SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by Registrant |X|
Filed by a Party Other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
Astea International Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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[ASTEA LOGO OMITTED]
Astea International Inc.
240 Gibraltar Road
Horsham, Pennsylvania 19044
---------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 19, 2004
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 Thursday, August 19, 2004
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 ratify the selection of BDO Seidman LLP as independent
auditors for the fiscal year ending December 31, 2004.
3. 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 June 30, 2004, the record
date fixed by the Board of Directors, 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
/s/ Zack B. Bergreen
--------------------
Zack B. Bergreen
President and Chief Executive Officer
Horsham, Pennsylvania
July 9, 2004
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 LOGO OMITTED]
Astea International Inc.
240 Gibraltar Road
Horsham, Pennsylvania 19044
PROXY STATEMENT
July 9, 2004
Proxies in the form enclosed with this proxy statement, which were
first mailed to stockholders on or about July 9, 2004, are being solicited by
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
Thursday, August 19, 2004, 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 June 30, 2004
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. As of that date, 2,986,527 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 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 of the Company 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, 2003, is being mailed together with this
proxy statement to all stockholders entitled to vote.
1
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
In accordance with the Company's By-Laws, the Company's 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 2005 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 Year Current Term
First Became a Director Age Position(s) with The Company Will Expire
----------------------- --- ---------------------------- -----------
Chairman of the Board,
Zack B. Bergreen (1979) 59 President and 2004
Chief Executive Officer
Adrian Peters (2000) 55 Director 2004
Thomas J. Reilly, Jr. (2003) 64 Director 2004
Eric Siegel (2002) 47 Director 2004
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 59 Chairman of the Board, President and Chief Executive
Officer
George S. Rapp 51 Chief Financial Officer and Treasurer
John Tobin 38 Vice President, General Counsel, and Secretary
Kenneth Roy 44 Vice President of Sales, North America
Marikit Klein-Smith 37 Vice President, Marketing
Zack B. Bergreen founded the Company in November 1979. From November
1979 to January 1998, he served as President, Treasurer and Director of the
Company. In April 1995, he was elected Chief Executive Officer and Chairman of
the Board of Directors. From January 1998 through August 1999 Mr. Bergreen
served as Chairman of the Board and Chief Executive
2
Officer. From August 1999 to May 2000, his sole title was Chairman of the Board.
Since June 2000, in addition to Chairman of the Board, Mr. Bergreen resumed the
positions of President and Chief Executive Officer. Mr. Bergreen holds a
Bachelor of Science and a Master of Science degree in Electrical Engineering
from the University of Maryland.
Adrian Peters joined the Company's Board of Directors in June 2000 and
is a member of the Audit Committee. He is the President and founder of Tellstone
(previously Boston Partners), a firm that specializes as strategic advisors to
high-tech firms, starting in 1995. 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, Andersen Consulting and IBM.
Mr. Peters studied science and engineering at the University of Stellenbosch in
South Africa as well as management at Harvard Business School.
Thomas J. Reilly, Jr. joined Astea's Board in September 2003. He is
also Chairman of the Audit Committee. 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 joined Astea's Board in September 2002 and is a member of
the Audit Committee. 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 had been utilized
by growth companies, public market and acquisition candidates, industry
consolidators and turnarounds. He also serves on the Board of NCO Group (NASDAQ:
NCOG), a provider of outsourced accounts receivable management and collection
services, and PSCInfoGroup, a privately 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.
George S. Rapp joined Astea in April 2004 as Chief Financial Officer
and Treasurer. Mr. Rapp is a certified public accountant and has over twenty
five years of experience in financial management and reporting. He is
responsible for the company's financial planning, investor relations, and
executive guidance to help drive corporate performance. Prior to Astea, from
June 2002 to January 2004, Mr. Rapp served as Senior Vice President and Chief
Financial Officer of Advanta Bank Corp, a commercial credit card issuer based in
Spring House, PA, which is a subsidiary of Advanta Corporation. From August 2000
to June 2002, Mr. Rapp served as Senior Vice President and Chief Accounting
Officer of Sovereign Bancorp in Philadelphia, PA. Immediately prior to that,
from 1995 to 2000, Mr. Rapp served as Chief Financial Officer of Republic First
Bancorp, a commercial bank holding company based in Philadelphia, Pennsylvania.
Mr. Rapp received his Bachelor of Science degree from St. Joseph's University.
John Tobin joined the Company in June 2000 and serves as Vice
President, General Counsel, and Secretary. Mr. Tobin is responsible for handling
the legal affairs of the Company, along with 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.
Kenneth Roy, Vice President of Sales, is chartered with leading the
Company's sales operations to drive revenue and market share. Mr. Roy joined
Astea in December 2003. Immediately prior to Astea, he worked at PTC, Inc., a
provider of Product Lifecycle Management software based in Needham,
Massachusetts, where he was a Global Account Manager. From July 2001 to
September 2002 he worked as Director of Sales for the Northeast at SynQuest,
Inc., a Norcross, Georgia based supply chain event planning software provider.
Prior to that, from December 1999 to July 2001, he was a Regional Vice President
at VerticalNet Solutions in Horsham, Pennsylvania, selling enterprise software.
Mr. Roy received a Bachelor of Science degree in Organizational Management from
Eastern College and a veteran of the U.S. Marine Corps.
Marikit Klein-Smith, Vice President, Marketing, joined Astea in April
2003 and brings over 15 years of experience in high-tech marketing, with
progressive management experience at leading enterprise software and service
companies. She is responsible for the Company's branding initiatives and
oversees product marketing, lead generation, public relations and analyst
relation efforts. Prior to joining Astea, from April 2001 until April 2003,
Klein-Smith was a strategic marketing consultant for Full Circle Communications.
Previously, she spent 12 years in the SAP enterprise software market, where she
held the position of Vice President of Marketing at eOnline, an application
service provider for SAP software (2000-2001); Director of Corporate
Communications at SAP America, one of the largest enterprise software developers
(1998 to 2000), Global Marketing Manager at Deloitte Consulting's SAP practice
(1995 to 1998), and Field Marketing/Public Relations Specialist at SAP America
(1989 to 1995). Klein-Smith holds a Bachelor of Science in Economics from
Ursinus College.
3
Our Board of Directors elects executive officers on an annual basis,
which 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.
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 five (5) times in person
or by telephone during the fiscal year ended December 31, 2003. During their
respective terms of service in fiscal 2003, 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 us 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.
Audit Committee
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. A copy of the charter is attached as Exhibit A. 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 four times during
the fiscal year ended December 31, 2003.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee was formed on May 12,
2004 and therefore did not hold any meetings during fiscal year 2003. Upon
formation, the Board of Directors adopted the Nominating and Corporate
Governance Committee charter, which is attached as Exhibit B. 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 us; 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 relating to stockholder proposals, and are discussed in detail in our
bylaws, which will be provided to you upon written request.
The Nominating and Corporate Governance Committee uses a variety of
criteria to evaluate the qualifications and skills necessary for members of our
Board of Directors. Under these criteria, members of the Board of Directors
should have the highest professional and personal ethics and values, consistent
with our longstanding values and standards. They should have
4
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.
The Nominating and Corporate Governance Committee utilizes a variety of
methods for identifying and evaluating nominees for director. The Nominating and
Corporate Governance Committee regularly assesses the appropriate size of the
Board of Directors, and whether any vacancies on the Board of Directors are
expected due to retirement or otherwise. In the event that vacancies are
anticipated, or otherwise arise, the Nominating and Corporate Governance
Committee considers various potential candidates for director. Candidates may
come to the attention of the Nominating and Corporate Governance Committee
through current members of the Board of Directors, professional search firms,
stockholders or other persons. These candidates are evaluated at regular or
special meetings of the Nominating and Corporate Governance Committee, and may
be considered at any point during the year. As described above, the Nominating
and Corporate Governance Committee considers properly submitted stockholder
recommendations for candidates for the Board of Directors. In evaluating such
recommendations, the Nominating and Governance Committee uses the qualifications
standards discussed above and seeks to achieve a balance of knowledge,
experience and capability on the Board of Directors.
All nominees for election to the Board this year are incumbents. Mr.
Reilly is the sole Director who has not previously stood for election to the
Board by the stockholders. Mr. Reilly joined the Board in September 2003
following Isidore Sobkowski's resignation from the Board and following the 2003
Annual stockholder's meeting. He first came to the attention of the Board
through the suggestion of outside advisors. At that time, the Board considered
Mr. Reilly and his qualifications and elected him to the Board in August 2003,
to take effect September 5, 2003. Mr. Reilly's background and qualifications are
identified in the biographical section above.
Compensation Committee
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 us 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.
5
The following table sets forth as of June 30, 2004: (i) the name of
each person who, to our knowledge, owned beneficially more than 5% of the shares
of Common Stock of the Company outstanding at such date; (ii) the name of each
Director; and (iii) the name of each named executive officer of the Company. The
following table also sets forth as of June 30, 2004 the number of shares 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) 1,398,000 46.8%
Adrian Peters (4) 14,200 *
Eric Siegel (5) 4,700 *
Thomas J. Reilly, Jr. (6) 1,000 *
George S. Rapp 0 *
John Tobin (7) 13,750 *
Rick Etskovitz (8) 16,500 *
Kenneth Roy 0 *
Marikit Klein-Smith (9) 2,500 *
Leviticus Partners, L.P. (10) 250,000 8.4%
30 Park Avenue, Suite 12F
New York, New York 10016
All current directors, nominees and executive officers 1,450,650 48.6%
as a group (8 persons)(1)-(9)
------------------------
+ Except as otherwise indicated, the address of each person named
in the table is c/o Astea International Inc., 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 SEC 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
2,986,527 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. Also included are 40,000 options, all of which are currently
exercisable.
(4) Board Member. Represents options to purchase 14,200 shares, 10,900 of
which are currently exercisable, and 3,300 of which shall become
exercisable within the next 60 days.
(5) Board Member. Represents options to purchase 4,700 shares, all
of which are currently exercisable.
(6) Board Member. Represents 1,000 shares of Common Stock purchased on the
open market.
(7) Vice President and General Counsel. Represents options to purchase 13,750
shares, all of which are currently exercisable.
(8) Former Chief Financial Officer, resigned May 2004. Represents options to
purchase 12,500 shares, all of which are currently exercisable, and 4,000
shares of Common Stock purchased on the open market.
(9) Vice President, Marketing. Represents options to purchase 2,500
shares, all of which are currently exercisable.
(10) Information with respect to beneficial ownership is based upon information
furnished by the stockholder pursuant to a Schedule 13D, as amended and
filed with the SEC, dated June 1, 2004.
6
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, 2003, 2002, and 2001, of the following persons (i) each person who served as
Chief Executive Officer during the year ended December 31, 2003, and (ii) four
other executive officers of the Company in office at December 31, 2003 who
earned more than $100,000 in salary and bonus in fiscal 2003 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Compensation
------------------------------------------- ------------
Securities
Underlying
Options All Other
Name and Principal Position Year Salary ($) Bonus ($) (# of shares) Compensation ($)
--------------------------- ---- ---------- --------- ------------- ----------------
Zack B. Bergreen 2003 $ 210,000 -- -- 2,563 (1)
Chairman of the Board and Chief 2002 130,000 -- -- 69,600 (2)
Executive Officer 2001 130,000 -- 400,000 (3) 69,600 (2)
Rick Etskovitz (4) 2003 $ 129,525 -- 10,000 (5) --
Chief Financial Officer 2002 127,050 -- 10,000 (5) --
2001 119,160 -- 5,000 (5) --
John Tobin (6) 2003 $ 150,306 -- 10,000 (5) 1,236 (1)
Vice President and General Counsel 2002 151,033 (7) -- 10,000 (5) --
2001 126,895 (7) -- 5,000 (5) --
Kenneth Roy (8) 2003 $ 15,865 -- 35,000 (5) --
Vice President of Sales
Marikit Klein-Smith (9) 2003 $ 90,192 $ 9,700 10,000 (5) --
Vice President, Marketing
(1) Represents partial matching 401(k) contributions.
(2) Includes premiums for term, split-dollar life insurance paid by the Company
on behalf of the Named Executive Officer.
(3) Represents options to purchase shares of Common Stock, which was awarded as
compensation for a decrease taken in salary.
(4) Mr. Etskovitz resigned as Chief Financial Officer on May 12, 2004, and was
replaced by George S. Rapp.
(5) Represents options to purchase shares of Common Stock, which was awarded
based on merit.
(6) Hired as employee effective January 1, 2003.
(7) Compensation paid to Coleman Legal, a third party legal services provider.
(8) Kenneth Roy joined Astea in November 2003.
(9) Marikit Klein-Smith joined Astea in March 2003.
7
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
year ended December 31, 2003 to each of the Named Executive Officers:
Individual Grants
-----------------
Percent of
Total Potential Realizable Value at
Number of Options Assumed
Securities Granted to Annual Rates of Stock Price
Underlying Employees Exercise Appreciation for Option
Options In Fiscal Price Expiration Terms(2)
Name Granted (#) Year ($/Share)(1) Date 5%($) 10%($)
---- ----------- ---- ------------ ---- ----- ------
Zack B. Bergreen -- -- -- -- -- --
Rick Etskovitz 10,000(3) 9% $3.34 11/12/2013 $54,405 $86,631
John Tobin 10,000(3) 9% $3.34 11/12/2013 $54,405 $86,631
Kenneth Roy 35,000(3) 30% $3.34 11/12/2013 $190,418 $303,208
Marikit Klein-Smith 10,000(3) 9% $2.90 03/27/2013 $47,238 $75,219
(1) The exercise price per share of each option was fixed by the Board of
Directors at the closing market price on the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the market value of the Company's Common Stock on the date of option
grant over the term of the options. These numbers are calculated based on
rules promulgated by the SEC and do not reflect our estimate of future
stock price growth. Actual gains, if any, on stock option exercises and
Common Stock holdings are dependent on the timing of such exercise and the
future performance of the Company's Common Stock. There can be no assurance
that the rates of appreciation assumed in this table can be achieved or
that the amounts reflected will be received by the individual.
(3) Options to purchase shares will vest in equal installments on each of the
first four anniversaries of the grant date.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth, for each of the Named Executive
Officers, information with respect to the exercise of stock options during the
year ended December 31, 2003 and the year-end value of unexercised options:
Value of Unexercised
Shares Numbers of Unexercised In-the-Money Options
Name Acquired on Value Options at Year End at Year End
Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
----------- ----------- ------------------------- -------------------------
Zack B. Bergreen -- -- 40,000/40,000 --
Rick Etskovitz -- -- 8,750/21,250 --
John Tobin -- -- 10,000/20,000 --
Kenneth Roy -- -- --/35,000 --
Marikit Klein-Smith -- -- -- /10,000 --/$29,000
Employment Agreements and Severance Arrangements with Executive Officers
The Company has not entered into employment agreements with any of its
current Executive Officers.
8
Board Interlocks and Insider Participation
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 was, during the fiscal year ended December 31, 2003,
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 members of the Board of Directors of the
Company (the "Board") who functioned as an ad hoc Compensation Committee in
2003. 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 1991 Amended
Non-Qualified Stock Option Plan, 1994 Amended Stock Option Plan, 1995 Amended
Non-Employee Director Stock Option Plan, 1995 Employee Stock Purchase Plan, 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, the Company's 1995 Employee Stock Purchase Plan,
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 Committee near the beginning of each calendar
year based on recommendations of the Chief Executive Officer.
Fiscal 2003 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 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
Committee believes that fiscal 2003 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 upon the Company's performance,
at the sole discretion of the Committee. Additional bonuses may be awarded
during the fiscal year to reward an executive officer for superior individual or
business-unit performance. In 2003, because the Company was not profitable, no
cash bonuses were awarded based on Company performance, however, certain Named
Executive Officers received bonuses for individual or business-unit performance.
Ms. Klein-Smith received $9,700 in bonuses pursuant to her marketing incentive
plan.
9
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 Company's Common
Stock. The 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 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 had been administered by the Board
since January 1997 and by the Compensation Committee since its creation in May
2004. The Committee periodically grants new options to provide continuing
incentives for future performance. When establishing stock option grant levels,
the Committee considers existing levels of stock ownership, previous grants of
stock options, vesting schedules of outstanding options and the current price of
the Company's 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 an employee stock purchase plan, under which employees may
purchase Common Stock at a legally permitted discount, and 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 2003, Mr. Bergreen received
an annual base salary of $210,000. This is an increase from the $130,000 annual
base salary in 2002. The increase was primarily designed to compensate Mr.
Bergreen for the termination of the split dollar life insurance premiums that he
had previously benefited from, and that the Company ceased in order to comply
with our interpretation of applicable federal law. In the event that the Company
improves its financial performance, his base salary may be increased, and
bonuses may potentially be awarded. The Committee deemed Mr. Bergreen's
compensation appropriate based on an assessment of salaries believed by the
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 Committee has
considered these requirements and the related regulations. It is the present
intention 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 Board of
Directors:
Adrian Peters
Thomas J. Reilly, Jr.
Eric Siegel
Compensation of Directors
Our non-employee Directors receive 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 are also reimbursed for their 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 the Company's
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. Non-employee
Directors are also eligible to receive annual stock option grants under the
Company's 1995 Non-Employee Director Stock Option Plan. Directors who are
employees are not compensated for their service on the Board of Directors or any
committee thereof.
10
REPORT OF THE AUDIT COMMITTEE
For Fiscal 2003, the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditor,
management represented to the committee that the Company's consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the 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 Committee with the written disclosures
required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," and the Committee discussed with the
independent auditor that firm's independence.
Following the Committee's discussions with management and the
independent auditor, the Committee recommended that the Board of Directors
include the audited consolidated financial statements in our Annual Report on
Form 10-K for the year ended December 31, 2003.
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, 2003 and 2002, and fees
billed for other services rendered by BDO Seidman, LLP during those periods:
2003 2002
----------------- ----------------
Audit Fees (1) $ 145,500 $ 127,800
Audit-related Fees (2) 9,000 8,000
Tax Fees (3) 62,200 67,900
All Other Fees (4) - -
----------------- ----------------
Total (5) $ 216,700 $ 203,700
================= ================
(1) Audit fees consisted 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 consisted 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 consisted 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 2003.
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 2003, 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
11
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative
total stockholder return on the Company's Common Stock during the period from
December 31, 1998 through December 31, 2003, 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, 1998 in the Company's Common Stock at the initial public offering price and
in each of the foregoing indices, and assumes reinvestment of dividends, if any.
Comparison of 5 Year Cumulative Total Return
Among Astea International Inc.,
NASDAQ Market Index and SIC Code Index
[GRAPHIC OMITTED]
Years Ending 1998 1999 2000 2001 2002 2003
------------ ---- ---- ---- ---- ---- ----
Astea Int'l Inc. $100.00 $318.52 $81.70 $68.16 $57.89 $56.02
NASDAQ US $100.00 $186.12 $113.20 $89.66 $61.65 $93.10
Peer Group $100.00 $189.90 $102.26 $97.23 $66.94 $87.22
Assumes $100 Invested on Dec. 31, 1998
Assumes Dividend Reinvested
Fiscal Year Ending Dec. 31, 2003
Related Party Transactions
In each of 2002, 2001 and 2000, the Company paid premiums on behalf of
Zack B. Bergreen (the Chairman and Chief Executive Officer) and his wife of
$69,600 under split dollar life insurance policies. As of January 1, 2003, the
Company has ceased to make these premium payments.
12
PROPOSAL 2
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, 2004. 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 our 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 our
Common Stock (collectively, "Reporting Persons") to file with the SEC initial
reports of ownership and reports of changes in ownership of our Common Stock.
Such persons are required by regulations of the SEC to furnish us with copies of
all such filings. Based on our review of the copies of such filings received by
us with respect to the fiscal year ended December 31, 2003, and written
representations from certain Reporting Persons, we believe that all Reporting
Persons complied with all Section 16(a) filing requirements in the fiscal year
ended December 31, 2003.
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 March 24, 2005. Any such proposal must comply with the rules and
regulations of the Commission. 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 2005 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 March 24,
2005.
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, 2003. 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
President and Chief Executive Officer
Horsham, Pennsylvania
July 9, 2004
13
EXHIBIT A
AUDIT COMMITTEE CHARTER
1. Members. The Board of Directors shall appoint an Audit Committee of at least
three members, consisting entirely of independent directors of the Board, and
shall either designate one member as chairperson or delegate the authority to
designate a chairman to the Audit Committee. Members of the Audit Committee
shall be appointed by the Board of Directors upon the recommendation of a
majority of the independent directors and may be removed by the Board of
Directors in its discretion. For the purposes hereof, the term "independent"
shall mean a director who meets The Nasdaq Stock Market, Inc. ("NASDAQ")
standards of "independence," as determined by the Board.
Each member of the Company's Audit Committee must be financially
literate at the time of appointment, and at least one member of the Audit
Committee must be an "audit committee financial expert," as determined by the
Board. In addition, no Audit Committee member may have participated in the
preparation of the financial statements of the Company or any of the Company's
current subsidiaries at any time in the past three years.
2. Purposes, Duties, and Responsibilities. The purposes of the Audit Committee
shall be to:
o assist the Board of Directors in discharging its oversight
responsibility relating to: (i) the accounting, reporting, and
financial practices of the Company and its subsidiaries,
including the integrity of the Company's financial statements;
(ii) the surveillance of administration and financial controls
and the Company's compliance with legal and regulatory
requirements; (iii) the outside auditing firm's qualifications
and independence; and (iv) the performance of the Company's
internal audit function and the Company's outside auditing
firm; and
o prepare the report required by the rules of the SEC to be
included in the Company's annual proxy statement.
Among its specific duties and responsibilities, the Audit Committee
shall, consistent with and subject to applicable law and rules and regulations
promulgated by the SEC, NASD or other regulatory authority:
(i) Be directly responsible, in its capacity as a committee of the Board,
for the appointment, compensation, retention and oversight of the work
of the outside auditing firm. In this regard, the Audit Committee shall
have the sole authority to: (A) appoint and retain, (subject to
ratification by the Company's stockholders), (B) determine the funding
for, and (C) when appropriate, terminate, the outside auditing firm,
which shall report directly to the Audit Committee.
(ii) Approve in advance all audit services to be provided by the outside
auditing firm, including any written engagement letters related
thereto. (By approving the audit engagement, the audit service
contemplated in any written engagement letter shall be deemed to have
been pre-approved.)
(iii) Establish policies and procedures for the engagement of the outside
auditing firm to provide permissible non-audit services, which shall
require pre-approval by the Audit Committee of all permissible
non-audit services to be provided by the outside auditing firm.
(iv) Consider, at least annually, the independence of the outside auditing
firm, including whether the outside auditing firm's performance of
permissible non-audit services is compatible with the auditor's
independence; obtain and review a report by the outside auditing firm
describing any relationships between the outside auditing firm and the
Company or any other relationships that may adversely affect the
independence of the auditor; discuss with the outside auditing firm any
disclosed relationships or services that may impact the objectivity and
independence of the auditor; and present to the Board of Directors the
Audit Committee's conclusions with respect to the independence of the
outside auditing firm.
(v) Review and discuss with the outside auditing firm: (A) the scope of the
audit, the results of the annual audit examination by the auditor and
any accompanying management letters, and any difficulties the auditor
encountered in the course of their audit work, including any
restrictions on the scope of the outside auditing firm's activities or
on access to requested information, and any significant disagreements
with management; and (B) any reports of the outside auditing firm with
respect to interim periods.
(vi) Review the report from the outside auditing firm on the critical
accounting policies and the alternative treatments of financial
information that have been discussed with management.
(vii) Review and discuss with management and the outside auditing firm the
annual audited and quarterly unaudited financial statements of the
Company, including: (A) an analysis of the auditor's judgment as to the
quality of the Company's accounting principles, setting forth
significant financial reporting issues and judgments made in connection
with the preparation of the financial statements; (B) the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations," including the development,
selection and reporting of
A-1
accounting policies that may be regarded as critical; (C) the steps
that the Company is taking to review and assess its internal control
over financial reporting; and (D) major issues regarding the Company's
accounting principles and financial statement presentations, including
any significant changes in the Company's selection or application of
accounting principles and financial statement presentations.
(viii) Recommend to the Board based on the review and discussion described in
paragraphs (v)-(vii) above, whether the financial statements should be
included in the Annual Report on Form 10-K.
(ix) Periodically review and discuss the adequacy of the Company's internal
controls, any significant deficiencies in internal controls, and
significant changes in such controls; and review and discuss with the
principal internal auditor of the Company and such others as the Audit
Committee deems appropriate, the scope and results of the internal
audit program.
(x) Periodically review and discuss the adequacy and effectiveness of the
Company's disclosure controls and procedures and management reports
thereon.
(xi) Review and discuss with management and the outside auditors any
material financial or non-financial arrangements of the Company which
do not appear on the financial statements of the Company.
(xii) Review any related party transactions involving directors or executive
officers of the Company.
(xiii) Review, with the General Counsel, material pending legal proceedings
involving the Company, other contingent liabilities, the Company's
compliance policies, and any material reports or inquiries received
from regulators or governmental agencies
(xiv) Establish procedures for receiving and handling complaints regarding
accounting, internal accounting controls and auditing matters,
including procedures for confidential, anonymous submission of concerns
by employees regarding accounting and auditing matters.
(xv) Review and discuss corporate policies with respect to earnings press
releases, as well as financial information and earnings guidance
provided to analysts and investors.
(xvi) Review codes of conduct applicable to directors, officers and
employees.
(xvii) Establish policies for the hiring of employees and former employees of
the outside auditing firm.
(xviii) Evaluate annually the performance of the Audit Committee and the
adequacy of the Audit Committee charter.
3. Outside Advisors. The Audit Committee shall have the authority to retain
such outside counsel, accountants, experts and other advisors as it determines
appropriate to assist the Audit Committee in the performance of its functions.
The Audit Committee shall have sole authority to approve related fees and
retention terms and shall receive appropriate funding from the Company, as
determined by the Audit Committee, for payment of fees to any such advisors.
4. Meetings. The Audit Committee will meet at least four times per year, either
in person or telephonically, and at such times and places as the Audit Committee
shall determine. The Audit Committee shall meet separately in executive session,
periodically, with each of management, the principal internal auditor of the
Company and the outside auditing firm. A majority of the members of the Audit
Committee present in person or by telephone shall constitute a quorum. The Audit
Committee shall maintain minutes or other records of its meetings and
activities. The Audit Committee shall report regularly to the full Board of
Directors with respect to its activities.
A-2
EXHIBIT B
CHARTER FOR THE
NOMINATING AND GOVERNANCE COMMITTEE
OF
ASTEA INTERNATIONAL INC.
PURPOSE:
The purpose of the Nominating and Governance Committee is to ensure
that the Board of Directors is properly constituted to meet its fiduciary
obligations to stockholders and the Company and that the Company has and follows
appropriate governance standards. To carry out this purpose, the Nominating and
Governance Committee shall: (1) assist the board by identifying prospective
director nominees and recommending to the board the director nominees for the
next annual meeting of stockholders; (2) develop and recommend to the board the
governance principles applicable to the Company; (3) oversee the evaluation of
the board and management; and (4) recommend to the board director nominees for
each committee.
COMMITTEE MEMBERSHIP AND ORGANIZATION:
* The Nominating and Governance Committee shall be comprised of no fewer
than three (3) members.
* The members of the Nominating and Governance Committee shall meet the
independence requirements of the Nasdaq Stock Market.
* The members of the Nominating and Governance Committee shall be
appointed and replaced by the board.
COMMITTEE RESPONSIBILITIES AND AUTHORITY:
* Evaluate the current composition, organization and governance of the
board and its committees, determine future requirements and make
recommendations to the board for approval.
* Determine on an annual basis desired board qualifications, expertise
and characteristics and conduct searches for potential board members
with corresponding attributes. Evaluate and propose nominees for
election to the board. In performing these tasks the Nominating and
Governance Committee shall have the sole authority to retain and
terminate any search firm to be used to identify director candidates.
The selection and nomination process shall be as detailed in Appendix
A.
* Oversee the board performance evaluation process including conducting
surveys of director observations, suggestions and preferences.
* Form and delegate authority to subcommittees when appropriate.
* Evaluate and make recommendations to the board concerning the
appointment of directors to board committees, the selection of board
committee chairs, and proposal of the board slate for election.
Consider shareholder nominees for election to the board.
* Evaluate and recommend termination of membership of individual
directors in accordance with the board's governance principles, for
cause or for other appropriate reasons.
* Coordinate and approve board and committee meeting schedules.
* Make regular reports to the board.
* Review and re-examine this Charter annually and make recommendations to
the board for any proposed changes.
* Annually review and evaluate its' own performance.
* In performing its responsibilities, the Nominating and Governance
Committee shall have the authority to obtain advice, reports or
opinions from internal or external counsel and expert advisors.
B-1
APPENDIX A
----------
Statement of Policy on Criteria for Selecting Directors and Nominations Process
The Nominating and Governance Committee (the "Committee") has adopted
this policy statement in connection with requirements under applicable Nasdaq
rules and for purposes of required disclosure under the federal securities laws.
The Committee believes that all candidates for nomination as a director
should meet the following minimum criteria:
o Candidates must possess the ability to apply good business
judgment and must be in a position to properly exercise their
duties of loyalty and care.
o Candidates should exhibit proven leadership capabilities, high
integrity and moral character, significant business experience
and a high level of responsibility within their chosen fields.
o Candidates should have the ability to quickly grasp complex
principles of business, finance, international transactions
and the regulatory environment in which public companies must
operate.
o Candidates should have the ability to read and understand
basic financial statements.
o In general, candidates will be preferred who hold an
established senior or executive level position in business,
finance, law, education, research or government.
The Committee intends to follow the process outlined below in selecting
director candidates for nomination by the Board:
o In the case of incumbent directors whose terms of office are
set to expire, the Committee will review such directors'
overall service to the Company during their term, including
the number of meetings attended, level of participation,
quality of performance, and any transactions of such directors
with the Company during their term.
o On the basis of information learned during this
process, the Committee will determine which
nominee(s) to recommend to the Board to submit for
election at the next annual meeting.
o In the case of new director candidates, the committee will
first determine whether the nominee must be independent for
Nasdaq purposes, which determination will be based upon the
Company's charter and bylaws, applicable securities laws, the
rules and regulations of the SEC, the rules of the National
Association of Securities Dealers, and the advice of counsel,
if necessary.
o The Committee will then use its and management's
network of contacts to compile a list of potential
candidates, but may also engage, if it deems
appropriate, a professional search firm.
o The Committee will then conduct a process of making a
preliminary assessment of each candidate based upon
the resume and biographical information, an
indication of the individual's willingness to serve
and other background information.
o This information will be evaluated against the
criteria set forth above and the specific needs of
the Company at that time. Based upon a preliminary
assessment of the candidate(s), those who appear best
suited to meet the needs of the Company may be
invited to participate in a series of interviews,
which are used as a further means of evaluating
potential candidates.
o On the basis of information learned during this
process, the Committee will determine which
nominee(s) to recommend to the Board to submit for
election at the next annual meeting.
B-2
ASTEA INTERNATIONAL INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
AUGUST 19, 2004
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 July
9, 2004 and hereby appoints Zack B. Bergreen and George S. Rapp 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 August 19, 2004 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)
ANNUAL MEETING OF STOCKHOLDERS OF
ASTEA INTERNATIONAL INC.
August 19, 2004
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.
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE |x|
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1. To elect four (4) Directors to serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified.
NOMINEES:
|_| FOR ALL NOMINEES O Zack B. Bergreen
|_| WITHHOLD AUTHORITY O Adrian A. Peters
FOR ALL NOMINEES O Thomas J. Reilly, Jr.
|_| FOR ALL EXCEPT O Eric Siegel
(see instructions below)
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: |x|
2. To ratify the selection of the firm of BDO Seidman, LLP as independent
auditors for the fiscal year ending December 31, 2004.
|_| FOR |_| AGAINST |_| ABSTAIN
3. 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.
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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. |
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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.