the
exercise price per share specified in the agreement relating to each
Non-Qualified Option granted and the purchase price per share of stock granted
in any Award or authorized as a Purchase under the Plan may be less than
the
fair market value of the Common Stock of the Company on the date of grant;
provided that in no event shall such exercise price or such purchase price
be
less than the minimum legal consideration required therefor under the laws
of
any jurisdiction in which the Company or its successors in interest may be
organized.
B. Price
for ISOs.
The
exercise price per share specified in the agreement relating to each ISO
granted
under the Plan shall not be less than the fair market value per share of
Common
Stock on the date of such grant. In the case of an ISO to be granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to such
ISO
shall not be less than one hundred ten percent (110%) of the fair market
value
per share of Common Stock on the date of grant. For purposes of determining
stock ownership under this paragraph, the rules of Section 424(d) of the
Code shall apply.
C. $100,000
Annual Limitation on ISO Vesting.
Each
eligible employee may be granted ISOs only to the extent that, in the aggregate
under this Plan and all incentive stock option plans of the Company and any
Related Corporation, ISOs to purchase more than $100,000 of Common Stock
(determined at the time the ISOs were granted) do not become exercisable
for the
first time by such employee during any calendar year. Any options granted
to an
employee in excess of such amount will be granted as Non-Qualified
Options.
D. Determination
of Fair Market Value.
If, at
the time an Option is granted under the Plan, the Company's Common Stock
is
publicly traded, "fair market value" shall be determined as of the date of
grant
or, if the prices or quotes discussed in this sentence are unavailable for
such
date, the last business day for which such prices or quotes are available
prior
to the date such Option is granted and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock
is
then traded on a national securities exchange; or (ii) the last reported
sale price (on that date) of the Common Stock on the Nasdaq Capital Market,
if
the Common Stock is not then traded on a national securities exchange; or
(iii) the average of the closing bid and asked prices last quoted (on that
date) by an established quotation service for over-the-counter securities,
if
the Common Stock is not reported on the Nasdaq National Market. However,
if the
Common Stock is not publicly traded at the time an Option is granted under
the
Plan, "fair market value" shall be deemed to be the fair value of the Common
Stock as determined by the Committee after taking into consideration all
factors
which it deems appropriate, including, without limitation, recent sale and
offer
prices of the Common Stock in private transactions negotiated at arm's length.
7. Option
Duration.
Subject
to earlier termination as provided in paragraphs 10 and 11 or in the
agreement relating to such Option, each Option shall expire on the date
specified by the Committee, but not more than (i) ten years from the date
of grant in the case of Options generally, and (ii) five years from the
date of grant in the case of ISOs granted to an employee owning stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of
stock of the Company or any Related Corporation, as determined under
subparagraph 6(B). Subject to earlier termination as provided in
paragraphs 10 and 11, the term of each ISO shall be the term set forth in
the original instrument granting such ISO, except with respect to any part
of
such ISO that is converted into a Non-Qualified Option pursuant to
paragraph 17.
8. Exercise
of Option.
Subject
to the provisions of paragraphs 10 through 13, each Option granted under
the Plan shall be exercisable as follows:
A. Full
Vesting or Partial Vesting.
The
Option shall either be fully exercisable on the date of grant or shall become
exercisable thereafter in such installments as the Committee may specify
in the
agreement relating to the Option.
B. Full
Vesting of Installments.
Once an
installment becomes exercisable it shall remain exercisable until expiration
or
termination of the Option, unless otherwise specified by the Committee in
the
agreement relating to the Option or as otherwise provided in this
Plan.
C. Partial
Exercise.
Each
Option or installment may be exercised at any time or from time to time,
in
whole or in part, for up to the total number of shares with respect to which
it
is then exercisable.
D. Acceleration
of Vesting.
The
Committee shall have the right to accelerate the date of exercise of any
installment of any Option; provided that the Committee shall not accelerate
the
exercise date of any installment of any Option granted to any employee as
an ISO
(and not previously converted into a Non-Qualified Option pursuant to
paragraph 17) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in
paragraph 6(C).
9. Acquisitions.
In
anticipation of and contingent upon an Acquisition (as defined below), all
outstanding Options shall become immediately vested and exercisable with
respect
to one-half of the shares subject to the Option that were not otherwise vested
and exercisable as of the date of such Acquisition (the "Unvested Shares").
Unless otherwise provided in the agreement relating to a particular Option,
the
remaining
Unvested
Shares subject to any Option outstanding as of the date of the Acquisition
will
become vested and exercisable on the earliest to occur of (i) the date on
which
the Option would otherwise have become vested and exercisable with respect
to
the Unvested Shares, (ii) the first anniversary of the Acquisition, provided
the
Grantee holding the Option remains continuously employed or engaged by the
Company or a Related Corporation (or the successor of either) through that
anniversary, and (iii) the date, within the twelve (12) month period following
the Acquisition, on which the Grantee’s employment or other service is
terminated without Cause by the Company or a Related Corporation (or the
successor of either); provided that in no event shall the offer to a Grantee
of
a new position within the Company or a Related Corporation (or the successor
of
either) be considered a termination of employment or other service by the
Company or a Related Corporation (or the successor of either) for purposes
of
this paragraph 9 so long as the offered position is substantially similar
to the
position held by the Grantee immediately prior to the Acquisition as determined
by the Board of Directors in its sole discretion.
Notwithstanding anything to the contrary set forth in the Plan, upon or in
anticipation of any Acquisition, the Board may, in its sole and absolute
discretion and without the need for the consent of any Grantee, take one
or more
of the following actions contingent upon the occurrence of that Acquisition:
(i) cause any or all outstanding Options held by Grantees affected by the
Acquisition to become vested and immediately exercisable, in whole or in
part;
(ii) cause any or all outstanding grants of Awards or authorizations of
Purchases to Grantees affected by the Acquisition to become non-forfeitable,
in
whole or in part; (iii) redeem any share held by a Grantee acquired through
an
Award or Purchase, which is affected by the Acquisition, for cash and/or
other
substitute consideration with a value equal to the fair market value of a
share
of Common Stock on the date of the Acquisition; or (iv) cancel any Option
held
by a Grantee affected by the Acquisition in exchange for cash and/or other
substitute consideration with a value equal to (A) the number of shares subject
to that Option, multiplied by (B) the amount, if any, by which the fair market
value per share on the date of the Acquisition exceeds the exercise price
of
that Option; provided,
that
if
the fair market value per share on the date of the Acquisition does not exceed
the exercise price of any such Option, the Board may cancel that Option without
any payment of consideration therefor.
For
purposes of the Plan, an "Acquisition" shall mean any merger, consolidation,
sale of all (or substantially all) of the assets of the Company, or other
business combination involving the sale or transfer of all (or substantially
all) of the capital stock or assets of the Company, in which the Company
is not
the surviving entity, or, if it is the surviving entity, does not survive
as an
operating going concern in substantially the same line of business; provided,
however,
that
the term "Acquisition" shall not include any reincorporation of the Company
in a
different state pursuant to a migratory merger.
10.
Termination.
Unless
otherwise provided by the Committee in the agreement relating to an Option,
if a
Grantee ceases to be employed, or engaged as a consultant or director, by
the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 11, no further installments of his Options shall
become exercisable, and his Options shall terminate on the earlier of (a)
three
months after the date of termination of his employment or engagement, or
(b)
their specified expiration dates. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed ninety (90) days or, if longer, any
period during which such Grantee's right to reemployment is guaranteed by
statute or by contract. A bona fide leave of absence with the written approval
of the Committee shall not be considered an interruption of employment under
the
Plan. Options granted under the Plan shall not be affected by any change
of
employment (or, except with respect to ISOs, engagement) within or among
the
Company and Related Corporations, so long as the Grantee continues to be
an
employee, director or consultant of the Company or any Related Corporation.
Nothing in the Plan shall be deemed to give any Grantee of any Stock Right
the
right to be retained in employment or other service by the Company or any
Related Corporation for any period of time.
11. Death;
Disability.
A. Death.
Unless
otherwise provided by the Committee in the agreement relating to an Option,
if a
Grantee ceases to be employed, or engaged as a consultant or director, by
the
Company and all Related Corporations by reason of his or her death, any Option
owned by such Grantee may be exercised, to the extent of the number of shares
with respect to which he or she could have exercised it on the date of his
or
her death, by the estate, personal representative or beneficiary who has
acquired the Option by will or by the laws of descent and distribution, at
any
time prior to the earlier of (i) the specified expiration date of the
Option or (ii) 180 days from the date of the Grantee's death. Unless
otherwise provided in the agreement relating to an Option, the Option shall
terminate upon the Grantee’s death to the extent the Option was not exercisable
at the time of death.
B. Disability.
Unless
otherwise provided by the Committee in the agreement relating to an Option,
if a
Grantee ceases to be employed or engaged as a consultant or director by the
Company and all Related Corporations by reason of his or her disability,
such
Grantee, or his personal representative if applicable, shall have the right
to
exercise any Option held by him or her on the date of termination of employment
or other service, to the extent of the number of shares with respect to which
he
or she could have exercised it on that date, until the earlier of (i) the
specified expiration date of the Option or (ii) 180 days from the date
of the termination of the Grantee's employment or other service. For the
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code or successor
statute. Unless otherwise provided in the agreement relating to an Option,
the
Option shall terminate upon the termination of the Grantee’s employment or other
service by reason of disability to the extent the Option was not exercisable
at
the time of such termination.
12. Assignability.
Except
to the extent permitted by Rule 16b-3, no Non-Qualified Option shall be
assignable or transferable by the Grantee except (a) subject to procedures
adopted by the Committee, to members of Grantee’s immediate family or (b) by
will or by the laws of descent and distribution or (c) pursuant to a valid
domestic relations order. No ISO shall be assignable or transferable except
by
will or by the laws of descent and distribution. During the lifetime of the
Grantee each Option shall be exercisable only by him, or by his personal
representative as provided in subparagraph 11(B).
13. Terms
and Conditions of Options.
Options
shall be evidenced by instruments (which need not be identical) in such forms
as
the Committee may from time to time approve. Such instruments shall conform
to
the terms and conditions set forth in paragraphs 6 through 12 hereof and
may contain such other provisions as the Committee deems advisable which
are not
inconsistent with the Plan, including restrictions applicable to shares of
Common Stock issuable upon exercise of Options. In granting any Non-Qualified
Option, the Committee may specify that such Non-Qualified Option shall be
subject to the restrictions set forth herein with respect to ISOs, or to
such
other termination and cancellation provisions as the Committee may determine.
The Committee may from time to time confer authority and responsibility on
one
or more of its own members and/or one or more officers of the Company to
execute
and deliver such instruments. The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable from time
to time
to carry out the terms of such instruments.
14. Adjustments.
Upon the
occurrence of any of the following events, a Grantee's rights with respect
to
Options granted to him hereunder shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Grantee and the Company relating to such Option:
A. Stock
Dividends and Stock Splits.
If the
shares of Common Stock shall be subdivided or combined into a greater or
smaller
number of shares or if the Company shall issue any shares of Common Stock
as a
stock dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately increased
or decreased proportionately, and appropriate adjustments shall be made in
the
purchase price per share to reflect such subdivision, combination or stock
dividend.
B. Recapitalization
or Reorganization.
In the
event of a recapitalization or reorganization of the Company (other than
a
transaction described in paragraph 9 above) pursuant to which securities of
the Company or of another corporation are issued with respect to the outstanding
shares of Common Stock, a Grantee upon exercising an Option shall be entitled
to
receive for the purchase price paid upon such exercise the securities he
would
have received upon such recapitalization or reogranization if he had exercised
his Option prior to such recapitalization or reorganization.
C. Modification
of ISOs.
Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs A or B above with respect to ISOs shall be made only after
the Committee, after consulting with counsel for the Company, determines
whether
such adjustments would constitute a "modification" of such ISOs (as that
term is
defined in Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee determines that
such
adjustments made with respect to ISOs would constitute a modification of
such
ISOs or would cause adverse tax consequences to the holders, it may refrain
from
making such adjustments.
D. Dissolution
or Liquidation.
In the
event of the proposed dissolution or liquidation of the Company, each Option
will terminate immediately prior to the consummation of such proposed action
or
at such other time and subject to such other conditions as shall be determined
by the Committee.
E. Issuances
of Securities.
Except
as expressly provided herein, no issuance by the Company of shares of stock
of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the
number or price of shares subject to Options. No adjustments shall be made
for
dividends paid in cash or in property other than securities of the
Company.
F. Fractional
Shares.
No
fractional shares shall be issued under the Plan and the Grantee shall receive
from the Company cash in lieu of such fractional shares.
G. Adjustments.
Upon the
happening of any of the foregoing events described in subparagraphs A or B
above, the class and aggregate number of shares set forth in paragraph 4
hereof that are subject to Stock Rights which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect the events described in such subparagraphs. The Committee or the
Successor Board shall determine the specific adjustments to be made under
this
paragraph 14 and, subject to paragraph 2, its determination shall be
conclusive.
H. Restrictions.
If any
person or entity owning restricted Common Stock obtained by exercise of a
Stock
Right made hereunder receives shares or securities or cash in connection
with a
corporate transaction described in subparagraphs A or B above as a result
of owning such restricted Common Stock, such shares or securities or cash
shall
be subject to all of the conditions and restrictions applicable to the
restricted Common Stock with respect to which such shares or securities or
cash
were issued, unless otherwise determined by the Committee or the Successor
Board.
15. Means
of Exercising Stock Rights.
A Stock
Right (or any part or installment thereof) shall be exercised by giving written
notice to the Company at its principal office address. Such notice shall
identify the Stock Right being exercised and specify the number of shares
as to
which such Stock Right is being exercised, accompanied by full payment of
the
purchase price therefor either (a) in United States dollars in cash or by
check, or (b) at the discretion of , and subject to procedures or
restrictions imposed by, the Committee, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to
the
cash exercise price of the Stock Right, or (c) at the discretion of the
Committee, by delivery of the Grantee's personal recourse note bearing interest
payable not less frequently than annually at no less than 100% of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Code, or
(d) at the discretion of the Committee and consistent with applicable law,
through the delivery of an assignment to the Company of a sufficient amount
of
the proceeds from the sale of the Common Stock acquired upon exercise of
the
Option and an authorization to the broker or selling agent to pay that amount
to
the Company, which sale shall be at the participant's direction at the time
of
exercise, or (e) at the discretion of the Committee, by any combination of
(a), (b), (c) and (d) above. If the Committee exercises its discretion to
permit
payment of the exercise price of an ISO by means of the methods set forth
in
clauses (b), (c), (d) or (e) of the preceding sentence, such discretion shall
be
exercised in writing at the time of the grant of the ISO in question. The
holder
of a Stock Right shall not have the rights of a shareholder with respect
to the
shares covered by his Stock Right until the date of issuance of a stock
certificate to him for such shares. Except as expressly provided above in
paragraph 14 with respect to changes in capitalization and stock dividends,
no adjustment shall be made for dividends or similar rights for which the
record
date is before the date such stock certificate is issued.
16. Term
and Amendment of Plan.
This
Plan was adopted by the Board as of March 28, 2006, subject to approval of
the
Plan by the stockholders of the Company at the next Meeting of Stockholders
or,
in lieu thereof, by written consent. The Plan shall expire at the end of
the day
on May 5, 2016 (except as to Options outstanding on that date). No Stock
Rights
may be granted under the Plan until the date of stockholder approval of the
Plan. The Board may terminate or amend the Plan in any respect at any time,
except that (i) the Board may not amend the Plan, without the approval of
the
stockholders obtained within 12 months before or after the Board adopts a
resolution authorizing the amendment, to increase the total number of shares
that may be issued under the Plan (except by adjustment pursuant to paragraph
14) or to change the provisions of paragraph 3 regarding eligibility for
Options; (ii) the provisions of subparagraph 6(B) regarding the
exercise price at which shares may be offered pursuant to ISOs may not be
modified (except by adjustment pursuant to paragraph 13); and
(iii) the expiration date of the Plan may not be extended. Except as
otherwise provided in this paragraph 16, in no event may action of the
Board or stockholders alter or impair the rights of a Grantee, without his
consent, under any Stock Right previously granted to him.
17. Conversion
of ISOs into Non-Qualified Options; Termination of ISOs.
Subject
to subparagraph 14(C), without the prior written consent of the holder of
an
ISO, the Committee shall not alter the terms of such ISO (including the means
of
exercising such ISO) if such alteration would constitute a modification (within
the meaning of Section 424(h)(3) of the Code). The Committee, at the written
request or with the written consent of any Grantee, may in its discretion
take
such actions as may be necessary to convert such Grantee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to
the
expiration of such ISOs, regardless of whether the Grantee is an employee
of the
Company or a Related Corporation at the time of such conversion. Such actions
may include, but shall not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such ISOs.
At the
time of such conversion, the Committee (with the consent of the Grantee)
may
impose such conditions on the exercise of the resulting Non-Qualified Options
as
the Committee in its discretion may determine, provided that such conditions
shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed
to
give any Grantee the right to have such Grantee's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless
the
Committee takes appropriate action. Upon the taking of any such action, the
Company shall issue separate certificates to the Grantee with respect to
the
Options that are Non-Qualified Options and Options that are ISOs.
18. Application
Of Funds.
The
proceeds received by the Company from the sale of shares pursuant to Options
granted and Purchases authorized under the Plan shall be used for general
corporate purposes.
19. Conditions
On Issuance of Shares.
A. Governmental
Regulation.
The
Company's obligation to sell and deliver shares of the Common Stock under
this
Plan is subject to the approval of any governmental authority deemed by the
Company’s counsel to be necessary for the lawful authorization, issuance or sale
of such shares.
B. Legal
Compliance.
Shares
shall not be issued pursuant to the exercise of an Option unless the exercise
of
such Option and the issuance and delivery of such Shares pursuant thereto
shall
comply with all relevant provisions of law, including, without limitation,
the
Securities Act, the Exchange Act, the rules and regulations promulgated
thereunder, and the applicable requirements of any securities exchange, and
shall be further subject to the approval of counsel for the Company with
respect
to such compliance. The Company may postpone the issuance and delivery of
the
certificate(s) representing the Shares for which an Option has been exercised
for such period as may be required by the Company to comply with any applicable
listing requirement of any securities exchange or any law or regulation
applicable to the issuance or delivery of such Shares.
C. Representations
and Warranties.
As a
condition to the exercise of an Option, the person exercising such Option
may be
required to execute an agreement with and/or make any representation and/or
warranty to the Company as may be, in the judgment of counsel to the Company,
necessary or appropriate under applicable laws or regulations. Such
representations and warranties may include, but not be limited to, a
representation and warranty that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares.
20. Withholding
of Additional Income Taxes.
Upon the
exercise of a Non-Qualified Option, the grant of an Award, the making of
a
Purchase of Common Stock for less than its fair market value, the making
of a
Disqualifying Disposition (as defined in paragraph 21), the making of a
distribution or other payment with respect to such stock or securities, or
the
vesting or transfer of restricted Common Stock acquired on the exercise of
a
Stock Right hereunder, the Company may, in accordance with applicable law,
withhold from any property, compensation or other amounts payable to the
Grantee
any income and/or employment taxes in respect of amounts that constitute
compensation includible in gross income, or otherwise treated by federal,
state
or other applicable law as wages for withholding for income or employment
tax
purposes. The Committee in its discretion may condition (i) the exercise of
an Option, (ii) the grant of an Award, (iii) the making of a Purchase
of Common Stock for less than its fair market value, or (iv) the vesting or
transferability of restricted Common Stock acquired by exercising a Stock
Right,
on the Grantee's making satisfactory arrangement for such withholding. Such
arrangement may include payment by the Grantee in cash or by check of the
amount
of the withholding taxes or, at the discretion of the Company, by the Grantee's
delivery of previously held shares of Common Stock or the withholding from
the
shares of Common Stock otherwise deliverable upon exercise of Option shares
having an aggregate fair market value equal to the amount of such withholding
taxes. The use of any method of payment other than by cash or check in some
cases may require or cause additional withholding obligations.
21. Notice
to Company of Disqualifying Disposition.
By
accepting an ISO granted under the Plan, each ISO Grantee thereby agrees
to
notify the Company in writing immediately after such Grantee makes a
Disqualifying Disposition (as described in Section 421, 422, and 424 of the
Code
and regulations thereunder) of any stock acquired pursuant to the exercise
of
ISOs granted under the Plan. Generally, a Disqualifying Disposition is any
disposition (including any sale) of such Common Stock occurring on or before
the
later of the date (a) two years after the date the employee was granted the
ISO, or (b) one year after the date the employee acquired Common Stock by
exercising the ISO.
22. No
Exercise of Option if Engagement or Employment Terminated for
Cause.
Unless
otherwise provided in the agreement relating to an Option or Award, if the
employment (or other service to the Company) of a Grantee is terminated for
"Cause," all Options and Awards held by such Grantee shall be forfeited and
shall terminate on the date of such termination, and no Option held by the
Grantee shall thereupon be exercisable to any extent whatsoever. "Cause"
is
conduct, as determined by the Board of Directors, involving one or more of
the
following: (i) gross misconduct by the Grantee which is materially
injurious to the Company; or (ii) the commission by the
Grantee
of an act of embezzlement, fraud or deliberate disregard of the rules or
policies of the Company which results in material economic loss, damage or
injury to the Company; or (iii) the unauthorized disclosure by the Grantee
of any trade secret or confidential information of the Company or any third
party who has a business relationship with the Company or the violation by
the
Grantee of any noncompetition covenant or assignment of inventions obligation
with the Company; or (iv) the commission by the Grantee of an act which
induces any customer or prospective customer of the Company to break a contract
with the Company or to decline to do business with the Company; or (v) the
conviction of the Grantee of a felony involving any financial impropriety
or
which would materially interfere with the Grantee’s ability to perform his or
her services or otherwise be injurious to the Company; or (vi) the failure
of the Grantee to perform in a material respect his or her employment, or
engagement, obligations without proper cause; or (v) such other conditions
as
determined by the Committee and stated in the instrument evidencing an Option
or
other Stock Right. In making such determination, the Board of Directors shall
act fairly and in utmost good faith. For the purposes of this paragraph 22,
termination of employment (or other service) shall be deemed to occur when
the
Grantee receives notice that his employment (or other service) is terminated,
and "Company" means the Company and all Related Corporations.
23. Governing
Law; Construction.
The
validity and construction of the Plan and the instruments evidencing Stock
Rights shall be governed by the laws of the State of Delaware or the laws
of any
jurisdiction in which the Company or its successors in interest may be
organized. In construing this Plan, the singular shall include the plural
and
the masculine gender shall include the feminine and neuter, unless the context
otherwise requires.
A-8
ANNUAL
MEETING OF STOCKHOLDERS OF
ASTEA
INTERNATIONAL INC.
May
5, 2006
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
Please
detach along perforated line and mail in the envelope
provided.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE [x]
1.
To elect four (4) Directors to serve until the next Annual
Meeting of
Stockholders or until their successors are duly elected and
qualified.
|
|
2.
To approve the 2006 Stock Option Plan.
FOR AGAINST ABSTAIN
[
] [
] [ ]
3.
To ratify the selection of the firm of BDO Seidman, LLP as
independent
auditors for the fiscal year ending December 31, 2006.
[
] [
] [ ]
4.
To transact such other
business as may properly come before the meeting or any adjournment
or
adjournments thereof.
THIS
PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION
IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR RATIFICATION
OF THE
APPOINTMENT OF BDO SEIDMAN LLP AS INDEPENDENT AUDITORS, AND
AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE
THE MEETING.
STOCKHOLDERS
WHO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS MAY VOTE IN PERSON
EVEN
THOUGH THEY HAVE PREVIOUSLY MAILED THIS PROXY.
|
|
|
[
] FOR
ALL NOMINEES
[
] WITHHOLD
AUTHORITY
FOR
ALL NOMINEES
[
] FOR
ALL EXCEPT
(See
instructions below)
|
NOMINEES:
O
Zack
B. Bergreen
O
Adrian
A. Peters
O
Thomas
J. Reilly, Jr.
O
Eric
Siegel
|
|
INSTRUCTION:
To
withhold authority to vote for any individual nominee(s), mark
“FOR
ALL EXCEPT”and
fill in the circle next to each nominee you wish to withhold,
as shown
here:
|
|
|
|
|
|
|
|
|
To
change the address on your account, please check the box at
right and
indicate your new address in the address space above. Please
note that
changes to the registered name(s) on the account may not be
submitted via
this method. [ ]
|
|
|
Signature
of Stockholder
|
Date:
|
Signature
of Stockholder
|
Date:
|
Note:
Please
sign exactly as your name or names appear on this Proxy. When shares
are held
jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the
signer is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
ASTEA
INTERNATIONAL INC.
PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS
May
5, 2006
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned stockholder of Astea International Inc., a Delaware corporation
(the
"Corporation"), hereby acknowledges receipt of the Notice of Annual Meeting
of
Stockholders and accompanying Proxy Statement each dated April 3,
2006 and hereby appoints Zack B. Bergreen and Rick Etskovitz as proxies and
attorneys-in-fact, with full power of substitution, on behalf and in
the name of
the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held at the offices of the Company
at 240
Gibraltar Road, Horsham, Pennsylvania 19044, on May 5, 2006 at 10:00
a.m. local time, and at any adjournment or adjournments thereof, and
to vote all
shares of Common Stock which the undersigned would be entitled to vote
if then
and there personally present, on all matters set forth in the Notice
of Annual
Meeting of Stockholders and accompanying Proxy Statement, and in their
discretion upon any other business that may properly come before the
meeting or
any adjournment or adjournments thereof:
(Continued
and to be signed on the reverse side)